To improve the bill.

SA 4983. Mr. REID (for Mr. Dodd (for himself and Mr. Shelby))
proposed an amendment to the bill H.R. 3221, moving the United States
toward greater energy independence and security, developing innovative
new technologies, reducing carbon emissions, creating green jobs,
protecting consumers, increasing clean renewable energy production, and
modernizing our energy infrastructure, and to amend the Internal
Revenue Code of 1986 to provide tax

[[Page S5840]]

incentives for the production of renewable energy and energy
conservation; as follows:

In lieu of the matter proposed to be inserted, insert the
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Housing
and Economic Recovery Act of 2008''.
(b) Table of Content.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.

DIVISION A--HOUSING FINANCE REFORM

Sec. 1001. Short title.
Sec. 1002. Definitions.

TITLE I--REFORM OF REGULATION OF ENTERPRISES

Subtitle A--Improvement of Safety and Soundness Supervision

Sec. 1101. Establishment of the Federal Housing Finance Agency.
Sec. 1102. Duties and authorities of the Director.
Sec. 1103. Federal Housing Finance Oversight Board.
Sec. 1104. Authority to require reports by regulated entities.
Sec. 1105. Examiners and accountants; authority to contract for reviews
of regulated entities; ombudsman.
Sec. 1106. Assessments.
Sec. 1107. Regulations and orders.
Sec. 1108. Prudential management and operations standards.
Sec. 1109. Review of and authority over enterprise assets and
liabilities.
Sec. 1110. Risk-based capital requirements.
Sec. 1111. Minimum capital levels.
Sec. 1112. Registration under the securities laws.
Sec. 1113. Prohibition and withholding of executive compensation.
Sec. 1114. Limit on golden parachutes.
Sec. 1115. Reporting of fraudulent loans.

Subtitle B--Improvement of Mission Supervision

Sec. 1121. Transfer of program approval and housing goal oversight.
Sec. 1122. Assumption by the Director of certain other HUD
responsibilities.
Sec. 1123. Review of enterprise products.
Sec. 1124. Conforming loan limits.
Sec. 1125. Annual housing report.
Sec. 1126. Public use database.
Sec. 1127. Reporting of mortgage data.
Sec. 1128. Revision of housing goals.
Sec. 1129. Duty to serve underserved markets.
Sec. 1130. Monitoring and enforcing compliance with housing goals.
Sec. 1131. Affordable housing programs.
Sec. 1132. Financial education and counseling.
Sec. 1133. Transfer and rights of certain HUD employees.

Subtitle C--Prompt Corrective Action

Sec. 1141. Critical capital levels.
Sec. 1142. Capital classifications.
Sec. 1143. Supervisory actions applicable to undercapitalized regulated
entities.
Sec. 1144. Supervisory actions applicable to significantly
undercapitalized regulated entities.
Sec. 1145. Authority over critically undercapitalized regulated
entities.

Subtitle D--Enforcement Actions

Sec. 1151. Cease and desist proceedings.
Sec. 1152. Temporary cease and desist proceedings.
Sec. 1153. Removal and prohibition authority.
Sec. 1154. Enforcement and jurisdiction.
Sec. 1155. Civil money penalties.
Sec. 1156. Criminal penalty.
Sec. 1157. Notice after separation from service.
Sec. 1158. Subpoena authority.

Subtitle E--General Provisions

Sec. 1161. Conforming and technical amendments.
Sec. 1162. Presidentially-appointed directors of enterprises.
Sec. 1163. Effective date.

TITLE II--FEDERAL HOME LOAN BANKS

Sec. 1201. Recognition of distinctions between the enterprises and the
Federal Home Loan Banks.
Sec. 1202. Directors.
Sec. 1203. Definitions.
Sec. 1204. Agency oversight of Federal Home Loan Banks.
Sec. 1205. Housing goals.
Sec. 1206. Community development financial institutions.
Sec. 1207. Sharing of information among Federal Home Loan Banks.
Sec. 1208. Exclusion from certain requirements.
Sec. 1209. Voluntary mergers.
Sec. 1210. Authority to reduce districts.
Sec. 1211. Community financial institution members.
Sec. 1212. Public use data base; reports to Congress.
Sec. 1213. Semiannual reports.
Sec. 1214. Liquidation or reorganization of a Federal Home Loan Bank.
Sec. 1215. Study and report to Congress on securitization of acquired
member assets.
Sec. 1216. Technical and conforming amendments.
Sec. 1217. Study on Federal Home Loan Bank advances.
Sec. 1218. Federal Home Loan Bank refinancing authority for certain
residential mortgage loans.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND
THE FEDERAL HOUSING FINANCE BOARD

Subtitle A--OFHEO

Sec. 1301. Abolishment of OFHEO.
Sec. 1302. Continuation and coordination of certain actions.
Sec. 1303. Transfer and rights of employees of OFHEO.
Sec. 1304. Transfer of property and facilities.

Subtitle B--Federal Housing Finance Board

Sec. 1311. Abolishment of the Federal Housing Finance Board.
Sec. 1312. Continuation and coordination of certain actions.
Sec. 1313. Transfer and rights of employees of the Federal Housing
Finance Board.
Sec. 1314. Transfer of property and facilities.

TITLE IV--HOPE FOR HOMEOWNERS

Sec. 1401. Short title.
Sec. 1402. Establishment of HOPE for Homeowners Program.
Sec. 1403. Fiduciary duty of servicers of pooled residential mortgage
loans.
Sec. 1404. Revised standards for FHA appraisers.

TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

Sec. 1501. Short title.
Sec. 1502. Purposes and methods for establishing a mortgage licensing
system and registry.
Sec. 1503. Definitions.
Sec. 1504. License or registration required.
Sec. 1505. State license and registration application and issuance.
Sec. 1506. Standards for State license renewal.
Sec. 1507. System of registration administration by Federal agencies.
Sec. 1508. Secretary of Housing and Urban Development backup authority
to establish a loan originator licensing system.
Sec. 1509. Backup authority to establish a nationwide mortgage
licensing and registry system.
Sec. 1510. Fees.
Sec. 1511. Background checks of loan originators.
Sec. 1512. Confidentiality of information.
Sec. 1513. Liability provisions.
Sec. 1514. Enforcement under HUD backup licensing system.
Sec. 1515. State examination authority.
Sec. 1516. Reports and recommendations to Congress.
Sec. 1517. Study and reports on defaults and foreclosures.

TITLE VI--MISCELLANEOUS

Sec. 1601. Study and reports on guarantee fees.
Sec. 1602. Study and report on default risk evaluation.
Sec. 1603. Conversion of HUD contracts.
Sec. 1604. Bridge depository institutions.
Sec. 1605. Sense of the Senate.

DIVISION B--FORECLOSURE PREVENTION

Sec. 2001. Short title.
Sec. 2002. Emergency designation.

TITLE I--FHA MODERNIZATION ACT OF 2008

Sec. 2101. Short title.

Subtitle A--Building American Homeownership

Sec. 2111. Short title.
Sec. 2112. Maximum principal loan obligation.
Sec. 2113. Cash investment requirement and prohibition of seller-funded
down payment assistance.
Sec. 2114. Mortgage insurance premiums.
Sec. 2115. Rehabilitation loans.
Sec. 2116. Discretionary action.
Sec. 2117. Insurance of condominiums.
Sec. 2118. Mutual Mortgage Insurance Fund.
Sec. 2119. Hawaiian home lands and Indian reservations.
Sec. 2120. Conforming and technical amendments.
Sec. 2121. Insurance of mortgages.
Sec. 2122. Home equity conversion mortgages.
Sec. 2123. Energy efficient mortgages program.
Sec. 2124. Pilot program for automated process for borrowers without
sufficient credit history.
Sec. 2125. Homeownership preservation.
Sec. 2126. Use of FHA savings for improvements in FHA technologies,
procedures, processes, program performance, staffing, and
salaries.
Sec. 2127. Post-purchase housing counseling eligibility improvements.
Sec. 2128. Pre-purchase homeownership counseling demonstration.
Sec. 2129. Fraud prevention.
Sec. 2130. Limitation on mortgage insurance premium increases.
Sec. 2131. Savings provision.
Sec. 2132. Implementation.
Sec. 2133. Moratorium on implementation of risk-based premiums.

Subtitle B--Manufactured Housing Loan Modernization

Sec. 2141. Short title.
Sec. 2142. Purposes.
Sec. 2143. Exception to limitation on financial institution portfolio.

[[Page S5841]]

Sec. 2144. Insurance benefits.
Sec. 2145. Maximum loan limits.
Sec. 2146. Insurance premiums.
Sec. 2147. Technical corrections.
Sec. 2148. Revision of underwriting criteria.
Sec. 2149. Prohibition against kickbacks and unearned fees.
Sec. 2150. Leasehold requirements.

TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS

Sec. 2201. Temporary increase in maximum loan guaranty amount for
certain housing loans guaranteed by the Secretary of
Veterans Affairs.
Sec. 2202. Counseling on mortgage foreclosures for members of the Armed
Forces returning from service abroad.
Sec. 2203. Enhancement of protections for servicemembers relating to
mortgages and mortgage foreclosures.

TITLE III--EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND
FORECLOSED HOMES

Sec. 2301. Emergency assistance for the redevelopment of abandoned and
foreclosed homes.
Sec. 2302. Nationwide distribution of resources.
Sec. 2303. Limitation on use of funds with respect to eminent domain.
Sec. 2304. Limitation on distribution of funds.
Sec. 2305. Counseling intermediaries.

TITLE IV--HOUSING COUNSELING RESOURCES

Sec. 2401. Housing counseling resources.
Sec. 2402. Credit counseling.

TITLE V--MORTGAGE DISCLOSURE IMPROVEMENT ACT

Sec. 2501. Short title.
Sec. 2502. Enhanced mortgage loan disclosures.
Sec. 2503. Community development investment authority for depository
institutions.

TITLE VI--VETERANS HOUSING MATTERS

Sec. 2601. Home improvements and structural alterations for totally
disabled members of the Armed Forces before discharge or
release from the Armed Forces.
Sec. 2602. Eligibility for specially adapted housing benefits and
assistance for members of the Armed Forces with service-
connected disabilities and individuals residing outside
the United States.
Sec. 2603. Specially adapted housing assistance for individuals with
severe burn injuries.
Sec. 2604. Extension of assistance for individuals residing temporarily
in housing owned by a family member.
Sec. 2605. Increase in specially adapted housing benefits for disabled
veterans.
Sec. 2606. Report on specially adapted housing for disabled
individuals.
Sec. 2607. Report on specially adapted housing assistance for
individuals who reside in housing owned by a family
member on permanent basis.
Sec. 2608. Definition of annual income for purposes of section 8 and
other public housing programs.
Sec. 2609. Payment of transportation of baggage and household effects
for members of the Armed Forces who relocate due to
foreclosure of leased housing.

DIVISION C--TAX-RELATED PROVISIONS

Sec. 3000. Short title; etc.

TITLE I--HOUSING TAX INCENTIVES

Subtitle A--Multi-Family Housing

PART I--Low-Income Housing Tax Credit

Sec. 3001. Temporary increase in volume cap for low-income housing tax
credit.
Sec. 3002. Determination of credit rate.
Sec. 3003. Modifications to definition of eligible basis.
Sec. 3004. Other simplification and reform of low-income housing tax
incentives.
Sec. 3005. Treatment of military basic pay.

PART II--Modifications to Tax-Exempt Housing Bond Rules

Sec. 3007. Recycling of tax-exempt debt for financing residential
rental projects.
Sec. 3008. Coordination of certain rules applicable to low-income
housing credit and qualified residential rental project
exempt facility bonds.

PART III--Reforms Related to the Low-Income Housing Credit and Tax-
Exempt Housing Bonds

Sec. 3009. Hold harmless for reductions in area median gross income.
Sec. 3010. Exception to annual current income determination requirement
where determination not relevant.

Subtitle B--Single Family Housing

Sec. 3011. First-time homebuyer credit.
Sec. 3012. Additional standard deduction for real property taxes for
nonitemizers.

Subtitle C--General Provisions

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules.
Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt
housing bonds, low-income housing tax credit, and
rehabilitation credit.
Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for
treatment as tax-exempt bonds.
Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign
affidavits.
Sec. 3025. Modification of definition of tax-exempt use property for
purposes of the rehabilitation credit.
Sec. 3026. Extension of special rule for mortgage revenue bonds for
residences located in disaster areas.

TITLE II--REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

Subtitle A--Foreign Currency and Other Qualified Activities

Sec. 3031. Revisions to REIT income tests.
Sec. 3032. Revisions to REIT asset tests.
Sec. 3033. Conforming foreign currency revisions.

Subtitle B--Taxable REIT Subsidiaries

Sec. 3041. Conforming taxable REIT subsidiary asset test.

Subtitle C--Dealer Sales

Sec. 3051. Holding period under safe harbor.
Sec. 3052. Determining value of sales under safe harbor.

Subtitle D--Health Care REITs

Sec. 3061. Conformity for health care facilities.

Subtitle E--Effective Dates

Sec. 3071. Effective dates.

TITLE III--REVENUE PROVISIONS

Subtitle A--General Provisions

Sec. 3081. Election to accelerate amt and r and d credits in lieu of
bonus depreciation.
Sec. 3082. Certain GO Zone incentives.

Subtitle B--Revenue Offsets

Sec. 3091. Returns relating to payments made in settlement of payment
card and third party network transactions.
Sec. 3092. Gain from sale of principal residence allocated to
nonqualified use not excluded from income.
Sec. 3093. Increase in information return penalties.
Sec. 3094. Increase in penalty for failure to file S corporation
returns.
Sec. 3095. Increase in penalty for failure to file partnership returns.
Sec. 3096. Increase in minimum penalty on failure to file a return of
tax.

DIVISION A--HOUSING FINANCE REFORM

SEC. 1001. SHORT TITLE.

This division may be cited as the ``Federal Housing Finance
Regulatory Reform Act of 2008''.

SEC. 1002. DEFINITIONS.

(a) Federal Safety and Soundness Act Definitions.--Section
1303 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4502) is amended--
(1) in each of paragraphs (8), (9), (10), and (19), by
striking ``Secretary'' each place that term appears and
inserting ``Director'';
(2) by redesignating paragraphs (16) through (19) as
paragraphs (21) through (24), respectively;
(3) by striking paragraphs (13) through (15) and inserting
the following:
``(19) Office of finance.--The term `Office of Finance'
means the Office of Finance of the Federal Home Loan Bank
System (or any successor thereto).
``(20) Regulated entity.--The term `regulated entity'
means--
``(A) the Federal National Mortgage Association and any
affiliate thereof;
``(B) the Federal Home Loan Mortgage Corporation and any
affiliate thereof; and
``(C) any Federal Home Loan Bank.'';
(4) by redesignating paragraphs (11) and (12) as paragraphs
(17) and (18), respectively;
(5) by redesignating paragraph (7) as paragraph (12);
(6) by redesignating paragraphs (8) through (10) as
paragraphs (14) through (16), respectively;
(7) in paragraph (5)--
(A) by striking ``(5)'' and inserting ``(9)''; and
(B) by striking ``Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban
Development'' and inserting ``Federal Housing Finance
Agency'';
(8) by redesignating paragraph (6) as paragraph (10);
(9) by redesignating paragraphs (2) through (4) as
paragraphs (5) through (7), respectively;
(10) by inserting after paragraph (7), as redesignated, the
following:
``(8) Default; in danger of default.--
``(A) Default.--The term `default' means, with respect to a
regulated entity, any adjudication or other official
determination by any court of competent jurisdiction, or the
Agency, pursuant to which a conservator, receiver, limited-
life regulated entity, or legal custodian is appointed for a
regulated entity.
``(B) In danger of default.--The term `in danger of
default' means a regulated entity with respect to which, in
the opinion of the Agency--

[[Page S5842]]

``(i) the regulated entity is not likely to be able to pay
the obligations of the regulated entity in the normal course
of business; or
``(ii) the regulated entity--

``(I) has incurred or is likely to incur losses that will
deplete all or substantially all of its capital; and
``(II) there is no reasonable prospect that the capital of
the regulated entity will be replenished.'';

(11) by inserting after paragraph (1) the following:
``(2) Agency.--The term `Agency' means the Federal Housing
Finance Agency established under section 1311.
``(3) Authorizing statutes.--The term `authorizing
statutes' means--
``(A) the Federal National Mortgage Association Charter
Act;
``(B) the Federal Home Loan Mortgage Corporation Act; and
``(C) the Federal Home Loan Bank Act.
``(4) Board.--The term `Board' means the Federal Housing
Finance Oversight Board established under section 1313A.'';
(12) by inserting after paragraph (10), as redesignated by
this section, the following:
``(11) Entity-affiliated party.--The term `entity-
affiliated party' means--
``(A) any director, officer, employee, or controlling
stockholder of, or agent for, a regulated entity;
``(B) any shareholder, affiliate, consultant, or joint
venture partner of a regulated entity, and any other person,
as determined by the Director (by regulation or on a case-by-
case basis) that participates in the conduct of the affairs
of a regulated entity, provided that a member of a Federal
Home Loan Bank shall not be deemed to have participated in
the affairs of that Bank solely by virtue of being a
shareholder of, and obtaining advances from, that Bank;
``(C) any independent contractor for a regulated entity
(including any attorney, appraiser, or accountant), if--
``(i) the independent contractor knowingly or recklessly
participates in--

``(I) any violation of any law or regulation;
``(II) any breach of fiduciary duty; or
``(III) any unsafe or unsound practice; and

``(ii) such violation, breach, or practice caused, or is
likely to cause, more than a minimal financial loss to, or a
significant adverse effect on, the regulated entity;
``(D) any not-for-profit corporation that receives its
principal funding, on an ongoing basis, from any regulated
entity; and
``(E) the Office of Finance.'';
(13) by inserting after paragraph (12), as redesignated by
this section, the following:
``(13) Limited-life regulated entity.--The term `limited-
life regulated entity' means an entity established by the
Agency under section 1367(i) with respect to a Federal Home
Loan Bank in default or in danger of default or with respect
to an enterprise in default or in danger of default.''; and
(14) by adding at the end the following:
``(25) Violation.--The term `violation' includes any action
(alone or in combination with another or others) for or
toward causing, bringing about, participating in, counseling,
or aiding or abetting a violation.''.
(b) References in This Act.--As used in this Act, unless
otherwise specified--
(1) the term ``Agency'' means the Federal Housing Finance
Agency;
(2) the term ``Director'' means the Director of the Agency;
and
(3) the terms ``enterprise'', ``regulated entity'', and
``authorizing statutes'' have the same meanings as in section
1303 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, as amended by this Act.

TITLE I--REFORM OF REGULATION OF ENTERPRISES

Subtitle A--Improvement of Safety and Soundness Supervision

SEC. 1101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE
AGENCY.

The Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by
striking sections 1311 and 1312 and inserting the following:

``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE
AGENCY.

``(a) Establishment.--There is established the Federal
Housing Finance Agency, which shall be an independent agency
of the Federal Government.
``(b) General Supervisory and Regulatory Authority.--
``(1) In general.--Each regulated entity shall, to the
extent provided in this title, be subject to the supervision
and regulation of the Agency.
``(2) Authority over fannie mae, freddie mac, the federal
home loan banks, and the office of finance.--The Director
shall have general regulatory authority over each regulated
entity and the Office of Finance, and shall exercise such
general regulatory authority, including such duties and
authorities set forth under section 1313, to ensure that the
purposes of this Act, the authorizing statutes, and any other
applicable law are carried out.
``(c) Savings Provision.--The authority of the Director to
take actions under subtitles B and C shall not in any way
limit the general supervisory and regulatory authority
granted to the Director under subsection (b).

``SEC. 1312. DIRECTOR.

``(a) Establishment of Position.--There is established the
position of the Director of the Agency, who shall be the head
of the Agency.
``(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 are citizens of the United States,
have a demonstrated understanding of financial management or
oversight, and have a demonstrated understanding of capital
markets, including the mortgage securities markets and
housing finance.
``(2) Term.--The Director shall be appointed for a term of
5 years, unless removed before the end of such term for cause
by the President.
``(3) Vacancy.--A vacancy in the position of Director that
occurs before the expiration of the term for which a Director
was appointed shall be filled in the manner established under
paragraph (1), and the Director appointed to fill such
vacancy shall be appointed only for the remainder of such
term.
``(4) Service after end of term.--An individual may serve
as the Director after the expiration of the term for which
appointed until a successor has been appointed.
``(5) Transitional provision.--Notwithstanding paragraphs
(1) and (2), during the period beginning on the effective
date of the Federal Housing Finance Regulatory Reform Act of
2008, and ending on the date on which the Director is
appointed and confirmed, the person serving as the Director
of the Office of Federal Housing Enterprise Oversight of the
Department of Housing and Urban Development on that effective
date shall act for all purposes as, and with the full powers
of, the Director.
``(c) Deputy Director of the Division of Enterprise
Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Enterprise Regulation, who shall be
designated by the Director from among individuals who are
citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have
a demonstrated understanding of mortgage securities markets
and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Enterprise Regulation shall have such functions, powers, and
duties with respect to the oversight of the enterprises as
the Director shall prescribe.
``(d) Deputy Director Of The Division Of Federal Home Loan
Bank Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Federal Home Loan Bank Regulation, who
shall be designated by the Director from among individuals
who are citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have
a demonstrated understanding of the Federal Home Loan Bank
System and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Federal Home Loan Bank Regulation shall have such functions,
powers, and duties with respect to the oversight of the
Federal Home Loan Banks as the Director shall prescribe.
``(e) Deputy Director for Housing Mission and Goals.--
``(1) In general.--The Agency shall have a Deputy Director
for Housing Mission and Goals, who shall be designated by the
Director from among individuals who are citizens of the
United States, and have a demonstrated understanding of the
housing markets and housing finance.
``(2) Functions.--The Deputy Director for Housing Mission
and Goals shall have such functions, powers, and duties with
respect to the oversight of the housing mission and goals of
the enterprises, and with respect to oversight of the housing
finance and community and economic development mission of the
Federal Home Loan Banks, as the Director shall prescribe.
``(3) Considerations.--In exercising such functions,
powers, and duties, the Deputy Director for Housing Mission
and Goals shall consider the differences between the
enterprises and the Federal Home Loan Banks, including those
described in section 1313(f).
``(f) Acting Director.--In the event of the death,
resignation, sickness, or absence of the Director, the
President shall designate either the Deputy Director of the
Division of Enterprise Regulation, the Deputy Director of the
Division of Federal Home Loan Bank Regulation, or the Deputy
Director for Housing Mission and Goals, to serve as acting
Director until the return of the Director, or the appointment
of a successor pursuant to subsection (b).
``(g) Limitations.--The Director and each of the Deputy
Directors may not--
``(1) have any direct or indirect financial interest in any
regulated entity or entity-affiliated party;
``(2) hold any office, position, or employment in any
regulated entity or entity-affiliated party; or
``(3) have served as an executive officer or director of
any regulated entity or entity-affiliated party at any time
during the 3-year period preceding the date of appointment or
designation of such individual as Director or Deputy
Director, as applicable.''.

SEC. 1102. DUTIES AND AUTHORITIES OF THE DIRECTOR.

(a) In General.--Section 1313 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4513) is amended to read as follows:

``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

``(a) Duties.--
``(1) Principal duties.--The principal duties of the
Director shall be--

[[Page S5843]]

``(A) to oversee the prudential operations of each
regulated entity; and
``(B) to ensure that--
``(i) each regulated entity operates in a safe and sound
manner, including maintenance of adequate capital and
internal controls;
``(ii) the operations and activities of each regulated
entity foster liquid, efficient, competitive, and resilient
national housing finance markets (including activities
relating to mortgages on housing for low- and moderate-income
families involving a reasonable economic return that may be
less than the return earned on other activities);
``(iii) each regulated entity complies with this title and
the rules, regulations, guidelines, and orders issued under
this title and the authorizing statutes;
``(iv) each regulated entity carries out its statutory
mission only through activities that are authorized under and
consistent with this title and the authorizing statutes; and
``(v) the activities of each regulated entity and the
manner in which such regulated entity is operated are
consistent with the public interest.
``(2) Scope of authority.--The authority of the Director
shall include the authority--
``(A) to review and, if warranted based on the principal
duties described in paragraph (1), reject any acquisition or
transfer of a controlling interest in a regulated entity; and
``(B) to exercise such incidental powers as may be
necessary or appropriate to fulfill the duties and
responsibilities of the Director in the supervision and
regulation of each regulated entity.
``(b) Delegation of Authority.--The Director may delegate
to officers and employees of the Agency any of the functions,
powers, or duties of the Director, as the Director considers
appropriate.
``(c) Litigation Authority.--
``(1) In general.--In enforcing any provision of this
title, any regulation or order prescribed under this title,
or any other provision of law, rule, regulation, or order, or
in any other action, suit, or proceeding to which the
Director is a party or in which the Director is interested,
and in the administration of conservatorships and
receiverships, the Director may act in the Director's own
name and through the Director's own attorneys.
``(2) Subject to suit.--Except as otherwise provided by
law, the Director shall be subject to suit (other than suits
on claims for money damages) by a regulated entity with
respect to any matter under this title or any other
applicable provision of law, rule, order, or regulation under
this title, in the United States district court for the
judicial district in which the regulated entity has its
principal place of business, or in the United States District
Court for the District of Columbia, and the Director may be
served with process in the manner prescribed by the Federal
Rules of Civil Procedure.''.
(b) Independence in Congressional Testimony and
Recommendations.--Section 111 of Public Law 93-495 (12 U.S.C.
250) is amended by striking ``the Federal Housing Finance
Board'' and inserting ``the Director of the Federal Housing
Finance Agency''.

SEC. 1103. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

(a) In General.--The Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is
amended by inserting after section 1313 the following:

``SEC. 1313A. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

``(a) In General.--There is established the Federal Housing
Finance Oversight Board, which shall advise the Director with
respect to overall strategies and policies in carrying out
the duties of the Director under this title.
``(b) Limitations.--The Board may not exercise any
executive authority, and the Director may not delegate to the
Board any of the functions, powers, or duties of the
Director.
``(c) Composition.--The Board shall be comprised of 4
members, of whom--
``(1) 1 member shall be the Secretary of the Treasury;
``(2) 1 member shall be the Secretary of Housing and Urban
Development;
``(3) 1 member shall be the Chairman of the Securities and
Exchange Commission; and
``(4) 1 member shall be the Director, who shall serve as
the Chairperson of the Board.
``(d) Meetings.--
``(1) In general.--The Board shall meet upon notice by the
Director, but in no event shall the Board meet less
frequently than once every 3 months.
``(2) Special meetings.--Either the Secretary of the
Treasury, the Secretary of Housing and Urban Development, or
the Chairman of the Securities and Exchange Commission may,
upon giving written notice to the Director, require a special
meeting of the Board.
``(e) Testimony.--On an annual basis, the Board shall
testify before Congress regarding--
``(1) the safety and soundness of the regulated entities;
``(2) any material deficiencies in the conduct of the
operations of the regulated entities;
``(3) the overall operational status of the regulated
entities;
``(4) an evaluation of the performance of the regulated
entities in carrying out their respective missions;
``(5) operations, resources, and performance of the Agency;
and
``(6) such other matters relating to the Agency and its
fulfillment of its mission, as the Board determines
appropriate.''.
(b) Annual Report of the Director.--Section 1319B(a) of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4521(a)) is amended--
(1) by striking ``enterprise'' each place that term appears
and inserting ``regulated entity'';
(2) by striking ``enterprises'' each place that term
appears and inserting ``regulated entities'';
(3) in paragraph (3), by striking ``; and'' and inserting a
semicolon;
(4) in paragraph (4), by striking ``1994.'' and inserting
``1994; and''; and
(5) by adding at the end the following:
``(5) the assessment of the Board or any of its members
with respect to--
``(A) the safety and soundness of the regulated entities;
``(B) any material deficiencies in the conduct of the
operations of the regulated entities;
``(C) the overall operational status of the regulated
entities; and
``(D) an evaluation of the performance of the regulated
entities in carrying out their respective missions;
``(6) operations, resources, and performance of the Agency;
and
``(7) such other matters relating to the Agency and the
fulfillment of its mission.''.

SEC. 1104. AUTHORITY TO REQUIRE REPORTS BY REGULATED
ENTITIES.

(a) In General.--Section 1314 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4514) is amended--
(1) in the section heading, by striking ``ENTERPRISES'' and
inserting ``REGULATED ENTITIES'';
(2) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(3) by striking ``the enterprise'' and inserting ``the
regulated entity'';
(4) in subsection (a)--
(A) by striking the subsection heading and all that follows
through ``and operations'' in paragraph (1) and inserting the
following:
``(a) Regular and Special Reports.--
``(1) Regular reports.--The Director may require, by
general or specific orders, a regulated entity to submit
regular reports, including financial statements determined on
a fair value basis, on the condition (including financial
condition), management, activities, or operations of the
regulated entity, as the Director considers appropriate'';
and
(B) in paragraph (2)--
(i) by inserting ``, by general or specific orders,'' after
``may also require''; and
(ii) by striking ``whenever'' and inserting ``on any of the
topics specified in paragraph (1) or any other relevant
topics, if''; and
(5) by adding at the end the following:
``(c) Penalties for Failure To Make Reports.--
``(1) Violations.--It shall be a violation of this section
for any regulated entity--
``(A) to fail to make, transmit, or publish any report or
obtain any information required by the Director under this
section, section 309(k) of the Federal National Mortgage
Association Charter Act, section 307(c) of the Federal Home
Loan Mortgage Corporation Act, or section 20 of the Federal
Home Loan Bank Act, within the period of time specified in
such provision of law or otherwise by the Director; or
``(B) to submit or publish any false or misleading report
or information under this section.
``(2) Penalties.--
``(A) First tier.--
``(i) In general.--A violation described in paragraph (1)
shall be subject to a penalty of not more than $2,000 for
each day during which such violation continues, in any case
in which--

``(I) the subject regulated entity maintains procedures
reasonably adapted to avoid any inadvertent error and the
violation was unintentional and a result of such an error; or
``(II) the violation was an inadvertent transmittal or
publication of any report which was minimally late.

``(ii) Burden of proof.--For purposes of this subparagraph,
the regulated entity shall have the burden of proving that
the error was inadvertent or that a report was inadvertently
transmitted or published late.
``(B) Second tier.--A violation described in paragraph (1)
shall be subject to a penalty of not more than $20,000 for
each day during which such violation continues or such false
or misleading information is not corrected, in any case that
is not addressed in subparagraph (A) or (C).
``(C) Third tier.--A violation described in paragraph (1)
shall be subject to a penalty of not more than $1,000,000 per
day for each day during which such violation continues or
such false or misleading information is not corrected, in any
case in which the subject regulated entity committed such
violation knowingly or with reckless disregard for the
accuracy of any such information or report.
``(3) Assessments.--Any penalty imposed under this
subsection shall be in lieu of a penalty under section 1376,
but shall be assessed and collected by the Director in the
manner provided in section 1376 for penalties imposed under
that section, and any such assessment (including the
determination of the amount of the penalty) shall be
otherwise subject to the provisions of section 1376.

[[Page S5844]]

``(4) Hearing.--A regulated entity against which a penalty
is assessed under this section shall be afforded an agency
hearing if the regulated entity submits a request for a
hearing not later than 20 days after the date of the issuance
of the notice of assessment. Section 1374 shall apply to any
such proceedings.''.
(b) Conforming Amendment.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et
seq.) is amended by striking sections 1327 and 1328.

SEC. 1105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT
FOR REVIEWS OF REGULATED ENTITIES; OMBUDSMAN.

(a) In General.--Section 1317 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4517) is amended--
(1) in subsection (a), by striking ``enterprise'' each
place that term appears and inserting ``regulated entity'';
(2) in subsection (b)--
(A) by inserting ``of a regulated entity'' after ``under
this section''; and
(B) by striking ``to determine the condition of an
enterprise for the purpose of ensuring its financial safety
and soundness'' and inserting ``or appropriate'';
(3) in subsection (c), in the second sentence, by inserting
before the period ``to conduct examinations under this
section'';
(4) by redesignating subsections (d) through (f) as
subsections (e) through (g), respectively; and
(5) by inserting after subsection (c) the following:
``(d) Inspector General.--There shall be within the Agency
an Inspector General, who shall be appointed in accordance
with section 3(a) of the Inspector General Act of 1978.''.
(b) Direct Hire Authority To Hire Accountants, Economists,
and Examiners.--Section 1317 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4517) is amended by adding at the end the following:
``(h) Appointment of Accountants, Economists, and
Examiners.--
``(1) Applicability.--This section shall apply with respect
to any position of examiner, accountant, economist, and
specialist in financial markets and in technology at the
Agency, with respect to supervision and regulation of the
regulated entities, that is in the competitive service.
``(2) Appointment authority.--The Director may appoint
candidates to any position described in paragraph (1)--
``(A) in accordance with the statutes, rules, and
regulations governing appointments in the excepted service;
and
``(B) notwithstanding any statutes, rules, and regulations
governing appointments in the competitive service.''.
(c) Amendments to Inspector General Act.--Section 11 of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
(1) in paragraph (1), by inserting ``; the Director of the
Federal Housing Finance Agency'' after ``Social Security
Administration''; and
(2) in paragraph (2), by inserting ``, the Federal Housing
Finance Agency'' after ``Social Security Administration''.
(d) Authority To Contract for Reviews of Regulated
Entities.--Section 1319 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4519)
is amended--
(1) in the section heading, by striking ``ENTERPRISES BY
RATING ORGANIZATION'' and inserting ``REGULATED ENTITIES'';
and
(2) by striking ``enterprises'' and inserting ``regulated
entities''.
(e) Office of the Ombudsman.--Section 1317 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4517) is amended by adding at the end the
following:
``(i) Ombudsman.--The Director shall establish, by
regulation, an Office of the Ombudsman within the Agency,
which shall be responsible for considering complaints and
appeals, from any regulated entity and any person that has a
business relationship with a regulated entity, regarding any
matter relating to the regulation and supervision of such
regulated entity by the Agency. The regulation issued by the
Director under this subsection shall specify the authority
and duties of the Office of the Ombudsman.''.

SEC. 1106. ASSESSMENTS.

Section 1316 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4516) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) Annual Assessments.--The Director shall establish and
collect from the regulated entities annual assessments in an
amount not exceeding the amount sufficient to provide for
reasonable costs (including administrative costs) and
expenses of the Agency, including--
``(1) the expenses of any examinations under section 1317
of this Act and under section 20 of the Federal Home Loan
Bank Act;
``(2) the expenses of obtaining any reviews and credit
assessments under section 1319;
``(3) such amounts in excess of actual expenses for any
given year as deemed necessary by the Director to maintain a
working capital fund in accordance with subsection (e); and
``(4) the windup of the affairs of the Office of Federal
Housing Enterprise Oversight and the Federal Housing Finance
Board under title III of the Federal Housing Finance
Regulatory Reform Act of 2008.'';
(2) in subsection (b)--
(A) by realigning the margins of paragraph (2) two ems from
the left, so as to align the left margin of such paragraph
with the left margins of paragraph (1);
(B) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively; and
(C) by inserting after paragraph (1) the following:
``(2) Separate treatment of federal home loan bank and
enterprise assessments.--Assessments collected from the
enterprises shall not exceed the amounts sufficient to
provide for the costs and expenses described in subsection
(a) relating to the enterprises. Assessments collected from
the Federal Home Loan Banks shall not exceed the amounts
sufficient to provide for the costs and expenses described in
subsection (a) relating to the Federal Home Loan Banks.'';
(3) by striking subsection (c) and inserting the following:
``(c) Increased Costs of Regulation.--
``(1) Increase for inadequate capitalization.--The
semiannual payments made pursuant to subsection (b) by any
regulated entity that is not classified (for purposes of
subtitle B) as adequately capitalized may be increased, as
necessary, in the discretion of the Director to pay
additional estimated costs of regulation of the regulated
entity.
``(2) Adjustment for enforcement activities.--The Director
may adjust the amounts of any semiannual payments for an
assessment under subsection (a) that are to be paid pursuant
to subsection (b) by a regulated entity, as necessary in the
discretion of the Director, to ensure that the costs of
enforcement activities under this Act for a regulated entity
are borne only by such regulated entity.
``(3) Additional assessment for deficiencies.--If at any
time, as a result of increased costs of regulation of a
regulated entity that is not classified (for purposes of
subtitle B) as adequately capitalized or as the result of
supervisory or enforcement activities under this Act for a
regulated entity, the amount available from any semiannual
payment made by such regulated entity pursuant to subsection
(b) is insufficient to cover the costs of the Agency with
respect to such entity, the Director may make and collect
from such regulated entity an immediate assessment to cover
the amount of such deficiency for the semiannual period. If,
at the end of any semiannual period during which such an
assessment is made, any amount remains from such assessment,
such remaining amount shall be deducted from the assessment
for such regulated entity for the following semiannual
period.'';
(4) in subsection (d), by striking ``If'' and inserting
``Except with respect to amounts collected pursuant to
subsection (a)(3), if''; and
(5) by striking subsections (e) through (g) and inserting
the following:
``(e) Working Capital Fund.--At the end of each year for
which an assessment under this section is made, the Director
shall remit to each regulated entity any amount of assessment
collected from such regulated entity that is attributable to
subsection (a)(3) and is in excess of the amount the Director
deems necessary to maintain a working capital fund.
``(f) Treatment of Assessments.--
``(1) Deposit.--Amounts received by the Director from
assessments under this section may be deposited by the
Director 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
Director from any assessment under this section shall not be
construed to be Government or public funds or appropriated
money.
``(3) No apportionment of funds.--Notwithstanding any other
provision of law, the amounts received by the Director from
any assessment under this section shall not be subject to
apportionment for the purpose of chapter 15 of title 31,
United States Code, or under any other authority.
``(4) Use of funds.--The Director may use any amounts
received by the Director from assessments under this section
for compensation of the Director and other employees of the
Agency and for all other expenses of the Director and the
Agency.
``(5) Availability of oversight fund amounts.--
Notwithstanding any other provision of law, any amounts
remaining in the Federal Housing Enterprises Oversight Fund
established under this section (as in effect before the
effective date of the Federal Housing Finance Regulatory
Reform Act of 2008, and any amounts remaining from
assessments on the Federal Home Loan Banks pursuant to
section 18(b) of the Federal Home Loan Bank Act (12 U.S.C.
1438(b)), shall, upon such effective date, be treated for
purposes of this subsection as amounts received from
assessments under this section.
``(6) Treasury investments.--
``(A) Authority.--The Director may request the Secretary of
the Treasury to invest such portions of amounts received by
the Director from assessments paid under this section that,
in the Director's discretion, are not required to meet the
current working needs of the Agency.
``(B) Government obligations.--Pursuant to a request under
subparagraph (A), the Secretary of the Treasury shall invest
such amounts in Government obligations guaranteed as to
principal and interest by the United States with maturities
suitable to

[[Page S5845]]

the needs of the Agency and bearing interest at a rate
determined by the Secretary of the Treasury taking into
consideration current market yields on outstanding marketable
obligations of the United States of comparable maturity.
``(g) Budget and Financial Management.--
``(1) Financial operating plans and forecasts.--The
Director shall provide to the Director of the Office of
Management and Budget copies of the Director's financial
operating plans and forecasts, as prepared by the Director in
the ordinary course of the Agency's operations, and copies of
the quarterly reports of the Agency's financial condition and
results of operations, as prepared by the Director in the
ordinary course of the Agency's operations.
``(2) Financial statements.--The Agency shall prepare
annually a statement of--
``(A) assets and liabilities and surplus or deficit;
``(B) income and expenses; and
``(C) sources and application of funds.
``(3) Financial management systems.--The Agency shall
implement and maintain financial management systems that--
``(A) comply substantially with Federal financial
management systems requirements and applicable Federal
accounting standards; and
``(B) use a general ledger system that accounts for
activity at the transaction level.
``(4) Assertion of internal controls.--The Director shall
provide to the Comptroller General of the United States an
assertion as to the effectiveness of the internal controls
that apply to financial reporting by the Agency, using the
standards established in section 3512(c) of title 31, United
States Code.
``(5) Rule of construction.--This subsection may not be
construed as implying any obligation on the part of the
Director to consult with or obtain the consent or approval of
the Director of the Office of Management and Budget with
respect to any report, plan, forecast, or other information
referred to in paragraph (1) or any jurisdiction or oversight
over the affairs or operations of the Agency.
``(h) Audit of Agency.--
``(1) In general.--The Comptroller General shall annually
audit the financial transactions of the Agency in accordance
with the United States generally accepted government auditing
standards as may be prescribed by the Comptroller General of
the United States. The audit shall be conducted at the place
or places where accounts of the Agency are normally kept. The
representatives of the Government Accountability Office 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, things,
or property belonging to or under the control of or used or
employed by the Agency pertaining to its financial
transactions and necessary to facilitate the audit, and such
representatives shall be afforded full facilities for
verifying transactions with the balances or securities held
by depositories, fiscal agents, and custodians. All such
books, accounts, documents, records, reports, files, papers,
and property of the Agency shall remain in possession and
custody of the Agency. 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.
``(2) Report.--The Comptroller General shall submit to the
Congress a report of each annual audit conducted under this
subsection. The report to the Congress shall set forth the
scope of the audit and shall include the statement of assets
and liabilities and surplus or deficit, the statement of
income and expenses, the statement of sources and application
of funds, and such comments and information as may be deemed
necessary to inform Congress of the financial operations and
condition of the Agency, together with such recommendations
with respect thereto as the Comptroller General may deem
advisable. A copy of each report shall be furnished to the
President and to the Agency at the time submitted to the
Congress.
``(3) Assistance and costs.--For the purpose of conducting
an audit under this subsection, the Comptroller General may,
in the discretion of the Comptroller General, 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.
Upon the request of the Comptroller General, the Director of
the Agency shall transfer to the Government Accountability
Office from funds available, the amount requested by the
Comptroller General to cover the full costs of any audit and
report conducted by the Comptroller General. The Comptroller
General shall credit funds transferred to the account
established for salaries and expenses of the Government
Accountability Office, and such amount shall be available
upon receipt and without fiscal year limitation to cover the
full costs of the audit and report.''.

SEC. 1107. REGULATIONS AND ORDERS.

Section 1319G of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4526) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) Authority.--The Director shall issue any regulations,
guidelines, or orders necessary to carry out the duties of
the Director under this title or the authorizing statutes,
and to ensure that the purposes of this title and the
authorizing statutes are accomplished.''; and
(2) by striking subsection (c).

SEC. 1108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

The Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by
inserting after section 1313A, as added by this Act, the
following new section:

``SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

``(a) Standards.--The Director shall establish standards,
by regulation or guideline, for each regulated entity
relating to--
``(1) adequacy of internal controls and information systems
taking into account the nature and scale of business
operations;
``(2) independence and adequacy of internal audit systems;
``(3) management of interest rate risk exposure;
``(4) management of market risk, including standards that
provide for systems that accurately measure, monitor, and
control market risks and, as warranted, that establish
limitations on market risk;
``(5) adequacy and maintenance of liquidity and reserves;
``(6) management of asset and investment portfolio growth;
``(7) investments and acquisitions of assets by a regulated
entity, to ensure that they are consistent with the purposes
of this title and the authorizing statutes;
``(8) overall risk management processes, including adequacy
of oversight by senior management and the board of directors
and of processes and policies to identify, measure, monitor,
and control material risks, including reputational risks, and
for adequate, well-tested business resumption plans for all
major systems with remote site facilities to protect against
disruptive events;
``(9) management of credit and counterparty risk, including
systems to identify concentrations of credit risk and
prudential limits to restrict exposure of the regulated
entity to a single counterparty or groups of related
counterparties;
``(10) maintenance of adequate records, in accordance with
consistent accounting policies and practices that enable the
Director to evaluate the financial condition of the regulated
entity; and
``(11) such other operational and management standards as
the Director determines to be appropriate.
``(b) Failure To Meet Standards.--
``(1) Plan requirement.--
``(A) In general.--If the Director determines that a
regulated entity fails to meet any standard established under
subsection (a)--
``(i) if such standard is established by regulation, the
Director shall require the regulated entity to submit an
acceptable plan to the Director within the time allowed under
subparagraph (C); and
``(ii) if such standard is established by guideline, the
Director may require the regulated entity to submit a plan
described in clause (i).
``(B) Contents.--Any plan required under subparagraph (A)
shall specify the actions that the regulated entity will take
to correct the deficiency. If the regulated entity is
undercapitalized, the plan may be a part of the capital
restoration plan for the regulated entity under section
1369C.
``(C) Deadlines for submission and review.--The Director
shall by regulation establish deadlines that--
``(i) provide the regulated entities with reasonable time
to submit plans required under subparagraph (A), and
generally require a regulated entity to submit a plan not
later than 30 days after the Director determines that the
entity fails to meet any standard established under
subsection (a); and
``(ii) require the Director to act on plans expeditiously,
and generally not later than 30 days after the plan is
submitted.
``(2) Required order upon failure to submit or implement
plan.--If a regulated entity fails to submit an acceptable
plan within the time allowed under paragraph (1)(C), or fails
in any material respect to implement a plan accepted by the
Director, the following shall apply:
``(A) Required correction of deficiency.--The Director
shall, by order, require the regulated entity to correct the
deficiency.
``(B) Other authority.--The Director may, by order, take
one or more of the following actions until the deficiency is
corrected:
``(i) Prohibit the regulated entity from permitting its
average total assets (as such term is defined in section
1316(b)) during any calendar quarter to exceed its average
total assets during the preceding calendar quarter, or
restrict the rate at which the average total assets of the
entity may increase from one calendar quarter to another.
``(ii) Require the regulated entity--

``(I) in the case of an enterprise, to increase its ratio
of core capital to assets.
``(II) in the case of a Federal Home Loan Bank, to increase
its ratio of total capital (as such term is defined in
section 6(a)(5) of the Federal Home Loan Bank Act (12 U.S.C.
1426(a)(5)) to assets.

[[Page S5846]]

``(iii) Require the regulated entity to take any other
action that the Director determines will better carry out the
purposes of this section than any of the actions described in
this subparagraph.
``(3) Mandatory restrictions.--In complying with paragraph
(2), the Director shall take one or more of the actions
described in clauses (i) through (iii) of paragraph (2)(B)
if--
``(A) the Director determines that the regulated entity
fails to meet any standard prescribed under subsection (a);
``(B) the regulated entity has not corrected the
deficiency; and
``(C) during the 18-month period before the date on which
the regulated entity first failed to meet the standard, the
entity underwent extraordinary growth, as defined by the
Director.
``(c) Other Enforcement Authority Not Affected.--The
authority of the Director under this section is in addition
to any other authority of the Director.''.

SEC. 1109. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND
LIABILITIES.

(a) In General.--Subtitle B of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4611 et seq.) is amended--
(1) by striking the subtitle designation and heading and
inserting the following:

``Subtitle B--Required Capital Levels for Regulated Entities, Special
Enforcement Powers, and Reviews of Assets and Liabilities'';

and
(2) by adding at the end the following new section:

``SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES.

``(a) In General.--The Director shall, by regulation,
establish criteria governing the portfolio holdings of the
enterprises, to ensure that the holdings are backed by
sufficient capital and consistent with the mission and the
safe and sound operations of the enterprises. In establishing
such criteria, the Director shall consider the ability of the
enterprises to provide a liquid secondary market through
securitization activities, the portfolio holdings in relation
to the overall mortgage market, and adherence to the
standards specified in section 1313B.
``(b) Temporary Adjustments.--The Director may, by order,
make temporary adjustments to the established standards for
an enterprise or both enterprises, such as during times of
economic distress or market disruption.
``(c) Authority To Require Disposition or Acquisition.--The
Director shall monitor the portfolio of each enterprise.
Pursuant to subsection (a) and notwithstanding the capital
classifications of the enterprises, the Director may, by
order, require an enterprise, under such terms and conditions
as the Director determines to be appropriate, to dispose of
or acquire any asset, if the Director determines that such
action is consistent with the purposes of this Act or any of
the authorizing statutes.''.
(b) Regulations.--Not later than the expiration of the 180-
day period beginning on the effective date of this Act, the
Director shall issue regulations pursuant to section 1369E(a)
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (as added by subsection (a) of this
section) establishing the portfolio holdings standards under
such section.

SEC. 1110. RISK-BASED CAPITAL REQUIREMENTS.

(a) In General.--Section 1361 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4611) is amended to read as follows:

``SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED
ENTITIES.

``(a) In General.--
``(1) Enterprises.--The Director shall, by regulation,
establish risk-based capital requirements for the enterprises
to ensure that the enterprises operate in a safe and sound
manner, maintaining sufficient capital and reserves to
support the risks that arise in the operations and management
of the enterprises.
``(2) Federal home loan banks.--The Director shall
establish risk-based capital standards under section 6 of the
Federal Home Loan Bank Act for the Federal Home Loan Banks.
``(b) No Limitation.--Nothing in this section shall limit
the authority of the Director to require other reports or
undertakings, or take other action, in furtherance of the
responsibilities of the Director under this Act.''.
(b) Federal Home Loan Banks Risk-Based Capital.--Section
6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C.
1426(a)(3)) is amended--
(1) by striking subparagraph (A) and inserting the
following:
``(A) Risk-based capital standards.--The Director shall, by
regulation, establish risk-based capital standards for the
Federal Home Loan Banks to ensure that the Federal Home Loan
Banks operate in a safe and sound manner, with sufficient
permanent capital and reserves to support the risks that
arise in the operations and management of the Federal Home
Loans Banks.''; and
(2) in subparagraph (B), by striking ``(A)(ii)'' and
inserting ``(A)''.

SEC. 1111. MINIMUM CAPITAL LEVELS.

Section 1362 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4612) is
amended--
(1) in subsection (a), by striking ``In General'' and
inserting ``Enterprises''; and
(2) by striking subsection (b) and inserting the following:
``(b) Federal Home Loan Banks.--For purposes of this
subtitle, the minimum capital level for each Federal Home
Loan Bank shall be the minimum capital required to be
maintained to comply with the leverage requirement for the
bank established under section 6(a)(2) of the Federal Home
Loan Bank Act (12 U.S.C. 1426(a)(2)).
``(c) Establishment of Revised Minimum Capital Levels.--
Notwithstanding subsections (a) and (b) and notwithstanding
the capital classifications of the regulated entities, the
Director may, by regulations issued under section 1319G,
establish a minimum capital level for the enterprises, for
the Federal Home Loan Banks, or for both the enterprises and
the banks, that is higher than the level specified in
subsection (a) for the enterprises or the level specified in
subsection (b) for the Federal Home Loan Banks, to the extent
needed to ensure that the regulated entities operate in a
safe and sound manner.
``(d) Authority To Require Temporary Increase.--
``(1) In general.--Notwithstanding subsections (a) and (b)
and any minimum capital level established pursuant to
subsection (c), the Director may, by order, increase the
minimum capital level for a regulated entity on a temporary
basis, when the Director determines that such an increase is
necessary and consistent with the prudential regulation and
the safe and sound operations of a regulated entity.
``(2) Rescission.--The Director shall rescind any temporary
minimum capital level established under paragraph (1) when
the Director determines that the circumstances or facts no
longer justify the temporary minimum capital level.
``(3) Regulations required.--The Director shall issue
regulations establishing--
``(A) standards for the imposition of a temporary increase
in minimum capital under paragraph (1);
``(B) the standards and procedures that the Director will
use to make the determination referred to in paragraph (2);
and
``(C) a reasonable time frame for periodic review of any
temporary increase in minimum capital for the purpose of
making the determination referred to in paragraph (2).
``(e) Authority To Establish Additional Capital and Reserve
Requirements for Particular Purposes.--The Director may, at
any time by order or regulation, establish such capital or
reserve requirements with respect to any product or activity
of a regulated entity, as the Director considers appropriate
to ensure that the regulated entity operates in a safe and
sound manner, with sufficient capital and reserves to support
the risks that arise in the operations and management of the
regulated entity.
``(f) Periodic Review.--The Director shall periodically
review the amount of core capital maintained by the
enterprises, the amount of capital retained by the Federal
Home Loan Banks, and the minimum capital levels established
for such regulated entities pursuant to this section.''.

SEC. 1112. REGISTRATION UNDER THE SECURITIES LAWS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by adding at the end the following:

``SEC. 38. FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL
HOME LOAN MORTGAGE CORPORATION, FEDERAL HOME
LOAN BANKS.

``(a) Federal National Mortgage Association and Federal
Home Loan Mortgage Corporation.--No class of equity
securities of the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation shall be treated
as an exempted security for purposes of section 12, 13, 14,
or 16.
``(b) Federal Home Loan Banks.--
``(1) Registration.--Each Federal Home Loan Bank shall
register a class of its common stock under section 12(g), not
later than 120 days after the date of enactment of the
Federal Housing Finance Regulatory Reform Act of 2008, and
shall thereafter maintain such registration and be treated
for purposes of this title as an `issuer', the securities of
which are required to be registered under section 12,
regardless of the number of members holding such stock at any
given time.
``(2) Standards relating to audit committees.--Each Federal
Home Loan Bank shall comply with the rules issued by the
Commission under section 10A(m).
``(c) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Federal home loan bank; member.--The terms `Federal
Home Loan Bank' and `member', have the same meanings as in
section 2 of the Federal Home Loan Bank Act.
``(2) Federal national mortgage association.--The term
`Federal National Mortgage Association' means the corporation
created by the Federal National Mortgage Association Charter
Act.
``(3) Federal home loan mortgage corporation.--The term
`Federal Home Loan Mortgage Corporation' means the
corporation created by the Federal Home Loan Mortgage
Corporation Act.''.

SEC. 1113. PROHIBITION AND WITHHOLDING OF EXECUTIVE
COMPENSATION.

(a) In General.--Section 1318 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4518) is amended--
(1) in the section heading, by striking ``OF EXCESSIVE''
and inserting ``AND WITHHOLDING OF EXECUTIVE'';
(2) by redesignating subsection (b) as subsection (d); and
(3) by inserting after subsection (a) the following:

[[Page S5847]]

``(b) Factors.--In making any determination under
subsection (a), the Director may take into consideration any
factors the Director considers relevant, including any
wrongdoing on the part of the executive officer, and such
wrongdoing shall include any fraudulent act or omission,
breach of trust or fiduciary duty, violation of law, rule,
regulation, order, or written agreement, and insider abuse
with respect to the regulated entity. The approval of an
agreement or contract pursuant to section 309(d)(3)(B) of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(h)(2)) shall not
preclude the Director from making any subsequent
determination under subsection (a).
``(c) Withholding of Compensation.--In carrying out
subsection (a), the Director may require a regulated entity
to withhold any payment, transfer, or disbursement of
compensation to an executive officer, or to place such
compensation in an escrow account, during the review of the
reasonableness and comparability of compensation.''.
(b) Conforming Amendments.--
(1) Fannie mae.--Section 309(d) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is
amended by adding at the end the following new paragraph:
``(4) Notwithstanding any other provision of this section,
the corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an
agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section
1318 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4518).''.
(2) Freddie mac.--Section 303(h) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by
adding at the end the following new paragraph:
``(4) Notwithstanding any other provision of this section,
the Corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an
agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section
1318 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4518).''.
(3) Federal home loan banks.--Section 7 of the Federal Home
Loan Bank Act (12 U.S.C. 1427) is amended by adding at the
end the following new subsection:
``(l) Withholding of Compensation.--Notwithstanding any
other provision of this section, a Federal Home Loan Bank
shall not transfer, disburse, or pay compensation to any
executive officer, or enter into an agreement with such
executive officer, without the approval of the Director, for
matters being reviewed under section 1318 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4518).''.

SEC. 1114. LIMIT ON GOLDEN PARACHUTES.

Section 1318 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended
by adding at the end the following:
``(e) Authority to Regulate or Prohibit Certain Forms of
Benefits to Affiliated Parties.--
``(1) Golden parachutes and indemnification payments.--The
Director may prohibit or limit, by regulation or order, any
golden parachute payment or indemnification payment.
``(2) Factors to be taken into account.--The Director shall
prescribe, by regulation, the factors to be considered by the
Director in taking any action pursuant to paragraph (1),
which may include such factors as--
``(A) whether there is a reasonable basis to believe that
the affiliated party has committed any fraudulent act or
omission, breach of trust or fiduciary duty, or insider abuse
with regard to the regulated entity that has had a material
effect on the financial condition of the regulated entity;
``(B) whether there is a reasonable basis to believe that
the affiliated party is substantially responsible for the
insolvency of the regulated entity, the appointment of a
conservator or receiver for the regulated entity, or the
troubled condition of the regulated entity (as defined in
regulations prescribed by the Director);
``(C) whether there is a reasonable basis to believe that
the affiliated party has materially violated any applicable
provision of Federal or State law or regulation that has had
a material effect on the financial condition of the regulated
entity;
``(D) whether the affiliated party was in a position of
managerial or fiduciary responsibility; and
``(E) the length of time that the party was affiliated with
the regulated entity, and the degree to which--
``(i) the payment reasonably reflects compensation earned
over the period of employment; and
``(ii) the compensation involved represents a reasonable
payment for services rendered.
``(3) Certain payments prohibited.--No regulated entity may
prepay the salary or any liability or legal expense of any
affiliated party if such payment is made--
``(A) in contemplation of the insolvency of such regulated
entity, or after the commission of an act of insolvency; and
``(B) with a view to, or having the result of--
``(i) preventing the proper application of the assets of
the regulated entity to creditors; or
``(ii) preferring one creditor over another.
``(4) Golden parachute payment defined.--
``(A) In general.--For purposes of this subsection, the
term `golden parachute payment' means any payment (or any
agreement to make any payment) in the nature of compensation
by any regulated entity for the benefit of any affiliated
party pursuant to an obligation of such regulated entity
that--
``(i) is contingent on the termination of such party's
affiliation with the regulated entity; and
``(ii) is received on or after the date on which--

``(I) the regulated entity became insolvent;
``(II) any conservator or receiver is appointed for such
regulated entity; or
``(III) the Director determines that the regulated entity
is in a troubled condition (as defined in the regulations of
the Director).

``(B) Certain payments in contemplation of an event.--Any
payment which would be a golden parachute payment but for the
fact that such payment was made before the date referred to
in subparagraph (A)(ii) shall be treated as a golden
parachute payment if the payment was made in contemplation of
the occurrence of an event described in any subclause of such
subparagraph.
``(C) Certain payments not included.--For purposes of this
subsection, the term `golden parachute payment' shall not
include--
``(i) any payment made pursuant to a retirement plan which
is qualified (or is intended to be qualified) under section
401 of the Internal Revenue Code of 1986, or other
nondiscriminatory benefit plan;
``(ii) any payment made pursuant to a bona fide deferred
compensation plan or arrangement which the Director
determines, by regulation or order, to be permissible; or
``(iii) any payment made by reason of the death or
disability of an affiliated party.
``(5) Other definitions.--For purposes of this subsection,
the following definitions shall apply:
``(A) Indemnification payment.--Subject to paragraph (6),
the term `indemnification payment' means any payment (or any
agreement to make any payment) by any regulated entity for
the benefit of any person who is or was an affiliated party,
to pay or reimburse such person for any liability or legal
expense with regard to any administrative proceeding or civil
action instituted by the Agency which results in a final
order under which such person--
``(i) is assessed a civil money penalty;
``(ii) is removed or prohibited from participating in
conduct of the affairs of the regulated entity; or
``(iii) is required to take any affirmative action to
correct certain conditions resulting from violations or
practices, by order of the Director.
``(B) Liability or legal expense.--The term `liability or
legal expense' means--
``(i) any legal or other professional expense incurred in
connection with any claim, proceeding, or action;
``(ii) the amount of, and any cost incurred in connection
with, any settlement of any claim, proceeding, or action; and
``(iii) the amount of, and any cost incurred in connection
with, any judgment or penalty imposed with respect to any
claim, proceeding, or action.
``(C) Payment.--The term `payment' includes--
``(i) any direct or indirect transfer of any funds or any
asset; and
``(ii) any segregation of any funds or assets for the
purpose of making, or pursuant to an agreement to make, any
payment after the date on which such funds or assets are
segregated, without regard to whether the obligation to make
such payment is contingent on--

``(I) the determination, after such date, of the liability
for the payment of such amount; or
``(II) the liquidation, after such date, of the amount of
such payment.

``(6) Certain commercial insurance coverage not treated as
covered benefit payment.--No provision of this subsection
shall be construed as prohibiting any regulated entity from
purchasing any commercial insurance policy or fidelity bond,
except that, subject to any requirement described in
paragraph (5)(A)(iii), such insurance policy or bond shall
not cover any legal or liability expense of the regulated
entity which is described in paragraph (5)(A).''.

SEC. 1115. REPORTING OF FRAUDULENT LOANS.

Part 1 of subtitle C of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et
seq.), as amended by this Act, is amended by adding at the
end the following:

``SEC. 1379E. REPORTING OF FRAUDULENT LOANS.

``(a) Requirement to Report.--The Director shall require a
regulated entity to submit to the Director a timely report
upon discovery by the regulated entity that it has purchased
or sold a fraudulent loan or financial instrument, or
suspects a possible fraud relating to the purchase or sale of
any loan or financial instrument. The Director shall require
each regulated entity to establish and maintain procedures
designed to discover any such transactions.
``(b) Protection From Liability for Reports.--Any regulated
entity that, in good faith, makes a report pursuant to
subsection (a), and any entity-affiliated party, that, in
good faith, makes or requires another to make any such
report, shall not be liable to any person under any provision
of law or regulation, any constitution, law, or regulation

[[Page S5848]]

of any State or political subdivision of any State, or under
any contract or other legally enforceable agreement
(including any arbitration agreement) for such report or for
any failure to provide notice of such report to the person
who is the subject of such report or any other persons
identified in the report.''.

Subtitle B--Improvement of Mission Supervision

SEC. 1121. TRANSFER OF PROGRAM APPROVAL AND HOUSING GOAL
OVERSIGHT.

Part 2 of subtitle A of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et
seq.) is amended--
(1) by striking the heading for the part and inserting the
following:

``PART 2--ADDITIONAL AUTHORITIES OF THE DIRECTOR'';

and
(2) by striking sections 1321 and 1322.

SEC. 1122. ASSUMPTION BY THE DIRECTOR OF CERTAIN OTHER HUD
RESPONSIBILITIES.

(a) In General.--Part 2 of subtitle A of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking ``Secretary'' each place that term appears
and inserting ``Director'' in each of sections 1323, 1326,
1327, 1328, and 1336; and
(2) by striking sections 1338 and 1349 (12 U.S.C. 4562 note
and 4589).
(b) Retention of Fair Housing Responsibilities.--Section
1325 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4545) is amended in the
matter preceding paragraph (1), by inserting ``of Housing and
Urban Development'' after ``The Secretary''.

SEC. 1123. REVIEW OF ENTERPRISE PRODUCTS.

Part 2 of subtitle A of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et
seq.) is amended by inserting before section 1323 the
following:

``SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.

``(a) In General.--The Director shall require each
enterprise to obtain the approval of the Director for any
product of the enterprise before initially offering the
product.
``(b) Standard for Approval.--In considering any request
for approval of a product pursuant to subsection (a), the
Director shall make a determination that--
``(1) in the case of a product of the Federal National
Mortgage Association, the product is authorized under
paragraph (2), (3), (4), or (5) of section 302(b) or section
304 of the Federal National Mortgage Association Charter Act
(12 U.S.C. 1717(b), 1719);
``(2) in the case of a product of the Federal Home Loan
Mortgage Corporation, the product is authorized under
paragraph (1), (4), or (5) of section 305(a) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a));
``(3) the product is in the public interest; and
``(4) the product is consistent with the safety and
soundness of the enterprise or the mortgage finance system.
``(c) Procedure for Approval.--
``(1) Submission of request.--An enterprise shall submit to
the Director a written request for approval of a product that
describes the product in such form as prescribed by order or
regulation of the Director.
``(2) Request for public comment.--Immediately upon receipt
of a request for approval of a product, as required under
paragraph (1), the Director shall publish notice of such
request and of the period for public comment pursuant to
paragraph (3) regarding the product, and a description of the
product proposed by the request. The Director shall give
interested parties the opportunity to respond in writing to
the proposed product.
``(3) Public comment period.--During the 30-day period
beginning on the date of publication pursuant to paragraph
(2) of a request for approval of a product, the Director
shall receive public comments regarding the proposed product.
``(4) Offering of product.--
``(A) In general.--Not later than 30 days after the close
of the public comment period described in paragraph (3), the
Director shall approve or deny the product, specifying the
grounds for such decision in writing.
``(B) Failure to act.--If the Director fails to act within
the 30-day period described in subparagraph (A), then the
enterprise may offer the product.
``(C) Temporary approval.--The Director may, subject to the
rules of the Director, provide for temporary approval of the
offering of a product without a public comment period, if the
Director finds that the existence of exigent circumstances
makes such delay contrary to the public interest.
``(d) Conditional Approval.--If the Director approves the
offering of any product by an enterprise, the Director may
establish terms, conditions, or limitations with respect to
such product with which the enterprise must comply in order
to offer such product.
``(e) Exclusions.--
``(1) In general.--The requirements of subsections (a)
through (d) do not apply with respect to--
``(A) the automated loan underwriting system of an
enterprise in existence as of the date of enactment of the
Federal Housing Finance Regulatory Reform Act of 2008,
including any upgrade to the technology, operating system, or
software to operate the underwriting system;
``(B) any modification to the mortgage terms and conditions
or mortgage underwriting criteria relating to the mortgages
that are purchased or guaranteed by an enterprise, provided
that such modifications do not alter the underlying
transaction so as to include services or financing, other
than residential mortgage financing; or
``(C) any other activity that is substantially similar, as
determined by rule of the Director to--
``(i) the activities described in subparagraphs (A) and
(B); and
``(ii) other activities that have been approved by the
Director in accordance with this section.
``(2) Expedited review.--
``(A) Enterprise notice.--For any new activity that an
enterprise considers not to be a product, the enterprise
shall provide written notice to the Director of such
activity, and may not commence such activity until the date
of receipt of a notice under subparagraph (B) or the
expiration of the period described in subparagraph (C). The
Director shall establish, by regulation, the form and content
of such written notice.
``(B) Director determination.--Not later than 15 days after
the date of receipt of a notice under subparagraph (A), the
Director shall determine whether such activity is a product
subject to approval under this section. The Director shall,
immediately upon so determining, notify the enterprise.
``(C) Failure to act.--If the Director fails to determine
whether such activity is a product within the 15-day period
described in subparagraph (B), the enterprise may commence
the new activity in accordance with subparagraph (A).
``(f) No Limitation.--Nothing in this section may be
construed to restrict--
``(1) the safety and soundness authority of the Director
over all new and existing products or activities; or
``(2) the authority of the Director to review all new and
existing products or activities to determine that such
products or activities are consistent with the statutory
mission of an enterprise.''.

SEC. 1124. CONFORMING LOAN LIMITS.

(a) Fannie Mae.--
(1) General limit.--Section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) is amended by striking the 7th and 8th sentences
and inserting the following new sentences: ``Such limitations
shall not exceed $417,000 for a mortgage secured by a single-
family residence, $533,850 for a mortgage secured by a 2-
family residence, $645,300 for a mortgage secured by a 3-
family residence, 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 effective date of Federal Housing Finance Regulatory
Reform Act of 2008, 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 4th-quarter period ending before
the time of determining such annual adjustment, in the
housing price index maintained by the Director of the Federal
Housing Finance Agency (pursuant to section 1322 of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4541)). If the change in such house
price index during the most recent 12-month or 4th-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.''.
(2) High-cost area limit.--Section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) is amended by adding after the period at the end
the following: ``Such foregoing limitations shall also be
increased with respect to properties of a particular size
located in any area for which the median price for such size
residence exceeds the foregoing limitation for such size
residence, to the lesser of 150 percent of such foregoing
limitation for such size residence or the amount that is
equal to the median price in such area for such size
residence.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) of this subsection shall take effect upon the
expiration of the date described in section 201(a) of the
Economic Stimulus Act of 2008 (Public Law 110-185).
(b) Freddie Mac.--
(1) General limit.--Section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is
amended by striking the 6th and 7th sentences and inserting
the following new sentences: ``Such limitations shall not
exceed $417,000 for a mortgage secured by a single-family
residence, $533,850 for a mortgage secured by a 2-family
residence, $645,300 for a mortgage secured by a 3-family
residence, 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

[[Page S5849]]

after the effective date of the Federal Housing Finance
Regulatory Reform Act of 2008, 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 fourth-quarter period ending
before the time of determining such annual adjustment, in the
housing price index maintained by the Director of the Federal
Housing Finance Agency (pursuant to section 1322 of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4541)). If the change in such house
price index during the most recent 12-month or 4th-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.''.
(2) High-cost area limit.--Section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act is amended by adding after
the period at the end the following: ``Such foregoing
limitations shall also be increased with respect to
properties of a particular size located in any area for which
the median price for such size residence exceeds the
foregoing limitation for such size residence, to the lesser
of 150 percent of such foregoing limitation for such size
residence or the amount that is equal to the median price in
such area for such size residence.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) of this subsection shall take effect upon the
expiration of the date described in section 201(a) of the
Economic Stimulus Act of 2008 (Public Law 110-185).
(c) Sense of Congress.--It is the sense of the Congress
that the securitization of mortgages by the Federal National
Mortgage Association and the Federal Home Loan Mortgage
Corporation plays an important role in providing liquidity to
the United States housing markets. Therefore, the Congress
encourages the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation to securitize
mortgages acquired under the increased conforming loan limits
established under this Act.
(d) Housing Price Index.--Part 2 of subtitle A of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4541 et seq.) is amended by inserting
after section 1321 (as added by section 1123 of this Act) the
following new section:

``SEC. 1322. HOUSING PRICE INDEX.

``The Director shall establish and maintain a method of
assessing the national average 1-family house price for use
for adjusting the conforming loan limitations of the
enterprises. In establishing such method, the Director shall
take into consideration the monthly survey of all major
lenders conducted by the Federal Housing Finance Agency to
determine the national average 1-family house price, the
House Price Index maintained by the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development before the effective date of the Federal Housing
Finance Regulatory Reform Act of 2008, any appropriate house
price indexes of the Bureau of the Census of the Department
of Commerce, and any other indexes or measures that the
Director considers appropriate.''.

SEC. 1125. ANNUAL HOUSING REPORT.

(a) Repeal.--Section 1324 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4544) is hereby repealed.
(b) Annual Housing Report.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended by
inserting after section 1323 the following:

``SEC. 1324. ANNUAL HOUSING REPORT.

``(a) In General.--After reviewing and analyzing the
reports submitted under section 309(n) of the Federal
National Mortgage Association Charter Act and section 307(f)
of the Federal Home Loan Mortgage Corporation Act, the
Director shall submit a report, not later than October 30 of
each year, 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 activities of each
enterprise.
``(b) Contents.--The report required under subsection (a)
shall--
``(1) discuss--
``(A) the extent to and manner in which--
``(i) each enterprise is achieving the annual housing goals
established under subpart B;
``(ii) each enterprise is complying with its duty to serve
underserved markets, as established under section 1335;
``(iii) each enterprise is complying with section 1337;
``(iv) each enterprise received credit towards achieving
each of its goals resulting from a transaction or activity
pursuant to section 1331(b)(2); and
``(v) each enterprise is achieving the purposes of the
enterprise established by law; and
``(B) the actions that each enterprise could undertake to
promote and expand the purposes of the enterprise;
``(2) aggregate and analyze relevant data on income to
assess the compliance of each enterprise with the housing
goals established under subpart B;
``(3) aggregate and analyze data on income, race, and
gender by census tract and other relevant classifications,
and compare such data with larger demographic, housing, and
economic trends;
``(4) identify the extent to which each enterprise is
involved in mortgage purchases and secondary market
activities involving subprime and nontraditional loans;
``(5) compare the characteristics of subprime and
nontraditional loans both purchased and securitized by each
enterprise to other loans purchased and securitized by each
enterprise; and
``(6) compare the characteristics of high-cost loans
purchased and securitized, where such securities are not held
on portfolio to loans purchased and securitized, where such
securities are either retained on portfolio or repurchased by
the enterprise, including such characteristics as--
``(A) the purchase price of the property that secures the
mortgage;
``(B) the loan-to-value ratio of the mortgage, which shall
reflect any secondary liens on the relevant property;
``(C) the terms of the mortgage;
``(D) the creditworthiness of the borrower; and
``(E) any other relevant data, as determined by the
Director.
``(c) Data Collection and Reporting.--
``(1) In general.--To assist the Director in analyzing the
matters described in subsection (b), the Director shall
conduct, on a monthly basis, a survey of mortgage markets in
accordance with this subsection.
``(2) Data points.--Each monthly survey conducted by the
Director under paragraph (1) shall collect data on--
``(A) the characteristics of individual mortgages that are
eligible for purchase by the enterprises and the
characteristics of individual mortgages that are not eligible
for purchase by the enterprises including, in both cases,
information concerning--
``(i) the price of the house that secures the mortgage;
``(ii) the loan-to-value ratio of the mortgage, which shall
reflect any secondary liens on the relevant property;
``(iii) the terms of the mortgage;
``(iv) the creditworthiness of the borrower or borrowers;
and
``(v) whether the mortgage, in the case of a conforming
mortgage, was purchased by an enterprise;
``(B) the characteristics of individual subprime and
nontraditional mortgages that are eligible for purchase by
the enterprises and the characteristics of borrowers under
such mortgages, including the creditworthiness of such
borrowers and determination whether such borrowers would
qualify for prime lending; and
``(C) such other matters as the Director determines to be
appropriate.
``(3) Public availability.--The Director shall make any
data collected by the Director in connection with the conduct
of a monthly survey available to the public in a timely
manner, provided that the Director may modify the data
released to the public to ensure that the data--
``(A) is not released in an identifiable form; and
``(B) is not otherwise obtainable from other publicly
available data sets.
``(4) Definition.--For purposes of this subsection, the
term `identifiable form' means any representation of
information that permits the identity of a borrower to which
the information relates to be reasonably inferred by either
direct or indirect means.''.

SEC. 1126. PUBLIC USE DATABASE.

Section 1323 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (42 U.S.C. 4543) is
amended--
(1) in subsection (a)--
(A) by striking ``(a) In General.--The Secretary'' and
inserting the following:
``(a) Availability.--
``(1) In general.--The Director''; and
(B) by adding at the end the following new paragraph:
``(2) Census tract level reporting.--Such data shall
include the data elements required to be reported under the
Home Mortgage Disclosure Act of 1975, at the census tract
level.'';
(2) in subsection (b)(2), by inserting before the period at
the end the following: ``or with subsection (a)(2)''; and
(3) by adding at the end the following new subsection:
``(d) Timing.--Data submitted under this section by an
enterprise in connection with a provision referred to in
subsection (a) shall be made publicly available in accordance
with this section not later than September 30 of the year
following the year to which the data relates.''.

SEC. 1127. REPORTING OF MORTGAGE DATA.

Section 1326 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4546) is
amended--
(1) in subsection (a), by striking ``The Director'' and
inserting ``Subject to subsection (d), the Director''; and
(2) by adding at the end the following:
``(d) Mortgage Information.--Subject to privacy
considerations, as described in section 304(j) of the Home
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(j)), the
Director shall, by regulation or order, provide that certain
information relating to single family

[[Page S5850]]

mortgage data of the enterprises shall be disclosed to the
public, in order to make available to the public--
``(1) the same data from the enterprises that is required
of insured depository institutions under the Home Mortgage
Disclosure Act of 1975; and
``(2) information collected by the Director under section
1324(b)(6).''.

SEC. 1128. REVISION OF HOUSING GOALS.

(a) Repeal.--Sections 1331 through 1334 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4561 through 4564) are hereby repealed.
(b) Housing Goal.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended by
inserting before section 1335 the following:

``SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

``(a) In General.--The Director shall, by regulation,
establish effective for the first calendar year that begins
after the date of enactment of the Federal Housing Finance
Regulatory Reform Act of 2008, and each year thereafter,
annual housing goals, as described under this subpart, with
respect to the mortgage purchases by the enterprises.
``(b) Special Counting Requirements.--
``(1) In general.--The Director shall determine whether an
enterprise shall receive full, partial, or no credit for a
transaction toward achievement of any of the housing goals
established pursuant to this section or sections 1332 through
1334.
``(2) Considerations.--In making any determination under
paragraph (1), the Director shall consider whether a
transaction or activity of an enterprise is substantially
equivalent to a mortgage purchase and either (A) creates a
new market, or (B) adds liquidity to an existing market,
provided however that the terms and conditions of such
mortgage purchase is neither determined to be unacceptable,
nor contrary to good lending practices, and otherwise
promotes sustainable homeownership and further, that such
mortgage purchase actually fulfills the purposes of the
enterprise and is in accordance with the chartering Act of
such enterprise.
``(c) Eliminating Interest Rate Disparities.--
``(1) In general.--In establishing and implementing the
housing goals under this subpart, the Director shall require
the enterprises to disclose appropriate information to allow
the Director to assess if there are any disparities in
interest rates charged on mortgages to borrowers who are
minorities, as compared with borrowers of similar
creditworthiness who are not minorities, as evidenced in
reports pursuant to the Home Mortgage Disclosure Act of 1975.
``(2) Report to congress on disparities.--Upon a finding by
the Director that a pattern of disparities in interest rates
exists pursuant to the information provided by an enterprise
under paragraph (1), the Director shall--
``(A) forward 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 detailing
the disparities; and
``(B) forward the report prepared under subparagraph (A) to
any other appropriate regulatory or enforcement agency.
``(3) Identity of individuals not disclosed.--In carrying
out this subsection, the Director shall ensure that no
personally identifiable financial information that would
enable an individual borrower to be reasonably identified
shall be made public.
``(d) Timing.--The Director shall establish an annual
deadline for the establishment of housing goals described in
subsection (a), taking into consideration the need for the
enterprises to reasonably and sufficiently plan their
operations and activities in advance, including operations
and activities necessary to meet such goals.

``SEC. 1331A. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

``(a) Authority.--
``(1) Review.--The Director shall review the
appropriateness of each goal established pursuant to this
subpart at least once during each year to assure that given
current market conditions that each such goal is feasible.
``(2) Petition to reduce.--An enterprise may petition the
Director in writing at any time during a year to reduce the
level of any goal for such year established pursuant to this
subpart.
``(b) Standard for Reduction.--The Director may reduce the
level for a goal pursuant to such a petition only if--
``(1) market and economic conditions or the financial
condition of the enterprise require such action; or
``(2) efforts to meet the goal would result in the
constraint of liquidity, over-investment in certain market
segments, or other consequences contrary to the intent of
this subpart, section 301(3) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1716(3)), or section
301(b)(3) of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1451 note), as applicable.
``(c) Determination.--
``(1) 30-day period.--If an enterprise submits a petition
for reduction to the Director under subsection (a)(2), the
Director shall make a determination regarding any proposed
reduction within 30 days of receipt of the petition.
``(2) Extension.--The Director may extend the period
described in paragraph (1) for a single additional 15-day
period, but only if the Director requests additional
information from the enterprise.

``SEC. 1332. SINGLE-FAMILY HOUSING GOALS.

``(a) Establishment of Goals.--
``(1) In general.--The Director shall establish annual
goals for the purchase by each enterprise of conventional,
conforming, single-family, owner-occupied, purchase money
mortgages financing housing for each of the following:
``(A) Low-income families.
``(B) Families that reside in low-income areas.
``(C) Very low-income families.
``(2) Goals as percentage of total purchase money mortgage
purchases.--The goals established under paragraph (1) shall
be established as a percentage of the total number of single-
family dwelling units financed by single-family purchase
money mortgage purchases of the enterprise.
``(b) Determination of Compliance.--
``(1) In general.--The Director shall determine, for each
year that the housing goals under this section are in effect
pursuant to section 1331(a), whether each enterprise has
complied with the single-family housing goals established
under this section for such year.
``(2) Compliance requirements.--An enterprise shall be
considered to be in compliance with a goal described under
subsection (a) for a year, only if, for each of the types of
families described in subsection (a), the percentage of the
number of conventional, conforming, single-family, owner-
occupied, purchase money mortgages purchased by the
enterprise in such year that serve such families, meets or
exceeds the target established under subsection (c) for the
year for such type of family.
``(c) Annual Targets.--
``(1) In general.--The Director shall establish annual
targets for each goal described in subsection (a).
``(2) Considerations.--In establishing annual targets under
paragraph (1), the Director shall consider--
``(A) national housing needs;
``(B) economic, housing, and demographic conditions;
``(C) the performance and effort of the enterprises toward
achieving the housing goals under this section in previous
years;
``(D) the ability of the enterprise to lead the industry in
making mortgage credit available;
``(E) recent information submitted in compliance with the
Home Mortgage Disclosure Act of 1975 and such other reliable
mortgage data as may be available;
``(F) the size of the purchase money conventional mortgage
market serving each of the types of families described in
subsection (a), relative to the size of the overall purchase
money mortgage market; and
``(G) the need to maintain the sound financial condition of
the enterprises.
``(3) High-cost loans and inappropriate lending
practices.--In establishing annual targets under paragraph
(1), the Director shall not consider segments of the market
determined to be unacceptable or contrary to good lending
practices pursuant to section 1331(b)(2).
``(d) Notice of Determination and Enterprise Comment.--
``(1) Notice.--Within 30 days of making a determination
under subsection (b) regarding compliance of an enterprise
for a year with the housing goals established under this
section and before any public disclosure thereof, the
Director shall provide notice of the determination to the
enterprise, which shall include an analysis and comparison,
by the Director, of the performance of the enterprise for the
year and the targets for the year under subsection (c).
``(2) Comment period.--The Director shall provide each
enterprise and the public an opportunity to comment on the
determination during the 30-day period beginning upon receipt
by the enterprise of the notice.
``(e) Use of Borrower Income.--In monitoring the
performance of each enterprise pursuant to the housing goals
under this section and evaluating such performance (for
purposes of section 1336), the Director shall consider a
mortgagor's income to be the income of the mortgagor at the
time of origination of the mortgage.
``(f) Consideration of Properties With Rental Units.--
Mortgages financing 1-to-4 unit owner-occupied properties
shall count toward the achievement of the single-family
housing goal under this section, if such properties otherwise
meet the requirements under this section notwithstanding the
use of 1 or more units for rental purposes.

``SEC. 1333. SINGLE-FAMILY HOUSING REFINANCE GOALS.

``(a) Prepayment of Existing Loans.--
``(1) In general.--The Director shall establish annual
goals for the purchase by each enterprise of mortgages on
conventional, conforming, single-family, owner-occupied
housing given to pay off or prepay an existing loan served by
the same property for each of the following:
``(A) Low-income families.
``(B) Families that reside in low-income areas.
``(C) Very low-income families.
``(2) Goals as percentage of total refinancing mortgage
purchases.--The goals described under paragraph (1) shall be
established as a percentage of the total number of single-
family dwelling units refinanced by mortgage purchases of
each enterprise.
``(b) Determination of Compliance.--
``(1) In general.--The Director shall determine, for each
year that the housing goals under this section are in effect
pursuant to

[[Page S5851]]

section 1331(a), whether each enterprise has complied with
the single-family housing refinance goals established under
this section for such year.
``(2) Compliance.--An enterprise shall be considered to be
in compliance with the goals of this section for a year, only
if, for each of the types of families described in subsection
(a), the percentage of the number of conventional,
conforming, single-family, owner-occupied refinancing
mortgages purchased by each enterprise in such year that
serve such families, meets or exceeds the target for the year
for such type of family that is established under subsection
(c).
``(c) Annual Targets.--
``(1) In general.--The Director shall establish annual
targets for each goal described in subsection (a).
``(2) Considerations.--In establishing annual targets under
paragraph (1), the Director shall consider--
``(A) national housing needs;
``(B) economic, housing, and demographic conditions;
``(C) the performance and effort of the enterprises toward
achieving the housing goals under this section in previous
years;
``(D) the ability of the enterprise to lead the industry in
making mortgage credit available;
``(E) recent information submitted in compliance with the
Home Mortgage Disclosure Act of 1975 and such other reliable
mortgage data as may be available;
``(F) the size of the purchase money conventional mortgage
market serving each of the types of families described in
subsection (a), relative to the size of the overall purchase
money mortgage market; and
``(G) the need to maintain the sound financial condition of
the enterprises.
``(d) Notice of Determination and Enterprise Comment.--
``(1) Notice.--Within 30 days of making a determination
under subsection (b) regarding compliance of an enterprise
for a year with the housing goals established under this
section and before any public disclosure thereof, the
Director shall provide notice of the determination to the
enterprise, which shall include an analysis and comparison,
by the Director, of the performance of the enterprise for the
year and the targets for the year under subsection (c).
``(2) Comment period.--The Director shall provide each
enterprise and the public an opportunity to comment on the
determination during the 30-day period beginning upon receipt
by the enterprise of the notice.
``(e) Use of Borrower Income.--In monitoring the
performance of each enterprise pursuant to the housing goals
under this section and evaluating such performance (for
purposes of section 1336), the Director shall consider a
mortgagor's income to be the income of the mortgagor at the
time of origination of the mortgage.

``SEC. 1334. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

``(a) Establishment.--
``(1) In general.--The Director shall establish, by
regulation, by unit, dollar volume, or percentage of
multifamily activity, as determined by the Director, an
annual goal for the purchase by each enterprise of--
``(A) mortgages that finance dwelling units affordable to
very low-income families; and
``(B) mortgages that finance dwelling units assisted by the
low-income housing tax credit under section 42 of the
Internal Revenue Code of 1986.
``(2) Additional requirements for smaller projects.--The
Director shall establish, within the housing goal established
under this section, additional requirements for the purchase
by each enterprise of mortgages described in paragraph (1)
for multifamily housing projects of a smaller or limited
size, which may be based on the number of dwelling units in
the project or the amount of the mortgage, or both, and shall
include multifamily housing projects of 5 to 50 units (as
adjusted by the Director), or with mortgages of up to
$5,000,000 (as adjusted by the Director).
``(3) Factors.--The Director shall establish the goal and
additional requirements under this section taking into
consideration--
``(A) national multifamily mortgage credit needs;
``(B) the performance and effort of the enterprise in
making mortgage credit available for multifamily housing in
previous years;
``(C) the size of the multifamily mortgage market,
including the size of the small multifamily mortgage market;
``(D) the most recent information available for the
Residential Survey published by the Census Bureau, and such
other reliable data as may be available regarding multifamily
mortgages;
``(E) the ability of the enterprise to lead the industry in
expanding mortgage credit availability at favorable terms,
especially for underserved markets, such as for--
``(i) small multifamily projects;
``(ii) multifamily properties in need of preservation and
rehabilitation; and
``(iii) multifamily properties located in rural areas; and
``(F) the need to maintain the sound financial condition of
the enterprise.
``(b) Units Financed by Housing Finance Agency Bonds.--The
Director may give credit toward the achievement of the
multifamily special affordable housing goal under this
section (for purposes of section 1336) to dwelling units in
multifamily housing projects that otherwise qualify under
such goal and that are financed by tax-exempt or taxable
bonds issued by a State or local housing finance agency, but
only if such bonds--
``(1) are secured by a guarantee of the enterprise; or
``(2) are not investment grade and are purchased by the
enterprise.
``(c) Use of Tenant Rent Level.--
``(1) In general.--The Director shall monitor the
performance of each enterprise in meeting the goal
established under this section and shall evaluate such
performance (for purposes of section 1336) based on whether
the rent levels are affordable to low-income and very low-
income families.
``(2) Rent level.--A rent level shall be considered to be
affordable for purposes of this subsection for an income
category referred to in this subsection if it does not exceed
30 percent of the maximum income level of such income
category, with appropriate adjustments for unit size as
measured by the number of bedrooms.
``(d) Determination of Compliance.--
``(1) In general.--The Director shall, for each year that
the housing goal under this section is in effect pursuant to
section 1331(a), determine whether each enterprise has
complied with such goal and the additional requirements under
subsection (a)(2).
``(2) Compliance.--An enterprise shall be considered to be
in compliance with the goal described under subsection (a)
for a year only if the multifamily mortgage purchases of the
enterprise meet or exceed the goal for the year established
under subsection (a).
``(e) Consideration of Units in Single-Family Rental
Housing.--In establishing the goal under this section, the
Director may take into consideration the number of housing
units financed by any mortgage purchased by an enterprise on
single-family rental housing that is not owner-occupied.
``(f) Removing Credit.--The Director shall subtract from
the units or mortgages counted toward the goal established
under this section in a current year any units or mortgages
credited toward such goal in a prior year if an enterprise
requires a lender to repurchase, or reimburse for losses, or
indemnify the enterprise against potential losses on such
units or mortgages.
``(g) Notice of Determination and Enterprise Comment.--
``(1) Notice.--Within 30 days of making a determination
under subsection (d) regarding compliance of an enterprise
for a year with the housing goal established under this
section and before any public disclosure thereof, the
Director shall provide notice of the determination to the
enterprise, which shall include an analysis and comparison,
by the Director, of the performance of the enterprise for the
year and the goal for the year under subsection (a).
``(2) Comment period.--The Director shall provide each
enterprise and the public an opportunity to comment on the
determination during the 30-day period beginning upon receipt
by the enterprise of the notice.''.
(c) Conforming Amendments.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended--
(1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter
preceding paragraph (1), by striking ``low- and moderate-
income housing goal'' and all that follows through ``section
1334'' and inserting ``housing goals established under this
subpart''; and
(2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by
striking ``sections 1332, 1333, and 1334,'' and inserting
``this subpart''.
(d) Definitions.--Section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502) is amended--
(1) by striking paragraph (24), as so designated by section
1002 of this Act, and inserting the following:
``(24) 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 area median
income; and
``(ii) in the case of rental units, families having incomes
not greater than 50 percent of the area median income, with
adjustments for smaller and larger families, as determined by
the Director.
``(B) Rule of construction.--For purposes of section 1338
and 1339, 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 area
median income; and
``(ii) in the case of rental units, income in excess of 30
percent but not greater than 50 percent of the area median
income, with adjustments for smaller and larger families, as
determined by the Director.''; and
(2) by adding at the end the following:
``(26) Conforming mortgage.--The term `conforming mortgage'
means, with respect to an enterprise, a conventional mortgage
having an original principal obligation that does not exceed
the applicable dollar limitation, in effect at the time of
such origination, under--
``(A) section 302(b)(2) of the Federal National Mortgage
Association Charter Act; or
``(B) section 305(a)(2) of the Federal Home Loan Mortgage
Corporation Act.
``(27) 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 area median income; and
``(B) in the case of rental units, income not in excess of
30 percent of the area median income, with adjustments for
smaller and larger families, as determined by the Director.

[[Page S5852]]

``(28) Low-income area.--The term `low-income area' means a
census tract or block numbering area in which the median
income does not exceed 80 percent of the median income for
the area in which such census tract or block numbering area
is located, and, for the purposes of section 1332(a)(2),
shall include families having incomes not greater than 100
percent of the area median income who reside in minority
census tracts.
``(29) Minority census tract.--The term `minority census
tract' means a census tract that has a minority population of
at least 30 percent and a median family income of less than
100 percent of the area family median income.
``(30) Shortage of standard rental units both affordable
and available to extremely low-income renter households.--
``(A) In general.--The term `shortage of standard rental
units both affordable and available to extremely low-income
renter households' means the gap between--
``(i) the number of units with complete plumbing and
kitchen facilities with a rent that is 30 percent or less of
30 percent of the adjusted area median income as determined
by the Director that are occupied by extremely low-income
renter households or are vacant for rent; and
``(ii) the number of extremely low-income renter
households.
``(B) Rule of construction.--If the number of units
described in subparagraph (A)(i) exceeds the number of
extremely low-income households as described in subparagraph
(A)(ii), there is no shortage.
``(31) Shortage of standard rental units both affordable
and available to very low-income renter households.--
``(A) In general.--The term `shortage of standard rental
units both affordable and available to very low-income renter
households' means the gap between--
``(i) the number of units with complete plumbing and
kitchen facilities with a rent that is 30 percent or less of
50 percent of the adjusted area median income as determined
by the Director that are occupied by either extremely low- or
very low-income renter households or are vacant for rent; and
``(ii) the number of extremely low- and very low-income
renter households.
``(B) Rule of construction.--If the number of units
described in subparagraph (A)(i) exceeds the number of
extremely low- and very low-income households as described in
subparagraph (A)(ii), there is no shortage.''.

SEC. 1129. DUTY TO SERVE UNDERSERVED MARKETS.

(a) Establishment and Evaluation of Performance.--Section
1335 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4565) is amended--
(1) in the section heading, by inserting ``DUTY TO SERVE
UNDERSERVED MARKETS AND'' before ``OTHER'';
(2) by striking subsection (b);
(3) in subsection (a)--
(A) in the matter preceding paragraph (1), by inserting
``and to carry out the duty under subsection (a) of this
section'' before ``, each enterprise shall'';
(B) in paragraph (3), by inserting ``and'' after the
semicolon at the end;
(C) in paragraph (4), by striking ``; and'' and inserting a
period;
(D) by striking paragraph (5); and
(E) by redesignating such subsection as subsection (b);
(4) by inserting before subsection (b) (as so redesignated
by paragraph (3)(E) of this subsection) the following new
subsection:
``(a) Duty to Serve Underserved Markets.--
``(1) Duty.--In accordance with the purpose of the
enterprises under section 301(3) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1716) and section
301(b)(3) of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1451 note) to undertake activities relating to
mortgages on housing for very low-, low-, and moderate-income
families involving a reasonable economic return that may be
less than the return earned on other activities, each
enterprise shall have the duty to increase the liquidity of
mortgage investments and improve the distribution of
investment capital available for mortgage financing for
underserved markets by purchasing or securitizing mortgage
investments.
``(2) Underserved markets.--To meet its duty under
paragraph (1), each enterprise shall comply with the
following requirements with respect to the following
underserved markets:
``(A) Manufactured housing.--The enterprise shall lead the
industry in developing loan products and flexible
underwriting guidelines to facilitate a secondary market for
mortgages on manufactured homes for very low-, low-, and
moderate-income families.
``(B) Affordable housing preservation.--The enterprise
shall lead the industry in developing loan products and
flexible underwriting guidelines to facilitate a secondary
market to preserve housing affordable to very low-, low-, and
moderate-income families, including housing projects
subsidized under--
``(i) the project-based and tenant-based rental assistance
programs under section 8 of the United States Housing Act of
1937;
``(ii) the program under section 236 of the National
Housing Act;
``(iii) the below-market interest rate mortgage program
under section 221(d)(4) of the National Housing Act;
``(iv) the supportive housing for the elderly program under
section 202 of the Housing Act of 1959;
``(v) the supportive housing program for persons with
disabilities under section 811 of the Cranston-Gonzalez
National Affordable Housing Act;
``(vi) the programs under title IV of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11361 et seq.), but only
permanent supportive housing projects subsidized under such
programs; and
``(vii) the rural rental housing program under section 515
of the Housing Act of 1949.
``(C) Rural and other underserved markets.--The enterprise
shall lead the industry in developing loan products and
flexible underwriting guidelines to facilitate a secondary
market for mortgages on housing for very low-, low-, and
moderate-income families in rural areas, and for mortgages
for housing for any other underserved market for very low-,
low-, and moderate-income families that the Director
identifies as lacking adequate credit through conventional
lending sources. Such underserved markets may be identified
by borrower type, market segment, or geographic area.''; and
(5) by adding at the end the following new subsection:
``(c) Evaluation and Reporting of Compliance.--
``(1) In general.--Not later than 6 months after the
effective date of the Federal Housing Finance Regulatory
Reform Act of 2008, the Director shall establish a manner for
evaluating whether, and the extent to which, the enterprises
have complied with the duty under subsection (a) to serve
underserved markets and for rating the extent of such
compliance. Using such method, the Director shall, for each
year, evaluate such compliance and rate the performance of
each enterprise as to extent of compliance. The Director
shall include such evaluation and rating for each enterprise
for a year in the report for that year submitted pursuant to
section 1319B(a).
``(2) Separate evaluations.--In determining whether an
enterprise has complied with the duty referred to in
paragraph (1), the Director shall separately evaluate whether
the enterprise has complied with such duty with respect to
each of the underserved markets identified in subsection (a),
taking into consideration--
``(A) the development of loan products and more flexible
underwriting guidelines;
``(B) the extent of outreach to qualified loan sellers in
each of such underserved markets; and
``(C) the volume of loans purchased in each of such
underserved markets.
``(3) Manufactured housing market.--In determining whether
an enterprise has complied with the duty under subparagraph
(A) of subsection (a)(2), the Director may consider loans
secured by both real and personal property.''.
(b) Enforcement.--Subsection (a) of section 1336 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4566(a)) is amended--
(1) in paragraph (1), by inserting ``and with the duty
under section 1335(a) of each enterprise with respect to
underserved markets,'' before ``as provided in this
section''; and
(2) by adding at the end of such subsection, as amended by
the preceding provisions of this subtitle, the following new
paragraph:
``(4) Enforcement of duty to provide mortgage credit to
underserved markets.--The duty under section 1335(a) of each
enterprise to serve underserved markets (as determined in
accordance with section 1335(c)) shall be enforceable under
this section to the same extent and under the same provisions
that the housing goals established under this subpart are
enforceable. Such duty shall not be enforceable under any
other provision of this title (including subpart C of this
part) other than this section or under any provision of the
Federal National Mortgage Association Charter Act or the
Federal Home Loan Mortgage Corporation Act.''.

SEC. 1130. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING
GOALS.

(a) In General.--Section 1336 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4566) is amended by striking subsections (b) and (c)
and inserting the following:
``(b) Notice and Preliminary Determination of Failure To
Meet Goals.--
``(1) Notice.--If the Director preliminarily determines
that an enterprise has failed, or that there is a substantial
probability that an enterprise will fail, to meet any housing
goal under this subpart, the Director shall provide written
notice to the enterprise of such a preliminary determination,
the reasons for such determination, and the information on
which the Director based the determination.
``(2) Response period.--
``(A) In general.--During the 30-day period beginning on
the date on which an enterprise is provided notice under
paragraph (1), the enterprise may submit to the Director any
written information that the enterprise considers appropriate
for consideration by the Director in finally determining
whether such failure has occurred or whether the achievement
of such goal was or is feasible.
``(B) Extended period.--The Director may extend the period
under subparagraph (A) for good cause for not more than 30
additional days.
``(C) Shortened period.--The Director may shorten the
period under subparagraph (A) for good cause.

[[Page S5853]]

``(D) Failure to respond.--The failure of an enterprise to
provide information during the 30-day period under this
paragraph (as extended or shortened) shall waive any right of
the enterprise to comment on the proposed determination or
action of the Director.
``(3) Consideration of information and final
determination.--
``(A) In general.--After the expiration of the response
period under paragraph (2), or upon receipt of information
provided during such period by the enterprise, whichever
occurs earlier, the Director shall issue a final
determination on--
``(i) whether the enterprise has failed, or there is a
substantial probability that the enterprise will fail, to
meet the housing goal; and
``(ii) whether (taking into consideration market and
economic conditions and the financial condition of the
enterprise) the achievement of the housing goal was or is
feasible.
``(B) Considerations.--In making a final determination
under subparagraph (A), the Director shall take into
consideration any relevant information submitted by the
enterprise during the response period.
``(C) Notice.--The Director shall provide written notice,
including a response to any information submitted during the
response period, to the enterprise, the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the Committee
on Financial Services of the House of Representatives, of--
``(i) each final determination under this paragraph that an
enterprise has failed, or that there is a substantial
probability that the enterprise will fail, to meet a housing
goal;
``(ii) each final determination that the achievement of a
housing goal was or is feasible; and
``(iii) the reasons for each such final determination.
``(c) Cease and Desist, Civil Money Penalties, and Remedies
Including Housing Plans.--
``(1) Requirement.--If the Director finds, pursuant to
subsection (b), that there is a substantial probability that
an enterprise will fail, or has actually failed, to meet any
housing goal under this subpart, and that the achievement of
the housing goal was or is feasible, the Director may require
that the enterprise submit a housing plan under this
subsection. If the Director makes such a finding and the
enterprise refuses to submit such a plan, submits an
unacceptable plan, fails to comply with the plan, or the
Director finds that the enterprise has failed to meet any
housing goal under this subpart, in addition to requiring an
enterprise to submit a housing plan, the Director may issue a
cease and desist order in accordance with section 1341,
impose civil money penalties in accordance with section 1345,
or order other remedies as set forth in paragraph (7).
``(2) Housing plan.--If the Director requires a housing
plan under this subsection, such a plan shall be--
``(A) a feasible plan describing the specific actions the
enterprise will take--
``(i) to achieve the goal for the next calendar year; and
``(ii) if the Director determines that there is a
substantial probability that the enterprise will fail to meet
a goal in the current year, to make such improvements and
changes in its operations as are reasonable in the remainder
of such year; and
``(B) sufficiently specific to enable the Director to
monitor compliance periodically.
``(3) Deadline for submission.--The Director shall
establish a deadline for an enterprise to comply with any
remedial action or submit a housing plan to the Director,
which may not be more than 45 days after the enterprise is
provided notice. The Director may extend the deadline to the
extent that the Director determines necessary. Any extension
of the deadline shall be in writing and for a time certain.
``(4) Approval.--The Director shall review each submission
by an enterprise, including a housing plan submitted under
this subsection, and, not later than 30 days after
submission, approve or disapprove the plan or other action.
The Director may extend the period for approval or
disapproval for a single additional 30-day period if the
Director determines it necessary. The Director shall approve
any plan that the Director determines is likely to succeed,
and conforms with the Federal National Mortgage Association
Charter Act or the Federal Home Loan Mortgage Corporation Act
(as applicable), this title, and any other applicable
provision of law.
``(5) Notice of approval and disapproval.--The Director
shall provide written notice to any enterprise submitting a
housing plan of the approval or disapproval of the plan
(which shall include the reasons for any disapproval of the
plan) and of any extension of the period for approval or
disapproval.
``(6) Resubmission.--If the initial housing plan submitted
by an enterprise under this section is disapproved, the
enterprise shall submit an amended plan acceptable to the
Director not later than 15 days after such disapproval, or
such longer period that the Director determines is in the
public interest.
``(7) Additional remedies for failure to meet goals.--In
addition to ordering a housing plan under this section,
issuing cease and desist orders under section 1341, and
ordering civil money penalties under section 1345, the
Director may--
``(A) seek other actions when an enterprise fails to meet a
goal; and
``(B) exercise appropriate enforcement authority available
to the Director under this Act.''.
(b) Conforming Amendment.--The heading for subpart C of
part 2 of subtitle A of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended to read
as follows:

``Subpart C--Enforcement''.

(c) Cease and Desist Proceedings.--
(1) Repeal.--Section 1341 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4581) is hereby repealed.
(2) Cease and desist proceedings.--The Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 is
amended by inserting before section 1342 the following:

``SEC. 1341. CEASE AND DESIST PROCEEDINGS.

``(a) Grounds for Issuance.--The Director may issue and
serve a notice of charges under this section upon an
enterprise if the Director determines that--
``(1) the enterprise has failed to meet any housing goal
established under subpart B, following a written notice and
determination of such failure in accordance with section
1336;
``(2) the enterprise has failed to submit a report under
section 1327, following a notice of such failure, an
opportunity for comment by the enterprise, and a final
determination by the Director;
``(3) the enterprise has failed to submit the information
required under subsection (m) or (n) of section 309 of the
Federal National Mortgage Association Charter Act, subsection
(e) or (f) of section 307 of the Federal Home Loan Mortgage
Corporation Act, or section 1337 of this title;
``(4) the enterprise has violated any provision of part 2
of this title or any order, rule, or regulation under part 2;
``(5) the enterprise has failed to submit a housing plan or
perform its responsibilities under a remedial order that
substantially complies with section 1336(c) within the
applicable period; or
``(6) the enterprise has failed to comply with a housing
plan under section 1336(c).
``(b) Procedure.--
``(1) Notice of charges.--Each notice of charges issued
under this section shall contain a statement of the facts
constituting the alleged conduct and shall fix a time and
place at which a hearing will be held to determine on the
record whether an order to cease and desist from such conduct
should issue.
``(2) Issuance of order.--If the Director finds on the
record made at a hearing described in paragraph (1) that any
conduct specified in the notice of charges has been
established (or the enterprise consents pursuant to section
1342(a)(4)), the Director may issue and serve upon the
enterprise an order requiring the enterprise to--
``(A) comply with the goals;
``(B) submit a report under section 1327;
``(C) comply with any provision of part 2 of this title or
any order, rule, or regulation under part 2;
``(D) submit a housing plan in compliance with section
1336(c);
``(E) comply with the housing plan in compliance with
section 1336(c); or
``(F) provide the information required under subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act, or subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act.
``(c) Effective Date.--An order under this section shall
become effective upon the expiration of the 30-day period
beginning on the date of service of the order upon the
enterprise (except in the case of an order issued upon
consent, which shall become effective at the time specified
therein), and shall remain effective and enforceable as
provided in the order, except to the extent that the order is
stayed, modified, terminated, or set aside by action of the
Director or otherwise, as provided in this subpart.''.
(d) Civil Money Penalties.--
(1) Repeal.--Section 1345 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4585) is hereby repealed.
(2) Civil money penalties.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended by
inserting after section 1344 the following:

``SEC. 1345. CIVIL MONEY PENALTIES.

``(a) Authority.--The Director may impose a civil money
penalty, in accordance with the provisions of this section,
on any enterprise that has failed to--
``(1) meet any housing goal established under subpart B,
following a written notice and determination of such failure
in accordance with section 1336(b);
``(2) submit a report under section 1327, following a
notice of such failure, an opportunity for comment by the
enterprise, and a final determination by the Director;
``(3) submit the information required under subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act or subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act;
``(4) comply with any provision of part 2 of this title or
any order, rule, or regulation under part 2;
``(5) submit a housing plan or perform its responsibilities
under a remedial order

[[Page S5854]]

issued pursuant to section 1336(c) within the required
period; or
``(6) comply with a housing plan for the enterprise under
section 1336(c).
``(b) Amount of Penalty.--The amount of a penalty under
this section, as determined by the Director, may not exceed--
``(1) for any failure described in paragraph (1), (5), or
(6) of subsection (a), $100,000 for each day that the failure
occurs; and
``(2) for any failure described in paragraph (2), (3), or
(4) of subsection (a), $50,000 for each day that the failure
occurs.
``(c) Procedures.--
``(1) Establishment.--The Director shall establish
standards and procedures governing the imposition of civil
money penalties under this section. Such standards and
procedures--
``(A) shall provide for the Director to notify the
enterprise in writing of the determination of the Director to
impose the penalty, which shall be made on the record;
``(B) shall provide for the imposition of a penalty only
after the enterprise has been given an opportunity for a
hearing on the record pursuant to section 1342; and
``(C) may provide for review by the Director of any
determination or order, or interlocutory ruling, arising from
a hearing.
``(2) Factors in determining amount of penalty.--In
determining the amount of a penalty under this section, the
Director 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;
``(G) the length of time that the enterprise should
reasonably take to achieve the goal; and
``(H) such other factors as the Director may determine, by
regulation, to be appropriate.
``(d) Action to Collect Penalty.--If an enterprise fails to
comply with an order by the Director imposing a civil money
penalty under this section, after the order is no longer
subject to review, as provided in sections 1342 and 1343, the
Director may bring an action in the United States District
Court for the District of Columbia to obtain a monetary
judgment against the enterprise, 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.
``(e) Settlement by Director.--The Director may compromise,
modify, or remit any civil money penalty which may be, or has
been, imposed under this section.
``(f) Deposit of Penalties.--The Director shall use any
civil money penalties collected under this section to help
fund the Housing Trust Fund established under section
1338.''.
(e) Director Authority.--
(1) Authority to bring a civil action.--Section 1344(a) of
the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4584) is amended by striking
``The Secretary may request the Attorney General of the
United States to bring a civil action'' and inserting ``The
Director may bring a civil action''.
(2) Subpoena enforcement.--Section 1348(c) of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4588(c)) is amended by inserting ``may bring
an action or'' before ``may request''.
(3) Conforming amendments.--Subpart C of part 2 of subtitle
A of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4581 et seq.) is amended by
striking ``Secretary'' each place that term appears and
inserting ``Director'' in each of--
(A) section 1342 (12 U.S.C. 4582);
(B) section 1343 (12 U.S.C. 4583);
(C) section 1346 (12 U.S.C. 4586);
(D) section 1347 (12 U.S.C. 4587); and
(E) section 1348 (12 U.S.C. 4588).

SEC. 1131. AFFORDABLE HOUSING PROGRAMS.

(a) Repeal.--Section 1337 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4567) is hereby repealed.
(b) Annual Housing Report.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 1301 et
seq.) is amended by inserting after section 1336 the
following:

``SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS.

``(a) Set Aside and Allocation of Amounts by Enterprises.--
Subject to subsection (b), in each fiscal year--
``(1) the Federal Home Loan Mortgage Corporation shall--
``(A) set aside an amount equal to 4.2 basis points for
each dollar of the unpaid principal balance of its total new
business purchases; and
``(B) allocate or otherwise transfer--
``(i) 65 percent of such amounts to the Secretary of
Housing and Urban Development to fund the Housing Trust Fund
established under section 1338; and
``(ii) 35 percent of such amounts to fund the Capital
Magnet Fund established pursuant to section 1339; and
``(2) the Federal National Mortgage Association shall--
``(A) set aside an amount equal to 4.2 basis points for
each dollar of unpaid principal balance of its total new
business purchases; and
``(B) allocate or otherwise transfer--
``(i) 65 percent of such amounts to the Secretary of
Housing and Urban Development to fund the Housing Trust Fund
established under section 1338; and
``(ii) 35 percent of such amounts to fund the Capital
Magnet Fund established pursuant to section 1339.
``(b) Suspension of Contributions.--The Director shall
temporarily suspend allocations under subsection (a) by an
enterprise upon a finding by the Director that such
allocations--
``(1) are contributing, or would contribute, to the
financial instability of the enterprise;
``(2) are causing, or would cause, the enterprise to be
classified as undercapitalized; or
``(3) are preventing, or would prevent, the enterprise from
successfully completing a capital restoration plan under
section 1369C.
``(c) Prohibition of Pass-Through of Cost of Allocations.--
The Director shall, by regulation, prohibit each enterprise
from redirecting the costs of any allocation required under
this section, through increased charges or fees, or decreased
premiums, or in any other manner, to the originators of
mortgages purchased or securitized by the enterprise.
``(d) Enforcement of Requirements on Enterprise.--
Compliance by the enterprises with the requirements under
this section shall be enforceable under subpart C. Any
reference in such subpart to this part or to an order, rule,
or regulation under this part specifically includes this
section and any order, rule, or regulation under this
section.
``(e) Required Amount for HOPE Reserve Fund.--Of the
aggregate amount allocated under subsection (a), 25 percent
shall be deposited into a fund established in the Treasury of
the United States by the Secretary of the Treasury for such
purpose.
``(f) Limitation.--No funds under this title may be used in
conjunction with property taken by eminent domain, unless
eminent domain is employed only for a public use, except
that, for purposes of this section, public use shall not be
construed to include economic development that primarily
benefits any private entity.

``SEC. 1338. HOUSING TRUST FUND.

``(a) Establishment and Purpose.--The Secretary of Housing
and Urban Development (in this section referred to as the
`Secretary') shall establish and manage a Housing Trust Fund,
which shall be funded with amounts allocated by the
enterprises under section 1337 and any amounts as are or may
be appropriated, transferred, or credited to such Housing
Trust Fund under any other provisions of law. The purpose of
the Housing Trust Fund under this section is to provide
grants to States for use--
``(1) to increase and preserve the supply of rental housing
for extremely low- and very low-income families, including
homeless families; and
``(2) to increase homeownership for extremely low- and very
low-income families.
``(b) Allocations for HOPE Bond Payments.--
``(1) In general.--Notwithstanding subsection (c), to help
address the mortgage crisis, of the amounts allocated
pursuant to clauses (i) and (ii) of section 1337(a)(1)(B) and
clauses (i) and (ii) of section 1337(a)(2)(B) in excess of
amounts described in section 1337(e)--
``(A) 100 percent of such excess shall be used to reimburse
the Treasury for payments made pursuant to section
257(w)(1)(C) of the National Housing Act in calendar year
2009;
``(B) 50 percent of such excess shall be used to reimburse
the Treasury for such payments in calendar year 2010; and
``(C) 25 percent of such excess shall be used to reimburse
the Treasury for such payments in calendar year 2011.
``(2) Excess funds.--At the termination of the HOPE for
Homeowners Program established under section 257 of the
National Housing Act, if amounts used to reimburse the
Treasury under paragraph (1) exceed the total net cost to the
Government of the HOPE for Homeowners Program, such amounts
shall be used for their original purpose, as described in
paragraphs (1)(B) and (2)(B) of section 1337(a).
``(3) Treasury fund.--The amounts referred to in
subparagraphs (A) through (C) of paragraph (1) shall be
deposited into a fund established in the Treasury of the
United States by the Secretary of the Treasury for such
purpose.
``(c) Allocation for Housing Trust Fund in Fiscal Year 2010
and Subsequent Years.--
``(1) In general.--Except as provided in subsection (b),
the Secretary shall distribute the amounts allocated for the
Housing Trust Fund under this section to provide affordable
housing as described in this subsection.
``(2) Permissible designees.--A State receiving grant
amounts under this subsection may designate a State housing
finance agency, housing and community development entity,
tribally designated housing entity (as such term is defined
in section 4 of the Native American Housing Assistance and
Self-Determination Act of 1997 (25 U.S.C. 4103)), or any
other qualified instrumentality of the State to receive such
grant amounts.
``(3) Distribution to states by needs-based formula.--
``(A) In general.--The Secretary shall, by regulation,
establish a formula within 12 months of the date of enactment
of the Federal Housing Finance Regulatory Reform Act of 2008,
to distribute amounts made

[[Page S5855]]

available under this subsection to each State to provide
affordable housing to extremely low- and very low-income
households.
``(B) Basis for formula.--The formula required under
subparagraph (A) shall include the following:
``(i) The ratio of the shortage of standard rental units
both affordable and available to extremely low-income renter
households in the State to the aggregate shortage of standard
rental units both affordable and available to extremely low-
income renter households in all the States.
``(ii) The ratio of the shortage of standard rental units
both affordable and available to very low-income renter
households in the State to the aggregate shortage of standard
rental units both affordable and available to very low-income
renter households in all the States.
``(iii) The ratio of extremely low-income renter households
in the State living with either (I) incomplete kitchen or
plumbing facilities, (II) more than 1 person per room, or
(III) paying more than 50 percent of income for housing
costs, to the aggregate number of extremely low-income renter
households living with either (IV) incomplete kitchen or
plumbing facilities, (V) more than 1 person per room, or (VI)
paying more than 50 percent of income for housing costs in
all the States.
``(iv) The ratio of very low-income renter households in
the State paying more than 50 percent of income on rent
relative to the aggregate number of very low-income renter
households paying more than 50 percent of income on rent in
all the States.
``(v) The resulting sum calculated from the factors
described in clauses (i) through (iv) shall be multiplied by
the relative cost of construction in the State. For purposes
of this subclause, the term `cost of construction'--

``(I) means the cost of construction or building
rehabilitation in the State relative to the national cost of
construction or building rehabilitation; and
``(II) shall be calculated such that values higher than 1.0
indicate that the State's construction costs are higher than
the national average, a value of 1.0 indicates that the
State's construction costs are exactly the same as the
national average, and values lower than 1.0 indicate that the
State's cost of construction are lower than the national
average.

``(C) Priority.--The formula required under subparagraph
(A) shall give priority emphasis and consideration to the
factor described in subparagraph (B)(i).
``(4) Allocation of grant amounts.--
``(A) Notice.--Not later than 60 days after the date that
the Secretary determines the formula amounts described in
paragraph (3), the Secretary shall caused to be published in
the Federal Register a notice that such amounts shall be so
available.
``(B) Grant amount.--In each fiscal year other than fiscal
year 2009, the Secretary shall make a grant to each State in
an amount that is equal to the formula amount determined
under paragraph (3) for that State.
``(C) Minimum state allocations.--If the formula amount
determined under paragraph (3) for a fiscal year would
allocate less than $3,000,000 to any State, the allocation
for such State shall be $3,000,000, and the increase shall be
deducted pro rata from the allocations made to all other
States.
``(5) Allocation plans required.--
``(A) In general.--For each year that a State or State
designated entity receives a grant under this subsection, the
State or State designated entity shall establish an
allocation plan. Such plan shall--
``(i) set forth a plan for the distribution of grant
amounts received by the State or State designated entity for
such year;
``(ii) be based on priority housing needs, as determined by
the State or State designated entity in accordance with the
regulations established under subsection (g)(2)(C);
``(iii) comply with paragraph (6); and
``(iv) include performance goals that comply with the
requirements established by the Secretary pursuant to
subsection (g)(2).
``(B) Establishment.--In establishing an allocation plan
under this paragraph, a State or State designated entity
shall--
``(i) notify the public of the establishment of the plan;
``(ii) provide an opportunity for public comments regarding
the plan;
``(iii) consider any public comments received regarding the
plan; and
``(iv) make the completed plan available to the public.
``(C) Contents.--An allocation plan of a State or State
designated entity under this paragraph shall set forth the
requirements for eligible recipients under paragraph (8) to
apply for such grant amounts, including a requirement that
each such application include--
``(i) a description of the eligible activities to be
conducted using such assistance; and
``(ii) a certification by the eligible recipient applying
for such assistance that any housing units assisted with such
assistance will comply with the requirements under this
section.
``(6) Selection of activities funded using housing trust
fund grant amounts.--Grant amounts received by a State or
State designated entity under this subsection may be used, or
committed for use, only for activities that--
``(A) are eligible under paragraph (7) for such use;
``(B) comply with the applicable allocation plan of the
State or State designated entity under paragraph (5); and
``(C) are selected for funding by the State or State
designated entity in accordance with the process and criteria
for such selection established pursuant to subsection
(g)(2)(C).
``(7) Eligible activities.--Grant amounts allocated to a
State or State designated entity under this subsection shall
be eligible for use, or for commitment for use, only for
assistance for--
``(A) the production, preservation, and rehabilitation of
rental housing, including housing under the programs
identified in section 1335(a)(2)(B) and for operating costs,
except that not less than 75 percent of such grant amounts
shall be used for the benefit only of extremely low-income
families and not more than 25 percent for the benefit only of
very low-income families; and
``(B) the production, preservation, and rehabilitation of
housing for homeownership, including such forms as down
payment assistance, closing cost assistance, and assistance
for interest rate buy-downs, that--
``(i) is available for purchase only for use as a principal
residence by families that qualify both as--

``(I) extremely low- and very low-income families at the
times described in subparagraphs (A) through (C) of section
215(b)(2) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12745(b)(2)); and
``(II) first-time homebuyers, as such term is defined in
section 104 of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12704), except that any reference in
such section to assistance under title II of such Act shall
for purposes of this subsection be considered to refer to
assistance from affordable housing fund grant amounts;

``(ii) has an initial purchase price that meets the
requirements of section 215(b)(1) of the Cranston-Gonzalez
National Affordable Housing Act;
``(iii) is subject to the same resale restrictions
established under section 215(b)(3) of the Cranston-Gonzalez
National Affordable Housing Act and applicable to the
participating jurisdiction that is the State in which such
housing is located; and
``(iv) is made available for purchase only by, or in the
case of assistance under this subsection, is made available
only to homebuyers who have, before purchase completed a
program of independent financial education and counseling
from an eligible organization that meets the requirements of
section 132 of the Federal Housing Finance Regulatory Reform
Act of 2008.
``(8) Eligible recipients.--Grant amounts allocated to a
State or State designated entity under this subsection may be
provided only to a recipient that is an organization, agency,
or other entity (including a for-profit entity or a nonprofit
entity) that--
``(A) has demonstrated experience and capacity to conduct
an eligible activity under paragraph (7), as evidenced by its
ability to--
``(i) own, construct or rehabilitate, manage, and operate
an affordable multifamily rental housing development;
``(ii) design, construct or rehabilitate, and market
affordable housing for homeownership; or
``(iii) provide forms of assistance, such as down payments,
closing costs, or interest rate buy-downs for purchasers;
``(B) demonstrates the ability and financial capacity to
undertake, comply, and manage the eligible activity;
``(C) demonstrates its familiarity with the requirements of
any other Federal, State, or local housing program that will
be used in conjunction with such grant amounts to ensure
compliance with all applicable requirements and regulations
of such programs; and
``(D) makes such assurances to the State or State
designated entity as the Secretary shall, by regulation,
require to ensure that the recipient will comply with the
requirements of this subsection during the entire period that
begins upon selection of the recipient to receive such grant
amounts and ending upon the conclusion of all activities
under paragraph (8) that are engaged in by the recipient and
funded with such grant amounts.
``(9) Limitations on use.--
``(A) Required amount for homeownership activities.--Of the
aggregate amount allocated to a State or State designated
entity under this subsection not more than 10 percent shall
be used for activities under subparagraph (B) of paragraph
(7).
``(B) Deadline for commitment or use.--Grant amounts
allocated to a State or State designated entity under this
subsection shall be used or committed for use within 2 years
of the date that such grant amounts are made available to the
State or State designated entity. The Secretary shall
recapture any such amounts not so used or committed for use
and reallocate such amounts under this subsection in the
first year after such recapture.
``(C) Use of returns.--The Secretary shall, by regulation,
provide that any return on a loan or other investment of any
grant amount used by a State or State designated entity to
provide a loan under this subsection shall be treated, for
purposes of availability to and use by the State or State
designated entity, as a grant amount authorized under this
subsection.
``(D) Prohibited uses.--The Secretary shall, by
regulation--

[[Page S5856]]

``(i) set forth prohibited uses of grant amounts allocated
under this subsection, which shall include use for--

``(I) political activities;
``(II) advocacy;
``(III) lobbying, whether directly or through other
parties;
``(IV) counseling services;
``(V) travel expenses; and
``(VI) preparing or providing advice on tax returns;

``(ii) provide that, except as provided in clause (iii),
grant amounts of a State or State designated entity may not
be used for administrative, outreach, or other costs of--

``(I) the State or State designated entity; or
``(II) any other recipient of such grant amounts; and

``(iii) limit the amount of any grant amounts for a year
that may be used by the State or State designated entity for
administrative costs of carrying out the program required
under this subsection, including home ownership counseling,
to a percentage of such grant amounts of the State or State
designated entity for such year, which may not exceed 10
percent.
``(E) Prohibition of consideration of use for meeting
housing goals or duty to serve.--In determining compliance
with the housing goals under this subpart and the duty to
serve underserved markets under section 1335, the Director
may not consider any grant amounts used under this section
for eligible activities under paragraph (7). The Director
shall give credit toward the achievement of such housing
goals and such duty to serve underserved markets to purchases
by the enterprises of mortgages for housing that receives
funding from such grant amounts, but only to the extent that
such purchases by the enterprises are funded other than with
such grant amounts.
``(d) Reduction for Failure to Obtain Return of Misused
Funds.--If in any year a State or State designated entity
fails to obtain reimbursement or return of the full amount
required under subsection (e)(1)(B) to be reimbursed or
returned to the State or State designated entity during such
year--
``(1) except as provided in paragraph (2)--
``(A) the amount of the grant for the State or State
designated entity for the succeeding year, as determined
pursuant to this section, shall be reduced by the amount by
which such amounts required to be reimbursed or returned
exceed the amount actually reimbursed or returned; and
``(B) the amount of the grant for the succeeding year for
each other State or State designated entity whose grant is
not reduced pursuant to subparagraph (A) shall be increased
by the amount determined by applying the formula established
pursuant to this section to the total amount of all
reductions for all State or State designated entities for
such year pursuant to subparagraph (A); or
``(2) in any case in which such failure to obtain
reimbursement or return occurs during a year immediately
preceding a year in which grants under this section will not
be made, the State or State designated entity shall pay to
the Secretary for reallocation among the other grantees an
amount equal to the amount of the reduction for the entity
that would otherwise apply under paragraph (1)(A).
``(e) Accountability of Recipients and Grantees.--
``(1) Recipients.--
``(A) Tracking of funds.--The Secretary shall--
``(i) require each State or State designated entity to
develop and maintain a system to ensure that each recipient
of assistance under this section uses such amounts in
accordance with this section, the regulations issued under
this section, and any requirements or conditions under which
such amounts were provided; and
``(ii) establish minimum requirements for agreements,
between the State or State designated entity and recipients,
regarding assistance under this section, which shall
include--

``(I) appropriate periodic financial and project reporting,
record retention, and audit requirements for the duration of
the assistance to the recipient to ensure compliance with the
limitations and requirements of this section and the
regulations under this section; and
``(II) any other requirements that the Secretary determines
are necessary to ensure appropriate administration and
compliance.

``(B) Misuse of funds.--
``(i) Reimbursement requirement.--If any recipient of
assistance under this section is determined, in accordance
with clause (ii), to have used any such amounts in a manner
that is materially in violation of this section, the
regulations issued under this section, or any requirements or
conditions under which such amounts were provided, the State
or State designated entity shall require that, within 12
months after the determination of such misuse, the recipient
shall reimburse the State or State designated entity for such
misused amounts and return to the State or State designated
entity any such amounts that remain unused or uncommitted for
use. The remedies under this clause are in addition to any
other remedies that may be available under law.
``(ii) Determination.--A determination is made in
accordance with this clause if the determination is made by
the Secretary or made by the State or State designated
entity, provided that--

``(I) the State or State designated entity provides
notification of the determination to the Secretary for
review, in the discretion of the Secretary, of the
determination; and
``(II) the Secretary does not subsequently reverse the
determination.

``(2) Grantees.--
``(A) Report.--
``(i) In general.--The Secretary shall require each State
or State designated entity receiving grant amounts in any
given year under this section to submit a report, for such
year, to the Secretary that--

``(I) describes the activities funded under this section
during such year with such grant amounts; and
``(II) the manner in which the State or State designated
entity complied during such year with any allocation plan
established pursuant to subsection (c).

``(ii) Public availability.--The Secretary shall make such
reports pursuant to this subparagraph publicly available.
``(B) Misuse of funds.--If the Secretary determines, after
reasonable notice and opportunity for hearing, that a State
or State designated entity has failed to comply substantially
with any provision of this section, and until the Secretary
is satisfied that there is no longer any such failure to
comply, the Secretary shall--
``(i) reduce the amount of assistance under this section to
the State or State designated entity by an amount equal to
the amount of grant amounts which were not used in accordance
with this section;
``(ii) require the State or State designated entity to
repay the Secretary any amount of the grant which was not
used in accordance with this section;
``(iii) limit the availability of assistance under this
section to the State or State designated entity to activities
or recipients not affected by such failure to comply; or
``(iv) terminate any assistance under this section to the
State or State designated entity.
``(f) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Extremely low-income renter household.--The term
`extremely low-income renter household' means a household
whose income is not in excess of 30 percent of the area
median income, with adjustments for smaller and larger
families, as determined by the Secretary.
``(2) Recipient.--The term `recipient' means an individual
or entity that receives assistance from a State or State
designated entity from amounts made available to the State or
State designated entity under this section.
``(3) Shortage of standard rental units both affordable and
available to extremely low-income renter households.--
``(A) In general.--The term `shortage of standard rental
units both affordable and available to extremely low-income
renter households' means for any State or other geographical
area the gap between--
``(i) the number of units with complete plumbing and
kitchen facilities with a rent that is 30 percent or less of
30 percent of the adjusted area median income as determined
by the Secretary that are occupied by extremely low-income
renter households or are vacant for rent; and
``(ii) the number of extremely low-income renter
households.
``(B) Rule of construction.--If the number of units
described in subparagraph (A)(i) exceeds the number of
extremely low-income households as described in subparagraph
(A)(ii), there is no shortage.
``(4) Shortage of standard rental units both affordable and
available to very low-income renter households.--
``(A) In general.--The term `shortage of standard rental
units both affordable and available to very low-income renter
households' means for any State or other geographical area
the gap between--
``(i) the number of units with complete plumbing and
kitchen facilities with a rent that is 30 percent or less of
50 percent of the adjusted area median income as determined
by the Secretary that are occupied by very low-income renter
households or are vacant for rent; and
``(ii) the number of very low-income renter households.
``(B) Rule of construction.--If the number of units
described in subparagraph (A)(i) exceeds the number of very
low-income households as described in subparagraph (A)(ii),
there is no shortage.
``(5) Very low-income family.--The term `very low-income
family' has the meaning given such term in section 1303,
except that such term includes any family that resides in a
rural area that has an income that does not exceed the
poverty line (as such term is defined in section 673(2) of
the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C.
9902(2)), including any revision required by such section)
applicable to a family of the size involved.
``(6) Very low-income renter households.--The term `very
low-income renter households' means a household whose income
is in excess of 30 percent but not greater than 50 percent of
the area median income, with adjustments for smaller and
larger families, as determined by the Secretary.
``(g) Regulations.--
``(1) In general.--The Secretary shall issue regulations to
carry out this section.
``(2) Required contents.--The regulations issued under this
subsection shall include--
``(A) a requirement that the Secretary ensure that the use
of grant amounts under this section by States or State
designated

[[Page S5857]]

entities is audited not less than annually to ensure
compliance with this section;
``(B) authority for the Secretary to audit, provide for an
audit, or otherwise verify a State or State designated
entity's activities to ensure compliance with this section;
``(C) requirements for a process for application to, and
selection by, each State or State designated entity for
activities meeting the State or State designated entity's
priority housing needs to be funded with grant amounts under
this section, which shall provide for priority in funding to
be based upon--
``(i) geographic diversity;
``(ii) ability to obligate amounts and undertake activities
so funded in a timely manner;
``(iii) in the case of rental housing projects under
subsection (c)(7)(A), the extent to which rents for units in
the project funded are affordable, especially for extremely
low-income families;
``(iv) in the case of rental housing projects under
subsection (c)(7)(A), the extent of the duration for which
such rents will remain affordable;
``(v) the extent to which the application makes use of
other funding sources; and
``(vi) the merits of an applicant's proposed eligible
activity;
``(D) requirements to ensure that grant amounts provided to
a State or State designated entity under this section that
are used for rental housing under subsection (c)(7)(A) are
used only for the benefit of extremely low- and very low-
income families; and
``(E) requirements and standards for establishment, by a
State or State designated entity, for use of grant amounts in
2009 and subsequent years of performance goals, benchmarks,
and timetables for the production, preservation, and
rehabilitation of affordable rental and homeownership housing
with such grant amounts.
``(h) Affordable Housing Trust Fund.--If, after the date of
enactment of the Federal Housing Finance Regulatory Reform
Act of 2008, in any year, there is enacted any provision of
Federal law establishing an affordable housing trust fund
other than under this title for use only for grants to
provide affordable rental housing and affordable
homeownership opportunities, and the subsequent year is a
year referred to in subsection (c), the Secretary shall in
such subsequent year and any remaining years referred to in
subsection (c) transfer to such affordable housing trust fund
the aggregate amount allocated pursuant to subsection (c) in
such year. Notwithstanding any other provision of law,
assistance provided using amounts transferred to such
affordable housing trust fund pursuant to this subsection may
not be used for any of the activities specified in clauses
(i) through (vi) of subsection (c)(9)(D).
``(i) Funding Accountability and Transparency.--Any grant
under this section to a grantee by a State or State
designated entity, any assistance provided to a recipient by
a State or State designated entity, and any grant, award, or
other assistance from an affordable housing trust fund
referred to in subsection (h) shall be considered a Federal
award for purposes of the Federal Funding Accountability and
Transparency Act of 2006 (31 U.S.C. 6101 note). Upon the
request of the Director of the Office of Management and
Budget, the Secretary shall obtain and provide such
information regarding any such grants, assistance, and awards
as the Director of the Office of Management and Budget
considers necessary to comply with the requirements of such
Act, as applicable, pursuant to the preceding sentence.

``SEC. 1339. CAPITAL MAGNET FUND.

``(a) Establishment.--There is established in the Treasury
of the United States a trust fund to be known as the Capital
Magnet Fund, which shall be a special account within the
Community Development Financial Institutions Fund.
``(b) Deposits to Trust Fund.--The Capital Magnet Fund
shall consist of--
``(1) any amounts transferred to the Fund pursuant to
section 1337; and
``(2) any amounts as are or may be appropriated,
transferred, or credited to such Fund under any other
provisions of law.
``(c) Expenditures From Trust Fund.--Amounts in the Capital
Magnet Fund shall be available to the Secretary of the
Treasury to carry out a competitive grant program to attract
private capital for and increase investment in--
``(1) the development, preservation, rehabilitation, or
purchase of affordable housing for primarily extremely low-,
very low-, and low-income families; and
``(2) economic development activities or community service
facilities, such as day care centers, workforce development
centers, and health care clinics, which in conjunction with
affordable housing activities implement a concerted strategy
to stabilize or revitalize a low-income area or underserved
rural area.
``(d) Federal Assistance.--All assistance provided using
amounts in the Capital Magnet Fund shall be considered to be
Federal financial assistance.
``(e) Eligible Grantees.--A grant under this section may be
made, pursuant to such requirements as the Secretary of the
Treasury shall establish for experience and success in
attracting private financing and carrying out the types of
activities proposed under the application of the grantee,
only to--
``(1) a Treasury certified community development financial
institution; or
``(2) a nonprofit organization having as 1 of its principal
purposes the development or management of affordable housing.
``(f) Eligible Uses.--Grant amounts awarded from the
Capital Magnet Fund pursuant to this section may be used for
the purposes described in paragraphs (1) and (2) of
subsection (c), including for the following uses:
``(1) To provide loan loss reserves.
``(2) To capitalize a revolving loan fund.
``(3) To capitalize an affordable housing fund.
``(4) To capitalize a fund to support activities described
in subsection (c)(2).
``(5) For risk-sharing loans.
``(g) Applications.--
``(1) In general.--The Secretary of the Treasury shall
provide, in a competitive application process established by
regulation, for eligible grantees under subsection (e) to
submit applications for Capital Magnet Fund grants to the
Secretary at such time and in such manner as the Secretary
shall determine.
``(2) Content of application.--The application required
under paragraph (1) shall include a detailed description of--
``(A) the types of affordable housing, economic, and
community revitalization projects that support or sustain
residents of an affordable housing project funded by a grant
under this section for which such grant amounts would be
used, including the proposed use of eligible grants as
authorized under this section;
``(B) the types, sources, and amounts of other funding for
such projects; and
``(C) the expected time frame of any grant used for such
project.
``(h) Grant Limitation.--
``(1) In general.--Any 1 eligible grantee and its
subsidiaries and affiliates may not be awarded more than 15
percent of the aggregate funds available for grants during
any year from the Capital Magnet Fund.
``(2) Geographic diversity.--
``(A) Goal.--The Secretary of the Treasury shall seek to
fund activities in geographically diverse areas of economic
distress, including metropolitan and underserved rural areas
in every State.
``(B) Diversity defined.--For purposes of this paragraph,
geographic diversity includes those areas that meet objective
criteria of economic distress developed by the Secretary of
the Treasury, which may include--
``(i) the percentage of low-income families or the extent
of poverty;
``(ii) the rate of unemployment or underemployment;
``(iii) extent of blight and disinvestment;
``(iv) projects that target extremely low-, very low-, and
low-income families in or outside a designated economic
distress area; or
``(v) any other criteria designated by the Secretary of the
Treasury.
``(3) Leverage of funds.--Each grant from the Capital
Magnet Fund awarded under this section shall be reasonably
expected to result in eligible housing, or economic and
community development projects that support or sustain an
affordable housing project funded by a grant under this
section whose aggregate costs total at least 10 times the
grant amount.
``(4) Commitment for use deadline.--Amounts made available
for grants under this section shall be committed for use
within 2 years of the date of such allocation. The Secretary
of the Treasury shall recapture into the Capital Magnet Fund
any amounts not so used or committed for use and allocate
such amounts in the first year after such recapture.
``(5) Lobbying restrictions.--No assistance or amounts made
available under this section may be expended by an eligible
grantee to pay any person to influence or attempt to
influence any agency, elected official, officer or employee
of a State or local government in connection with the making,
award, extension, continuation, renewal, amendment, or
modification of any State or local government contract,
grant, loan, or cooperative agreement as such terms are
defined in section 1352 of title 31, United States Code.
``(6) Prohibition of consideration of use for meeting
housing goals or duty to serve.--In determining the
compliance of the enterprises with the housing goals under
this section and the duty to serve underserved markets under
section 1335, the Director of the Federal Housing Finance
Agency may not consider any Capital Magnet Fund amounts used
under this section for eligible activities under subsection
(f). The Director of the Federal Housing Finance Agency shall
give credit toward the achievement of such housing goals and
such duty to serve underserved markets to purchases by the
enterprises of mortgages for housing that receives funding
from Capital Magnet Fund grant amounts, but only to the
extent that such purchases by the enterprises are funded
other than with such grant amounts.
``(7) Accountability of recipients and grantees.--
``(A) Tracking of funds.--The Secretary of the Treasury
shall--
``(i) require each grantee to develop and maintain a system
to ensure that each recipient of assistance from the Capital
Magnet Fund uses such amounts in accordance with this
section, the regulations issued under this section, and any
requirements or conditions under which such amounts were
provided; and
``(ii) establish minimum requirements for agreements,
between the grantee and the Capital Magnet Fund, regarding
assistance

[[Page S5858]]

from the Capital Magnet Fund, which shall include--

``(I) appropriate periodic financial and project reporting,
record retention, and audit requirements for the duration of
the grant to the recipient to ensure compliance with the
limitations and requirements of this section and the
regulations under this section; and
``(II) any other requirements that the Secretary determines
are necessary to ensure appropriate grant administration and
compliance.

``(B) Misuse of funds.--If the Secretary of the Treasury
determines, after reasonable notice and opportunity for
hearing, that a grantee has failed to comply substantially
with any provision of this section and until the Secretary is
satisfied that there is no longer any such failure to comply,
the Secretary shall--
``(i) reduce the amount of assistance under this section to
the grantee by an amount equal to the amount of Capital
Magnet Fund grant amounts which were not used in accordance
with this section;
``(ii) require the grantee to repay the Secretary any
amount of the Capital Magnet Fund grant amounts which were
not used in accordance with this section;
``(iii) limit the availability of assistance under this
section to the grantee to activities or recipients not
affected by such failure to comply; or
``(iv) terminate any assistance under this section to the
grantee.
``(i) Periodic Reports.--
``(1) In general.--The Secretary of the Treasury shall
submit a report, on a periodic basis, to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives describing the activities to be funded under
this section.
``(2) Reports available to public.--The Secretary of the
Treasury shall make the reports required under paragraph (1)
publicly available.
``(j) Regulations.--
``(1) In general.--The Secretary of the Treasury shall
issue regulations to carry out this section.
``(2) Required contents.--The regulations issued under this
subsection shall include--
``(A) authority for the Secretary to audit, provide for an
audit, or otherwise verify an enterprise's activities, to
ensure compliance with this section;
``(B) a requirement that the Secretary ensure that the
allocation of each enterprise is audited not less than
annually to ensure compliance with this section; and
``(C) requirements for a process for application to, and
selection by, the Secretary for activities to be funded with
amounts from the Capital Magnet Fund, which shall provide
that--
``(i) funds be fairly distributed to urban, suburban, and
rural areas; and
``(ii) selection shall be based upon specific criteria,
including a prioritization of funding based upon--

``(I) the ability to use such funds to generate additional
investments;
``(II) affordable housing need (taking into account the
distinct needs of different regions of the country); and
``(III) ability to obligate amounts and undertake
activities so funded in a timely manner.''.

SEC. 1132. FINANCIAL EDUCATION AND COUNSELING.

(a) Goals.--Financial education and counseling under this
section shall have the goal of--
(1) increasing the financial knowledge and decision making
capabilities of prospective homebuyers;
(2) assisting prospective homebuyers to develop monthly
budgets, build personal savings, finance or plan for major
purchases, reduce their debt, improve their financial
stability, and set and reach their financial goals;
(3) helping prospective homebuyers to improve their credit
scores by understanding the relationship between their credit
histories and their credit scores; and
(4) educating prospective homebuyers about the options
available to build savings for short- and long-term goals.
(b) Grants.--
(1) In general.--The Secretary of the Treasury (in this
section referred to as the ``Secretary'') shall make grants
to eligible organizations to enable such organizations to
provide a range of financial education and counseling
services to prospective homebuyers.
(2) Selection.--The Secretary shall select eligible
organizations to receive assistance under this section based
on their experience and ability to provide financial
education and counseling services that result in documented
positive behavioral changes.
(c) Eligible Organizations.--
(1) In general.--For purposes of this section, the term
``eligible organization'' means an organization that is--
(A) certified in accordance with section 106(e)(1) of the
Housing and Urban Development Act of 1968 (12 U.S.C.
1701x(e)); or
(B) certified by the Office of Financial Education of the
Department of the Treasury for purposes of this section, in
accordance with paragraph (2).
(2) OFE certification.--To be certified by the Office of
Financial Education for purposes of this section, an eligible
organization shall be--
(A) a housing counseling agency certified by the Secretary
of Housing and Urban Development under section 106(e) of the
Housing and Urban Development Act of 1968;
(B) a State, local, or tribal government agency;
(C) a community development financial institution (as
defined in section 103(5) of the Community Development
Banking and Financial Institutions Act of 1994 (12 U.S.C.
4702(5)) or a credit union; or
(D) any collaborative effort of entities described in any
of subparagraphs (A) through (C).
(d) Authority for Pilot Projects.--
(1) In general.--The Secretary of the Treasury shall
authorize not more than 5 pilot project grants to eligible
organizations under subsection (c) in order to--
(A) carry out the services under this section; and
(B) provide such other services that will improve the
financial stability and economic condition of low- and
moderate-income and low-wealth individuals.
(2) Goal.--The goal of the pilot project grants under this
subsection is to--
(A) identify successful methods resulting in positive
behavioral change for financial empowerment; and
(B) establish program models for organizations to carry out
effective counseling services.
(e) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary such sums as are
necessary to carry out this section and for the provision of
additional financial educational services.
(f) Study and Report on Effectiveness and Impact.--
(1) In general.--The Comptroller General of the United
States shall conduct a study on the effectiveness and impact
of the grant program established under this section. Not
later than 3 years after the date of enactment of this Act,
the Comptroller General shall submit a report on the results
of such study to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives.
(2) Content of study.--The study required under paragraph
(1) shall include an evaluation of the following:
(A) The effectiveness of the grant program established
under this section in improving the financial situation of
homeowners and prospective homebuyers served by the grant
program.
(B) The extent to which financial education and counseling
services have resulted in positive behavioral changes.
(C) The effectiveness and quality of the eligible
organizations providing financial education and counseling
services under the grant program.
(g) Regulations.--The Secretary is authorized to promulgate
such regulations as may be necessary to implement and
administer the grant program authorized by this section.

SEC. 1133. TRANSFER AND RIGHTS OF CERTAIN HUD EMPLOYEES.

(a) Transfer.--Each employee of the Department of Housing
and Urban Development whose position responsibilities
primarily involve the establishment and enforcement of the
housing goals under subpart B of part 2 of subtitle A of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4561 et seq.) shall be transferred to
the Federal Housing Finance Agency for employment, not later
than the effective date of the Federal Housing Finance
Regulatory Reform Act of 2008, and such transfer shall be
deemed a transfer of function for purposes of section 3503 of
title 5, United States Code.
(b) Guaranteed Positions.--
(1) In general.--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.
(2) No involuntary separation or reduction.--An employee
transferred under subsection (a) holding a permanent position
on the day immediately preceding the transfer may not be
involuntarily separated or reduced in grade or compensation
during the 12-month period beginning on the date of transfer,
except for cause, or, in the case of a temporary employee,
separated in accordance with the terms of the appointment of
the employee.
(c) Appointment Authority for Excepted and Senior Executive
Service Employees.--
(1) In general.--In the case of an employee occupying a
position in the excepted service or the Senior Executive
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 Director may decline a
transfer of authority under paragraph (1) to the extent that
such authority relates to--
(A) a position excepted from the competitive service
because of its confidential, policymaking, policy-
determining, or policy-advocating character; or
(B) a noncareer position in the Senior Executive Service
(within the meaning of section 3132(a)(7) of title 5, United
States Code).
(d) Reorganization.--If the Director determines, after the
end of the 1-year period beginning on the effective date of
the Federal Housing Finance Regulatory Reform Act of 2008,
that a reorganization of the combined workforce is required,
that reorganization shall be deemed a major reorganization
for

[[Page S5859]]

purposes of affording affected employee retirement under
section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States
Code.
(e) Employee Benefit Programs.--
(1) In general.--Any employee described under subsection
(a) accepting employment with the Agency 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 Department of
Housing and Urban Development, as applicable, including
insurance, to which such employee belongs on such effective
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 Director of
the Federal Housing Finance Agency.
(2) Cost differential.--
(A) In general.--The difference in the costs between the
benefits which would have been provided by the Department of
Housing and Urban Development and those provided by this
section shall be paid by the Director.
(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 Director, 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.

Subtitle C--Prompt Corrective Action

SEC. 1141. CRITICAL CAPITAL LEVELS.

(a) In General.--Section 1363 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4613) is amended--
(1) by striking ``For'' and inserting ``(a) Enterprises.--
For''; and
(2) by adding at the end the following new subsection:
``(b) Federal Home Loan Banks.--
``(1) In general.--For purposes of this subtitle, the
critical capital level for each Federal Home Loan Bank shall
be such amount of capital as the Director shall, by
regulation, require.
``(2) Consideration of other critical capital levels.--In
establishing the critical capital level under paragraph (1)
for the Federal Home Loan Banks, the Director shall take due
consideration of the critical capital level established under
subsection (a) for the enterprises, with such modifications
as the Director determines to be appropriate to reflect the
difference in operations between the banks and the
enterprises.''.
(b) Regulations.--Not later than the expiration of the 180-
day period beginning on the date of enactment of this Act,
the Director of the Federal Housing Finance Agency shall
issue regulations pursuant to section 1363(b) of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (as added by this section) establishing the critical
capital level under such section.

SEC. 1142. CAPITAL CLASSIFICATIONS.

(a) In General.--Section 1364 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4614) is amended--
(1) in the heading for subsection (a) by striking ``In
General'' and inserting ``Enterprises'';
(2) in subsection (c)--
(A) by striking ``subsection (b)'' and inserting
``subsection (c)'';
(B) by striking ``enterprises'' and inserting ``regulated
entities''; and
(C) by striking the last sentence;
(3) by redesignating subsections (c) (as so amended by
paragraph (2) of this subsection) and (d) as subsections (d)
and (f), respectively;
(4) by striking subsection (b) and inserting the following:
``(b) Federal Home Loan Banks.--
``(1) Establishment and criteria.--For purposes of this
subtitle, the Director shall, by regulation--
``(A) establish the capital classifications specified under
paragraph (2) for the Federal Home Loan Banks;
``(B) establish criteria for each such capital
classification based on the amount and types of capital held
by a bank and the risk-based, minimum, and critical capital
levels for the banks and taking due consideration of the
capital classifications established under subsection (a) for
the enterprises, with such modifications as the Director
determines to be appropriate to reflect the difference in
operations between the banks and the enterprises; and
``(C) shall classify the Federal Home Loan Banks according
to such capital classifications.
``(2) Classifications.--The capital classifications
specified under this paragraph are--
``(A) adequately capitalized;
``(B) undercapitalized;
``(C) significantly undercapitalized; and
``(D) critically undercapitalized.
``(c) Discretionary Classification.--
``(1) Grounds for reclassification.--The Director may
reclassify a regulated entity under paragraph (2) if--
``(A) at any time, the Director determines in writing that
the regulated entity is engaging in conduct that could result
in a rapid depletion of core or total capital or the value of
collateral pledged as security has decreased significantly or
that the value of the property subject to any mortgage held
by the regulated entity (or securitized in the case of an
enterprise) has decreased significantly;
``(B) after notice and an opportunity for hearing, the
Director determines that the regulated entity is in an unsafe
or unsound condition; or
``(C) pursuant to section 1371(b), the Director deems the
regulated entity to be engaging in an unsafe or unsound
practice.
``(2) Reclassification.--In addition to any other action
authorized under this title, including the reclassification
of a regulated entity for any reason not specified in this
subsection, if the Director takes any action described in
paragraph (1), the Director may classify a regulated entity--
``(A) as undercapitalized, if the regulated entity is
otherwise classified as adequately capitalized;
``(B) as significantly undercapitalized, if the regulated
entity is otherwise classified as undercapitalized; and
``(C) as critically undercapitalized, if the regulated
entity is otherwise classified as significantly
undercapitalized.''; and
(5) by inserting after subsection (d) (as so redesignated
by paragraph (3) of this subsection), the following new
subsection:
``(e) Restriction on Capital Distributions.--
``(1) In general.--A regulated entity shall make no capital
distribution if, after making the distribution, the regulated
entity would be undercapitalized.
``(2) Exception.--Notwithstanding paragraph (1), the
Director may permit a regulated entity, to the extent
appropriate or applicable, to repurchase, redeem, retire, or
otherwise acquire shares or ownership interests if the
repurchase, redemption, retirement, or other acquisition--
``(A) is made in connection with the issuance of additional
shares or obligations of the regulated entity in at least an
equivalent amount; and
``(B) will reduce the financial obligations of the
regulated entity or otherwise improve the financial condition
of the entity.''.
(b) Regulations.--Not later than the expiration of the 180-
day period beginning on the date of enactment of this Act,
the Director of the Federal Housing Finance Agency shall
issue regulations to carry out section 1364(b) of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (as added by this section), relating to capital
classifications for the Federal Home Loan Banks.

SEC. 1143. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED
REGULATED ENTITIES.

Section 1365 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4615) is
amended--
(1) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(2) by striking ``An enterprise'' each place that term
appears and inserting ``A regulated entity'';
(3) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(4) in subsection (a)--
(A) by redesignating paragraphs (1) and (2) as paragraphs
(2) and (3), respectively;
(B) by inserting before paragraph (2), as redesignated, the
following:
``(1) Required monitoring.--The Director shall--
``(A) closely monitor the condition of any undercapitalized
regulated entity;
``(B) closely monitor compliance with the capital
restoration plan, restrictions, and requirements imposed on
an undercapitalized regulated entity under this section; and
``(C) periodically review the plan, restrictions, and
requirements applicable to an undercapitalized regulated
entity to determine whether the plan, restrictions, and
requirements are achieving the purpose of this section.'';
and
(C) by adding at the end the following:
``(4) Restriction of asset growth.--An undercapitalized
regulated entity shall not permit its average total assets
during any calendar quarter to exceed its average total
assets during the preceding calendar quarter, unless--
``(A) the Director has accepted the capital restoration
plan of the regulated entity;
``(B) any increase in total assets is consistent with the
capital restoration plan; and
``(C) the ratio of tangible equity to assets of the
regulated entity increases during the calendar quarter at a
rate sufficient to enable the regulated entity to become
adequately capitalized within a reasonable time.
``(5) Prior approval of acquisitions and new activities.--
An undercapitalized regulated entity shall not, directly or
indirectly, acquire any interest in any entity or engage in
any new activity, unless--
``(A) the Director has accepted the capital restoration
plan of the regulated entity, the regulated entity is
implementing the plan, and the Director determines that the
proposed action is consistent with and will further the
achievement of the plan; or
``(B) the Director determines that the proposed action will
further the purpose of this subtitle.'';
(5) in subsection (b)--
(A) in the subsection heading, by striking
``Discretionary'';
(B) in the matter preceding paragraph (1), by striking
``may'' and inserting ``shall''; and
(C) in paragraph (2)--
(i) by striking ``make, in good faith, reasonable efforts
necessary to''; and
(ii) by striking the period at the end and inserting ``in
any material respect.''; and

[[Page S5860]]

(6) by striking subsection (c) and inserting the following:
``(c) Other Discretionary Safeguards.--The Director may
take, with respect to an undercapitalized regulated entity,
any of the actions authorized to be taken under section 1366
with respect to a significantly undercapitalized regulated
entity, if the Director determines that such actions are
necessary to carry out the purpose of this subtitle.''.

SEC. 1144. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED REGULATED ENTITIES.

Section 1366 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4616) is
amended--
(1) in subsection (a)(2), by striking ``undercapitalized
enterprise'' and inserting ``undercapitalized'';
(2) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(3) by striking ``An enterprise'' each place that term
appears and inserting ``A regulated entity'';
(4) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(5) in subsection (b)--
(A) in the subsection heading, by striking ``Discretionary
Supervisory'' and inserting ``Specific'';
(B) in the matter preceding paragraph (1), by striking
``may, at any time, take any'' and inserting ``shall carry
out this section by taking, at any time, 1 or more'';
(C) by striking paragraph (6);
(D) by redesignating paragraph (5) as paragraph (6);
(E) by inserting after paragraph (4) the following:
``(5) Improvement of management.--Take 1 or more of the
following actions:
``(A) New election of board.--Order a new election for the
board of directors of the regulated entity.
``(B) Dismissal of directors or executive officers.--
Require the regulated entity to dismiss from office any
director or executive officer who had held office for more
than 180 days immediately before the date on which the
regulated entity became undercapitalized. Dismissal under
this subparagraph shall not be construed to be a removal
pursuant to the enforcement powers of the Director under
section 1377.
``(C) Employ qualified executive officers.--Require the
regulated entity to employ qualified executive officers (who,
if the Director so specifies, shall be subject to approval by
the Director).''; and
(F) by adding at the end the following:
``(7) Other action.--Require the regulated entity to take
any other action that the Director determines will better
carry out the purpose of this section than any of the other
actions specified in this subsection.''; and
(6) by striking subsection (c) and inserting the following:
``(c) Restriction on Compensation of Executive Officers.--A
regulated entity that is classified as significantly
undercapitalized in accordance with section 1364 may not,
without prior written approval by the Director--
``(1) pay any bonus to any executive officer; or
``(2) provide compensation to any executive officer at a
rate exceeding the average rate of compensation of that
officer (excluding bonuses, stock options, and profit
sharing) during the 12 calendar months preceding the calendar
month in which the regulated entity became significantly
undercapitalized.''.

SEC. 1145. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED
REGULATED ENTITIES.

(a) In General.--Section 1367 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4617) is amended to read as follows:

``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED
REGULATED ENTITIES.

``(a) Appointment of the Agency as Conservator or
Receiver.--
``(1) In general.--Notwithstanding any other provision of
Federal or State law, the Director may appoint the Agency as
conservator or receiver for a regulated entity in the manner
provided under paragraph (2) or (4). All references to the
conservator or receiver under this section are references to
the Agency acting as conservator or receiver.
``(2) Discretionary appointment.--The Agency may, at the
discretion of the Director, be appointed conservator or
receiver for the purpose of reorganizing, rehabilitating, or
winding up the affairs of a regulated entity.
``(3) Grounds for discretionary appointment of conservator
or receiver.--The grounds for appointing conservator or
receiver for any regulated entity under paragraph (2) are as
follows:
``(A) Substantial dissipation.--Substantial dissipation of
assets or earnings due to--
``(i) any violation of any provision of Federal or State
law; or
``(ii) any unsafe or unsound practice.
``(B) Unsafe or unsound condition.--An unsafe or unsound
condition to transact business.
``(C) Cease and desist orders.--Any willful violation of a
cease and desist order that has become final.
``(D) Concealment.--Any concealment of the books, papers,
records, or assets of the regulated entity, or any refusal to
submit the books, papers, records, or affairs of the
regulated entity, for inspection to any examiner or to any
lawful agent of the Director.
``(E) Inability to meet obligations.--The regulated entity
is likely to be unable to pay its obligations or meet the
demands of its creditors in the normal course of business.
``(F) Losses.--The regulated entity has incurred or is
likely to incur losses that will deplete all or substantially
all of its capital, and there is no reasonable prospect for
the regulated entity to become adequately capitalized (as
defined in section 1364(a)(1)).
``(G) Violations of law.--Any violation of any law or
regulation, or any unsafe or unsound practice or condition
that is likely to--
``(i) cause insolvency or substantial dissipation of assets
or earnings; or
``(ii) weaken the condition of the regulated entity.
``(H) Consent.--The regulated entity, by resolution of its
board of directors or its shareholders or members, consents
to the appointment.
``(I) Undercapitalization.--The regulated entity is
undercapitalized or significantly undercapitalized (as
defined in section 1364(a)(3)), and--
``(i) has no reasonable prospect of becoming adequately
capitalized;
``(ii) fails to become adequately capitalized, as required
by--

``(I) section 1365(a)(1) with respect to a regulated
entity; or
``(II) section 1366(a)(1) with respect to a significantly
undercapitalized regulated entity;

``(iii) fails to submit a capital restoration plan
acceptable to the Agency within the time prescribed under
section 1369C; or
``(iv) materially fails to implement a capital restoration
plan submitted and accepted under section 1369C.
``(J) Critical undercapitalization.--The regulated entity
is critically undercapitalized, as defined in section
1364(a)(4).
``(K) Money laundering.--The Attorney General notifies the
Director in writing that the regulated entity has been found
guilty of a criminal offense under section 1956 or 1957 of
title 18, United States Code, or section 5322 or 5324 of
title 31, United States Code.
``(4) Mandatory receivership.--
``(A) In general.--The Director shall appoint the Agency as
receiver for a regulated entity if the Director determines,
in writing, that--
``(i) the assets of the regulated entity are, and during
the preceding 60 calendar days have been, less than the
obligations of the regulated entity to its creditors and
others; or
``(ii) the regulated entity is not, and during the
preceding 60 calendar days has not been, generally paying the
debts of the regulated entity (other than debts that are the
subject of a bona fide dispute) as such debts become due.
``(B) Periodic determination required for critically
undercapitalized regulated entity.--If a regulated entity is
critically undercapitalized, the Director shall make a
determination, in writing, as to whether the regulated entity
meets the criteria specified in clause (i) or (ii) of
subparagraph (A)--
``(i) not later than 30 calendar days after the regulated
entity initially becomes critically undercapitalized; and
``(ii) at least once during each succeeding 30-calendar day
period.
``(C) Determination not required if receivership already in
place.--Subparagraph (B) does not apply with respect to a
regulated entity in any period during which the Agency serves
as receiver for the regulated entity.
``(D) Receivership terminates conservatorship.--The
appointment of the Agency as receiver of a regulated entity
under this section shall immediately terminate any
conservatorship established for the regulated entity under
this title.
``(5) Judicial review.--
``(A) In general.--If the Agency is appointed conservator
or receiver under this section, the regulated entity may,
within 30 days of such appointment, bring an action in the
United States district court for the judicial district in
which the home office of such regulated entity is located, or
in the United States District Court for the District of
Columbia, for an order requiring the Agency to remove itself
as conservator or receiver.
``(B) Review.--Upon the filing of an action under
subparagraph (A), the court shall, upon the merits, dismiss
such action or direct the Agency to remove itself as such
conservator or receiver.
``(6) Directors not liable for acquiescing in appointment
of conservator or receiver.--The members of the board of
directors of a regulated entity shall not be liable to the
shareholders or creditors of the regulated entity for
acquiescing in or consenting in good faith to the appointment
of the Agency as conservator or receiver for that regulated
entity.
``(7) Agency not subject to any other federal agency.--When
acting as conservator or receiver, the Agency shall not be
subject to the direction or supervision of any other agency
of the United States or any State in the exercise of the
rights, powers, and privileges of the Agency.
``(b) Powers and Duties of the Agency as Conservator or
Receiver.--
``(1) Rulemaking authority of the agency.--The Agency may
prescribe such regulations as the Agency determines to be
appropriate regarding the conduct of conservatorships or
receiverships.
``(2) General powers.--
``(A) Successor to regulated entity.--The Agency shall, as
conservator or receiver,

[[Page S5861]]

and by operation of law, immediately succeed to--
``(i) all rights, titles, powers, and privileges of the
regulated entity, and of any stockholder, officer, or
director of such regulated entity with respect to the
regulated entity and the assets of the regulated entity; and
``(ii) title to the books, records, and assets of any other
legal custodian of such regulated entity.
``(B) Operate the regulated entity.--The Agency may, as
conservator or receiver--
``(i) take over the assets of and operate the regulated
entity with all the powers of the shareholders, the
directors, and the officers of the regulated entity and
conduct all business of the regulated entity;
``(ii) collect all obligations and money due the regulated
entity;
``(iii) perform all functions of the regulated entity in
the name of the regulated entity which are consistent with
the appointment as conservator or receiver;
``(iv) preserve and conserve the assets and property of the
regulated entity; and
``(v) provide by contract for assistance in fulfilling any
function, activity, action, or duty of the Agency as
conservator or receiver.
``(C) Functions of officers, directors, and shareholders of
a regulated entity.--The Agency may, by regulation or order,
provide for the exercise of any function by any stockholder,
director, or officer of any regulated entity for which the
Agency has been named conservator or receiver.
``(D) Powers as conservator.--The Agency may, as
conservator, take such action as may be--
``(i) necessary to put the regulated entity in a sound and
solvent condition; and
``(ii) appropriate to carry on the business of the
regulated entity and preserve and conserve the assets and
property of the regulated entity.
``(E) Additional powers as receiver.--In any case in which
the Agency is acting as receiver, the Agency shall place the
regulated entity in liquidation and proceed to realize upon
the assets of the regulated entity in such manner as the
Agency deems appropriate, including through the sale of
assets, the transfer of assets to a limited-life regulated
entity established under subsection (i), or the exercise of
any other rights or privileges granted to the Agency under
this paragraph.
``(F) Organization of new enterprise.--The Agency shall, as
receiver for an enterprise, organize a successor enterprise
that will operate pursuant to subsection (i).
``(G) Transfer or sale of assets and liabilities.--The
Agency may, as conservator or receiver, transfer or sell any
asset or liability of the regulated entity in default, and
may do so without any approval, assignment, or consent with
respect to such transfer or sale.
``(H) Payment of valid obligations.--The Agency, as
conservator or receiver, shall, to the extent of proceeds
realized from the performance of contracts or sale of the
assets of a regulated entity, pay all valid obligations of
the regulated entity that are due and payable at the time of
the appointment of the Agency as conservator or receiver, in
accordance with the prescriptions and limitations of this
section.
``(I) Subpoena authority.--
``(i) In general.--

``(I) Agency authority.--The Agency may, as conservator or
receiver, and for purposes of carrying out any power,
authority, or duty with respect to a regulated entity
(including determining any claim against the regulated entity
and determining and realizing upon any asset of any person in
the course of collecting money due the regulated entity),
exercise any power established under section 1348.
``(II) Applicability of law.--The provisions of section
1348 shall apply with respect to the exercise of any power
under this subparagraph, in the same manner as such
provisions apply under that section.

``(ii) Subpoena.--A subpoena or subpoena duces tecum may be
issued under clause (i) only by, or with the written approval
of, the Director, or the designee of the Director.
``(iii) Rule of construction.--This subsection shall not be
construed to limit any rights that the Agency, in any
capacity, might otherwise have under section 1317 or 1379B.
``(J) Incidental powers.--The Agency may, as conservator or
receiver--
``(i) exercise all powers and authorities specifically
granted to conservators or receivers, respectively, under
this section, and such incidental powers as shall be
necessary to carry out such powers; and
``(ii) take any action authorized by this section, which
the Agency determines is in the best interests of the
regulated entity or the Agency.
``(K) Other provisions.--
``(i) Shareholders and creditors of failed regulated
entity.--Notwithstanding any other provision of law, the
appointment of the Agency as receiver for a regulated entity
pursuant to paragraph (2) or (4) of subsection (a) and its
succession, by operation of law, to the rights, titles,
powers, and privileges described in subsection (b)(2)(A)
shall terminate all rights and claims that the stockholders
and creditors of the regulated entity may have against the
assets or charter of the regulated entity or the Agency
arising as a result of their status as stockholders or
creditors, except for their right to payment, resolution, or
other satisfaction of their claims, as permitted under
subsections (b)(9), (c), and (e).
``(ii) Assets of regulated entity.--Notwithstanding any
other provision of law, for purposes of this section, the
charter of a regulated entity shall not be considered an
asset of the regulated entity.
``(3) Authority of receiver to determine claims.--
``(A) In general.--The Agency may, as receiver, determine
claims in accordance with the requirements of this subsection
and any regulations prescribed under paragraph (4).
``(B) Notice requirements.--The receiver, in any case
involving the liquidation or winding up of the affairs of a
closed regulated entity, shall--
``(i) promptly publish a notice to the creditors of the
regulated entity to present their claims, together with
proof, to the receiver by a date specified in the notice
which shall be not less than 90 days after the date of
publication of such notice; and
``(ii) republish such notice approximately 1 month and 2
months, respectively, after the date of publication under
clause (i).
``(C) Mailing required.--The receiver shall mail a notice
similar to the notice published under subparagraph (B)(i) at
the time of such publication to any creditor shown on the
books of the regulated entity--
``(i) at the last address of the creditor appearing in such
books; or
``(ii) upon discovery of the name and address of a claimant
not appearing on the books of the regulated entity, within 30
days after the discovery of such name and address.
``(4) Rulemaking authority relating to determination of
claims.--Subject to subsection (c), the Director may
prescribe regulations regarding the allowance or disallowance
of claims by the receiver and providing for administrative
determination of claims and review of such determination.
``(5) Procedures for determination of claims.--
``(A) Determination period.--
``(i) In general.--Before the end of the 180-day period
beginning on the date on which any claim against a regulated
entity is filed with the Agency as receiver, the Agency shall
determine whether to allow or disallow the claim and shall
notify the claimant of any determination with respect to such
claim.
``(ii) Extension of time.--The period described in clause
(i) may be extended by a written agreement between the
claimant and the Agency.
``(iii) Mailing of notice sufficient.--The requirements of
clause (i) shall be deemed to be satisfied if the notice of
any determination with respect to any claim is mailed to the
last address of the claimant which appears--

``(I) on the books of the regulated entity;
``(II) in the claim filed by the claimant; or
``(III) in documents submitted in proof of the claim.

``(iv) Contents of notice of disallowance.--If any claim
filed under clause (i) is disallowed, the notice to the
claimant shall contain--

``(I) a statement of each reason for the disallowance; and
``(II) the procedures available for obtaining agency review
of the determination to disallow the claim or judicial
determination of the claim.

``(B) Allowance of proven claim.--The receiver shall allow
any claim received on or before the date specified in the
notice published under paragraph (3)(B)(i) by the receiver
from any claimant which is proved to the satisfaction of the
receiver.
``(C) Disallowance of claims filed after filing period.--
Claims filed after the date specified in the notice published
under paragraph (3)(B)(i), or the date specified under
paragraph (3)(C), shall be disallowed and such disallowance
shall be final.
``(D) Authority to disallow claims.--
``(i) In general.--The receiver may disallow any portion of
any claim by a creditor or claim of security, preference, or
priority which is not proved to the satisfaction of the
receiver.
``(ii) Payments to less than fully secured creditors.--In
the case of a claim of a creditor against a regulated entity
which is secured by any property or other asset of such
regulated entity, the receiver--

``(I) may treat the portion of such claim which exceeds an
amount equal to the fair market value of such property or
other asset as an unsecured claim against the regulated
entity; and
``(II) may not make any payment with respect to such
unsecured portion of the claim, other than in connection with
the disposition of all claims of unsecured creditors of the
regulated entity.

``(iii) Exceptions.--No provision of this paragraph shall
apply with respect to--

``(I) any extension of credit from any Federal Reserve
Bank, Federal Home Loan Bank, or the United States Treasury;
or
``(II) any security interest in the assets of the regulated
entity securing any such extension of credit.

``(E) No judicial review of determination pursuant to
subparagraph (d).--No court may review the determination of
the Agency under subparagraph (D) to disallow a claim.
``(F) Legal effect of filing.--
``(i) Statute of limitation tolled.--For purposes of any
applicable statute of limitations, the filing of a claim with
the receiver shall constitute a commencement of an action.
``(ii) No prejudice to other actions.--Subject to paragraph
(10), the filing of a claim

[[Page S5862]]

with the receiver shall not prejudice any right of the
claimant to continue any action which was filed before the
date of the appointment of the receiver, subject to the
determination of claims by the receiver.
``(6) Provision for judicial determination of claims.--
``(A) In general.--The claimant may file suit on a claim
(or continue an action commenced before the appointment of
the receiver) in the district or territorial court of the
United States for the district within which the principal
place of business of the regulated entity is located or the
United States District Court for the District of Columbia
(and such court shall have jurisdiction to hear such claim),
before the end of the 60-day period beginning on the earlier
of--
``(i) the end of the period described in paragraph
(5)(A)(i) with respect to any claim against a regulated
entity for which the Agency is receiver; or
``(ii) the date of any notice of disallowance of such claim
pursuant to paragraph (5)(A)(i).
``(B) Statute of limitations.--A claim shall be deemed to
be disallowed (other than any portion of such claim which was
allowed by the receiver), and such disallowance shall be
final, and the claimant shall have no further rights or
remedies with respect to such claim, if the claimant fails,
before the end of the 60-day period described under
subparagraph (A), to file suit on such claim (or continue an
action commenced before the appointment of the receiver).
``(7) Review of claims.--
``(A) Other review procedures.--
``(i) In general.--The Agency shall establish such
alternative dispute resolution processes as may be
appropriate for the resolution of claims filed under
paragraph (5)(A)(i).
``(ii) Criteria.--In establishing alternative dispute
resolution processes, the Agency shall strive for procedures
which are expeditious, fair, independent, and low cost.
``(iii) Voluntary binding or nonbinding procedures.--The
Agency may establish both binding and nonbinding processes
under this subparagraph, which may be conducted by any
government or private party. All parties, including the
claimant and the Agency, must agree to the use of the process
in a particular case.
``(B) Consideration of incentives.--The Agency shall seek
to develop incentives for claimants to participate in the
alternative dispute resolution process.
``(8) Expedited determination of claims.--
``(A) Establishment required.--The Agency shall establish a
procedure for expedited relief outside of the routine claims
process established under paragraph (5) for claimants who--
``(i) allege the existence of legally valid and enforceable
or perfected security interests in assets of any regulated
entity for which the Agency has been appointed receiver; and
``(ii) allege that irreparable injury will occur if the
routine claims procedure is followed.
``(B) Determination period.--Before the end of the 90-day
period beginning on the date on which any claim is filed in
accordance with the procedures established under subparagraph
(A), the Director shall--
``(i) determine--

``(I) whether to allow or disallow such claim; or
``(II) whether such claim should be determined pursuant to
the procedures established under paragraph (5); and

``(ii) notify the claimant of the determination, and if the
claim is disallowed, provide a statement of each reason for
the disallowance and the procedure for obtaining agency
review or judicial determination.
``(C) Period for filing or renewing suit.--Any claimant who
files a request for expedited relief shall be permitted to
file a suit, or to continue a suit filed before the date of
appointment of the receiver, seeking a determination of the
rights of the claimant with respect to such security interest
after the earlier of--
``(i) the end of the 90-day period beginning on the date of
the filing of a request for expedited relief; or
``(ii) the date on which the Agency denies the claim.
``(D) Statute of limitations.--If an action described under
subparagraph (C) is not filed, or the motion to renew a
previously filed suit is not made, before the end of the 30-
day period beginning on the date on which such action or
motion may be filed under subparagraph (B), the claim shall
be deemed to be disallowed as of the end of such period
(other than any portion of such claim which was allowed by
the receiver), such disallowance shall be final, and the
claimant shall have no further rights or remedies with
respect to such claim.
``(E) Legal effect of filing.--
``(i) Statute of limitation tolled.--For purposes of any
applicable statute of limitations, the filing of a claim with
the receiver shall constitute a commencement of an action.
``(ii) No prejudice to other actions.--Subject to paragraph
(10), the filing of a claim with the receiver shall not
prejudice any right of the claimant to continue any action
that was filed before the appointment of the receiver,
subject to the determination of claims by the receiver.
``(9) Payment of claims.--
``(A) In general.--The receiver may, in the discretion of
the receiver, and to the extent that funds are available from
the assets of the regulated entity, pay creditor claims, in
such manner and amounts as are authorized under this section,
which are--
``(i) allowed by the receiver;
``(ii) approved by the Agency pursuant to a final
determination pursuant to paragraph (7) or (8); or
``(iii) determined by the final judgment of any court of
competent jurisdiction.
``(B) Agreements against the interest of the agency.--No
agreement that tends to diminish or defeat the interest of
the Agency in any asset acquired by the Agency as receiver
under this section shall be valid against the Agency unless
such agreement is in writing and executed by an authorized
officer or representative of the regulated entity.
``(C) Payment of dividends on claims.--The receiver may, in
the sole discretion of the receiver, pay from the assets of
the regulated entity dividends on proved claims at any time,
and no liability shall attach to the Agency by reason of any
such payment, for failure to pay dividends to a claimant
whose claim is not proved at the time of any such payment.
``(D) Rulemaking authority of the director.--The Director
may prescribe such rules, including definitions of terms, as
the Director deems appropriate to establish a single uniform
interest rate for, or to make payments of post-insolvency
interest to creditors holding proven claims against the
receivership estates of the regulated entity, following
satisfaction by the receiver of the principal amount of all
creditor claims.
``(10) Suspension of legal actions.--
``(A) In general.--After the appointment of a conservator
or receiver for a regulated entity, the conservator or
receiver may, in any judicial action or proceeding to which
such regulated entity is or becomes a party, request a stay
for a period not to exceed--
``(i) 45 days, in the case of any conservator; and
``(ii) 90 days, in the case of any receiver.
``(B) Grant of stay by all courts required.--Upon receipt
of a request by the conservator or receiver under
subparagraph (A) for a stay of any judicial action or
proceeding in any court with jurisdiction of such action or
proceeding, the court shall grant such stay as to all
parties.
``(11) Additional rights and duties.--
``(A) Prior final adjudication.--The Agency shall abide by
any final unappealable judgment of any court of competent
jurisdiction which was rendered before the appointment of the
Agency as conservator or receiver.
``(B) Rights and remedies of conservator or receiver.--In
the event of any appealable judgment, the Agency as
conservator or receiver--
``(i) shall have all of the rights and remedies available
to the regulated entity (before the appointment of such
conservator or receiver) and the Agency, including removal to
Federal court and all appellate rights; and
``(ii) shall not be required to post any bond in order to
pursue such remedies.
``(C) No attachment or execution.--No attachment or
execution may issue by any court upon assets in the
possession of the receiver, or upon the charter, of a
regulated entity for which the Agency has been appointed
receiver.
``(D) Limitation on judicial review.--Except as otherwise
provided in this subsection, no court shall have jurisdiction
over--
``(i) any claim or action for payment from, or any action
seeking a determination of rights with respect to, the assets
or charter of any regulated entity for which the Agency has
been appointed receiver; or
``(ii) any claim relating to any act or omission of such
regulated entity or the Agency as receiver.
``(E) Disposition of assets.--In exercising any right,
power, privilege, or authority as conservator or receiver in
connection with any sale or disposition of assets of a
regulated entity for which the Agency has been appointed
conservator or receiver, the Agency shall conduct its
operations in a manner which--
``(i) maximizes the net present value return from the sale
or disposition of such assets;
``(ii) minimizes the amount of any loss realized in the
resolution of cases; and
``(iii) ensures adequate competition and fair and
consistent treatment of offerors.
``(12) Statute of limitations for actions brought by
conservator or receiver.--
``(A) In general.--Notwithstanding any provision of any
contract, the applicable statute of limitations with regard
to any action brought by the Agency as conservator or
receiver shall be--
``(i) in the case of any contract claim, the longer of--

``(I) the 6-year period beginning on the date on which the
claim accrues; or
``(II) the period applicable under State law; and

``(ii) in the case of any tort claim, the longer of--

``(I) the 3-year period beginning on the date on which the
claim accrues; or
``(II) the period applicable under State law.

``(B) Determination of the date on which a claim accrues.--
For purposes of subparagraph (A), the date on which the
statute of limitations begins to run on any claim described
in such subparagraph shall be the later of--

[[Page S5863]]

``(i) the date of the appointment of the Agency as
conservator or receiver; or
``(ii) the date on which the cause of action accrues.
``(13) Revival of expired state causes of action.--
``(A) In general.--In the case of any tort claim described
under clause (ii) for which the statute of limitations
applicable under State law with respect to such claim has
expired not more than 5 years before the appointment of the
Agency as conservator or receiver, the Agency may bring an
action as conservator or receiver on such claim without
regard to the expiration of the statute of limitations
applicable under State law.
``(B) Claims described.--A tort claim referred to under
clause (i) is a claim arising from fraud, intentional
misconduct resulting in unjust enrichment, or intentional
misconduct resulting in substantial loss to the regulated
entity.
``(14) Accounting and recordkeeping requirements.--
``(A) In general.--The Agency as conservator or receiver
shall, consistent with the accounting and reporting practices
and procedures established by the Agency, maintain a full
accounting of each conservatorship and receivership or other
disposition of a regulated entity in default.
``(B) Annual accounting or report.--With respect to each
conservatorship or receivership, the Agency shall make an
annual accounting or report available to the Board, the
Comptroller General of the United States, the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of
Representatives.
``(C) Availability of reports.--Any report prepared under
subparagraph (B) shall be made available by the Agency upon
request to any shareholder of a regulated entity or any
member of the public.
``(D) Recordkeeping requirement.--After the end of the 6-
year period beginning on the date on which the
conservatorship or receivership is terminated by the
Director, the Agency may destroy any records of such
regulated entity which the Agency, in the discretion of the
Agency, determines to be unnecessary, unless directed not to
do so by a court of competent jurisdiction or governmental
agency, or prohibited by law.
``(15) Fraudulent transfers.--
``(A) In general.--The Agency, as conservator or receiver,
may avoid a transfer of any interest of an entity-affiliated
party, or any person determined by the conservator or
receiver to be a debtor of the regulated entity, in property,
or any obligation incurred by such party or person, that was
made within 5 years of the date on which the Agency was
appointed conservator or receiver, if such party or person
voluntarily or involuntarily made such transfer or incurred
such liability with the intent to hinder, delay, or defraud
the regulated entity, the Agency, the conservator, or
receiver.
``(B) Right of recovery.--To the extent a transfer is
avoided under subparagraph (A), the conservator or receiver
may recover, for the benefit of the regulated entity, the
property transferred, or, if a court so orders, the value of
such property (at the time of such transfer) from--
``(i) the initial transferee of such transfer or the
entity-affiliated party or person for whose benefit such
transfer was made; or
``(ii) any immediate or mediate transferee of any such
initial transferee.
``(C) Rights of transferee or obligee.--The conservator or
receiver may not recover under subparagraph (B) from--
``(i) any transferee that takes for value, including
satisfaction or securing of a present or antecedent debt, in
good faith; or
``(ii) any immediate or mediate good faith transferee of
such transferee.
``(D) Rights under this paragraph.--The rights under this
paragraph of the conservator or receiver described under
subparagraph (A) shall be superior to any rights of a trustee
or any other party (other than any party which is a Federal
agency) under title 11, United States Code.
``(16) Attachment of assets and other injunctive relief.--
Subject to paragraph (17), any court of competent
jurisdiction may, at the request of the conservator or
receiver, issue an order in accordance with rule 65 of the
Federal Rules of Civil Procedure, including an order placing
the assets of any person designated by the conservator or
receiver under the control of the court, and appointing a
trustee to hold such assets.
``(17) Standards of proof.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any proceeding
under paragraph (16) without regard to the requirement of
such rule that the applicant show that the injury, loss, or
damage is irreparable and immediate.
``(18) Treatment of claims arising from breach of contracts
executed by the conservator or receiver.--
``(A) In general.--Notwithstanding any other provision of
this subsection, any final and unappealable judgment for
monetary damages entered against the conservator or receiver
for the breach of an agreement executed or approved in
writing by the conservator or receiver after the date of its
appointment, shall be paid as an administrative expense of
the conservator or receiver.
``(B) No limitation of power.--Nothing in this paragraph
shall be construed to limit the power of the conservator or
receiver to exercise any rights under contract or law,
including to terminate, breach, cancel, or otherwise
discontinue such agreement.
``(19) General exceptions.--
``(A) Limitations.--The rights of the conservator or
receiver appointed under this section shall be subject to the
limitations on the powers of a receiver under sections 402
through 407 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4402 through 4407).
``(B) Mortgages held in trust.--
``(i) In general.--Any mortgage, pool of mortgages, or
interest in a pool of mortgages held in trust, custodial, or
agency capacity by a regulated entity for the benefit of any
person other than the regulated entity shall not be available
to satisfy the claims of creditors generally, except that
nothing in this clause shall be construed to expand or
otherwise affect the authority of any regulated entity.
``(ii) Holding of mortgages.--Any mortgage, pool of
mortgages, or interest in a pool of mortgages described in
clause (i) shall be held by the conservator or receiver
appointed under this section for the beneficial owners of
such mortgage, pool of mortgages, or interest in accordance
with the terms of the agreement creating such trust,
custodial, or other agency arrangement.
``(iii) Liability of conservator or receiver.--The
liability of the conservator or receiver appointed under this
section for damages shall, in the case of any contingent or
unliquidated claim relating to the mortgages held in trust,
be estimated in accordance with the regulations of the
Director.
``(c) Priority of Expenses and Unsecured Claims.--
``(1) In general.--Unsecured claims against a regulated
entity, or the receiver therefor, that are proven to the
satisfaction of the receiver shall have priority in the
following order:
``(A) Administrative expenses of the receiver.
``(B) Any other general or senior liability of the
regulated entity (which is not a liability described under
subparagraph (C) or (D).
``(C) Any obligation subordinated to general creditors
(which is not an obligation described under subparagraph
(D)).
``(D) Any obligation to shareholders or members arising as
a result of their status as shareholder or members.
``(2) Creditors similarly situated.--All creditors that are
similarly situated under paragraph (1) shall be treated in a
similar manner, except that the receiver may take any action
(including making payments) that does not comply with this
subsection, if--
``(A) the Director determines that such action is necessary
to maximize the value of the assets of the regulated entity,
to maximize the present value return from the sale or other
disposition of the assets of the regulated entity, or to
minimize the amount of any loss realized upon the sale or
other disposition of the assets of the regulated entity; and
``(B) all creditors that are similarly situated under
paragraph (1) receive not less than the amount provided in
subsection (e)(2).
``(3) Definition.--As used in this subsection, the term
`administrative expenses of the receiver' includes--
``(A) the actual, necessary costs and expenses incurred by
the receiver in preserving the assets of a failed regulated
entity or liquidating or otherwise resolving the affairs of a
failed regulated entity; and
``(B) any obligations that the receiver determines are
necessary and appropriate to facilitate the smooth and
orderly liquidation or other resolution of the regulated
entity.
``(d) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
``(1) Authority to repudiate contracts.--In addition to any
other rights a conservator or receiver may have, the
conservator or receiver for any regulated entity may
disaffirm or repudiate any contract or lease--
``(A) to which such regulated entity is a party;
``(B) the performance of which the conservator or receiver,
in its sole discretion, determines to be burdensome; and
``(C) the disaffirmance or repudiation of which the
conservator or receiver determines, in its sole discretion,
will promote the orderly administration of the affairs of the
regulated entity.
``(2) Timing of repudiation.--The conservator or receiver
shall determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable period
following such appointment.
``(3) Claims for damages for repudiation.--
``(A) In general.--Except as otherwise provided under
subparagraph (C) and paragraphs (4), (5), and (6), the
liability of the conservator or receiver for the
disaffirmance or repudiation of any contract pursuant to
paragraph (1) shall be--
``(i) limited to actual direct compensatory damages; and
``(ii) determined as of--

``(I) the date of the appointment of the conservator or
receiver; or
``(II) in the case of any contract or agreement referred to
in paragraph (8), the date of the disaffirmance or
repudiation of such contract or agreement.

``(B) No liability for other damages.--For purposes of
subparagraph (A), the term `actual direct compensatory
damages' shall not include--
``(i) punitive or exemplary damages;
``(ii) damages for lost profits or opportunity; or

[[Page S5864]]

``(iii) damages for pain and suffering.
``(C) Measure of damages for repudiation of financial
contracts.--In the case of any qualified financial contract
or agreement to which paragraph (8) applies, compensatory
damages shall be--
``(i) deemed to include normal and reasonable costs of
cover or other reasonable measures of damages utilized in the
industries for such contract and agreement claims; and
``(ii) paid in accordance with this subsection and
subsection (e), except as otherwise specifically provided in
this section.
``(4) Leases under which the regulated entity is the
lessee.--
``(A) In general.--If the conservator or receiver
disaffirms or repudiates a lease under which the regulated
entity was the lessee, the conservator or receiver shall not
be liable for any damages (other than damages determined
under subparagraph (B)) for the disaffirmance or repudiation
of such lease.
``(B) Payments of rent.--Notwithstanding subparagraph (A),
the lessor under a lease to which that subparagraph applies
shall--
``(i) be entitled to the contractual rent accruing before
the later of the date on which--

``(I) the notice of disaffirmance or repudiation is mailed;
or
``(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of the
lease;

``(ii) have no claim for damages under any acceleration
clause or other penalty provision in the lease; and
``(iii) have a claim for any unpaid rent, subject to all
appropriate offsets and defenses, due as of the date of the
appointment, which shall be paid in accordance with this
subsection and subsection (e).
``(5) Leases under which the regulated entity is the
lessor.--
``(A) In general.--If the conservator or receiver
repudiates an unexpired written lease of real property of the
regulated entity under which the regulated entity is the
lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease may
either--
``(i) treat the lease as terminated by such repudiation; or
``(ii) remain in possession of the leasehold interest for
the balance of the term of the lease, unless the lessee
defaults under the terms of the lease after the date of such
repudiation.
``(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described under
subparagraph (A) remains in possession of a leasehold
interest under clause (ii) of subparagraph (A)--
``(i) the lessee--

``(I) shall continue to pay the contractual rent pursuant
to the terms of the lease after the date of the repudiation
of such lease; and
``(II) may offset against any rent payment which accrues
after the date of the repudiation of the lease, and any
damages which accrue after such date due to the
nonperformance of any obligation of the regulated entity
under the lease after such date; and

``(ii) the conservator or receiver shall not be liable to
the lessee for any damages arising after such date as a
result of the repudiation, other than the amount of any
offset allowed under clause (i)(II).
``(6) Contracts for the sale of real property.--
``(A) In general.--If the conservator or receiver
repudiates any contract for the sale of real property and the
purchaser of such real property under such contract is in
possession, and is not, as of the date of such repudiation,
in default, such purchaser may either--
``(i) treat the contract as terminated by such repudiation;
or
``(ii) remain in possession of such real property.
``(B) Provisions applicable to purchaser remaining in
possession.--If any purchaser of real property under any
contract described under subparagraph (A) remains in
possession of such property under clause (ii) of subparagraph
(A)--
``(i) the purchaser--

``(I) shall continue to make all payments due under the
contract after the date of the repudiation of the contract;
and
``(II) may offset against any such payments any damages
which accrue after such date due to the nonperformance (after
such date) of any obligation of the regulated entity under
the contract; and

``(ii) the conservator or receiver shall--

``(I) not be liable to the purchaser for any damages
arising after such date as a result of the repudiation, other
than the amount of any offset allowed under clause (i)(II);
``(II) deliver title to the purchaser in accordance with
the provisions of the contract; and
``(III) have no obligation under the contract other than
the performance required under subclause (II).

``(C) Assignment and sale allowed.--
``(i) In general.--No provision of this paragraph shall be
construed as limiting the right of the conservator or
receiver to assign the contract described under subparagraph
(A), and sell the property subject to the contract and the
provisions of this paragraph.
``(ii) No liability after assignment and sale.--If an
assignment and sale described under clause (i) is
consummated, the conservator or receiver shall have no
further liability under the contract described under
subparagraph (A), or with respect to the real property which
was the subject of such contract.
``(7) Service contracts.--
``(A) Services performed before appointment.--In the case
of any contract for services between any person and any
regulated entity for which the Agency has been appointed
conservator or receiver, any claim of such person for
services performed before the appointment of the conservator
or receiver shall be--
``(i) a claim to be paid in accordance with subsections (b)
and (e); and
``(ii) deemed to have arisen as of the date on which the
conservator or receiver was appointed.
``(B) Services performed after appointment and prior to
repudiation.--If, in the case of any contract for services
described under subparagraph (A), the conservator or receiver
accepts performance by the other person before the
conservator or receiver makes any determination to exercise
the right of repudiation of such contract under this
section--
``(i) the other party shall be paid under the terms of the
contract for the services performed; and
``(ii) the amount of such payment shall be treated as an
administrative expense of the conservatorship or
receivership.
``(C) Acceptance of performance no bar to subsequent
repudiation.--The acceptance by the conservator or receiver
of services referred to under subparagraph (B) in connection
with a contract described in such subparagraph shall not
affect the right of the conservator or receiver to repudiate
such contract under this section at any time after such
performance.
``(8) Certain qualified financial contracts.--
``(A) Rights of parties to contracts.--Subject to
paragraphs (9) and (10), and notwithstanding any other
provision of this title (other than subsection (b)(9)(B) of
this section), any other Federal law, or the law of any
State, no person shall be stayed or prohibited from
exercising--
``(i) any right of that person to cause the termination,
liquidation, or acceleration of any qualified financial
contract with a regulated entity that arises upon the
appointment of the Agency as receiver for such regulated
entity at any time after such appointment;
``(ii) any right under any security agreement or
arrangement or other credit enhancement relating to one or
more qualified financial contracts; or
``(iii) any right to offset or net out any termination
value, payment amount, or other transfer obligation arising
under or in connection with 1 or more contracts and
agreements described in clause (i), including any master
agreement for such contracts or agreements.
``(B) Applicability of other provisions.--Subsection
(b)(10) shall apply in the case of any judicial action or
proceeding brought against any receiver referred to under
subparagraph (A), or the regulated entity for which such
receiver was appointed, by any party to a contract or
agreement described under subparagraph (A)(i) with such
regulated entity.
``(C) Certain transfers not avoidable.--
``(i) In general.--Notwithstanding paragraph (11), or any
other provision of Federal or State law relating to the
avoidance of preferential or fraudulent transfers, the
Agency, whether acting as such or as conservator or receiver
of a regulated entity, may not avoid any transfer of money or
other property in connection with any qualified financial
contract with a regulated entity.
``(ii) Exception for certain transfers.--Clause (i) shall
not apply to any transfer of money or other property in
connection with any qualified financial contract with a
regulated entity if the Agency determines that the transferee
had actual intent to hinder, delay, or defraud such regulated
entity, the creditors of such regulated entity, or any
conservator or receiver appointed for such regulated entity.
``(D) Certain contracts and agreements defined.--In this
subsection the following definitions shall apply:
``(i) Qualified financial contract.--The term `qualified
financial contract' means any securities contract, commodity
contract, forward contract, repurchase agreement, swap
agreement, and any similar agreement that the Agency
determines by regulation, resolution, or order to be a
qualified financial contract for purposes of this paragraph.
``(ii) Securities contract.--The term `securities
contract'--

``(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit, or mortgage loans or interests
therein (including any interest therein or based on the value
thereof) or any option on any of the foregoing, including any
option to purchase or sell any such security, certificate of
deposit, mortgage loan, interest, group or index, or option,
and including any repurchase or reverse repurchase
transaction on any such security, certificate of deposit,
mortgage loan, interest, group or index, or option;
``(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan, unless the Agency determines by regulation, resolution,
or order to include any such agreement within the meaning of
such term;

[[Page S5865]]

``(III) means any option entered into on a national
securities exchange relating to foreign currencies;
``(IV) means the guarantee by or to any securities clearing
agency of any settlement of cash, securities, certificates of
deposit, mortgage loans or interests therein, group or index
of securities, certificates of deposit, or mortgage loans or
interests therein (including any interest therein or based on
the value thereof) or option on any of the foregoing,
including any option to purchase or sell any such security,
certificate of deposit, mortgage loan, interest, group or
index, or option;
``(V) means any margin loan;
``(VI) means any other agreement or transaction that is
similar to any agreement or transaction referred to in this
clause;
``(VII) means any combination of the agreements or
transactions referred to in this clause;
``(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
``(IX) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
(IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a securities contract under this
clause, except that the master agreement shall be considered
to be a securities contract under this clause only with
respect to each agreement or transaction under the master
agreement that is referred to in subclause (I), (III), (IV),
(V), (VI), (VII), or (VIII); and
``(X) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in this clause, including any guarantee or
reimbursement obligation in connection with any agreement or
transaction referred to in this clause.

``(iii) Commodity contract.--The term `commodity contract'
means--

``(I) with respect to a futures commission merchant, a
contract for the purchase or sale of a commodity for future
delivery on, or subject to the rules of, a contract market or
board of trade;
``(II) with respect to a foreign futures commission
merchant, a foreign future;
``(III) with respect to a leverage transaction merchant, a
leverage transaction;
``(IV) with respect to a clearing organization, a contract
for the purchase or sale of a commodity for future delivery
on, or subject to the rules of, a contract market or board of
trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a
contract market or board of trade that is cleared by such
clearing organization;
``(V) with respect to a commodity options dealer, a
commodity option;
``(VI) any other agreement or transaction that is similar
to any agreement or transaction referred to in this clause;
``(VII) any combination of the agreements or transactions
referred to in this clause;
``(VIII) any option to enter into any agreement or
transaction referred to in this clause;
``(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), (IV),
(V), (VI), (VII), or (VIII), together with all supplements to
any such master agreement, without regard to whether the
master agreement provides for an agreement or transaction
that is not a commodity contract under this clause, except
that the master agreement shall be considered to be a
commodity contract under this clause only with respect to
each agreement or transaction under the master agreement that
is referred to in subclause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII); or
``(X) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in this clause, including any guarantee or reimbursement
obligation in connection with any agreement or transaction
referred to in this clause.

``(iv) Forward contract.--The term `forward contract'
means--

``(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar
good, article, service, right, or interest which is presently
or in the future becomes the subject of dealing in the
forward contract trade, or product or byproduct thereof, with
a maturity date more than 2 days after the date on which the
contract is entered into, including a repurchase transaction,
reverse repurchase transaction, consignment, lease, swap,
hedge transaction, deposit, loan, option, allocated
transaction, unallocated transaction, or any other similar
agreement;
``(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
``(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
``(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III),
together with all supplements to any such master agreement,
without regard to whether the master agreement provides for
an agreement or transaction that is not a forward contract
under this clause, except that the master agreement shall be
considered to be a forward contract under this clause only
with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
or (III); or
``(V) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in subclause (I), (II), (III), or (IV), including any
guarantee or reimbursement obligation in connection with any
agreement or transaction referred to in any such subclause.

``(v) Repurchase agreement.--The term `repurchase
agreement' (including a reverse repurchase agreement)--

``(I) means an agreement, including related terms, which
provides for the transfer of one or more certificates of
deposit, mortgage-related securities (as such term is defined
in section 3 of the Securities Exchange Act of 1934),
mortgage loans, interests in mortgage-related securities or
mortgage loans, eligible bankers' acceptances, qualified
foreign government securities (defined for purposes of this
clause as a security that is a direct obligation of, or that
is fully guaranteed by, the central government of a member of
the Organization for Economic Cooperation and Development, as
determined by regulation or order adopted by the appropriate
Federal banking authority), or securities that are direct
obligations of, or that are fully guaranteed by, the United
States or any agency of the United States against the
transfer of funds by the transferee of such certificates of
deposit, eligible bankers' acceptances, securities, mortgage
loans, or interests with a simultaneous agreement by such
transferee to transfer to the transferor thereof certificates
of deposit, eligible bankers' acceptances, securities,
mortgage loans, or interests as described above, at a date
certain not later than 1 year after such transfers or on
demand, against the transfer of funds, or any other similar
agreement;
``(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan, unless the
Agency determines by regulation, resolution, or order to
include any such participation within the meaning of such
term;
``(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
``(IV) means any option to enter into any agreement or
transaction referred to in subclause (I) or (III);
``(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
or (IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
provides for an agreement or transaction that is not a
repurchase agreement under this clause, except that the
master agreement shall be considered to be a repurchase
agreement under this subclause only with respect to each
agreement or transaction under the master agreement that is
referred to in subclause (I), (III), or (IV); and

``(VI) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in subclause (I), (III), (IV), or (V), including
any guarantee or reimbursement obligation in connection with
any agreement or transaction referred to in any such
subclause.

``(vi) Swap agreement.--The term `swap agreement' means--

``(I) any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, future, or forward
agreement; an equity index or equity swap, option, future, or
forward agreement; a debt index or debt swap, option, future,
or forward agreement; a total return, credit spread or credit
swap, option, future, or forward agreement; a commodity index
or commodity swap, option, future, or forward agreement; or a
weather swap, weather derivative, or weather option;
``(II) any agreement or transaction that is similar to any
other agreement or transaction referred to in this clause and
that is of a type that has been, is presently, or in the
future becomes, the subject of recurrent dealings in the swap
markets (including terms and conditions incorporated by
reference in such agreement) and that is a forward, swap,
future, or option on one or more rates, currencies,
commodities, equity securities or other equity instruments,
debt securities or other debt instruments, quantitative
measures associated with an occurrence, extent of an
occurrence, or contingency associated with a financial,
commercial, or economic consequence, or economic or financial
indices or measures of economic or financial risk or value;
``(III) any combination of agreements or transactions
referred to in this clause;
``(IV) any option to enter into any agreement or
transaction referred to in this clause;
``(V) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), or
(IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
contains an agreement or transaction that is not a swap
agreement under this clause, except that the master agreement
shall be considered to be a swap agreement under this clause
only with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
(III), or (IV); and

[[Page S5866]]

``(VI) any security agreement or arrangement or other
credit enhancement related to any agreements or transactions
referred to in subclause (I), (II), (III), (IV), or (V),
including any guarantee or reimbursement obligation in
connection with any agreement or transaction referred to in
any such subclause.

``(vii) Treatment of master agreement as one agreement.--
Any master agreement for any contract or agreement described
in any preceding clause of this subparagraph (or any master
agreement for such master agreement or agreements), together
with all supplements to such master agreement, shall be
treated as a single agreement and a single qualified
financial contract. If a master agreement contains provisions
relating to agreements or transactions that are not
themselves qualified financial contracts, the master
agreement shall be deemed to be a qualified financial
contract only with respect to those transactions that are
themselves qualified financial contracts.
``(viii) Transfer.--The term `transfer' means every mode,
direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or with
an interest in property, including retention of title as a
security interest and foreclosure of the equity of redemption
of the regulated entity.
``(E) Certain protections in event of appointment of
conservator.--Notwithstanding any other provision of this
section, any other Federal law, or the law of any State
(other than paragraph (10) of this subsection and subsection
(b)(9)(B)), no person shall be stayed or prohibited from
exercising--
``(i) any right such person has to cause the termination,
liquidation, or acceleration of any qualified financial
contract with a regulated entity in a conservatorship based
upon a default under such financial contract which is
enforceable under applicable noninsolvency law;
``(ii) any right under any security agreement or
arrangement or other credit enhancement relating to 1 or more
such qualified financial contracts; or
``(iii) any right to offset or net out any termination
values, payment amounts, or other transfer obligations
arising under or in connection with such qualified financial
contracts.
``(F) Clarification.--No provision of law shall be
construed as limiting the right or power of the Agency, or
authorizing any court or agency to limit or delay in any
manner, the right or power of the Agency to transfer any
qualified financial contract in accordance with paragraphs
(9) and (10), or to disaffirm or repudiate any such contract
in accordance with subsection (d)(1).
``(G) Walkaway clauses not effective.--
``(i) In general.--Notwithstanding the provisions of
subparagraphs (A) and (E), and sections 403 and 404 of the
Federal Deposit Insurance Corporation Improvement Act of
1991, no walkaway clause shall be enforceable in a qualified
financial contract of a regulated entity in default.
``(ii) Walkaway clause defined.--For purposes of this
subparagraph, the term `walkaway clause' means a provision in
a qualified financial contract that, after calculation of a
value of a party's position or an amount due to or from 1 of
the parties in accordance with its terms upon termination,
liquidation, or acceleration of the qualified financial
contract, either does not create a payment obligation of a
party or extinguishes a payment obligation of a party in
whole or in part solely because of the status of such party
as a nondefaulting party.
``(9) Transfer of qualified financial contracts.--In making
any transfer of assets or liabilities of a regulated entity
in default which includes any qualified financial contract,
the conservator or receiver for such regulated entity shall
either--
``(A) transfer to 1 person--
``(i) all qualified financial contracts between any person
(or any affiliate of such person) and the regulated entity in
default;
``(ii) all claims of such person (or any affiliate of such
person) against such regulated entity under any such contract
(other than any claim which, under the terms of any such
contract, is subordinated to the claims of general unsecured
creditors of such regulated entity);
``(iii) all claims of such regulated entity against such
person (or any affiliate of such person) under any such
contract; and
``(iv) all property securing, or any other credit
enhancement for any contract described in clause (i), or any
claim described in clause (ii) or (iii) under any such
contract; or
``(B) transfer none of the financial contracts, claims, or
property referred to under subparagraph (A) (with respect to
such person and any affiliate of such person).
``(10) Notification of transfer.--
``(A) In general.--The conservator or receiver shall notify
any person that is a party to a contract or transfer by 5:00
p.m. (Eastern Standard Time) on the business day following
the date of the appointment of the receiver in the case of a
receivership, or the business day following such transfer in
the case of a conservatorship, if--
``(i) the conservator or receiver for a regulated entity in
default makes any transfer of the assets and liabilities of
such regulated entity; and
``(ii) such transfer includes any qualified financial
contract.
``(B) Certain rights not enforceable.--
``(i) Receivership.--A person who is a party to a qualified
financial contract with a regulated entity may not exercise
any right that such person has to terminate, liquidate, or
net such contract under paragraph (8)(A) of this subsection
or under section 403 or 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991, solely by reason of or
incidental to the appointment of a receiver for the regulated
entity (or the insolvency or financial condition of the
regulated entity for which the receiver has been appointed)--

``(I) until 5:00 p.m. (Eastern Standard Time) on the
business day following the date of the appointment of the
receiver; or
``(II) after the person has received notice that the
contract has been transferred pursuant to paragraph (9)(A).

``(ii) Conservatorship.--A person who is a party to a
qualified financial contract with a regulated entity may not
exercise any right that such person has to terminate,
liquidate, or net such contract under paragraph (8)(E) of
this subsection or under section 403 or 404 of the Federal
Deposit Insurance Corporation Improvement Act of 1991, solely
by reason of or incidental to the appointment of a
conservator for the regulated entity (or the insolvency or
financial condition of the regulated entity for which the
conservator has been appointed).
``(iii) Notice.--For purposes of this paragraph, the
conservator or receiver of a regulated entity shall be deemed
to have notified a person who is a party to a qualified
financial contract with such regulated entity, if the
conservator or receiver has taken steps reasonably calculated
to provide notice to such person by the time specified in
subparagraph (A).
``(C) Business day defined.--For purposes of this
paragraph, the term `business day' means any day other than
any Saturday, Sunday, or any day on which either the New York
Stock Exchange or the Federal Reserve Bank of New York is
closed.
``(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of a conservator or receiver with respect to any
qualified financial contract to which a regulated entity is a
party, the conservator or receiver for such institution shall
either--
``(A) disaffirm or repudiate all qualified financial
contracts between--
``(i) any person or any affiliate of such person; and
``(ii) the regulated entity in default; or
``(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A) (with
respect to such person or any affiliate of such person).
``(12) Certain security interests not avoidable.--No
provision of this subsection shall be construed as permitting
the avoidance of any legally enforceable or perfected
security interest in any of the assets of any regulated
entity, except where such an interest is taken in
contemplation of the insolvency of the regulated entity, or
with the intent to hinder, delay, or defraud the regulated
entity or the creditors of such regulated entity.
``(13) Authority to enforce contracts.--
``(A) In general.--Notwithstanding any provision of a
contract providing for termination, default, acceleration, or
exercise of rights upon, or solely by reason of, insolvency
or the appointment of, or the exercise of rights or powers
by, a conservator or receiver, the conservator or receiver
may enforce any contract, other than a contract for liability
insurance for a director or officer, or a contract or a
regulated entity bond, entered into by the regulated entity.
``(B) Certain rights not affected.--No provision of this
paragraph may be construed as impairing or affecting any
right of the conservator or receiver to enforce or recover
under a liability insurance contract for an officer or
director, or regulated entity bond under other applicable
law.
``(C) Consent requirement.--
``(i) In general.--Except as otherwise provided under this
section, no person may exercise any right or power to
terminate, accelerate, or declare a default under any
contract to which a regulated entity is a party, or to obtain
possession of or exercise control over any property of the
regulated entity, or affect any contractual rights of the
regulated entity, without the consent of the conservator or
receiver, as appropriate, for a period of--

``(I) 45 days after the date of appointment of a
conservator; or
``(II) 90 days after the date of appointment of a receiver.

``(ii) Exceptions.--This subparagraph shall not--

``(I) apply to a contract for liability insurance for an
officer or director;
``(II) apply to the rights of parties to certain qualified
financial contracts under subsection (d)(8); and
``(III) be construed as permitting the conservator or
receiver to fail to comply with otherwise enforceable
provisions of such contracts.

``(14) Savings clause.--The meanings of terms used in this
subsection are applicable for purposes of this subsection
only, and shall not be construed or applied so as to
challenge or affect the characterization, definition, or
treatment of any similar terms under any other statute,
regulation, or rule, including the Gramm-Leach-Bliley Act,
the Legal Certainty for Bank Products Act of

[[Page S5867]]

2000, the securities laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of 1934), and the
Commodity Exchange Act.
``(15) Exception for federal reserve and federal home loan
banks.--No provision of this subsection shall apply with
respect to--
``(A) any extension of credit from any Federal Home Loan
Bank or Federal Reserve Bank to any regulated entity; or
``(B) any security interest in the assets of the regulated
entity securing any such extension of credit.
``(e) Valuation of Claims in Default.--
``(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method which the Agency determines to utilize with respect to
a regulated entity in default or in danger of default,
including transactions authorized under subsection (i), this
subsection shall govern the rights of the creditors of such
regulated entity.
``(2) Maximum liability.--The maximum liability of the
Agency, acting as receiver or in any other capacity, to any
person having a claim against the receiver or the regulated
entity for which such receiver is appointed shall be not more
than the amount that such claimant would have received if the
Agency had liquidated the assets and liabilities of the
regulated entity without exercising the authority of the
Agency under subsection (i).
``(f) Limitation on Court Action.--Except as provided in
this section or at the request of the Director, no court may
take any action to restrain or affect the exercise of powers
or functions of the Agency as a conservator or a receiver.
``(g) Liability of Directors and Officers.--
``(1) In general.--A director or officer of a regulated
entity may be held personally liable for monetary damages in
any civil action described in paragraph (2) brought by, on
behalf of, or at the request or direction of the Agency, and
prosecuted wholly or partially for the benefit of the
Agency--
``(A) acting as conservator or receiver of such regulated
entity; or
``(B) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed by such
receiver or conservator.
``(2) Actions addressed.--Paragraph (1) applies in any
civil action for gross negligence, including any similar
conduct or conduct that demonstrates a greater disregard of a
duty of care than gross negligence, including intentional
tortious conduct, as such terms are defined and determined
under applicable State law.
``(3) No limitation.--Nothing in this subsection shall
impair or affect any right of the Agency under other
applicable law.
``(h) Damages.--In any proceeding related to any claim
against a director, officer, employee, agent, attorney,
accountant, appraiser, or any other party employed by or
providing services to a regulated entity, recoverable damages
determined to result from the improvident or otherwise
improper use or investment of any assets of the regulated
entity shall include principal losses and appropriate
interest.
``(i) Limited-Life Regulated Entities.--
``(1) Organization.--
``(A) Purpose.--The Agency, as receiver appointed pursuant
to subsection (a)--
``(i) may, in the case of a Federal Home Loan Bank,
organize a limited-life regulated entity with those powers
and attributes of the Federal Home Loan Bank in default or in
danger of default as the Director determines necessary,
subject to the provisions of this subsection, and the
Director shall grant a temporary charter to that limited-life
regulated entity, and that limited-life regulated entity
shall operate subject to that charter; and
``(ii) shall, in the case of an enterprise, organize a
limited-life regulated entity with respect to that enterprise
in accordance with this subsection.
``(B) Authorities.--Upon the creation of a limited-life
regulated entity under subparagraph (A), the limited-life
regulated entity may--
``(i) assume such liabilities of the regulated entity that
is in default or in danger of default as the Agency may, in
its discretion, determine to be appropriate, except that the
liabilities assumed shall not exceed the amount of assets
purchased or transferred from the regulated entity to the
limited-life regulated entity;
``(ii) purchase such assets of the regulated entity that is
in default, or in danger of default as the Agency may, in its
discretion, determine to be appropriate; and
``(iii) perform any other temporary function which the
Agency may, in its discretion, prescribe in accordance with
this section.
``(2) Charter and establishment.--
``(A) Transfer of charter.--
``(i) Fannie mae.--If the Agency is appointed as receiver
for the Federal National Mortgage Association, the limited-
life regulated entity established under this subsection with
respect to such enterprise shall, by operation of law and
immediately upon its organization--

``(I) succeed to the charter of the Federal National
Mortgage Association, as set forth in the Federal National
Mortgage Association Charter Act; and
``(II) thereafter operate in accordance with, and subject
to, such charter, this Act, and any other provision of law to
which the Federal National Mortgage Association is subject,
except as otherwise provided in this subsection.

``(ii) Freddie mac.--If the Agency is appointed as receiver
for the Federal Home Loan Mortgage Corporation, the limited-
life regulated entity established under this subsection with
respect to such enterprise shall, by operation of law and
immediately upon its organization--

``(I) succeed to the charter of the Federal Home Loan
Mortgage Corporation, as set forth in the Federal Home Loan
Mortgage Corporation Charter Act; and
``(II) thereafter operate in accordance with, and subject
to, such charter, this Act, and any other provision of law to
which the Federal Home Loan Mortgage Corporation is subject,
except as otherwise provided in this subsection.

``(B) Interests in and assets and obligations of regulated
entity in default.--Notwithstanding subparagraph (A) or any
other provision of law--
``(i) a limited-life regulated entity shall assume,
acquire, or succeed to the assets or liabilities of a
regulated entity only to the extent that such assets or
liabilities are transferred by the Agency to the limited-life
regulated entity in accordance with, and subject to the
restrictions set forth in, paragraph (1)(B);
``(ii) a limited-life regulated entity shall not assume,
acquire, or succeed to any obligation that a regulated entity
for which a receiver has been appointed may have to any
shareholder of the regulated entity that arises as a result
of the status of that person as a shareholder of the
regulated entity; and
``(iii) no shareholder or creditor of a regulated entity
shall have any right or claim against the charter of the
regulated entity once the Agency has been appointed receiver
for the regulated entity and a limited-life regulated entity
succeeds to the charter pursuant to subparagraph (A).
``(C) Limited-life regulated entity treated as being in
default for certain purposes.--A limited-life regulated
entity shall be treated as a regulated entity in default at
such times and for such purposes as the Agency may, in its
discretion, determine.
``(D) Management.--Upon its establishment, a limited-life
regulated entity shall be under the management of a board of
directors consisting of not fewer than 5 nor more than 10
members appointed by the Agency.
``(E) Bylaws.--The board of directors of a limited-life
regulated entity shall adopt such bylaws as may be approved
by the Agency.
``(3) Capital stock.--
``(A) No agency requirement.--The Agency is not required to
pay capital stock into a limited-life regulated entity or to
issue any capital stock on behalf of a limited-life regulated
entity established under this subsection.
``(B) Authority.--If the Director determines that such
action is advisable, the Agency may cause capital stock or
other securities of a limited-life regulated entity
established with respect to an enterprise to be issued and
offered for sale, in such amounts and on such terms and
conditions as the Director may determine, in the discretion
of the Director.
``(4) Investments.--Funds of a limited-life regulated
entity shall be kept on hand in cash, invested in obligations
of the United States or obligations guaranteed as to
principal and interest by the United States, or deposited
with the Agency, or any Federal reserve bank.
``(5) Exempt tax status.--Notwithstanding any other
provision of Federal or State law, a limited-life regulated
entity, its franchise, property, 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.
``(6) Winding up.--
``(A) In general.--Subject to subparagraphs (B) and (C),
not later than 2 years after the date of its organization,
the Agency shall wind up the affairs of a limited-life
regulated entity.
``(B) Extension.--The Director may, in the discretion of
the Director, extend the status of a limited-life regulated
entity for 3 additional 1-year periods.
``(C) Termination of status as limited-life regulated
entity.--
``(i) In general.--Upon the sale by the Agency of 80
percent or more of the capital stock of a limited-life
regulated entity, as defined in clause (iv), to 1 or more
persons (other than the Agency)--

``(I) the status of the limited-life regulated entity as
such shall terminate; and
``(II) the entity shall cease to be a limited-life
regulated entity for purposes of this subsection.

``(ii) Divestiture of remaining stock, if any.--

``(I) In general.--Not later than 1 year after the date on
which the status of a limited-life regulated entity is
terminated pursuant to clause (i), the Agency shall sell to 1
or more persons (other than the Agency) any remaining capital
stock of the former limited-life regulated entity.
``(II) Extension authorized.--The Director may extend the
period referred to in subclause (I) for not longer than an
additional 2 years, if the Director determines that such
action would be in the public interest.

``(iii) Savings clause.--Notwithstanding any provision of
law, other than clause (ii), the Agency shall not be required
to sell the capital stock of an enterprise or a limited-

[[Page S5868]]

life regulated entity established with respect to an
enterprise.
``(iv) Applicability.--This subparagraph applies only with
respect to a limited-life regulated entity that is
established with respect to an enterprise.
``(7) Transfer of assets and liabilities.--
``(A) In general.--
``(i) Transfer of assets and liabilities.--The Agency, as
receiver, may transfer any assets and liabilities of a
regulated entity in default, or in danger of default, to the
limited-life regulated entity in accordance with and subject
to the restrictions of paragraph (1).
``(ii) Subsequent transfers.--At any time after the
establishment of a limited-life regulated entity, the Agency,
as receiver, may transfer any assets and liabilities of the
regulated entity in default, or in danger of default, as the
Agency may, in its discretion, determine to be appropriate in
accordance with and subject to the restrictions of paragraph
(1).
``(iii) Effective without approval.--The transfer of any
assets or liabilities of a regulated entity in default or in
danger of default to a limited-life regulated entity shall be
effective without any further approval under Federal or State
law, assignment, or consent with respect thereto.
``(iv) Equitable treatment of similarly situated
creditors.--The Agency shall treat all creditors of a
regulated entity in default or in danger of default that are
similarly situated under subsection (c)(1) in a similar
manner in exercising the authority of the Agency under this
subsection to transfer any assets or liabilities of the
regulated entity to the limited-life regulated entity
established with respect to such regulated entity, except
that the Agency may take actions (including making payments)
that do not comply with this clause, if--

``(I) the Director determines that such actions are
necessary to maximize the value of the assets of the
regulated entity, to maximize the present value return from
the sale or other disposition of the assets of the regulated
entity, or to minimize the amount of any loss realized upon
the sale or other disposition of the assets of the regulated
entity; and
``(II) all creditors that are similarly situated under
subsection (c)(1) receive not less than the amount provided
in subsection (e)(2).

``(v) Limitation on transfer of liabilities.--
Notwithstanding any other provision of law, the aggregate
amount of liabilities of a regulated entity that are
transferred to, or assumed by, a limited-life regulated
entity may not exceed the aggregate amount of assets of the
regulated entity that are transferred to, or purchased by,
the limited-life regulated entity.
``(8) Regulations.--The Agency may promulgate such
regulations as the Agency determines to be necessary or
appropriate to implement this subsection.
``(9) Powers of limited-life regulated entities.--
``(A) In general.--Each limited-life regulated entity
created under this subsection shall have all corporate powers
of, and be subject to the same provisions of law as, the
regulated entity in default or in danger of default to which
it relates, except that--
``(i) the Agency may--

``(I) remove the directors of a limited-life regulated
entity;
``(II) fix the compensation of members of the board of
directors and senior management, as determined by the Agency
in its discretion, of a limited-life regulated entity; and
``(III) indemnify the representatives for purposes of
paragraph (1)(B), and the directors, officers, employees, and
agents of a limited-life regulated entity on such terms as
the Agency determines to be appropriate; and

``(ii) the board of directors of a limited-life regulated
entity--

``(I) shall elect a chairperson who may also serve in the
position of chief executive officer, except that such person
shall not serve either as chairperson or as chief executive
officer without the prior approval of the Agency; and
``(II) may appoint a chief executive officer who is not
also the chairperson, except that such person shall not serve
as chief executive officer without the prior approval of the
Agency.

``(B) Stay of judicial action.--Any judicial action to
which a limited-life regulated entity becomes a party by
virtue of its acquisition of any assets or assumption of any
liabilities of a regulated entity in default shall be stayed
from further proceedings for a period of not longer than 45
days, at the request of the limited-life regulated entity.
Such period may be modified upon the consent of all parties.
``(10) No federal status.--
``(A) Agency status.--A limited-life regulated entity is
not an agency, establishment, or instrumentality of the
United States.
``(B) Employee status.--Representatives for purposes of
paragraph (1)(B), interim directors, directors, officers,
employees, or agents of a limited-life regulated entity are
not, solely by virtue of service in any such capacity,
officers or employees of the United States. Any employee of
the Agency or of any Federal instrumentality who serves at
the request of the Agency as a representative for purposes of
paragraph (1)(B), interim director, director, officer,
employee, or agent of a limited-life regulated entity shall
not--
``(i) solely by virtue of service in any such capacity lose
any existing status as an officer or employee of the United
States for purposes of title 5, United States Code, or any
other provision of law; or
``(ii) receive any salary or benefits for service in any
such capacity with respect to a limited-life regulated entity
in addition to such salary or benefits as are obtained
through employment with the Agency or such Federal
instrumentality.
``(11) Authority to obtain credit.--
``(A) In general.--A limited-life regulated entity may
obtain unsecured credit and issue unsecured debt.
``(B) Inability to obtain credit.--If a limited-life
regulated entity is unable to obtain unsecured credit or
issue unsecured debt, the Director may authorize the
obtaining of credit or the issuance of debt by the limited-
life regulated entity--
``(i) with priority over any or all of the obligations of
the limited-life regulated entity;
``(ii) secured by a lien on property of the limited-life
regulated entity that is not otherwise subject to a lien; or
``(iii) secured by a junior lien on property of the
limited-life regulated entity that is subject to a lien.
``(C) Limitations.--
``(i) In general.--The Director, after notice and a
hearing, may authorize the obtaining of credit or the
issuance of debt by a limited-life regulated entity that is
secured by a senior or equal lien on property of the limited-
life regulated entity that is subject to a lien (other than
mortgages that collateralize the mortgage-backed securities
issued or guaranteed by an enterprise) only if--

``(I) the limited-life regulated entity is unable to
otherwise obtain such credit or issue such debt; and
``(II) there is adequate protection of the interest of the
holder of the lien on the property with respect to which such
senior or equal lien is proposed to be granted.

``(D) Burden of proof.--In any hearing under this
subsection, the Director has the burden of proof on the issue
of adequate protection.
``(12) Affect on debts and liens.--The reversal or
modification on appeal of an authorization under this
subsection to obtain credit or issue debt, or of a grant
under this section of a priority or a lien, does not affect
the validity of any debt so issued, or any priority or lien
so granted, to an entity that extended such credit in good
faith, whether or not such entity knew of the pendency of the
appeal, unless such authorization and the issuance of such
debt, or the granting of such priority or lien, were stayed
pending appeal.
``(j) Other Agency Exemptions.--
``(1) Applicability.--The provisions of this subsection
shall apply with respect to the Agency in any case in which
the Agency is acting as a conservator or a receiver.
``(2) Taxation.--The Agency, including its franchise, its
capital, reserves, and surplus, and its income, shall be
exempt from all taxation imposed by any State, county,
municipality, or local taxing authority, except that any real
property of the Agency 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, except that, notwithstanding the failure of any person
to challenge an assessment under State law of the value of
such property, and the tax thereon, shall be determined as of
the period for which such tax is imposed.
``(3) Property protection.--No property of the Agency shall
be subject to levy, attachment, garnishment, foreclosure, or
sale without the consent of the Agency, nor shall any
involuntary lien attach to the property of the Agency.
``(4) Penalties and fines.--The Agency shall not be liable
for any amounts in the nature of penalties or fines,
including those arising from the failure of any person to pay
any real property, personal property, probate, or recording
tax or any recording or filing fees when due.
``(k) Prohibition of Charter Revocation.--In no case may
the receiver appointed pursuant to this section revoke,
annul, or terminate the charter of an enterprise.''.
(b) Technical and 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 1368 (12 U.S.C. 4618)--
(A) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity''; and
(B) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(2) in section 1369C (12 U.S.C. 4622), by striking
``enterprise'' each place that term appears and inserting
``regulated entity'';
(3) in section 1369D (12 U.S.C. 4623)--
(A) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity''; and
(B) in subsection (a)(1), by striking ``An enterprise'' and
inserting ``A regulated entity''; and
(4) by striking sections 1369, 1369A, and 1369B (12 U.S.C.
4619, 4620, and 4621).

Subtitle D--Enforcement Actions

SEC. 1151. CEASE AND DESIST PROCEEDINGS.

Section 1371 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4631) is
amended--
(1) by striking subsections (a) and (b) and inserting the
following:
``(a) Issuance for Unsafe or Unsound Practices and
Violations.--

[[Page S5869]]

``(1) Authority of director.--If, in the opinion of the
Director, a regulated entity or any entity-affiliated party
is engaging or has engaged, or the Director has reasonable
cause to believe that the regulated entity or any entity-
affiliated party is about to engage, in an unsafe or unsound
practice in conducting the business of the regulated entity
or the Office of Finance, or is violating or has violated, or
the Director has reasonable cause to believe is about to
violate, a law, rule, regulation, or order, or any condition
imposed in writing by the Director in connection with the
granting of any application or other request by the regulated
entity or the Office of Finance or any written agreement
entered into with the Director, the Director may issue and
serve upon the regulated entity or entity-affiliated party a
notice of charges in respect thereof.
``(2) Limitation.--The Director may not, pursuant to this
section, enforce compliance 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, with subsection (m) or
(n) of section 309 of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1723a(m), (n)), with
subsection (e) or (f) of section 307 of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1456(e), (f)), or with
paragraph (5) of section 10(j) of the Federal Home Loan Bank
Act (12 U.S.C. 1430(j)).
``(b) Issuance for Unsatisfactory Rating.--If a regulated
entity receives, in its most recent report of examination, a
less-than-satisfactory rating for asset quality, management,
earnings, or liquidity, the Director may (if the deficiency
is not corrected) deem the regulated entity to be engaging in
an unsafe or unsound practice for purposes of subsection
(a).'';
(2) in subsection (c)--
(A) in paragraph (1), by inserting before the period at the
end the following: ``, unless the party served with a notice
of charges shall appear at the hearing personally or by a
duly authorized representative, the party shall be deemed to
have consented to the issuance of the cease and desist
order''; and
(B) in paragraph (2)--
(i) by striking ``or director'' and inserting ``director,
or entity-affiliated party''; and
(ii) by inserting ``or entity-affiliated party'' before
``consents'';
(3) in each of subsections (c), (d), and (e)--
(A) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(B) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity''; and
(C) by striking ``conduct'' each place that term appears
and inserting ``practice'';
(4) in subsection (d)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``or director'' and inserting ``director,
or entity-affiliated party''; and
(ii) by inserting ``to require a regulated entity or
entity-affiliated party'' after ``includes the authority'';
(B) in paragraph (1)--
(i) by striking ``to require an executive officer or a
director to''; and
(ii) by striking ``loss'' and all that follows through
``person'' and inserting ``loss, if'';
(iii) in subparagraph (A), by inserting ``such entity or
party or finance facility'' before ``was''; and
(iv) by striking subparagraph (B) and inserting the
following:
``(B) the violation or practice involved a reckless
disregard for the law or any applicable regulations or prior
order of the Director;''; and
(C) in paragraph (4), by inserting ``loan or'' before
``asset'';
(5) in subsection (e), by inserting ``or entity-affiliated
party''--
(A) before ``or any executive''; and
(B) before the period at the end; and
(6) in subsection (f)--
(A) by striking ``enterprise'' and inserting ``regulated
entity, finance facility,''; and
(B) by striking ``or director'' and inserting ``director,
or entity-affiliated party''.

SEC. 1152. TEMPORARY CEASE AND DESIST PROCEEDINGS.

Section 1372 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4632) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) Grounds for Issuance.--
``(1) In general.--If the Director determines that the
actions specified in the notice of charges served upon a
regulated entity or any entity-affiliated party pursuant to
section 1371(a), or the continuation thereof, is likely to
cause insolvency or significant dissipation of assets or
earnings of that entity, or is likely to weaken the condition
of that entity prior to the completion of the proceedings
conducted pursuant to sections 1371 and 1373, the Director
may--
``(A) issue a temporary order requiring that regulated
entity or entity-affiliated party to cease and desist from
any such violation or practice; and
``(B) require that regulated entity or entity-affiliated
party to take affirmative action to prevent or remedy such
insolvency, dissipation, condition, or prejudice pending
completion of such proceedings.
``(2) Additional requirements.--An order issued under
paragraph (1) may include any requirement authorized under
subsection 1371(d).'';
(2) in subsection (b)--
(A) by striking ``or director'' and inserting ``director,
or entity-affiliated party''; and
(B) by striking ``enterprise'' each place that term appears
and inserting ``regulated entity'';
(3) in subsection (c), by striking ``enterprise'' each
place that term appears and inserting ``regulated entity'';
(4) in subsection (d)--
(A) by striking ``or director'' each place that term
appears and inserting ``director, or entity-affiliated
party''; and
(B) by striking ``An enterprise'' and inserting ``A
regulated entity''; and
(5) in subsection (e)--
(A) by striking ``request the Attorney General of the
United States to''; and
(B) by striking ``or may, under the direction and control
of the Attorney General, bring such action''.

SEC. 1153. REMOVAL AND PROHIBITION AUTHORITY.

(a) In General.--Part 1 of subtitle C of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4631 et seq.) is amended--
(1) by redesignating sections 1377 through 1379B (12 U.S.C.
4637-4641) as sections 1379 through 1379D, respectively; and
(2) by inserting after section 1376 (12 U.S.C. 4636) the
following:

``SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.

``(a) Authority to Issue Order.--
``(1) In general.--The Director may serve upon a party
described in paragraph (2), or any officer, director, or
management of the Office of Finance a written notice of the
intention of the Director to suspend or remove such party
from office, or prohibit any further participation by such
party, in any manner, in the conduct of the affairs of the
regulated entity.
``(2) Applicability.--A party described in this paragraph
is an entity-affiliated party or any officer, director, or
management of the Office of Finance, if the Director
determines that--
``(A) that party, officer, or director has, directly or
indirectly--
``(i) violated--

``(I) any law or regulation;
``(II) any cease and desist order which has become final;
``(III) any condition imposed in writing by the Director in
connection with the grant of any application or other request
by such regulated entity; or
``(IV) any written agreement between such regulated entity
and the Director;

``(ii) engaged or participated in any unsafe or unsound
practice in connection with any regulated entity or business
institution; or
``(iii) committed or engaged in any act, omission, or
practice which constitutes a breach of such party's fiduciary
duty;
``(B) by reason of the violation, practice, or breach
described in subparagraph (A)--
``(i) such regulated entity or business institution has
suffered or will probably suffer financial loss or other
damage; or
``(ii) such party has received financial gain or other
benefit; and
``(C) the violation, practice, or breach described in
subparagraph (A)--
``(i) involves personal dishonesty on the part of such
party; or
``(ii) demonstrates willful or continuing disregard by such
party for the safety or soundness of such regulated entity or
business institution.
``(b) Suspension Order.--
``(1) Suspension or prohibition authority.--If the Director
serves written notice under subsection (a) upon a party
subject to that subsection (a), the Director may, by order,
suspend or remove such party from office, or prohibit such
party from further participation in any manner in the conduct
of the affairs of the regulated entity, if the Director--
``(A) determines that such action is necessary for the
protection of the regulated entity; and
``(B) serves such party with written notice of the order.
``(2) Effective period.--Any order issued under this
subsection--
``(A) shall become effective upon service; and
``(B) unless a court issues a stay of such order under
subsection (g), shall remain in effect and enforceable
until--
``(i) the date on which the Director dismisses the charges
contained in the notice served under subsection (a) with
respect to such party; or
``(ii) the effective date of an order issued under
subsection (b).
``(3) Copy of order.--If the Director issues an order under
subsection (b) to any party, the Director shall serve a copy
of such order on any regulated entity with which such party
is affiliated at the time such order is issued.
``(c) Notice, Hearing, and Order.--
``(1) Notice.--A notice under subsection (a) of the
intention of the Director to issue an order under this
section shall contain a statement of the facts constituting
grounds for such action, and shall fix a time and place at
which a hearing will be held on such action.
``(2) Timing of hearing.--A hearing shall be fixed for a
date not earlier than 30 days, nor later than 60 days, after
the date of service of notice under subsection (a), unless an
earlier or a later date is set by the Director at the request
of--
``(A) the party receiving such notice, and good cause is
shown; or
``(B) the Attorney General of the United States.

[[Page S5870]]

``(3) Consent.--Unless the party that is the subject of a
notice delivered under subsection (a) appears at the hearing
in person or by a duly authorized representative, such party
shall be deemed to have consented to the issuance of an order
under this section.
``(4) Issuance of order of suspension.--The Director may
issue an order under this section, as the Director may deem
appropriate, if--
``(A) a party is deemed to have consented to the issuance
of an order under paragraph (3); or
``(B) upon the record made at the hearing, the Director
finds that any of the grounds specified in the notice have
been established.
``(5) Effectiveness of order.--Any order issued under
paragraph (4) shall become effective at the expiration of 30
days after the date of service upon the relevant regulated
entity and party (except in the case of an order issued upon
consent under paragraph (3), which shall become effective at
the time specified therein). Such order shall remain
effective and enforceable except to such extent as it is
stayed, modified, terminated, or set aside by action of the
Director or a reviewing court.
``(d) Prohibition of Certain Specific Activities.--Any
person subject to an order issued under this section shall
not--
``(1) participate in any manner in the conduct of the
affairs of any regulated entity or the Office of Finance;
``(2) solicit, procure, transfer, attempt to transfer,
vote, or attempt to vote any proxy, consent, or authorization
with respect to any voting rights in any regulated entity;
``(3) violate any voting agreement previously approved by
the Director; or
``(4) vote for a director, or serve or act as an entity-
affiliated party of a regulated entity or as an officer or
director of the Office of Finance.
``(e) Industry-Wide Prohibition.--
``(1) In general.--Except as provided in paragraph (2), any
person who, pursuant to an order issued under this section,
has been removed or suspended from office in a regulated
entity or the Office of Finance, or prohibited from
participating in the conduct of the affairs of a regulated
entity or the Office of Finance, may not, while such order is
in effect, continue or commence to hold any office in, or
participate in any manner in the conduct of the affairs of,
any regulated entity or the Office of Finance.
``(2) Exception if director provides written consent.--If,
on or after the date on which an order is issued under this
section which removes or suspends from office any party, or
prohibits such party from participating in the conduct of the
affairs of a regulated entity or the Office of Finance, such
party receives the written consent of the Director, the order
shall, to the extent of such consent, cease to apply to such
party with respect to the regulated entity or such Office of
Finance described in the written consent. Any such consent
shall be publicly disclosed.
``(3) Violation of paragraph (1) treated as violation of
order.--Any violation of paragraph (1) by any person who is
subject to an order issued under subsection (h) shall be
treated as a violation of the order.
``(f) Applicability.--This section shall only apply to a
person who is an individual, unless the Director specifically
finds that it should apply to a corporation, firm, or other
business entity.
``(g) Stay of Suspension and Prohibition of Entity-
Affiliated Party.--Not later than 10 days after the date on
which any entity-affiliated party has been suspended from
office or prohibited from participation in the conduct of the
affairs of a regulated entity under this section, such party
may apply to the United States District Court for the
District of Columbia, or the United States district court for
the judicial district in which the headquarters of the
regulated entity is located, for a stay of such suspension or
prohibition pending the completion of the administrative
proceedings pursuant to subsection (c). The court shall have
jurisdiction to stay such suspension or prohibition.
``(h) Suspension or Removal of Entity-Affiliated Party
Charged With Felony.--
``(1) Suspension or prohibition.--
``(A) In general.--Whenever any entity-affiliated party is
charged in any information, indictment, or complaint, with
the commission of or participation in a crime involving
dishonesty or breach of trust which is punishable by
imprisonment for a term exceeding 1 year under Federal or
State law, the Director may, if continued service or
participation by such party may pose a threat to the
regulated entity or impair public confidence in the regulated
entity, by written notice served upon such party, suspend
such party from office or prohibit such party from further
participation in any manner in the conduct of the affairs of
any regulated entity.
``(B) Provisions applicable to notice.--
``(i) Copy.--A copy of any notice under subparagraph (A)
shall be served upon the relevant regulated entity.
``(ii) Effective period.--A suspension or prohibition under
subparagraph (A) shall remain in effect until the
information, indictment, or complaint referred to in
subparagraph (A) is finally disposed of, or until terminated
by the Director.
``(2) Removal or prohibition.--
``(A) In general.--If a judgment of conviction or an
agreement to enter a pretrial diversion or other similar
program is entered against an entity-affiliated party in
connection with a crime described in paragraph (1)(A), at
such time as such judgment is not subject to further
appellate review, the Director may, if continued service or
participation by such party may pose a threat to the
regulated entity or impair public confidence in the regulated
entity, issue and serve upon such party an order removing
such party from office or prohibiting such party from further
participation in any manner in the conduct of the affairs of
the regulated entity without the prior written consent of the
Director.
``(B) Provisions applicable to order.--
``(i) Copy.--A copy of any order under subparagraph (A)
shall be served upon the relevant regulated entity, at which
time the entity-affiliated party who is subject to the order
(if a director or an officer) shall cease to be a director or
officer of such regulated entity.
``(ii) Effect of acquittal.--A finding of not guilty or
other disposition of the charge shall not preclude the
Director from instituting proceedings after such finding or
disposition to remove a party from office or to prohibit
further participation in the affairs of a regulated entity
pursuant to subsection (a) or (b).
``(iii) Effective period.--Unless terminated by the
Director, any notice of suspension or order of removal issued
under this subsection shall remain effective and outstanding
until the completion of any hearing or appeal authorized
under paragraph (4).
``(3) Authority of remaining board members.--
``(A) In general.--If at any time, because of the
suspension of 1 or more directors pursuant to this section,
there shall be on the board of directors of a regulated
entity less than a quorum of directors not so suspended, all
powers and functions vested in or exercisable by such board
shall vest in and be exercisable by the director or directors
on the board not so suspended, until such time as there shall
be a quorum of the board of directors.
``(B) Appointment of temporary directors.--If all of the
directors of a regulated entity are suspended pursuant to
this section, the Director shall appoint persons to serve
temporarily as directors pending the termination of such
suspensions, or until such time as those who have been
suspended cease to be directors of the regulated entity and
their respective successors take office.
``(4) Hearing regarding continued participation.--
``(A) In general.--Not later than 30 days after the date of
service of any notice of suspension or order of removal
issued pursuant to paragraph (1) or (2), the entity-
affiliated party may request in writing an opportunity to
appear before the Director to show that the continued service
or participation in the conduct of the affairs of the
regulated entity by such party does not, or is not likely to,
pose a threat to the interests of the regulated entity, or
threaten to impair public confidence in the regulated entity.
``(B) Timing and form of hearing.--Upon receipt of a
request for a hearing under subparagraph (A), the Director
shall fix a time (not later than 30 days after the date of
receipt of such request, unless extended at the request of
such party) and place at which the entity-affiliated party
may appear, personally or through counsel, before the
Director or 1 or more designated employees of the Director to
submit written materials (or, at the discretion of the
Director, oral testimony) and oral argument.
``(C) Determination.--Not later than 60 days after the date
of a hearing under subparagraph (B), the Director shall
notify the entity-affiliated party whether the suspension or
prohibition from participation in any manner in the conduct
of the affairs of the regulated entity will be continued,
terminated, or otherwise modified, or whether the order
removing such party from office or prohibiting such party
from further participation in any manner in the conduct of
the affairs of the regulated entity will be rescinded or
otherwise modified. Such notification shall contain a
statement of the basis for any adverse decision of the
Director.
``(5) Rules.--The Director is authorized to prescribe such
rules as may be necessary to carry out this subsection.''.
(b) Conforming Amendments.--
(1) Safety and soundness act.--Subtitle C of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4501 et seq.) is amended--
(A) in section 1317(f), by striking ``section 1379B'' and
inserting ``section 1379D'';
(B) in section 1373(a)--
(i) in paragraph (1), by striking ``or 1376(c)'' and
inserting ``, 1376(c), or 1377'';
(ii) in paragraph (2), by inserting ``or 1377''
after''1371''; and
(iii) in paragraph (4), by inserting ``or removal or
prohibition'' after ``cease and desist''; and
(C) in section 1374(a)--
(i) by striking ``or 1376'' and inserting ``1313B , 1376,
or 1377''; and
(ii) by striking ``such section'' and inserting ``this
title''.
(2) Fannie mae charter act.--Section 308(b) of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1723(b))
is amended in the second sentence, by striking ``The'' and
inserting ``Except to the extent that action under section
1377 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 temporarily results in a lesser number,
the''.
(3) Freddie mac charter act.--Section 303(a)(2)(A) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1452(a)(2)(A))

[[Page S5871]]

is amended, in the second sentence, by striking ``The'' and
inserting ``Except to the extent action under section 1377 of
the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 temporarily results in a lesser number,
the''.

SEC. 1154. ENFORCEMENT AND JURISDICTION.

Section 1375 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4635) is
amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Enforcement.--The Director may, in the discretion of
the Director, apply to the United States District Court for
the District of Columbia, or the United States district court
within the jurisdiction of which the headquarters of the
regulated entity is located, for the enforcement of any
effective and outstanding notice or order issued under this
subtitle or subtitle B, or request that the Attorney General
of the United States bring such an action. Such court shall
have jurisdiction and power to order and require compliance
with such notice or order.''; and
(2) in subsection (b), by striking ``or 1376'' and
inserting ``1313B, 1376, or 1377''.

SEC. 1155. CIVIL MONEY PENALTIES.

Section 1376 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4636) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) In General.--The Director may impose a civil money
penalty in accordance with this section on any regulated
entity or any entity-affiliated party. The Director shall not
impose a civil penalty in accordance with this section on any
regulated entity or any entity-affiliated party for any
violation that is addressed under section 1345(a).'';
(2) by striking subsection (b) and inserting the following:
``(b) Amount of Penalty.--
``(1) First tier.--A regulated entity or entity-affiliated
party shall forfeit and pay a civil penalty of not more than
$10,000 for each day during which a violation continues, if
such regulated entity or party--
``(A) violates any provision of this title, the authorizing
statutes, or any order, condition, rule, or regulation under
this title or any authorizing statute;
``(B) violates any final or temporary order or notice
issued pursuant to this title;
``(C) violates any condition imposed in writing by the
Director in connection with the grant of any application or
other request by such regulated entity; or
``(D) violates any written agreement between the regulated
entity and the Director.
``(2) Second tier.--Notwithstanding paragraph (1), a
regulated entity or entity-affiliated party shall forfeit and
pay a civil penalty of not more than $50,000 for each day
during which a violation, practice, or breach continues, if--
``(A) the regulated entity or entity-affiliated party,
respectively--
``(i) commits any violation described in any subparagraph
of paragraph (1);
``(ii) recklessly engages in an unsafe or unsound practice
in conducting the affairs of the regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) the violation, practice, or breach--
``(i) is part of a pattern of misconduct;
``(ii) causes or is likely to cause more than a minimal
loss to the regulated entity; or
``(iii) results in pecuniary gain or other benefit to such
party.
``(3) Third tier.--Notwithstanding paragraphs (1) and (2),
any regulated entity or entity-affiliated party shall forfeit
and pay a civil penalty in an amount not to exceed the
applicable maximum amount determined under paragraph (4) for
each day during which such violation, practice, or breach
continues, if such regulated entity or entity-affiliated
party--
``(A) knowingly--
``(i) commits any violation described in any subparagraph
of paragraph (1);
``(ii) engages in any unsafe or unsound practice in
conducting the affairs of the regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) knowingly or recklessly causes a substantial loss to
the regulated entity or a substantial pecuniary gain or other
benefit to such party by reason of such violation, practice,
or breach.
``(4) Maximum amounts of penalties for any violation
described in paragraph (3).--The maximum daily amount of any
civil penalty which may be assessed pursuant to paragraph (3)
for any violation, practice, or breach described in paragraph
(3) is--
``(A) in the case of any entity-affiliated party, an amount
not to exceed $2,000,000; and
``(B) in the case of any regulated entity, $2,000,000.'';
(3) in subsection (c)--
(A) by striking ``enterprise'' each place that term appears
and inserting ``regulated entity'';
(B) by inserting ``or entity-affiliated party'' before ``in
writing''; and
(C) by inserting ``or entity-affiliated party'' before
``has been given'';
(4) in subsection (d)--
(A) by striking ``or director'' each place such term
appears and inserting ``director, or entity-affiliated
party'';
(B) by striking ``an enterprise'' and inserting ``a
regulated entity'';
(C) by striking ``the enterprise'' and inserting ``the
regulated entity'';
(D) by striking ``request the Attorney General of the
United States to'';
(E) by inserting ``, or the United States district court
within the jurisdiction of which the headquarters of the
regulated entity is located,'' after ``District of
Columbia'';
(F) by striking ``, or may, under the direction and control
of the Attorney General of the United States, bring such an
action''; and
(G) by striking ``and section 1374''; and
(5) in subsection (g), by striking ``An enterprise'' and
inserting ``A regulated entity''.

SEC. 1156. CRIMINAL PENALTY.

(a) In General.--Subtitle C of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4631 et seq.) is amended by inserting after section
1377, as added by this Act, the following:

``SEC. 1378. CRIMINAL PENALTY.

``Whoever, being subject to an order in effect under
section 1377, without the prior written approval of the
Director, knowingly participates, directly or indirectly, in
any manner (including by engaging in an activity specifically
prohibited in such an order) in the conduct of the affairs of
any regulated entity shall, notwithstanding section 3571 of
title 18, be fined not more than $1,000,000, imprisoned for
not more than 5 years, or both.''.
(b) Technical and 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 1379 (as so designated by this Act)--
(A) by striking ``an enterprise'' and inserting ``a
regulated entity''; and
(B) by striking ``the enterprise'' and inserting ``the
regulated entity'';
(2) in section 1379A (as so designated by this Act), by
striking ``an enterprise'' and inserting ``a regulated
entity'';
(3) in section 1379B(c) (as so designated by this Act), by
striking ``enterprise'' and inserting ``regulated entity'';
and
(4) in section 1379D (as so designated by this Act), by
striking ``enterprise'' and inserting ``regulated entity''.

SEC. 1157. NOTICE AFTER SEPARATION FROM SERVICE.

Section 1379 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4637), as so
designated by this Act, is amended--
(1) by striking ``2-year'' and inserting ``6-year'';
(2) by striking ``a director or executive officer of an
enterprise'' and inserting ``an entity-affiliated party'';
(3) by striking ``director or officer'' each place that
term appears and inserting ``entity-affiliated party''; and
(4) by striking ``enterprise.'' and inserting ``regulated
entity.''.

SEC. 1158. SUBPOENA AUTHORITY.

(a) In General.--Section 1379B of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4641) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``administrative'';
(ii) by inserting ``, examination, or investigation'' after
``proceeding'';
(iii) by striking ``subtitle'' and inserting ``title''; and
(iv) by inserting ``or any designated representative
thereof, including any person designated to conduct any
hearing under this subtitle'' after ``Director''; and
(B) in paragraph (4), by striking ``issued by the
Director'';
(2) in subsection (b), by inserting ``or in any territory
or other place subject to the jurisdiction of the United
States'' after ``State'';
(3) by striking subsection (c) and inserting the following:
``(c) Enforcement.--
``(1) In general.--The Director, or any party to
proceedings under this subtitle, may apply to the United
States District Court for the District of Columbia, or the
United States district court for the judicial district of the
United States in any territory in which such proceeding is
being conducted, or where the witness resides or carries on
business, for enforcement of any subpoena or subpoena duces
tecum issued pursuant to this section.
``(2) Power of court.--The courts described under paragraph
(1) shall have the jurisdiction and power to order and
require compliance with any subpoena issued under paragraph
(1).'';
(4) in subsection (d), by inserting ``enterprise-affiliated
party'' before ``may allow''; and
(5) by adding at the end the following:
``(e) Penalties.--A person shall be guilty of a
misdemeanor, and upon conviction, shall be subject to a fine
of not more than $1,000 or to imprisonment for a term of not
more than 1 year, or both, if that person willfully fails or
refuses, in disobedience of a subpoena issued under
subsection (c), to--
``(1) attend court;
``(2) testify in court;
``(3) answer any lawful inquiry; or
``(4) produce books, papers, correspondence, contracts,
agreements, or such other records as requested in the
subpoena.''.

Subtitle E--General Provisions

SEC. 1161. CONFORMING AND TECHNICAL AMENDMENTS.

(a) Amendments to 1992 Act.--The Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.), as amended by this Act, is amended--

[[Page S5872]]

(1) in section 1315 (12 U.S.C. 4515)--
(A) in subsection (a)--
(i) by striking ``(a) Office Personnel.--The'' and
inserting ``(a) In General.--Subject to title III of the
Federal Housing Finance Regulatory Reform Act of 2008, the'';
and
(ii) by striking ``the Office'' each place that term
appears and inserting ``the Agency'';
(B) in subsection (c), by striking ``the Office'' and
inserting ``the Agency'';
(C) in subsection (e), by striking ``the Office'' and
inserting ``the Agency'';
(D) by striking subsection (d) and redesignating subsection
(e) as subsection (d); and
(E) by striking subsection (f);
(2) in section 1319A (12 U.S.C. 4520)--
(A) by striking ``(a) In General.--''; and
(B) by striking subsection (b);
(3) in section 1364(c) (12 U.S.C. 4614(c)), by striking the
last sentence;
(4) by striking section 1383 (12 U.S.C. 1451 note);
(5) in each of sections 1319D, 1319E, and 1319F (12 U.S.C.
4523, 4524, 4525) by striking ``the Office'' each place that
term appears and inserting ``the Agency''; and
(6) in each of sections 1319B and 1369(a)(3) (12 U.S.C.
4521, 4619(a)(3)), by striking ``Committee on Banking,
Finance and Urban Affairs'' each place such term appears and
inserting ``Committee on Financial Services''.
(b) Amendments to Fannie Mae Charter Act.--The Federal
National Mortgage Association Charter Act (12 U.S.C. 1716 et
seq.) is amended--
(1) in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)),
309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12
U.S.C. 1723a(k)(1)), by striking ``Director of the Office of
Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development'' each place that term appears,
and inserting ``Director of the Federal Housing Finance
Agency''; and
(2) in section 309--
(A) in subsection (m) (12 U.S.C. 1723a(m))--
(i) in paragraph (1), by striking ``to the Secretary, in a
form determined by the Secretary'' and inserting ``to the
Director of the Federal Housing Finance Agency, in a form
determined by the Director''; and
(ii) in paragraph (2), by striking ``to the Secretary, in a
form determined by the Secretary'' and inserting ``to the
Director of the Federal Housing Finance Agency, in a form
determined by the Director'';
(B) in subsection (n) (12 U.S.C. 1723a(n))--
(i) in paragraph (1), by striking ``and the Secretary'' and
inserting ``and the Director of the Federal Housing Finance
Agency''; and
(ii) in paragraph (2), by striking ``Secretary'' each place
that term appears and inserting ``Director of the Federal
Housing Finance Agency''; and
(C) in paragraph (3)(B), by striking ``Secretary'' and
inserting ``Director of the Federal Housing Finance Agency''.
(c) Amendments to Freddie Mac Charter Act.--The Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.)
is amended--
(1) in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)),
303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12
U.S.C. 1456(c)(1)), by striking ``Director of the Office of
Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development'' each place that term appears,
and inserting ``Director of the Federal Housing Finance
Agency'';
(2) in section 306 (12 U.S.C. 1455)--
(A) in subsection (c)(2), by inserting ``the'' after
``Secretary of'';
(B) in subsection (i)--
(i) by striking ``section 1316(c)'' and inserting ``section
306(c)''; and
(ii) by striking ``section 106'' and inserting ``section
1316''; and
(C) in subsection (j)(2), by striking ``of substantially''
and inserting ``or substantially''; and
(3) in section 307 (12 U.S.C. 1456)--
(A) in subsection (e)--
(i) in paragraph (1), by striking ``to the Secretary, in a
form determined by the Secretary'' and inserting ``to the
Director of the Federal Housing Finance Agency, in a form
determined by the Director''; and
(ii) in paragraph (2), by striking ``to the Secretary, in a
form determined by the Secretary'' and inserting ``to the
Director of the Federal Housing Finance Agency, in a form
determined by the Director''; and
(B) in subsection (f)--
(i) in paragraph (1), by striking ``and the Secretary'' and
inserting ``and the Director of the Federal Housing Finance
Agency'';
(ii) in paragraph (2), by striking ``the Secretary'' each
place that term appears and inserting ``the Director of the
Federal Housing Finance Agency''; and
(iii) in paragraph (3)(B), by striking ``Secretary'' and
inserting ``Director of the Federal Housing Finance Agency''.
(d) Amendment to Title 18, United States Code.--Section
1905 of title 18, United States Code, is amended by striking
``Office of Federal Housing Enterprise Oversight'' and
inserting ``Federal Housing Finance Agency''.
(e) Amendments to Flood Disaster Protection Act of 1973.--
Section 102(f)(3)(A) of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking
``Director of the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban
Development'' and inserting ``Director of the Federal Housing
Finance Agency''.
(f) Amendment to Department of Housing and Urban
Development Act.--Section 5 of the Department of Housing and
Urban Development Act (42 U.S.C. 3534) is amended by striking
subsection (d).
(g) Amendments to Title 5, United States Code.--Title 5,
United States Code, is amended--
(1) in section 5313, by striking the item relating to the
Director of the Office of Federal Housing Enterprise
Oversight, Department of Housing and Urban Development and
inserting the following new item:
``Director of the Federal Housing Finance Agency.''; and
(2) in section 3132(a)(1)--
(A) in subparagraph (B), by striking ``,, and'' and
inserting ``, and'';
(B) in subparagraph (D)--
(i) by striking ``the Federal Housing Finance Board'';
(ii) by striking ``the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban
Development'' and inserting ``the Federal Housing Finance
Agency''; and
(iii) by striking ``or or'' at the end;
(C) in subparagraph (E), as added by section
8(d)(1)(B)(iii) of Public Law 107-123, by adding ``or'' at
the end; and
(D) by redesignating subparagraph (E), as added by section
10702(c)(1)(C) of Public Law 107-171, as subparagraph (F).
(h) Amendment to 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 ``and
the Director of the Federal Housing Finance Agency,'' after
``Commission,''.
(i) Amendment to Federal Deposit Insurance Act.--Section
11(t)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C.
1821(t)(2)(A)) is amended by adding at the end the following:
``(vii) Federal Housing Finance Agency.''.

SEC. 1162. PRESIDENTIALLY-APPOINTED DIRECTORS OF ENTERPRISES.

(a) Fannie Mae.--
(1) In general.--Section 308(b) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723(b)) is
amended--
(A) in the first sentence, by striking ``eighteen persons,
five of whom shall be appointed annually by the President of
the United States, and the remainder of whom'' and inserting
``13 persons, or such other number that the Director
determines appropriate, who'';
(B) in the second sentence, by striking ``appointed by the
President'';
(C) in the third sentence--
(i) by striking ``appointed or''; and
(ii) by striking ``, except that any such appointed member
may be removed from office by the President for good cause'';
(D) in the fourth sentence, by striking ``elective''; and
(E) by striking the fifth sentence.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of
the board of directors of the Federal National Mortgage
Association until the expiration of the annual term for such
position during which the effective date under section 1163
occurs.
(b) Freddie Mac.--
(1) In general.--Section 303(a)(2) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended--
(A) in subparagraph (A)--
(i) in the first sentence, by striking ``18 persons, 5 of
whom shall be appointed annually by the President of the
United States and the remainder of whom'' and inserting ``13
persons, or such other number as the Director determines
appropriate, who''; and
(ii) in the second sentence, by striking ``appointed by the
President of the United States'';
(B) in subparagraph (B)--
(i) by striking ``such or''; and
(ii) by striking ``, except that any appointed member may
be removed from office by the President for good cause''; and
(C) in subparagraph (C)--
(i) by striking the first sentence; and
(ii) by striking ``elective''.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of
the board of directors of the Federal Home Loan Mortgage
Corporation until the expiration of the annual term for such
position during which the effective date under section 1163
occurs.

SEC. 1163. EFFECTIVE DATE.

Except as otherwise specifically provided in this title,
this title and the amendments made by this title shall take
effect on, and shall apply beginning on, the date of
enactment of this Act.

TITLE II--FEDERAL HOME LOAN BANKS

SEC. 1201. RECOGNITION OF DISTINCTIONS BETWEEN THE
ENTERPRISES AND THE FEDERAL HOME LOAN BANKS.

Section 1313 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended
by adding at the end the following:
``(f) Recognition of Distinctions Between the Enterprises
and the Federal Home Loan Banks.--Prior to promulgating any
regulation or taking any other formal or informal agency
action of general applicability relating to the Federal Home
Loan Banks, including the issuance of an advisory document or
examination guidance, the Director shall consider the
differences between the Federal Home Loan Banks and the
enterprises with respect to--
``(1) the Banks'--
``(A) cooperative ownership structure;

[[Page S5873]]

``(B) the mission of providing liquidity to members;
``(C) affordable housing and community development mission;
``(D) capital structure; and
``(E) joint and several liability; and
``(2) any other differences that the Director considers
appropriate.''.

SEC. 1202. DIRECTORS.

Section 7 of the Federal Home Loan Bank Act (12 U.S.C.
1427) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Number; Election; Qualifications; Conflicts of
Interest.--
``(1) In general.--Subject to paragraphs (2) through (4),
the management of each Federal Home Loan Bank shall be vested
in a board of 13 directors, or such other number as the
Director determines appropriate.
``(2) Board makeup.--The board of directors of each Bank
shall be comprised of--
``(A) member directors, who shall comprise at least the
majority of the members of the board of directors; and
``(B) independent directors, who shall comprise not fewer
than \2/5\ of the members of the board of directors.
``(3) Selection criteria.--
``(A) In general.--Each member of the board of directors
shall be--
``(i) elected by plurality vote of the members, in
accordance with procedures established under this section;
and
``(ii) a citizen of the United States.
``(B) Independent director criteria.--
``(i) In general.--Each independent director that is not a
public interest director under clause (ii) shall have
demonstrated knowledge of, or experience in, financial
management, auditing and accounting, risk management
practices, derivatives, project development, or
organizational management, or such other knowledge or
expertise as the Director may provide by regulation.
``(ii) Public interest.--Not fewer than 2 of the
independent directors shall have more than 4 years of
experience in representing consumer or community interests on
banking services, credit needs, housing, or financial
consumer protections.
``(iii) Conflicts of interest.--No independent director
may, during the term of service on the board of directors,
serve as an officer of any Federal Home Loan Bank or as a
director, officer, or employee of any member of a Bank, or of
any person that receives advances from a Bank.
``(4) Definitions.--For purposes of this section, the
following definitions shall apply:
``(A) Independent director.--The terms `independent
director' and `independent directorship' mean a member of the
board of directors of a Federal Home Loan Bank who is a bona
fide resident of the district in which the Federal Home Loan
Bank is located, or the directorship held by such a person,
respectively.
``(B) Member director.--The terms `member director' and
`member directorship' mean a member of the board of directors
of a Federal Home Loan Bank who is an officer or director of
a member institution that is located in the district in which
the Federal Home Loan Bank is located, or the directorship
held by such a person, respectively.'';
(2) by striking ``elective'' each place that term appears,
other than in subsections (d), (e), and (f), and inserting
``member'';
(3) in subsection (b)--
(A) by striking the subsection heading and all that follows
through ``Each elective directorship'' and inserting the
following:
``(b) Directorships.--
``(1) Member directorships.--Each member directorship'';
and
(B) by adding at the end the following:
``(2) Independent directorships.--
``(A) Elections.--Each independent director--
``(i) shall be elected by the members entitled to vote,
from among eligible persons nominated, after consultation
with the Advisory Council of the Bank, by the board of
directors of the Bank; and
``(ii) shall be elected by a plurality of the votes of the
members of the Bank at large, with each member having the
number of votes for each such directorship as it has under
paragraph (1) in an election to fill member directorships.
``(B) Criteria.--Nominees shall meet all applicable
requirements prescribed in this section.
``(C) Nomination and election procedures.--Procedures for
nomination and election of independent directors shall be
prescribed by the bylaws of each Federal Home Loan Bank, in a
manner consistent with the rules and regulations of the
Agency.'';
(4) in subsection (c)--
(A) by striking ``elective'' each place that term appears
and inserting ``member'', except--
(i) in the second sentence, the second place that term
appears; and
(ii) each place that term appears in the fifth sentence;
and
(B) in the second sentence--
(i) by inserting ``(A) except as provided in clause (B) of
this sentence,'' before ``if at any time''; and
(ii) by inserting before the period at the end the
following: ``, and (B) clause (A) of this sentence shall not
apply to the directorships of any Federal Home Loan Bank
resulting from the merger of any 2 or more such Banks'';
(5) in subsection (d)--
(A) in the first sentence--
(i) by striking ``, whether elected or appointed,''; and
(ii) by striking ``3 years'' and inserting ``4 years'';
(B) in the second sentence--
(i) by striking ``Federal Home Loan Bank System
Modernization Act of 1999'' and inserting ``Federal Housing
Finance Regulatory Reform Act of 2008'';
(ii) by striking ``\1/3\'' and inserting ``\1/4\''; and
(iii) by striking ``or appointed''; and
(C) in the third sentence--
(i) by striking ``an elective'' each place that term
appears and inserting ``a''; and
(ii) by striking ``in any elective directorship or elective
directorships'';
(6) in subsection (f)--
(A) by striking paragraph (2);
(B) by striking ``appointed or'' each place that term
appears; and
(C) in paragraph (3)--
(i) by striking ``(3) Elected bank directors.--'' and
inserting ``(2) Election process.--''; and
(ii) by striking ``elective'' each place that term appears;
(7) in subsection (i)--
(A) in paragraph (1), by striking ``Subject to paragraph
(2), each'' and inserting ``Each''; and
(B) by striking paragraph (2) and inserting the following:
``(2) Annual report.--The Director shall include, in the
annual report submitted to the Congress pursuant to section
1319B of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, information regarding the compensation
and expenses paid by the Federal Home Loan Banks to the
directors on the boards of directors of the Banks.''; and
(8) by adding at the end the following:
``(l) Transition Rule.--Any member of the board of
directors of a Bank elected or appointed in accordance with
this section prior to the date of enactment of this
subsection may continue to serve as a member of that board of
directors for the remainder of the existing term of
service.''.

SEC. 1203. DEFINITIONS.

Section 2 of the Federal Home Loan Bank Act (12 U.S.C.
1422) is amended--
(1) by striking paragraphs (1), (10), and (11);
(2) by redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;
(3) by redesignating paragraphs (12) and (13) as paragraphs
(9) and (10), respectively; and
(4) by adding at the end the following:
``(11) Director.--The term `Director' means the Director of
the Federal Housing Finance Agency.
``(12) Agency.--The term `Agency' means the Federal Housing
Finance Agency, established under section 1311 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992.''.

SEC. 1204. AGENCY OVERSIGHT OF FEDERAL HOME LOAN BANKS.

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.),
other than in provisions of that Act added or amended
otherwise by this Act, is amended--
(1) by striking sections 2A and 2B (12 U.S.C. 1422a,
1422b);
(2) by striking section 18 (12 U.S.C. 1438) and inserting
the following:

``SEC. 18. ADMINISTRATIVE PROVISIONS.

``(a) Acquisition Authority.--The Director of the Office of
Thrift Supervision, utilizing the services of the
Administrator of General Services (hereinafter referred to as
the `Administrator'), and subject to any limitation hereon
which may hereafter be imposed in appropriation Acts, is
hereby authorized--
``(1) to acquire, in the name of the United States, real
property in the District of Columbia, for the purposes set
forth in this section;
``(2) to construct, develop, furnish, and equip such
buildings thereon and such facilities as in its judgment may
be appropriate to provide, to such extent as the Director of
the Office of Thrift Supervision may deem advisable, suitable
and adequate quarters and facilities for the Director of the
Office of Thrift Supervision and the agencies under its
administration or supervision;
``(3) to enlarge, remodel, or reconstruct any of the same;
and
``(4) to make or enter into contracts for any of the
foregoing.
``(b) Advances.--The Director of the Office of Thrift
Supervision may require of the respective banks, and they
shall make to the Director of the Office of Thrift
Supervision, such advances of funds for the purposes set out
in subsection (a) as in the sole judgment of the Director of
the Office of Thrift Supervision may from time to time be
advisable. Such advances shall be apportioned by the Director
of the Office of Thrift Supervision among the banks in
proportion to the total assets of the respective banks,
determined in such manner and as of such times as the
Director of the Office of Thrift Supervision may prescribe.
Each such advance shall bear interest at the rate of 4 \1/2\
per centum per annum from the date of the advance and shall
be repaid by the Director of the Office of Thrift Supervision
in such installments and over such period, not longer than
twenty-five years from the making of the advance, as the
Director of the Office of Thrift Supervision may determine.
Payments of interest and principal upon such advances shall
be made from receipts of the Director of the Office of Thrift
Supervision or from other sources which may from time to time
be available to the Director of the Office of Thrift
Supervision. The obligation of the Director of the Office of
Thrift Supervision to

[[Page S5874]]

make any such payment shall not be regarded as an obligation
of the United States. To such extent as the Director of the
Office of Thrift Supervision may prescribe any such
obligation shall be regarded as a legal investment for the
purposes of subsections (g) and (h) of section 11 and for the
purposes of section 16.
``(c) Plans and Designs.--The plans and designs for such
buildings and facilities and for any such enlargement,
remodeling, or reconstruction shall, to such extent as the
chairperson of the Director of the Office of Thrift
Supervision may request, be subject to the approval of the
Director.
``(d) Custody, Management and Control.--Upon the making of
arrangements mutually agreeable to the Director of the Office
of Thrift Supervision and the Administrator, which
arrangements may be modified from time to time by mutual
agreement between them and may include but shall not be
limited to the making of payments by the Director of the
Office of Thrift Supervision and such agencies to the
Administrator and by the Administrator to the Director of the
Office of Thrift Supervision, the custody, management, and
control of such buildings and facilities and of such real
property shall be vested in the Administrator in accordance
therewith. Until the making of such arrangements, such
custody, management, and control, including the assignment
and allotment and the reassignment and reallotment of
building and other space, shall be vested in the Director of
the Office of Thrift Supervision.
``(e) Proceeds.--Any proceeds (including advances) received
by the Director of the Office of Thrift Supervision in
connection with this subsection, and any proceeds from the
sale or other disposition of real or other property acquired
by the Director of the Office of Thrift Supervision under
this section, shall be considered as receipts of the Director
of the Office of Thrift Supervision, and obligations and
expenditures of the Director of the Office of Thrift
Supervision and such agencies in connection with this section
shall not be considered as administrative expenses. As used
in this section, the term `property' shall include interests
in property.
``(f) Budget Program.--
``(1) In general.--With respect to its functions under this
section, the Director of the Office of Thrift Supervision
shall--
``(A) annually prepare and submit a budget program as
provided in title I of the Government Corporation Control Act
with regard to wholly owned Government corporations, and for
purposes of this paragraph, the terms `wholly owned
Government corporations' and `Government corporations',
wherever used in such title, shall include the Director of
the Office of Thrift Supervision; and
``(B) maintain an integral set of accounts which shall be
audited by the General Accounting Office in accordance with
the principles and procedures applicable to commercial
corporate transactions, as provided in such title, and no
other settlement or adjustment shall be required with respect
to transactions under this section or with respect to claims,
demands, or accounts by or against any person arising
thereunder.
``(2) Miscellaneous provisions.--The first budget program
shall be for the first full fiscal year beginning on or after
the date of enactment of this subsection. Except as otherwise
provided in this section or by the Director of the Office of
Thrift Supervision, the provisions of this section and the
functions thereby or thereunder subsisting shall be
applicable and exercisable notwithstanding and without regard
to the Act of June 20, 1938 (D.C. Code, secs. 5-413--5-428),
except that the proviso of section 16 thereof shall apply to
any building constructed under this section, and section 306
of the Act of July 30, 1947 (61 Stat. 584), or any other
provision of law relating to the construction, alteration,
repair, or furnishing of public or other buildings or
structures or the obtaining of sites therefor, but any person
or body in whom any such function is vested may provide for
delegation or redelegation of the exercise of such function.
``(g) Limitation.--No obligation shall be incurred and no
expenditure, except in liquidation of obligation, shall be
made pursuant to paragraphs (1) and (2) of subsection (a), if
the total amount of all obligations incurred pursuant thereto
would thereupon exceed $13,200,000, or such greater amount as
may be provided in an appropriations Act or other law.''.
(3) in section 11 (12 U.S.C. 1431)--
(A) in subsection (b)--
(i) in the first sentence--

(I) by striking ``The Board'' and inserting ``The Office of
Finance, as agent for the Banks,''; and
(II) by striking ``the Board'' and inserting ``such
Office''; and

(ii) in the second and fourth sentences, by striking ``the
Board'' each place such term appears and inserting ``the
Office of Finance'';
(B) in subsection (c)--
(i) by striking ``the Board'' the first place such term
appears and inserting ``the Office of Finance, as agent for
the Banks,''; and
(ii) by striking ``the Board'' the second place such term
appears and inserting ``such Office''; and
(C) in subsection (f)--
(i) by striking the 2 commas after ``permit'' and inserting
``or''; and
(ii) by striking the comma after ``require'';
(4) in section 6 (12 U.S.C. 1426)--
(A) in subsection (b)(1), in the matter preceding
subparagraph (A), by striking ``Finance Board approval'' and
inserting ``approval by the Director''; and
(B) in each of subsections (c)(4)(B) and (d)(2), by
striking ``Finance Board regulations'' each place that term
appears and inserting ``regulations of the Director'';
(5) in section 10(b) (12 U.S.C. 1430(b))--
(A) in the subsection heading, by striking ``Formal Board
Resolution'' and inserting ``Approval of Director''; and
(B) by striking ``by formal resolution'';
(6) in section 21(b)(5) (12 U.S.C. 1441(b)(5)), by striking
``Chairperson of the Federal Housing Finance Board'' and
inserting ``Director'';
(7) in section 15 (12 U.S.C. 1435), by inserting ``or the
Director'' after ``the Board'';
(8) by striking ``the Board'' each place that term appears
and inserting ``the Director'';
(9) by striking ``The Board'' each place that term appears
and inserting ``The Director'';
(10) by striking ``the Finance Board'' each place that term
appears and inserting ``the Director'';
(11) by striking ``The Finance Board'' each place that term
appears and inserting ``The Director''; and
(12) by striking ``Federal Housing Finance Board'' each
place that term appears and inserting ``Director''.

SEC. 1205. HOUSING GOALS.

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is
amended by inserting after section 10b the following new
section:

``SEC. 10C. HOUSING GOALS.

``(a) In General.--The Director shall establish housing
goals with respect to the purchase of mortgages, if any, by
the Federal Home Loan Banks. Such goals shall be consistent
with the goals established under sections 1331 through 1334
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992.
``(b) Considerations.--In establishing the goals required
by subsection (a), the Director shall consider the unique
mission and ownership structure of the Federal Home Loan
Banks.
``(c) Transition Period.--To facilitate an orderly
transition, the Director shall establish interim target goals
for purposes of this section for each of the 2 calendar years
following the date of enactment of this section.
``(d) Monitoring and Enforcement of Goals.--The
requirements of section 1336 of the Federal Housing
Enterprises Safety and Soundness Act of 1992, shall apply to
this section, in the same manner and to the same extent as
that section applies to the Federal housing enterprises.
``(e) Annual Report.--The Director shall annually report to
Congress on the performance of the Banks in meeting the goals
established under this section.''.

SEC. 1206. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.

Section 4(a)(1) of the Federal Home Loan Bank Act (12
U.S.C. 1424(a)(1)) is amended--
(1) by inserting after ``savings bank,'' the following:
``community development financial institution,''; and
(2) in subparagraph (B), by inserting after ``United
States,'' the following: ``or, in the case of a community
development financial institution, is certified as a
community development financial institution under the
Community Development Banking and Financial Institutions Act
of 1994.''.

SEC. 1207. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN
BANKS.

The Federal Home Loan Bank Act is amended by inserting
after section 20 (12 U.S.C. 1440) the following new section:

``SEC. 20A. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN
BANKS.

``(a) Information on Financial Condition.--In order to
enable each Federal Home Loan Bank to evaluate the financial
condition of one or more of the other Federal Home Loan Banks
individually and the Federal Home Loan Bank System (including
any risks associated with the issuance or repayment of
consolidated Federal Home Loan Bank bonds and debentures or
other borrowings and the joint and several liabilities of the
Banks incurred due to such borrowings), as well as to comply
with any of its obligations under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.), the Director shall make
available to the Banks such reports, records, or other
information as may be available, relating to the condition of
any Federal Home Loan Bank.
``(b) Sharing of Information.--
``(1) In general.--The Director shall promulgate
regulations to facilitate the sharing of information made
available under subsection (a) directly among the Federal
Home Loan Banks.
``(2) Limitation.--Notwithstanding paragraph (1), a Federal
Home Loan Bank responding to a request from another Bank or
from the Director for information pursuant to this section
may request that the Director determine that such information
is proprietary and that the public interest requires that
such information not be shared.
``(c) Limitation.--Nothing in this section shall affect the
obligations of any Federal Home Loan Bank under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or
the regulations issued by the Securities and Exchange
Commission thereunder.''.

SEC. 1208. EXCLUSION FROM CERTAIN REQUIREMENTS.

(a) In General.--The Federal Home Loan Banks shall be
exempt from compliance with--
(1) sections 13(e), 14(a), and 14(c) of the Securities
Exchange Act of 1934, and related Commission regulations;

[[Page S5875]]

(2) section 15 of the Securities Exchange Act of 1934, and
related Commission regulations, with respect to transactions
in the capital stock of a Federal Home Loan Bank;
(3) section 17A of the Securities Exchange Act of 1934, and
related Commission regulations, with respect to the transfer
of the securities of a Federal Home Loan Bank; and
(4) the Trust Indenture Act of 1939.
(b) Member Exemption.--The members of the Federal Home Loan
Bank System shall be exempt from compliance with sections
13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange
Act of 1934, and related Commission regulations, with respect
to ownership of or transactions in the capital stock of the
Federal Home Loan Banks by such members.
(c) Exempted and Government Securities.--
(1) Capital stock.--The capital stock issued by each of the
Federal Home Loan Banks under section 6 of the Federal Home
Loan Bank Act are--
(A) exempted securities, within the meaning of section
3(a)(2) of the Securities Act of 1933; and
(B) exempted securities, within the meaning of section
3(a)(12)(A) of the Securities Exchange Act of 1934, except to
the extent provided in section 38 of that Act.
(2) Other obligations.--The debentures, bonds, and other
obligations issued under section 11 of the Federal Home Loan
Bank Act (12 U.S.C. 1431) are--
(A) exempted securities, within the meaning of section
3(a)(2) of the Securities Act of 1933;
(B) government securities, within the meaning of section
3(a)(42) of the Securities Exchange Act of 1934; and
(C) government securities, within the meaning of section
2(a)(16) of the Investment Company Act of 1940.
(3) Brokers and dealers.--A person (other than a Federal
Home Loan Bank effecting transactions for members of the
Federal Home Loan Bank System) that effects transactions in
the capital stock or other obligations of a Federal Home Loan
Bank, for the account of others or for that person's own
account, as applicable, is a broker or dealer, as those terms
are defined in paragraphs (4) and (5), respectively, of
section 3(a) of the Securities Exchange Act of 1934, but is
excluded from the definition of--
(A) the term ``government securities broker'' under section
3(a)(43) of the Securities Exchange Act of 1934; and
(B) the term ``government securities dealer'' under section
3(a)(44) of the Securities Exchange Act of 1934.
(d) Exemption From Reporting Requirements.--The Federal
Home Loan Banks shall be exempt from periodic reporting
requirements under the securities laws pertaining to the
disclosure of--
(1) related party transactions that occur in the ordinary
course of the business of the Banks with members; and
(2) the unregistered sales of equity securities.
(e) Tender Offers.--Commission rules relating to tender
offers shall not apply in connection with transactions in the
capital stock of the Federal Home Loan Banks.
(f) Regulations.--
(1) In general.--The Commission shall promulgate such rules
and regulations as may be necessary or appropriate in the
public interest or in furtherance of this section and the
exemptions provided in this section.
(2) Considerations.--In issuing regulations under this
section, the Commission shall consider the distinctive
characteristics of the Federal Home Loan Banks when
evaluating--
(A) the accounting treatment with respect to the payment to
the Resolution Funding Corporation;
(B) the role of the combined financial statements of the
Federal Home Loan Banks;
(C) the accounting classification of redeemable capital
stock; and
(D) the accounting treatment related to the joint and
several nature of the obligations of the Banks.
(g) Definitions.--As used in this section--
(1) the terms ``Bank'', ``Federal Home Loan Bank'',
``member'', and ``Federal Home Loan Bank System'' have the
same meanings as in section 2 of the Federal Home Loan Bank
Act (12 U.S.C. 1422);
(2) the term ``Commission'' means the Securities and
Exchange Commission; and
(3) the term ``securities laws'' has the same meaning as in
section 3(a)(47) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(47)).

SEC. 1209. VOLUNTARY MERGERS.

Section 26 of the Federal Home Loan Bank Act (12 U.S.C.
1446) is amended--
(1) by striking ``Whenever'' and inserting ``(a) In
General.--Whenever''; and
(2) by adding at the end the following:
``(b) Voluntary Mergers Authorized.--
``(1) In general.--Any Federal Home Loan Bank may, with the
approval of the Director and of the boards of directors of
the Banks involved, merge with another Bank.
``(2) Regulations required.--The Director shall promulgate
regulations establishing the conditions and procedures for
the consideration and approval of any voluntary merger
described in paragraph (1), including the procedures for Bank
member approval.''.

SEC. 1210. AUTHORITY TO REDUCE DISTRICTS.

Section 3 of the Federal Home Loan Bank Act (12 U.S.C.
1423) is amended--
(1) by striking ``As soon'' and inserting ``(a) In
General.--As soon''; and
(2) by adding at the end the following:
``(b) Authority to Reduce Districts.--Notwithstanding
subsection (a), the number of districts may be reduced to a
number less than 8--
``(1) pursuant to a voluntary merger between Banks, as
approved pursuant to section 26(b); or
``(2) pursuant to a decision by the Director to liquidate a
Bank pursuant to section 1367 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992.''.

SEC. 1211. COMMUNITY FINANCIAL INSTITUTION MEMBERS.

(a) Total Asset Requirement.--Paragraph (10) of section 2
of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so
redesignated by section 201(3) of this Act, is amended by
striking ``$500,000,000'' each place such term appears and
inserting ``$1,000,000,000''.
(b) Use of Advances for Community Development Activities.--
Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C.
1430(a)) is amended--
(1) in paragraph (2)(B)--
(A) by striking ``and''; and
(B) by inserting ``, and community development activities''
before the period at the end;
(2) in paragraph (3)(E), by inserting ``or community
development activities'' after ``agriculture,''; and
(3) in paragraph (6)--
(A) by striking ``and''; and
(B) by inserting ``, and `community development activities'
'' before ``shall''.

SEC. 1212. PUBLIC USE DATA BASE; REPORTS TO CONGRESS.

Section 10 of the Federal Home Loan Bank Act (12 U.S.C.
1430) is amended--
(1) in subsection (j)(12)--
(A) by striking subparagraph (C) and inserting the
following:
``(C) Reports.--The Director shall annually 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 collateral pledged to the Banks,
including an analysis of collateral by type and by Bank
district.''; and
(B) by adding at the end the following:
``(D) Submission to congress.--The Director shall submit
the reports under subparagraphs (A) and (C) to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives, not later than 180 days after the date of
enactment of the Federal Housing Finance Regulatory Reform
Act of 2008.''; and
(2) by adding at the end the following:
``(k) Public Use Database.--
``(1) Data.--Each Federal Home Loan Bank shall provide to
the Director, in a form determined by the Director, census
tract level data relating to mortgages purchased, if any,
including--
``(A) data consistent with that reported under section 1323
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992;
``(B) data elements required to be reported under the Home
Mortgage Disclosure Act of 1975; and
``(C) any other data elements that the Director considers
appropriate.
``(2) Public use database.--
``(A) In general.--The Director shall make available to the
public, in a form that is useful to the public (including
forms accessible electronically), and to the extent
practicable, the data provided to the Director under
paragraph (1).
``(B) Proprietary information.--Not withstanding
subparagraph (A), the Director may not provide public access
to, or disclose to the public, any information required to be
submitted under this subsection that the Director determines
is proprietary or that would provide personally identifiable
information and that is not otherwise publicly accessible
through other forms, unless the Director determines that it
is in the public interest to provide such information.''.

SEC. 1213. SEMIANNUAL REPORTS.

Section 21B of the Federal Home Loan Bank Act is amended in
subsection (f)(2)(C), by adding at the end the following:
``(v) Semiannual reports.--The Director shall report
semiannually 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 projected date for the
completion of contributions required by this section.''.

SEC. 1214. LIQUIDATION OR REORGANIZATION OF A FEDERAL HOME
LOAN BANK.

Section 26 of the Federal Home Loan Bank Act (12 U.S.C.
1446) is amended by adding at the end the following: ``At
least 30 days prior to liquidating or reorganizing any Bank
under this section, the Director shall notify the Bank of its
determination and the facts and circumstances upon which such
determination is based. The Bank may contest that
determination in a hearing before the Director, in which all
issues shall be determined on the record pursuant to section
554 of title 5, United States Code.''.

SEC. 1215. STUDY AND REPORT TO CONGRESS ON SECURITIZATION OF
ACQUIRED MEMBER ASSETS.

(a) Study.--The Director shall conduct a study on
securitization of home mortgage loans purchased or to be
purchased from member financial institutions under the
Acquired Member Assets programs. In conducting the study, the
Director shall establish a process for the formal submission
of comments.

[[Page S5876]]

(b) Elements.--The study shall encompass--
(1) the benefits and risks associated with securitization
of Acquired Member Assets;
(2) the potential impact of securitization upon liquidity
in the mortgage and broader credit markets;
(3) the ability of the Federal Home Loan Bank or Banks in
question to manage the risks associated with such a program;
(4) the impact of such a program on the existing activities
of the Banks, including their mortgage portfolios and
advances; and
(5) the joint and several liability of the Banks and the
cooperative structure of the Federal Home Loan Bank System.
(c) Consultations.--In conducting the study under this
section, the Director shall consult with the Federal Home
Loan Banks, the Banks' fiscal agent, representatives of the
mortgage lending industry, practitioners in the structured
finance field, and other experts as needed.
(d) Report.--Not later than 1 year after the date of
enactment of this Act, the Director shall submit a report to
Congress on the results of the study conducted under
subsection (a), including policy recommendations based on the
analysis of the Director of the feasibility of mortgage-
backed securities issuance by a Federal Home Loan Bank or
Banks and the risks and benefits associated with such program
or programs.
(e) Definitions.--As used in this section, the terms
``member'', ``Bank'', and ``Federal Home Loan Bank'' have the
same meanings as in section 2 of the Federal Home Loan Bank
Act (12 U.S.C. 1422).

SEC. 1216. TECHNICAL AND CONFORMING AMENDMENTS.

(a) 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--
(1) by striking ``Federal Housing Finance Board'' and
inserting ``Federal Housing Finance Agency''; and
(2) by striking ``Federal Housing Finance Board's'' and
inserting ``Federal Housing Finance Agency's''.
(b) 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 striking ``Federal Housing Finance
Board'' and inserting ``Federal Housing Finance Agency''.
(c) Title 18, United States Code.--Title 18, United States
Code, is amended by striking ``Federal Housing Finance
Board'' each place such term appears in each of sections 212,
657, 1006, and 1014, and inserting ``Federal Housing Finance
Agency''.
(d) 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 striking ``Federal
Housing Finance Board'' and inserting ``Federal Housing
Finance Agency''.
(e) Title 44, United States Code.--Section 3502(5) of title
44, United States Code, is amended by striking ``Federal
Housing Finance Board'' and inserting ``Federal Housing
Finance Agency''.
(f) 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 striking ``Office of
Federal Housing Enterprise Oversight, the Federal Housing
Finance Board'' and inserting ``Federal Housing Finance
Agency''.
(g) FIRREA.--Section 1216 of the Financial Institutions
Reform, Recovery, and Enhancement Act of 1989 (12 U.S.C.
1833e) is amended--
(1) in subsection (a), by striking paragraph (3) and
inserting the following:
``(3) the Federal Housing Finance Agency;'';
(2) in subsection (b), by striking ``Federal National
Mortgage Association'' and inserting ``Federal Home Loan
Banks, the Federal National Mortgage Association,''; and
(3) in subsection (c), by striking ``Finance Board'' and
inserting ``Finance Agency''.

SEC. 1217. STUDY ON FEDERAL HOME LOAN BANK ADVANCES.

(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Director shall conduct a study and
submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House or Representatives on the extent to
which loans and securities used as collateral to support
Federal Home Loan Bank advances are consistent with the
interagency guidance on nontraditional mortgage products.
(b) Required Content.--The study required under subsection
(a) shall--
(1) consider and recommend any additional regulations,
guidance, advisory bulletins, or other administrative actions
necessary to ensure that the Federal Home Loan Banks are not
supporting loans with predatory characteristics; and
(2) include an opportunity for the public to comment on any
recommendations made under paragraph (1).

SEC. 1218. FEDERAL HOME LOAN BANK REFINANCING AUTHORITY FOR
CERTAIN RESIDENTIAL MORTGAGE LOANS.

Section 10(j)(2) of the Federal Home Loan Bank Act (12
U.S.C. 1430(j)(2)) is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(C) during the 2-year period beginning on the date of
enactment of this subparagraph, refinance loans that are
secured by a first mortgage on a primary residence of any
family having an income at or below 80 percent of the median
income for the area.''.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND
THE FEDERAL HOUSING FINANCE BOARD

Subtitle A--OFHEO

SEC. 1301. ABOLISHMENT OF OFHEO.

(a) In General.--Effective at the end of the 1-year period
beginning on the date of enactment of this Act, the Office of
Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development and the positions of the
Director and Deputy Director of such Office are abolished.
(b) Disposition of Affairs.--During the 1-year period
beginning on the date of enactment of this Act, the Director
of the Office of Federal Housing Enterprise Oversight, solely
for the purpose of winding up the affairs of the Office of
Federal Housing Enterprise Oversight--
(1) shall manage the employees of such Office and provide
for the payment of the compensation and benefits of any such
employee which accrue before the effective date of the
transfer of such employee under section 1303; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Office.
(c) Status of Employees Before Transfer.--The amendments
made by title I and the abolishment of the Office of Federal
Housing Enterprise Oversight under subsection (a) of this
section may not be construed to affect the status of any
employee of such Office as an employee of an agency of the
United States for purposes of any other provision of law
before the effective date of the transfer of any such
employee under section 1303.
(d) Use of Property and Services.--
(1) Property.--The Director may use the property of the
Office of Federal Housing Enterprise Oversight to perform
functions which have been transferred to the Director for
such time as is reasonable to facilitate the orderly transfer
of functions transferred under 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, which was
providing supporting services to the Office of Federal
Housing Enterprise Oversight before the expiration of the
period under subsection (a) in connection with functions that
are transferred to the Director 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 Director may use the
services of employees and other personnel of the Office of
Federal Housing Enterprise Oversight, on a reimbursable
basis, to perform functions which have been transferred to
the Director for such time as is reasonable to facilitate the
orderly transfer of functions pursuant to 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) shall not affect the validity of
any right, duty, or obligation of the United States, the
Director of the Office of Federal Housing Enterprise
Oversight, or any other person, which--
(A) arises under--
(i) the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992;
(ii) the Federal National Mortgage Association Charter Act;
(iii) the Federal Home Loan Mortgage Corporation Act; or
(iv) any other provision of law applicable with respect to
such Office; and
(B) existed on the day before the date of abolishment under
subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Director of the Office of Federal
Housing Enterprise Oversight in connection with functions
that are transferred to the Director of the Federal Housing
Finance Agency shall abate by reason of the enactment of this
Act, except that the Director of the Federal Housing Finance
Agency shall be substituted for the Director of the Office of
Federal Housing Enterprise Oversight as a party to any such
action or proceeding.

SEC. 1302. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

(a) In General.--All regulations, orders, and
determinations described in subsection (b) shall remain in
effect according to the terms of such regulations, orders,
and determinations, and shall be enforceable by or against
the Director or the Secretary of Housing and Urban
Development, as the case may be, until modified, terminated,
set aside, or superseded in accordance with applicable law by
the Director or the Secretary, as the case may be, any court
of competent jurisdiction, or operation of law.
(b) Applicability.--A regulation, order, or determination
is described in this subsection if it--
(1) was issued, made, prescribed, or allowed to become
effective by--
(A) the Office of Federal Housing Enterprise Oversight;

[[Page S5877]]

(B) the Secretary of Housing and Urban Development, and
relates to the authority of the Secretary under--
(i) the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992;
(ii) the Federal National Mortgage Association Charter Act,
with respect to the Federal National Mortgage Association; or
(iii) the Federal Home Loan Mortgage Corporation Act, with
respect to the Federal Home Loan Mortgage Corporation; or
(C) a court of competent jurisdiction, and relates to
functions transferred by this Act; and
(2) is in effect on the effective date of the abolishment
under section 1301(a).

SEC. 1303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

(a) Transfer.--Each employee of the Office of Federal
Housing Enterprise Oversight shall be transferred to the
Agency for employment, not later than the effective date of
the abolishment under section 1301(a), and such transfer
shall be deemed a transfer of function for purposes of
section 3503 of title 5, United States Code.
(b) Guaranteed Positions.--
(1) In general.--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.
(2) No involuntary separation or reduction.--An employee
transferred under subsection (a) holding a permanent position
on the day immediately preceding the transfer may not be
involuntarily separated or reduced in grade or compensation
during the 12-month period beginning on the date of transfer,
except for cause, or, in the case of a temporary employee,
separated in accordance with the terms of the appointment of
the employee.
(c) Appointment Authority for Excepted and Senior Executive
Service Employees.--
(1) In general.--In the case of an employee occupying a
position in the excepted service or the Senior Executive
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 Director may decline a
transfer of authority under paragraph (1) to the extent that
such authority relates to--
(A) a position excepted from the competitive service
because of its confidential, policymaking, policy-
determining, or policy-advocating character; or
(B) a noncareer position in the Senior Executive Service
(within the meaning of section 3132(a)(7) of title 5, United
States Code).
(d) Reorganization.--If the Director determines, after the
end of the 1-year period beginning on the effective date of
the abolishment under section 1301(a), 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.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Office of Federal
Housing Enterprise Oversight accepting employment with the
Agency 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 Office of Federal Housing Enterprise Oversight
of the Department of Housing and Urban Development, as
applicable, including insurance, to which such employee
belongs on the date of the abolishment under section 1301(a),
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 Director of
the Federal Housing Finance Agency.
(2) Cost differential.--
(A) In general.--The difference in the costs between the
benefits which would have been provided by the Office of
Federal Housing Enterprise Oversight and those provided by
this section shall be paid by the Director.
(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 Director, 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. 1304. TRANSFER OF PROPERTY AND FACILITIES.

Upon the effective date of its abolishment under section
1301(a), all property of the Office of Federal Housing
Enterprise Oversight shall transfer to the Agency.

Subtitle B--Federal Housing Finance Board

SEC. 1311. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.

(a) In General.--Effective at the end of the 1-year period
beginning on the date of enactment of this Act, the Federal
Housing Finance Board (in this subtitle referred to as the
``Board'') is abolished.
(b) Disposition of Affairs.--During the 1-year period
beginning on the date of enactment of this Act, the Board,
solely for the purpose of winding up the affairs of the
Board--
(1) shall manage the employees of the Board and provide for
the payment of the compensation and benefits of any such
employee which accrue before the effective date of the
transfer of such employee under section 1313; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Board.
(c) Status of Employees Before Transfer.--The amendments
made by titles I and II and the abolishment of the Board
under subsection (a) may not be construed to affect the
status of any employee of the Board as an employee of an
agency of the United States for purposes of any other
provision of law before the effective date of the transfer of
any such employee under section 1313.
(d) Use of Property and Services.--
(1) Property.--The Director may use the property of the
Board to perform functions which have been transferred to the
Director, for such time as is reasonable to facilitate the
orderly transfer of functions transferred under 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, which was
providing supporting services to the Board before the
expiration of the 1-year period under subsection (a) in
connection with functions that are transferred to the
Director 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 Director may use the
services of employees and other personnel of the Board, on a
reimbursable basis, to perform functions which have been
transferred to the Director for such time as is reasonable to
facilitate the orderly transfer of functions pursuant to 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) shall not affect the validity of
any right, duty, or obligation of the United States, a member
of the Board, or any other person, which--
(A) arises under the Federal Home Loan Bank Act, or any
other provision of law applicable with respect to the Board;
and
(B) existed on the day before the effective date of the
abolishment under subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Board in connection with
functions that are transferred under this Act to the Director
shall abate by reason of the enactment of this Act, except
that the Director shall be substituted for the Board or any
member thereof as a party to any such action or proceeding.

SEC. 1312. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

(a) In General.--All regulations, orders, determinations,
and resolutions described under subsection (b) shall remain
in effect according to the terms of such regulations, orders,
determinations, and resolutions, and shall be enforceable by
or against the Director until modified, terminated, set
aside, or superseded in accordance with applicable law by the
Director, any court of competent jurisdiction, or operation
of law.
(b) Applicability.--A regulation, order, determination, or
resolution is described under this subsection if it--
(1) was issued, made, prescribed, or allowed to become
effective by--
(A) the Board; or
(B) a court of competent jurisdiction, and relates to
functions transferred by this Act; and
(2) is in effect on the effective date of the abolishment
under section 1311(a).

SEC. 1313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL
HOUSING FINANCE BOARD.

(a) Transfer.--Each employee of the Board shall be
transferred to the Agency for employment, not later than the
effective date of the abolishment under section 1311(a), and
such transfer shall be deemed a transfer of function for
purposes of section 3503 of title 5, United States Code.
(b) Guaranteed Positions.--
(1) In general.--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.
(2) No involuntary separation or reduction.--An employee
holding a permanent position on the day immediately preceding
the transfer may not be involuntarily separated or reduced in
grade or compensation during the 12-month period beginning on
the date of transfer, except for cause, or, if the employee
is a temporary employee, separated in accordance with the
terms of the appointment of the employee.
(c) 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 Director may decline a
transfer of authority under paragraph (1), to the extent that
such authority relates to a position excepted from

[[Page S5878]]

the competitive service because of its confidential,
policymaking, policy-determining, or policy-advocating
character.
(d) Reorganization.--If the Director determines, after the
end of the 1-year period beginning on the effective date of
the abolishment under section 1311(a), 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.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Board accepting
employment with the Agency 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 Board, as applicable,
including insurance, to which such employee belongs on the
effective date of the abolishment under section 1311(a) 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 Director.
(2) Cost differential.--
(A) In general.--The difference in the costs between the
benefits which would have been provided by the Board and
those provided by this section shall be paid by the Director.
(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 Director, 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. 1314. TRANSFER OF PROPERTY AND FACILITIES.

Upon the effective date of the abolishment under section
1311(a), all property of the Board shall transfer to the
Agency.

TITLE IV--HOPE FOR HOMEOWNERS

SEC. 1401. SHORT TITLE.

This title may be cited as the ``HOPE for Homeowners Act of
2008''.

SEC. 1402. ESTABLISHMENT OF HOPE FOR HOMEOWNERS PROGRAM.

(a) Establishment.--Title II of the National Housing Act
(12 U.S.C. 1707 et seq.) is amended by adding at the end the
following:

``SEC. 257. HOPE FOR HOMEOWNERS PROGRAM.

``(a) Establishment.--There is established in the Federal
Housing Administration a HOPE for Homeowners Program.
``(b) Purpose.--The purpose of the HOPE for Homeowners
Program is--
``(1) to create an FHA program, participation in which is
voluntary on the part of homeowners and existing loan holders
to insure refinanced loans for distressed borrowers to
support long-term, sustainable homeownership;
``(2) to allow homeowners to avoid foreclosure by reducing
the principle balance outstanding, and interest rate charged,
on their mortgages;
``(3) to help stabilize and provide confidence in mortgage
markets by bringing transparency to the value of assets based
on mortgage assets;
``(4) to target mortgage assistance under this section to
homeowners for their principal residence;
``(5) to enhance the administrative capacity of the FHA to
carry out its expanded role under the HOPE for Homeowners
Program;
``(6) to ensure the HOPE for Homeowners Program remains in
effect only for as long as is necessary to provide stability
to the housing market; and
``(7) to provide servicers of delinquent mortgages with
additional methods and approaches to avoid foreclosure.
``(c) Establishment and Implementation of Program
Requirements.--
``(1) Duties of the board.--In order to carry out the
purposes of the HOPE for Homeowners Program, the Board
shall--
``(A) establish requirements and standards for the program;
and
``(B) prescribe such regulations and provide such guidance
as may be necessary or appropriate to implement such
requirements and standards.
``(2) Duties of the secretary.--In carrying out any of the
program requirements or standards established under paragraph
(1), the Secretary may issue such interim guidance and
mortgagee letters as the Secretary determines necessary or
appropriate.
``(d) Insurance of Mortgages.--The Secretary is authorized
upon application of a mortgagee to make commitments to insure
or to insure any eligible mortgage that has been refinanced
in a manner meeting the requirements under subsection (e).
``(e) Requirements of Insured Mortgages.--To be eligible
for insurance under this section, a refinanced eligible
mortgage shall comply with all of the following requirements:
``(1) Lack of capacity to pay existing mortgage.--
``(A) Borrower certification.--
``(i) In general.--The mortgagor shall provide
certification to the Secretary that the mortgagor has not
intentionally defaulted on the mortgage or any other debt,
and has not knowingly, or willfully and with actual
knowledge, furnished material information known to be false
for the purpose of obtaining any eligible mortgage.
``(ii) Penalties.--

``(I) False statement.--Any certification filed pursuant to
clause (i) shall contain an acknowledgment that any willful
false statement made in such certification is punishable
under section 1001, of title 18, United States Code, by fine
or imprisonment of not more than 5 years, or both.
``(II) Liability for repayment.--The mortgagor shall agree
in writing that the mortgagor shall be liable to repay to the
Federal Housing Administration any direct financial benefit
achieved from the reduction of indebtedness on the existing
mortgage or mortgages on the residence refinanced under this
section derived from misrepresentations made in the
certifications and documentation required under this
subparagraph, subject to the discretion of the Secretary.

``(B) Current borrower debt-to-income ratio.--As of March
1, 2008, the mortgagor shall have had a ratio of mortgage
debt to income, taking into consideration all existing
mortgages of that mortgagor at such time, greater than 31
percent (or such higher amount as the Board determines
appropriate).
``(2) Determination of principal obligation amount.--The
principal obligation amount of the refinanced eligible
mortgage to be insured shall--
``(A) be determined by the reasonable ability of the
mortgagor to make his or her mortgage payments, as such
ability is determined by the Secretary pursuant to section
203(b)(4) or by any other underwriting standards established
by the Board; and
``(B) not exceed 90 percent of the appraised value of the
property to which such mortgage relates.
``(3) Required waiver of prepayment penalties and fees.--
All penalties for prepayment or refinancing of the eligible
mortgage, and all fees and penalties related to default or
delinquency on the eligible mortgage, shall be waived or
forgiven.
``(4) Extinguishment of subordinate liens.--
``(A) Required agreement.--All holders of outstanding
mortgage liens on the property to which the eligible mortgage
relates shall agree to accept the proceeds of the insured
loan as payment in full of all indebtedness under the
eligible mortgage, and all encumbrances related to such
eligible mortgage shall be removed. The Secretary may take
such actions, subject to standards established by the Board
under subparagraph (B), as may be necessary and appropriate
to facilitate coordination and agreement between the holders
of the existing senior mortgage and any existing subordinate
mortgages, taking into consideration the subordinate lien
status of such subordinate mortgages.
``(B) Shared appreciation.--
``(i) In general.--The Board shall establish standards and
policies that will allow for the payment to the holder of any
existing subordinate mortgage of a portion of any future
appreciation in the property secured by such eligible
mortgage that is owed to the Secretary pursuant to subsection
(k).
``(ii) Factors.--In establishing the standards and policies
required under clause (i), the Board shall take into
consideration--

``(I) the status of any subordinate mortgage;
``(II) the outstanding principal balance of and accrued
interest on the existing senior mortgage and any outstanding
subordinate mortgages;
``(III) the extent to which the current appraised value of
the property securing a subordinate mortgage is less than the
outstanding principal balance and accrued interest on any
other liens that are senior to such subordinate mortgage; and
``(IV) such other factors as the Board determines to be
appropriate.

``(C) Voluntary program.--This paragraph may not be
construed to require any holder of any existing mortgage to
participate in the program under this section generally, or
with respect to any particular loan.
``(5) Term of mortgage.--The refinanced eligible mortgage
to be insured shall--
``(A) bear interest at a single rate that is fixed for the
entire term of the mortgage; and
``(B) have a maturity of not less than 30 years from the
date of the beginning of amortization of such refinanced
eligible mortgage.
``(6) Maximum loan amount.--The principal obligation amount
of the eligible mortgage to be insured shall not exceed 132
percent of the dollar amount limitation in effect for 2007
under section 305(a)(2) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)) for a property of the
applicable size.
``(7) Prohibition on second liens.--A mortgagor may not
grant a new second lien on the mortgaged property during the
first 5 years of the term of the mortgage insured under this
section.
``(8) Appraisals.--Any appraisal conducted in connection
with a mortgage insured under this section shall--
``(A) be based on the current value of the property;
``(B) be conducted in accordance with title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3331 et seq.);
``(C) be completed by an appraiser who meets the competency
requirements of the Uniform Standards of Professional
Appraisal Practice;
``(D) be wholly consistent with the appraisal standards,
practices, and procedures under section 202(e) of this Act
that apply to all loans insured under this Act; and

[[Page S5879]]

``(E) comply with the requirements of subsection (g) of
this section (relating to appraisal independence).
``(9) Documentation and verification of income.--In
complying with the FHA underwriting requirements under the
HOPE for Homeowners Program under this section, the mortgagee
under the mortgage shall document and verify the income of
the mortgagor by procuring an Internal Revenue Service
transcript of the income tax returns of the mortgagor for the
2 most recent years for which the filing deadline for such
years has passed and by any other method, in accordance with
procedures and standards that the Board or the Secretary
shall establish.
``(10) Mortgage fraud.--The mortgagor shall not have been
convicted under any provision of Federal or State law for
fraud, including mortgage fraud.
``(11) Primary residence.--The mortgagor shall provide
documentation satisfactory in the determination of the
Secretary to prove that the residence covered by the mortgage
to be insured under this section is occupied by the mortgagor
as the primary residence of the mortgagor, and that such
residence is the only residence in which the mortgagor has
any present ownership interest.
``(f) Study of Auction or Bulk Refinance Program.--
``(1) Study.--The Board shall conduct a study of the need
for and efficacy of an auction or bulk refinancing mechanism
to facilitate refinancing of existing residential mortgages
that are at risk for foreclosure into mortgages insured under
this section. The study shall identify and examine various
options for mechanisms under which lenders and servicers of
such mortgages may make bids for forward commitments for such
insurance in an expedited manner.
``(2) Content.--
``(A) Analysis.--The study required under paragraph (1)
shall analyze--
``(i) the feasibility of establishing a mechanism that
would facilitate the more rapid refinancing of borrowers at
risk of foreclosure into performing mortgages insured under
this section;
``(ii) whether such a mechanism would provide an effective
and efficient mechanism to reduce foreclosures on qualified
existing mortgages;
``(iii) whether the use of an auction or bulk refinance
program is necessary to stabilize the housing market and
reduce the impact of turmoil in that market on the economy of
the United States;
``(iv) whether there are other mechanisms or authority that
would be useful to reduce foreclosure; and
``(v) and any other factors that the Board considers
relevant.
``(B) Determinations.--To the extent that the Board finds
that a facility of the type described in subparagraph (A) is
feasible and useful, the study shall--
``(i) determine and identify any additional authority or
resources needed to establish and operate such a mechanism;
``(ii) determine whether there is a need for additional
authority with respect to the loan underwriting criteria
established in this section or with respect to eligibility of
participating borrowers, lenders, or holders of liens;
``(iii) determine whether such underwriting criteria should
be established on the basis of individual loans, in the
aggregate, or otherwise to facilitate the goal of refinancing
borrowers at risk of foreclosure into viable loans insured
under this section.
``(3) Report.--Not later than the expiration of the 60-day
period beginning on the date of the enactment of this
section, the Board shall submit a report regarding the
results of the study conducted under this subsection to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate. The report shall include a
detailed description of the analysis required under paragraph
(2)(A) and of the determinations made pursuant to paragraph
(2)(B), and shall include any other findings and
recommendations of the Board pursuant to the study, including
identifying various options for mechanisms described in
paragraph (1).
``(g) Appraisal Independence.--
``(1) Prohibitions on interested parties in a real estate
transaction.--No mortgage lender, mortgage broker, mortgage
banker, real estate broker, appraisal management company,
employee of an appraisal management company, nor any other
person with an interest in a real estate transaction
involving an appraisal in connection with a mortgage insured
under this section shall improperly influence, or attempt to
improperly influence, through coercion, extortion, collusion,
compensation, instruction, inducement, intimidation,
nonpayment for services rendered, or bribery, the
development, reporting, result, or review of a real estate
appraisal sought in connection with the mortgage.
``(2) Civil monetary penalties.--The Secretary may impose a
civil money penalty for any knowing and material violation of
paragraph (1) under the same terms and conditions as are
authorized in section 536(a) of this Act.
``(h) Standards to Protect Against Adverse Selection.--
``(1) In general.--The Board shall, by rule or order,
establish standards and policies to require the underwriter
of the insured loan to provide such representations and
warranties as the Board considers necessary or appropriate to
enforce compliance with all underwriting and appraisal
standards of the HOPE for Homeowners Program.
``(2) Exclusion for violations.--The Board shall prohibit
the Secretary from paying insurance benefits to a mortgagee
who violates the representations and warranties, as
established under paragraph (1), or in any case in which a
mortgagor fails to make the first payment on a refinanced
eligible mortgage.
``(3) Other authority.--The Board may establish such other
standards or policies as necessary to protect against adverse
selection, including requiring loans identified by the
Secretary as higher risk loans to demonstrate payment
performance for a reasonable period of time prior to being
insured under the program.
``(i) Premiums.--For each refinanced eligible mortgage
insured under this section, the Secretary shall establish and
collect--
``(1) at the time of insurance, a single premium payment in
an amount equal to 3 percent of the amount of the original
insured principal obligation of the refinanced eligible
mortgage, which shall be paid from the proceeds of the
mortgage being insured under this section, through the
reduction of the amount of indebtedness that existed on the
eligible mortgage prior to refinancing; and
``(2) in addition to the premium required under paragraph
(1), an annual premium in an amount equal to 1.5 percent of
the amount of the remaining insured principal balance of the
mortgage.
``(j) Origination Fees and Interest Rate.--The Board shall
establish--
``(1) a reasonable limitation on origination fees for
refinanced eligible mortgages insured under this section; and
``(2) procedures to ensure that interest rates on such
mortgages shall be commensurate with market rate interest
rates on such types of loans.
``(k) Equity and Appreciation.--
``(1) Five-year phase-in for equity as a result of sale or
refinancing.--For each eligible mortgage insured under this
section, the Secretary and the mortgagor of such mortgage
shall, upon any sale or disposition of the property to which
such mortgage relates, or upon the subsequent refinancing of
such mortgage, be entitled to the following with respect to
any equity created as a direct result of such sale or
refinancing:
``(A) If such sale or refinancing occurs during the period
that begins on the date that such mortgage is insured and
ends 1 year after such date of insurance, the Secretary shall
be entitled to 100 percent of such equity.
``(B) If such sale or refinancing occurs during the period
that begins 1 year after such date of insurance and ends 2
years after such date of insurance, the Secretary shall be
entitled to 90 percent of such equity and the mortgagor shall
be entitled to 10 percent of such equity.
``(C) If such sale or refinancing occurs during the period
that begins 2 years after such date of insurance and ends 3
years after such date of insurance, the Secretary shall be
entitled to 80 percent of such equity and the mortgagor shall
be entitled to 20 percent of such equity.
``(D) If such sale or refinancing occurs during the period
that begins 3 years after such date of insurance and ends 4
years after such date of insurance, the Secretary shall be
entitled to 70 percent of such equity and the mortgagor shall
be entitled to 30 percent of such equity.
``(E) If such sale or refinancing occurs during the period
that begins 4 years after such date of insurance and ends 5
years after such date of insurance, the Secretary shall be
entitled to 60 percent of such equity and the mortgagor shall
be entitled to 40 percent of such equity.
``(F) If such sale or refinancing occurs during any period
that begins 5 years after such date of insurance, the
Secretary shall be entitled to 50 percent of such equity and
the mortgagor shall be entitled to 50 percent of such equity.
``(2) Appreciation in value.--For each eligible mortgage
insured under this section, the Secretary and the mortgagor
of such mortgage shall, upon any sale or disposition of the
property to which such mortgage relates, each be entitled to
50 percent of any appreciation in value of the appraised
value of such property that has occurred since the date that
such mortgage was insured under this section.
``(l) Establishment of HOPE Fund.--
``(1) In general.--There is established in the Federal
Housing Administration a revolving fund to be known as the
Home Ownership Preservation Entity Fund, which shall be used
by the Board for carrying out the mortgage insurance
obligations under this section.
``(2) Management of fund.--The HOPE Fund shall be
administered and managed by the Secretary, who shall
establish reasonable and prudent criteria for the management
and operation of any amounts in the HOPE Fund.
``(m) Limitation on Aggregate Insurance Authority.--The
aggregate original principal obligation of all mortgages
insured under this section may not exceed $300,000,000,000.
``(n) Reports by the Board.--The Board shall submit monthly
reports to the Congress identifying the progress of the HOPE
for Homeowners Program, which shall contain the following
information for each month:
``(1) The number of new mortgages insured under this
section, including the location of the properties subject to
such mortgages by census tract.

[[Page S5880]]

``(2) The aggregate principal obligation of new mortgages
insured under this section.
``(3) The average amount by which the principle balance
outstanding on mortgages insured this section was reduced.
``(4) The amount of premiums collected for insurance of
mortgages under this section.
``(5) The claim and loss rates for mortgages insured under
this section.
``(6) Any other information that the Board considers
appropriate.
``(o) Required Outreach Efforts.--The Secretary shall carry
out outreach efforts to ensure that homeowners, lenders, and
the general public are aware of the opportunities for
assistance available under this section.
``(p) Enhancement of FHA Capacity.--Under the direction of
the Board, the Secretary shall take such actions as may be
necessary to--
``(1) contract for the establishment of underwriting
criteria, automated underwriting systems, pricing standards,
and other factors relating to eligibility for mortgages
insured under this section;
``(2) contract for independent quality reviews of
underwriting, including appraisal reviews and fraud
detection, of mortgages insured under this section or pools
of such mortgages; and
``(3) increase personnel of the Department as necessary to
process or monitor the processing of mortgages insured under
this section.
``(q) GNMA Commitment Authority.--
``(1) Guarantees.--The Secretary shall take such actions as
may be necessary to ensure that securities based on and
backed by a trust or pool composed of mortgages insured under
this section are available to be guaranteed by the Government
National Mortgage Association as to the timely payment of
principal and interest.
``(2) Guarantee authority.--To carry out the purposes of
section 306 of the National Housing Act (12 U.S.C. 1721), the
Government National Mortgage Association may enter into new
commitments to issue guarantees of securities based on or
backed by mortgages insured under this section, not exceeding
$300,000,000,000. The amount of authority provided under the
preceding sentence to enter into new commitments to issue
guarantees is in addition to any amount of authority to make
new commitments to issue guarantees that is provided to the
Association under any other provision of law.
``(r) Sunset.--The Secretary may not enter into any new
commitment to insure any refinanced eligible mortgage, or
newly insure any refinanced eligible mortgage pursuant to
this section before October 1, 2008 or after September 30,
2011.
``(s) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Approved financial institution or mortgagee.--The
term `approved financial institution or mortgagee' means a
financial institution or mortgagee approved by the Secretary
under section 203 as responsible and able to service
mortgages responsibly.
``(2) Board.--The term `Board' means the Board of Directors
of the HOPE for Homeowners Program. The Board shall be
composed of the Secretary, the Secretary of the Treasury, the
Chairperson of the Board of Governors of the Federal Reserve
System, and the Chairperson of the Board of Directors of the
Federal Deposit Insurance Corporation.
``(3) Eligible mortgage.--The term `eligible mortgage'
means a mortgage--
``(A) the mortgagor of which--
``(i) occupies such property as his or her principal
residence; and
``(ii) cannot, subject to subsection (e)(1)(B) and such
other standards established by the Board, afford his or her
mortgage payments; and
``(B) originated on or before January 1, 2008.
``(4) Existing senior mortgage.--The term `existing senior
mortgage' means, with respect to a mortgage insured under
this section, the existing mortgage that has superior
priority.
``(5) Existing subordinate mortgage.--The term `existing
subordinate mortgage' means, with respect to a mortgage
insured under this section, an existing mortgage that has
subordinate priority to the existing senior mortgage.
``(6) HOPE for homeowners program.--The term `HOPE for
Homeowners Program' means the program established under this
section.
``(7) Secretary.--The term `Secretary' means the Secretary
of Housing and Urban Development, except where specifically
provided otherwise.
``(t) Requirements Related to the Board.--
``(1) Compensation, actual, necessary, and transportation
expenses.--
``(A) Federal employees.--A member of the Board who is an
officer or employee of the Federal Government shall serve
without additional pay (or benefits in the nature of
compensation) for service as a member of the Board.
``(B) Travel expenses.--Members of the Board shall be
entitled to receive travel expenses, including per diem in
lieu of subsistence, equivalent to those set forth in
subchapter I of chapter 57 of title 5, United States Code.
``(2) Bylaws.--The Board may prescribe, amend, and repeal
such bylaws as may be necessary for carrying out the
functions of the Board.
``(3) Quorum.--A majority of the Board shall constitute a
quorum.
``(4) Staff; experts and consultants.--
``(A) Detail of government employees.--Upon request of the
Board, any Federal Government employee may be detailed to the
Board without reimbursement, and such detail shall be without
interruption or loss of civil service status or privilege.
``(B) Experts and consultants.--The Board shall procure the
services of experts and consultants as the Board considers
appropriate.
``(u) Rule of Construction Related to Voluntary Nature of
the Program.--This section shall not be construed to require
that any approved financial institution or mortgagee
participate in any activity authorized under this section,
including any activity related to the refinancing of an
eligible mortgage.
``(v) Rule of Construction Related to Insurance of
Mortgages.--Except as otherwise provided for in this section
or by action of the Board, the provisions and requirements of
section 203(b) shall apply with respect to the insurance of
any eligible mortgage under this section.
``(w) HOPE Bonds.--
``(1) Issuance and repayment of bonds.--Notwithstanding
section 504(b) of the Federal Credit Reform Act of 1990 (2
U.S.C. 661d(b)), the Secretary of the Treasury shall--
``(A) subject to such terms and conditions as the Secretary
of the Treasury deems necessary, issue Federal credit
instruments, to be known as `HOPE Bonds', that are callable
at the discretion of the Secretary of the Treasury and do
not, in the aggregate, exceed the amount specified in
subsection (m);
``(B) provide the subsidy amounts necessary for loan
guarantees under the HOPE for Homeowners Program, not to
exceed the amount specified in subsection (m), in accordance
with the provisions of the Federal Credit Reform Act of 1990
(2 U.S.C. 661 et seq.), except as provided in this paragraph;
and
``(C) use the proceeds from HOPE Bonds only to pay for the
net costs to the Federal Government of the HOPE for
Homeowners Program, including administrative costs.
``(2) Reimbursements to treasury.--Funds received pursuant
to section 1338(b) of the Federal Housing Enterprises
Regulatory Reform Act of 1992 shall be used to reimburse the
Secretary of the Treasury for amounts borrowed under
paragraph (1).
``(3) Use of reserve fund.--If the net cost to the Federal
Government for the HOPE for Homeowners Program exceeds the
amount of funds received under paragraph (2), remaining debts
of the HOPE for Homeowners Program shall be paid from amounts
deposited into the fund established by the Secretary under
section 1337(e) of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992, remaining amounts in such
fund to be used to reduce the National debt.
``(4) Reduction of national debt.--Amounts collected under
the HOPE for Homeowners Program in accordance with
subsections (i) and (k) in excess of the net cost to the
Federal Government for such Program shall be used to reduce
the National debt.''.

SEC. 1403. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL
MORTGAGE LOANS.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is
amended by inserting after section 129 the following new
section:

``SEC. 129A. FIDUCIARY DUTY OF SERVICERS OF POOLED
RESIDENTIAL MORTGAGES.

``(a) In General.--Except as may be established in any
investment contract between a servicer of pooled residential
mortgages and an investor, a servicer of pooled residential
mortgages--
``(1) owes any duty to maximize the net present value of
the pooled mortgages in an investment to all investors and
parties having a direct or indirect interest in such
investment, not to any individual party or group of parties;
and
``(2) shall be deemed to act in the best interests of all
such investors and parties if the servicer agrees to or
implements a modification or workout plan, including any
modification or refinancing undertaken pursuant to the HOPE
for Homeowners Act of 2008, for a residential mortgage or a
class of residential mortgages that constitute a part or all
of the pooled mortgages in such investment, provided that any
mortgage so modified meets the following criteria:
``(A) Default on the payment of such mortgage has occurred
or is reasonably foreseeable.
``(B) The property securing such mortgage is occupied by
the mortgagor of such mortgage.
``(C) The anticipated recovery on the principal outstanding
obligation of the mortgage under the modification or workout
plan exceeds, on a net present value basis, the anticipated
recovery on the principal outstanding obligation of the
mortgage through foreclosure.
``(b) Definition.--As used in this section, the term
`servicer' has the same meaning as in section 6(i)(2) of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2605(i)(2)).''.

SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS.

Section 202(e) of the National Housing Act (12 U.S.C.
1708(e)) is amended by adding at the end the following:
``(5) Additional appraiser standards.--Beginning on the
date of enactment of the

[[Page S5881]]

Federal Housing Finance Regulatory Reform Act of 2008, any
appraiser chosen or approved to conduct appraisals for
mortgages under this title shall--
``(A) be certified--
``(i) by the State in which the property to be appraised is
located; or
``(ii) by a nationally recognized professional appraisal
organization; and
``(B) have demonstrated verifiable education in the
appraisal requirements established by the Federal Housing
Administration under this subsection.''.

TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

SEC. 1501. SHORT TITLE.

This title may be cited as the ``Secure and Fair
Enforcement for Mortgage Licensing Act of 2008'' or
``S.A.F.E. Mortgage Licensing Act of 2008''.

SEC. 1502. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE
LICENSING SYSTEM AND REGISTRY.

In order to increase uniformity, reduce regulatory burden,
enhance consumer protection, and reduce fraud, the States,
through the Conference of State Bank Supervisors and the
American Association of Residential Mortgage Regulators, are
hereby encouraged to establish a Nationwide Mortgage
Licensing System and Registry for the residential mortgage
industry that accomplishes all of the following objectives:
(1) Provides uniform license applications and reporting
requirements for State-licensed loan originators.
(2) Provides a comprehensive licensing and supervisory
database.
(3) Aggregates and improves the flow of information to and
between regulators.
(4) Provides increased accountability and tracking of loan
originators.
(5) Streamlines the licensing process and reduces the
regulatory burden.
(6) Enhances consumer protections and supports anti-fraud
measures.
(7) Provides consumers with easily accessible information,
offered at no charge, utilizing electronic media, including
the Internet, regarding the employment history of, and
publicly adjudicated disciplinary and enforcement actions
against, loan originators.
(8) Establishes a means by which residential mortgage loan
originators would, to the greatest extent possible, be
required to act in the best interests of the consumer.
(9) Facilitates responsible behavior in the subprime
mortgage market place and provides comprehensive training and
examination requirements related to subprime mortgage
lending.
(10) Facilitates the collection and disbursement of
consumer complaints on behalf of State and Federal mortgage
regulators.

SEC. 1503. DEFINITIONS.

For purposes of this title, the following definitions shall
apply:
(1) Federal banking agencies.--The term ``Federal banking
agencies'' means the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the National Credit
Union Administration, and the Federal Deposit Insurance
Corporation.
(2) Depository institution.--The term ``depository
institution'' has the same meaning as in section 3 of the
Federal Deposit Insurance Act, and includes any credit union.
(3) Loan originator.--
(A) In general.--The term ``loan originator''--
(i) means an individual who--

(I) takes a residential mortgage loan application; and
(II) offers or negotiates terms of a residential mortgage
loan for compensation or gain;

(ii) does not include any individual who is not otherwise
described in clause (i) and who performs purely
administrative or clerical tasks on behalf of a person who is
described in any such clause;
(iii) does not include a person or entity that only
performs real estate brokerage activities and is licensed or
registered in accordance with applicable State law, unless
the person or entity is compensated by a lender, a mortgage
broker, or other loan originator or by any agent of such
lender, mortgage broker, or other loan originator; and
(iv) does not include a person or entity solely involved in
extensions of credit relating to timeshare plans, as that
term is defined in section 101(53D) of title 11, United
States Code.
(B) Other definitions relating to loan originator.--For
purposes of this subsection, an individual ``assists a
consumer in obtaining or applying to obtain a residential
mortgage loan'' by, among other things, advising on loan
terms (including rates, fees, other costs), preparing loan
packages, or collecting information on behalf of the consumer
with regard to a residential mortgage loan.
(C) Administrative or clerical tasks.--The term
``administrative or clerical tasks'' means the receipt,
collection, and distribution of information common for the
processing or underwriting of a loan in the mortgage industry
and communication with a consumer to obtain information
necessary for the processing or underwriting of a residential
mortgage loan.
(D) Real estate brokerage activity defined.--The term
``real estate brokerage activity'' means any activity that
involves offering or providing real estate brokerage services
to the public, including--
(i) acting as a real estate agent or real estate broker for
a buyer, seller, lessor, or lessee of real property;
(ii) bringing together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(iii) negotiating, on behalf of any party, any portion of a
contract relating to the sale, purchase, lease, rental, or
exchange of real property (other than in connection with
providing financing with respect to any such transaction);
(iv) engaging in any activity for which a person engaged in
the activity is required to be registered or licensed as a
real estate agent or real estate broker under any applicable
law; and
(v) offering to engage in any activity, or act in any
capacity, described in clause (i), (ii), (iii), or (iv).
(4) Loan processor or underwriter.--
(A) In general.--The term ``loan processor or underwriter''
means an individual who performs clerical or support duties
at the direction of and subject to the supervision and
instruction of--
(i) a State-licensed loan originator; or
(ii) a registered loan originator.
(B) Clerical or support duties.--For purposes of
subparagraph (A), the term ``clerical or support duties'' may
include--
(i) the receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
residential mortgage loan; and
(ii) communicating with a consumer to obtain the
information necessary for the processing or underwriting of a
loan, to the extent that such communication does not include
offering or negotiating loan rates or terms, or counseling
consumers about residential mortgage loan rates or terms.
(5) Nationwide mortgage licensing system and registry.--The
term ``Nationwide Mortgage Licensing System and Registry''
means a mortgage licensing system developed and maintained by
the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators for the State
licensing and registration of State-licensed loan originators
and the registration of registered loan originators or any
system established by the Secretary under section 1509.
(6) Nontraditional mortgage product.--The term
``nontraditional mortgage product'' means any mortgage
product other than a 30-year fixed rate mortgage.
(7) Registered loan originator.--The term ``registered loan
originator'' means any individual who--
(A) meets the definition of loan originator and is an
employee of--
(i) a depository institution;
(ii) a subsidiary that is--

(I) owned and controlled by a depository institution; and
(II) regulated by a Federal banking agency; or

(iii) an institution regulated by the Farm Credit
Administration; and
(B) is registered with, and maintains a unique identifier
through, the Nationwide Mortgage Licensing System and
Registry.
(8) Residential mortgage loan.--The term ``residential
mortgage loan'' means any loan primarily for personal,
family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on
a dwelling (as defined in section 103(v) of the Truth in
Lending Act) or residential real estate upon which is
constructed or intended to be constructed a dwelling (as so
defined).
(9) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(10) State-licensed loan originator.--The term ``State-
licensed loan originator'' means any individual who--
(A) is a loan originator;
(B) is not an employee of--
(i) a depository institution;
(ii) a subsidiary that is--

(I) owned and controlled by a depository institution; and
(II) regulated by a Federal banking agency; or

(iii) an institution regulated by the Farm Credit
Administration; and
(C) is licensed by a State or by the Secretary under
section 1508 and registered as a loan originator with, and
maintains a unique identifier through, the Nationwide
Mortgage Licensing System and Registry.
(11) Unique identifier.--
(A) In general.--The term ``unique identifier'' means a
number or other identifier that--
(i) permanently identifies a loan originator;
(ii) is assigned by protocols established by the Nationwide
Mortgage Licensing System and Registry and the Federal
banking agencies to facilitate electronic tracking of loan
originators and uniform identification of, and public access
to, the employment history of and the publicly adjudicated
disciplinary and enforcement actions against loan
originators; and
(iii) shall not be used for purposes other than those set
forth under this title.
(B) Responsibility of states.--To the greatest extent
possible and to accomplish the purpose of this title, States
shall use unique identifiers in lieu of social security
numbers.

SEC. 1504. LICENSE OR REGISTRATION REQUIRED.

(a) In General.--An individual may not engage in the
business of a loan originator without first--
(1) obtaining, and maintaining annually--
(A) a registration as a registered loan originator; or

[[Page S5882]]

(B) a license and registration as a State-licensed loan
originator; and
(2) obtaining a unique identifier.
(b) Loan Processors and Underwriters.--
(1) Supervised loan processors and underwriters.--A loan
processor or underwriter who does not represent to the
public, through advertising or other means of communicating
or providing information (including the use of business
cards, stationery, brochures, signs, rate lists, or other
promotional items), that such individual can or will perform
any of the activities of a loan originator shall not be
required to be a State-licensed loan originator.
(2) Independent contractors.--An independent contractor may
not engage in residential mortgage loan origination
activities as a loan processor or underwriter unless such
independent contractor is a State-licensed loan originator.

SEC. 1505. STATE LICENSE AND REGISTRATION APPLICATION AND
ISSUANCE.

(a) Background Checks.--In connection with an application
to any State for licensing and registration as a State-
licensed loan originator, the applicant shall, at a minimum,
furnish to the Nationwide Mortgage Licensing System and
Registry information concerning the applicant's identity,
including--
(1) fingerprints for submission to the Federal Bureau of
Investigation, and any governmental agency or entity
authorized to receive such information for a State and
national criminal history background check; and
(2) personal history and experience, including
authorization for the System to obtain--
(A) an independent credit report obtained from a consumer
reporting agency described in section 603(p) of the Fair
Credit Reporting Act; and
(B) information related to any administrative, civil or
criminal findings by any governmental jurisdiction.
(b) Issuance of License.--The minimum standards for
licensing and registration as a State-licensed loan
originator shall include the following:
(1) The applicant has never had a loan originator license
revoked in any governmental jurisdiction.
(2) The applicant has not been convicted of, or pled guilty
or nolo contendere to, a felony in a domestic, foreign, or
military court--
(A) during the 7-year period preceding the date of the
application for licensing and registration; or
(B) at any time preceding such date of application, if such
felony involved an act of fraud, dishonesty, or a breach of
trust, or money laundering.
(3) The applicant has demonstrated financial
responsibility, character, and general fitness such as to
command the confidence of the community and to warrant a
determination that the loan originator will operate honestly,
fairly, and efficiently within the purposes of this title.
(4) The applicant has completed the pre-licensing education
requirement described in subsection (c).
(5) The applicant has passed a written test that meets the
test requirement described in subsection (d).
(6) The applicant has met either a net worth or surety bond
requirement, as required by the State pursuant to section
1508(d)(6).
(c) Pre-Licensing Education of Loan Originators.--
(1) Minimum educational requirements.--In order to meet the
pre-licensing education requirement referred to in subsection
(b)(4), a person shall complete at least 20 hours of
education approved in accordance with paragraph (2), which
shall include at least--
(A) 3 hours of Federal law and regulations;
(B) 3 hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues; and
(C) 2 hours of training related to lending standards for
the nontraditional mortgage product marketplace.
(2) Approved educational courses.--For purposes of
paragraph (1), pre-licensing education courses shall be
reviewed, and approved by the Nationwide Mortgage Licensing
System and Registry.
(3) Limitation and standards.--
(A) Limitation.--To maintain the independence of the
approval process, the Nationwide Mortgage Licensing System
and Registry shall not directly or indirectly offer pre-
licensure educational courses for loan originators.
(B) Standards.--In approving courses under this section,
the Nationwide Mortgage Licensing System and Registry shall
apply reasonable standards in the review and approval of
courses.
(d) Testing of Loan Originators.--
(1) In general.--In order to meet the written test
requirement referred to in subsection (b)(5), an individual
shall pass, in accordance with the standards established
under this subsection, a qualified written test developed by
the Nationwide Mortgage Licensing System and Registry and
administered by an approved test provider.
(2) Qualified test.--A written test shall not be treated as
a qualified written test for purposes of paragraph (1) unless
the test adequately measures the applicant's knowledge and
comprehension in appropriate subject areas, including--
(A) ethics;
(B) Federal law and regulation pertaining to mortgage
origination;
(C) State law and regulation pertaining to mortgage
origination;
(D) Federal and State law and regulation, including
instruction on fraud, consumer protection, the nontraditional
mortgage marketplace, and fair lending issues.
(3) Minimum competence.--
(A) Passing score.--An individual shall not be considered
to have passed a qualified written test unless the individual
achieves a test score of not less than 75 percent correct
answers to questions.
(B) Initial retests.--An individual may retake a test 3
consecutive times with each consecutive taking occurring at
least 30 days after the preceding test.
(C) Subsequent retests.--After failing 3 consecutive tests,
an individual shall wait at least 6 months before taking the
test again.
(D) Retest after lapse of license.--A State-licensed loan
originator who fails to maintain a valid license for a period
of 5 years or longer shall retake the test, not taking into
account any time during which such individual is a registered
loan originator.
(e) Mortgage Call Reports.--Each mortgage licensee shall
submit to the Nationwide Mortgage Licensing System and
Registry reports of condition, which shall be in such form
and shall contain such information as the Nationwide Mortgage
Licensing System and Registry may require.

SEC. 1506. STANDARDS FOR STATE LICENSE RENEWAL.

(a) In General.--The minimum standards for license renewal
for State-licensed loan originators shall include the
following:
(1) The loan originator continues to meet the minimum
standards for license issuance.
(2) The loan originator has satisfied the annual continuing
education requirements described in subsection (b).
(b) Continuing Education for State-Licensed Loan
Originators.--
(1) In general.--In order to meet the annual continuing
education requirements referred to in subsection (a)(2), a
State-licensed loan originator shall complete at least 8
hours of education approved in accordance with paragraph (2),
which shall include at least--
(A) 3 hours of Federal law and regulations;
(B) 2 hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues; and
(C) 2 hours of training related to lending standards for
the nontraditional mortgage product marketplace.
(2) Approved educational courses.--For purposes of
paragraph (1), continuing education courses shall be
reviewed, and approved by the Nationwide Mortgage Licensing
System and Registry.
(3) Calculation of continuing education credits.--A State-
licensed loan originator--
(A) may only receive credit for a continuing education
course in the year in which the course is taken; and
(B) may not take the same approved course in the same or
successive years to meet the annual requirements for
continuing education.
(4) Instructor credit.--A State-licensed loan originator
who is approved as an instructor of an approved continuing
education course may receive credit for the originator's own
annual continuing education requirement at the rate of 2
hours credit for every 1 hour taught.
(5) Limitation and standards.--
(A) Limitation.--To maintain the independence of the
approval process, the Nationwide Mortgage Licensing System
and Registry shall not directly or indirectly offer any
continuing education courses for loan originators.
(B) Standards.--In approving courses under this section,
the Nationwide Mortgage Licensing System and Registry shall
apply reasonable standards in the review and approval of
courses.

SEC. 1507. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL
AGENCIES.

(a) Development.--
(1) In general.--The Federal banking agencies shall
jointly, through the Federal Financial Institutions
Examination Council, and together with the Farm Credit
Administration, develop and maintain a system for registering
employees of a depository institution, employees of a
subsidiary that is owned and controlled by a depository
institution and regulated by a Federal banking agency, or
employees of an institution regulated by the Farm Credit
Administration, as registered loan originators with the
Nationwide Mortgage Licensing System and Registry. The system
shall be implemented before the end of the 1-year period
beginning on the date of enactment of this title.
(2) Registration requirements.--In connection with the
registration of any loan originator under this subsection,
the appropriate Federal banking agency and the Farm Credit
Administration shall, at a minimum, furnish or cause to be
furnished to the Nationwide Mortgage Licensing System and
Registry information concerning the employees's identity,
including--
(A) fingerprints for submission to the Federal Bureau of
Investigation, and any governmental agency or entity
authorized to receive such information for a State and
national criminal history background check; and
(B) personal history and experience, including
authorization for the Nationwide Mortgage Licensing System
and Registry to obtain information related to any
administrative, civil or criminal findings by any
governmental jurisdiction.
(b) Coordination.--

[[Page S5883]]

(1) Unique identifier.--The Federal banking agencies,
through the Financial Institutions Examination Council, and
the Farm Credit Administration shall coordinate with the
Nationwide Mortgage Licensing System and Registry to
establish protocols for assigning a unique identifier to each
registered loan originator that will facilitate electronic
tracking and uniform identification of, and public access to,
the employment history of and publicly adjudicated
disciplinary and enforcement actions against loan
originators.
(2) Nationwide mortgage licensing system and registry
development.--To facilitate the transfer of information
required by subsection (a)(2), the Nationwide Mortgage
Licensing System and Registry shall coordinate with the
Federal banking agencies, through the Financial Institutions
Examination Council, and the Farm Credit Administration
concerning the development and operation, by such System and
Registry, of the registration functionality and data
requirements for loan originators.
(c) Consideration of Factors and Procedures.--In
establishing the registration procedures under subsection (a)
and the protocols for assigning a unique identifier to a
registered loan originator, the Federal banking agencies
shall make such de minimis exceptions as may be appropriate
to paragraphs (1)(A) and (2) of section 1504(a), shall make
reasonable efforts to utilize existing information to
minimize the burden of registering loan originators, and
shall consider methods for automating the process to the
greatest extent practicable consistent with the purposes of
this title.

SEC. 1508. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP
AUTHORITY TO ESTABLISH A LOAN ORIGINATOR
LICENSING SYSTEM.

(a) Backup Licensing System.--If, by the end of the 1-year
period, or the 2-year period in the case of a State whose
legislature meets only biennially, beginning on the date of
the enactment of this title or at any time thereafter, the
Secretary determines that a State does not have in place by
law or regulation a system for licensing and registering loan
originators that meets the requirements of sections 1505 and
1506 and subsection (d) of this section, or does not
participate in the Nationwide Mortgage Licensing System and
Registry, the Secretary shall provide for the establishment
and maintenance of a system for the licensing and
registration by the Secretary of loan originators operating
in such State as State-licensed loan originators.
(b) Licensing and Registration Requirements.--The system
established by the Secretary under subsection (a) for any
State shall meet the requirements of sections 1505 and 1506
for State-licensed loan originators.
(c) Unique Identifier.--The Secretary shall coordinate with
the Nationwide Mortgage Licensing System and Registry to
establish protocols for assigning a unique identifier to each
loan originator licensed by the Secretary as a State-licensed
loan originator that will facilitate electronic tracking and
uniform identification of, and public access to, the
employment history of and the publicly adjudicated
disciplinary and enforcement actions against loan
originators.
(d) State Licensing Law Requirements.--For purposes of this
section, the law in effect in a State meets the requirements
of this subsection if the Secretary determines the law
satisfies the following minimum requirements:
(1) A State loan originator supervisory authority is
maintained to provide effective supervision and enforcement
of such law, including the suspension, termination, or
nonrenewal of a license for a violation of State or Federal
law.
(2) The State loan originator supervisory authority ensures
that all State-licensed loan originators operating in the
State are registered with Nationwide Mortgage Licensing
System and Registry.
(3) The State loan originator supervisory authority is
required to regularly report violations of such law, as well
as enforcement actions and other relevant information, to the
Nationwide Mortgage Licensing System and Registry.
(4) The State loan originator supervisory authority has a
process in place for challenging information contained in the
Nationwide Mortgage Licensing System and Registry.
(5) The State loan originator supervisory authority has
established a mechanism to assess civil money penalties for
individuals acting as mortgage originators in their State
without a valid license or registration.
(6) The State loan originator supervisory authority has
established minimum net worth or surety bonding requirements
that reflect the dollar amount of loans originated by a
residential mortgage loan originator.
(e) Temporary Extension of Period.--The Secretary may
extend, by not more than 24 months, the 1-year or 2-year
period, as the case may be, referred to in subsection (a) for
the licensing of loan originators in any State under a State
licensing law that meets the requirements of sections 1505
and 1506 and subsection (d) if the Secretary determines that
such State is making a good faith effort to establish a State
licensing law that meets such requirements, license mortgage
originators under such law, and register such originators
with the Nationwide Mortgage Licensing System and Registry.
(f) Contracting Authority.--The Secretary may enter into
contracts with qualified independent parties, as necessary to
efficiently fulfill the obligations of the Secretary under
this section.

SEC. 1509. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE
MORTGAGE LICENSING AND REGISTRY SYSTEM.

If at any time the Secretary determines that the Nationwide
Mortgage Licensing System and Registry is failing to meet the
requirements and purposes of this title for a comprehensive
licensing, supervisory, and tracking system for loan
originators, the Secretary shall establish and maintain such
a system to carry out the purposes of this title and the
effective registration and regulation of loan originators.

SEC. 1510. FEES.

The Federal banking agencies, the Farm Credit
Admininstration, the Secretary, and the Nationwide Mortgage
Licensing System and Registry may charge reasonable fees to
cover the costs of maintaining and providing access to
information from the Nationwide Mortgage Licensing System and
Registry, to the extent that such fees are not charged to
consumers for access to such system and registry.

SEC. 1511. BACKGROUND CHECKS OF LOAN ORIGINATORS.

(a) Access to Records.--Notwithstanding any other provision
of law, in providing identification and processing functions,
the Attorney General shall provide access to all criminal
history information to the appropriate State officials
responsible for regulating State-licensed loan originators to
the extent criminal history background checks are required
under the laws of the State for the licensing of such loan
originators.
(b) Agent.--For the purposes of this section and in order
to reduce the points of contact which the Federal Bureau of
Investigation may have to maintain for purposes of subsection
(a), the Conference of State Bank Supervisors or a wholly
owned subsidiary may be used as a channeling agent of the
States for requesting and distributing information between
the Department of Justice and the appropriate State agencies.

SEC. 1512. CONFIDENTIALITY OF INFORMATION.

(a) System Confidentiality.--Except as otherwise provided
in this section, any requirement under Federal or State law
regarding the privacy or confidentiality of any information
or material provided to the Nationwide Mortgage Licensing
System and Registry or a system established by the Secretary
under section 1509, and any privilege arising under Federal
or State law (including the rules of any Federal or State
court) with respect to such information or material, shall
continue to apply to such information or material after the
information or material has been disclosed to the system.
Such information and material may be shared with all State
and Federal regulatory officials with mortgage industry
oversight authority without the loss of privilege or the loss
of confidentiality protections provided by Federal and State
laws.
(b) Nonapplicability of Certain Requirements.--Information
or material that is subject to a privilege or confidentiality
under subsection (a) shall not be subject to--
(1) disclosure under any Federal or State law governing the
disclosure to the public of information held by an officer or
an agency of the Federal Government or the respective State;
or
(2) subpoena or discovery, or admission into evidence, in
any private civil action or administrative process, unless
with respect to any privilege held by the Nationwide Mortgage
Licensing System and Registry or the Secretary with respect
to such information or material, the person to whom such
information or material pertains waives, in whole or in part,
in the discretion of such person, that privilege.
(c) Coordination With Other Law.--Any State law, including
any State open record law, relating to the disclosure of
confidential supervisory information or any information or
material described in subsection (a) that is inconsistent
with subsection (a) shall be superseded by the requirements
of such provision to the extent State law provides less
confidentiality or a weaker privilege.
(d) Public Access to Information.--This section shall not
apply with respect to the information or material relating to
the employment history of, and publicly adjudicated
disciplinary and enforcement actions against, loan
originators that is included in Nationwide Mortgage Licensing
System and Registry for access by the public.

SEC. 1513. LIABILITY PROVISIONS.

The Secretary, any State official or agency, any Federal
banking agency, or any organization serving as the
administrator of the Nationwide Mortgage Licensing System and
Registry or a system established by the Secretary under
section 1509, or any officer or employee of any such entity,
shall not be subject to any civil action or proceeding for
monetary damages by reason of the good faith action or
omission of any officer or employee of any such entity, while
acting within the scope of office or employment, relating to
the collection, furnishing, or dissemination of information
concerning persons who are loan originators or are applying
for licensing or registration as loan originators.

SEC. 1514. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.

(a) Summons Authority.--The Secretary may--
(1) examine any books, papers, records, or other data of
any loan originator operating in any State which is subject
to a licensing system established by the Secretary under
section 1508; and

[[Page S5884]]

(2) summon any loan originator referred to in paragraph (1)
or any person having possession, custody, or care of the
reports and records relating to such loan originator, to
appear before the Secretary or any delegate of the Secretary
at a time and place named in the summons and to produce such
books, papers, records, or other data, and to give testimony,
under oath, as may be relevant or material to an
investigation of such loan originator for compliance with the
requirements of this title.
(b) Examination Authority.--
(1) In general.--If the Secretary establishes a licensing
system under section 1508 for any State, the Secretary shall
appoint examiners for the purposes of administering such
section.
(2) Power to examine.--Any examiner appointed under
paragraph (1) shall have power, on behalf of the Secretary,
to make any examination of any loan originator operating in
any State which is subject to a licensing system established
by the Secretary under section 1508 whenever the Secretary
determines an examination of any loan originator is necessary
to determine the compliance by the originator with this
title.
(3) Report of examination.--Each examiner appointed under
paragraph (1) shall make a full and detailed report of
examination of any loan originator examined to the Secretary.
(4) Administration of oaths and affirmations; evidence.--In
connection with examinations of loan originators operating in
any State which is subject to a licensing system established
by the Secretary under section 1508, or with other types of
investigations to determine compliance with applicable law
and regulations, the Secretary and examiners appointed by the
Secretary may administer oaths and affirmations and examine
and take and preserve testimony under oath as to any matter
in respect to the affairs of any such loan originator.
(5) Assessments.--The cost of conducting any examination of
any loan originator operating in any State which is subject
to a licensing system established by the Secretary under
section 1508 shall be assessed by the Secretary against the
loan originator to meet the Secretary's expenses in carrying
out such examination.
(c) Cease and Desist Proceeding.--
(1) Authority of secretary.--If the Secretary finds, after
notice and opportunity for hearing, that any person is
violating, has violated, or is about to violate any provision
of this title, or any regulation thereunder, with respect to
a State which is subject to a licensing system established by
the Secretary under section 1508, the Secretary may publish
such findings and enter an order requiring such person, and
any other person that is, was, or would be a cause of the
violation, due to an act or omission the person knew or
should have known would contribute to such violation, to
cease and desist from committing or causing such violation
and any future violation of the same provision, rule, or
regulation. Such order may, in addition to requiring a person
to cease and desist from committing or causing a violation,
require such person to comply, or to take steps to effect
compliance, with such provision or regulation, upon such
terms and conditions and within such time as the Secretary
may specify in such order. Any such order may, as the
Secretary deems appropriate, require future compliance or
steps to effect future compliance, either permanently or for
such period of time as the Secretary may specify, with such
provision or regulation with respect to any loan originator.
(2) Hearing.--The notice instituting proceedings pursuant
to paragraph (1) shall fix a hearing date not earlier than 30
days nor later than 60 days after service of the notice
unless an earlier or a later date is set by the Secretary
with the consent of any respondent so served.
(3) Temporary order.--Whenever the Secretary determines
that the alleged violation or threatened violation specified
in the notice instituting proceedings pursuant to paragraph
(1), or the continuation thereof, is likely to result in
significant dissipation or conversion of assets, significant
harm to consumers, or substantial harm to the public interest
prior to the completion of the proceedings, the Secretary may
enter a temporary order requiring the respondent to cease and
desist from the violation or threatened violation and to take
such action to prevent the violation or threatened violation
and to prevent dissipation or conversion of assets,
significant harm to consumers, or substantial harm to the
public interest as the Secretary deems appropriate pending
completion of such proceedings. Such an order shall be
entered only after notice and opportunity for a hearing,
unless the Secretary determines that notice and hearing prior
to entry would be impracticable or contrary to the public
interest. A temporary order shall become effective upon
service upon the respondent and, unless set aside, limited,
or suspended by the Secretary or a court of competent
jurisdiction, shall remain effective and enforceable pending
the completion of the proceedings.
(4) Review of temporary orders.--
(A) Review by secretary.--At any time after the respondent
has been served with a temporary cease and desist order
pursuant to paragraph (3), the respondent may apply to the
Secretary to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease and
desist order entered without a prior hearing before the
Secretary, the respondent may, within 10 days after the date
on which the order was served, request a hearing on such
application and the Secretary shall hold a hearing and render
a decision on such application at the earliest possible time.
(B) Judicial review.--Within--
(i) 10 days after the date the respondent was served with a
temporary cease and desist order entered with a prior hearing
before the Secretary; or
(ii) 10 days after the Secretary renders a decision on an
application and hearing under paragraph (1), with respect to
any temporary cease and desist order entered without a prior
hearing before the Secretary,

the respondent may apply to the United States district court
for the district in which the respondent resides or has its
principal place of business, or for the District of Columbia,
for an order setting aside, limiting, or suspending the
effectiveness or enforcement of the order, and the court
shall have jurisdiction to enter such an order. A respondent
served with a temporary cease and desist order entered
without a prior hearing before the Secretary may not apply to
the court except after hearing and decision by the Secretary
on the respondent's application under subparagraph (A).
(C) No automatic stay of temporary order.--The commencement
of proceedings under subparagraph (B) shall not, unless
specifically ordered by the court, operate as a stay of the
Secretary's order.
(5) Authority of the secretary to prohibit persons from
serving as loan originators.--In any cease and desist
proceeding under paragraph (1), the Secretary may issue an
order to prohibit, conditionally or unconditionally, and
permanently or for such period of time as the Secretary shall
determine, any person who has violated this title or
regulations thereunder, from acting as a loan originator if
the conduct of that person demonstrates unfitness to serve as
a loan originator.
(d) Authority of the Secretary To Assess Money Penalties.--
(1) In general.--The Secretary may impose a civil penalty
on a loan originator operating in any State which is subject
to a licensing system established by the Secretary under
section 1508, if the Secretary finds, on the record after
notice and opportunity for hearing, that such loan originator
has violated or failed to comply with any requirement of this
title or any regulation prescribed by the Secretary under
this title or order issued under subsection (c).
(2) Maximum amount of penalty.--The maximum amount of
penalty for each act or omission described in paragraph (1)
shall be $25,000.

SEC. 1515. STATE EXAMINATION AUTHORITY.

In addition to any authority allowed under State law a
State licensing agency shall have the authority to conduct
investigations and examinations as follows:
(1) For the purposes of investigating violations or
complaints arising under this title, or for the purposes of
examination, the State licensing agency may review,
investigate, or examine any loan originator licensed or
required to be licensed under this title, as often as
necessary in order to carry out the purposes of this title.
(2) Each such loan originator shall make available upon
request to the State licensing agency the books and records
relating to the operations of such originator. The State
licensing agency may have access to such books and records
and interview the officers, principals, loan originators,
employees, independent contractors, agents, and customers of
the licensee concerning their business.
(3) The authority of this section shall remain in effect,
whether such a loan originator acts or claims to act under
any licensing or registration law of such State, or claims to
act without such authority.
(4) No person subject to investigation or examination under
this section may knowingly withhold, abstract, remove,
mutilate, destroy, or secrete any books, records, computer
records, or other information.

SEC. 1516. REPORTS AND RECOMMENDATIONS TO CONGRESS.

(a) Annual Reports.--Not later than 1 year after the date
of enactment of this title, and annually thereafter, the
Secretary shall submit a report to Congress on the
effectiveness of the provisions of this title, including
legislative recommendations, if any, for strengthening
consumer protections, enhancing examination standards,
streamlining communication between all stakeholders involved
in residential mortgage loan origination and processing, and
establishing performance based bonding requirements for
mortgage originators or institutions that employ such
brokers.
(b) Legislative Recommendations.--Not later than 6 months
after the date of enactment of this title, the Secretary
shall make recommendations to Congress on legislative reforms
to the Real Estate Settlement Procedures Act of 1974, that
the Secretary deems appropriate to promote more transparent
disclosures, allowing consumers to better shop and compare
mortgage loan terms and settlement costs.

SEC. 1517. STUDY AND REPORTS ON DEFAULTS AND FORECLOSURES.

(a) Study Required.--The Secretary shall conduct an
extensive study of the root causes of default and foreclosure
of home loans, using as much empirical data as is available.
(b) Preliminary Report to Congress.--Not later than 6
months after the date of enactment of this title, the
Secretary shall

[[Page S5885]]

submit to Congress a preliminary report regarding the study
required by this section.
(c) Final Report to Congress.--Not later than 12 months
after the date of enactment of this title, the Secretary
shall submit to Congress a final report regarding the results
of the study required by this section, which shall include
any recommended legislation relating to the study, and
recommendations for best practices and for a process to
provide targeted assistance to populations with the highest
risk of potential default or foreclosure.

TITLE VI--MISCELLANEOUS

SEC. 1601. STUDY AND REPORTS ON GUARANTEE FEES.

(a) Ongoing Study of Fees.--The Director shall conduct an
ongoing study of fees charged by enterprises for guaranteeing
a mortgage.
(b) Collection of Data.--The Director shall, by regulation
or order, establish procedures for the collection of data
from enterprises for purposes of this subsection, including
the format and the process for collection of such data.
(c) Reports to Congress.--The Director shall annually
submit a report to Congress on the results of the study
conducted under subsection (a), based on the aggregated data
collected under subsection (a) for the subject year,
regarding the amount of such fees and the criteria used by
the enterprises to determine such fees.
(d) Contents of Reports.--The reports required under
subsection (c) shall identify and analyze--
(1) the factors considered in determining the amount of the
guarantee fees charged;
(2) the total revenue earned by the enterprises from
guarantee fees;
(3) the total costs incurred by the enterprises for
providing guarantees;
(4) the average guarantee fee charged by the enterprises;
(5) an analysis of any increase or decrease in guarantee
fees from the preceding year;
(6) a breakdown of the revenue and costs associated with
providing guarantees, based on product type and risk
classifications; and
(7) a breakdown of guarantee fees charged based on asset
size of the originator and the number of loans sold or
transferred to an enterprise.
(e) Protection of Information.--Nothing in this section may
be construed to require or authorize the Director to publicly
disclose information that is confidential or proprietary.

SEC. 1602. STUDY AND REPORT ON DEFAULT RISK EVALUATION.

(a) Study.--The Director shall conduct a study of ways to
improve the overall default risk evaluation used with respect
to residential mortgage loans. Particular attention shall be
paid to the development and utilization of processes and
technologies that provide a means to standardize the
measurement of risk.
(b) Report.--The Director shall submit a report on the
study conducted under this section to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives, not later than 1 year after the date of
enactment of this Act.

SEC. 1603. CONVERSION OF HUD CONTRACTS.

(a) In General.--Notwithstanding any other provision of
law, the Secretary may, at the request of an owner of a
multifamily housing project that exceeds 5,000 units to which
a contract for project-based rental assistance under section
8 of the United States Housing Act of 1937 (``Act'') (42
U.S.C. 1437f) and a Rental Assistance Payment contract is
subject, convert such contracts to a contract for project-
based rental assistance under section 8 of the Act.
(b) Initial Renewal.--
(1) At the request of an owner under subsection (a) made no
later than 90 days prior to a conversion, the Secretary may,
to the extent sufficient amounts are made available in
appropriation Acts and notwithstanding any other law, treat
the contemplated resulting contract as if such contract were
eligible for initial renewal under section 524(a) of the
MultiFamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note) (``MAHRA'') (42 U.S.C. 1437f
note).
(2) A request by an owner pursuant to paragraph (1) shall
be upon such terms and conditions as the Secretary may
require.
(c) Resulting Contract.--The resulting contract shall--
(1) be subject to section 524(a) of MAHRA (42 U.S.C. 1437f
note);
(2) be considered for all purposes a contract that has been
renewed under section 524(a) of MAHRA (42 U.S.C. 1437f note)
for a term not to exceed 20 years;
(3) be subsequently renewable at the request of an owner,
under any renewal option for which the project is eligible
under MAHRA (42 U.S.C. 1437f note);
(4) contain provisions limiting distributions, as the
Secretary determines appropriate, not to exceed 10 percent of
the initial investment of the owner;
(5) be subject to the availability of sufficient amounts in
appropriation Acts; and
(6) be subject to such other terms and conditions as the
Secretary considers appropriate.
(d) Income Targeting.--To the extent that assisted dwelling
units, subject to the resulting contract under subsection
(a), serve low-income families, as defined in section 3(b)(2)
of the Act (42 U.S.C. 1437a(b)(2)) the units shall be
considered to be in compliance with all income targeting
requirements under the Act (42 U.S.C. 1437 et seq.).
(e) Tenant Eligibility.--Notwithstanding any other
provision of law, each family residing in an assisted
dwelling unit on the date of conversion of a contract under
this section, subject to the resulting contract under
subsection (a), shall be considered to meet the applicable
requirements for income eligibility and occupancy.
(f) Definitions.--As used in this section--
(1) the term ``Secretary'' means the Secretary of Housing
and Urban Development;
(2) the term ``conversion'' means the action under which a
contract for project-based rental assistance under section 8
of the Act and a Rental Assistance Payment contract become a
contract for project-based rental assistance under section 8
of the Act (42 U.S.C. 1437f) pursuant to subsection (a);
(3) the term ``resulting contract'' means the new contract
after a conversion pursuant to subsection (a); and
(4) the term ``assisted dwelling unit'' means a dwelling
unit in a multifamily housing project that exceeds 5,000
units that, on the date of conversion of a contract under
this section, is subject to a contract for project-based
rental assistance under section 8 of the Act (42 U.S.C.
1437f) or a Rental Assistance Payment contract.

SEC. 1604. BRIDGE DEPOSITORY INSTITUTIONS.

(a) In General.--Section 11 of the Federal Deposit
Insurance Act (12 U.S.C. 1821) is amended--
(1) in subsection (d)(2)--
(A) in subsection (F), by striking ``as receiver'' and all
that follows through clause (ii) and inserting the following:
``as receiver, with respect to any insured depository
institution, organize a new depository institution under
subsection (m) or a bridge depository institution under
subsection (n).'';
(B) in subparagraph (G), by striking ``new bank or a bridge
bank'' and inserting ``new depository institution or a bridge
depository institution'';
(2) in subsection (e)(10)(C), by striking ``bridge bank''
each place that term appears and inserting ``bridge
depository institution'';
(3) in subsection (m)--
(A) in the subsection heading, by striking ``Banks'' and
inserting ``Depository Institutions'';
(B) by striking ``new bank'' each place that term appears
and inserting ``new depository institution'';
(C) by striking ``such bank'' each place that term appears
and inserting ``such depository institution'';
(D) in paragraph (1), by inserting ``or Federal savings
association'' after ``national bank'';
(E) in paragraph (6), by striking ``only bank'' and
inserting ``only depository institution'';
(F) in paragraph (9), by inserting ``or the Director of the
Office of Thrift Supervision, as appropriate'' after
``Comptroller of the Currency'';
(G) in paragraph (15), by striking ``, but in no event''
and all that follows through ``located'';
(H) in paragraph (16)--
(i) by inserting ``or the Director of the Office of Thrift
Supervision, as appropriate,'' after ``Comptroller of the
Currency'' each place that term appears;
(ii) by striking ``the bank'' each place that term appears
and inserting ``the depository institution'';
(iii) by inserting ``or Federal savings association'' after
``national bank'' each place that term appears;
(iv) by inserting ``or Federal savings associations'' after
``national banks''; and
(v) by striking ``Such bank'' and inserting ``Such
depository institution''; and
(I) in paragraph (18), by inserting ``or the Director of
the Office of Thrift Supervision, as appropriate,'' after
``Comptroller of the Currency'' each place that term appears;
(4) in subsection (n)--
(A) in the subsection heading, by striking ``Banks'' and
inserting ``Depository Institutions'';
(B) by striking ``bridge bank'' each place that term
appears and inserting ``bridge depository institution'';
(C) by striking ``bridge banks'' each place that term
appears (other than in paragraph (1)(A)) and inserting
``bridge depository institutions'';
(D) by striking ``bridge bank's'' each place that term
appears and inserting ``bridge depository institutions'';
(E) by striking ``insured bank'' each place that term
appears and inserting ``insured depository institution'';
(F) by striking ``insured banks'' each place that term
appears and inserting ``insured depository institutions'';
(G) by striking ``such bank'' each place that term appears
(other than in paragraph (4)(J)) and inserting ``such
depository institution'';
(H) by striking ``the bank'' each place that term appears
and inserting ``the depository institution'';
(I) in paragraph (1)(A)--
(i) by inserting ``, with respect to 1 or more insured
banks, or the Director of the Office of Thrift Supervision,
with respect to 1 or more insured savings associations,''
after ``Comptroller of the Currency'';
(ii) by inserting ``or Federal savings associations, as
appropriate,'' after ``national banks'';
(iii) by inserting ``or Federal savings associations, as
applicable,'' after ``banking associations''; and

[[Page S5886]]

(iv) by striking ``as bridge banks'' and inserting ``as
`bridge depository institutions' '';
(J) in paragraph (1)(B)--
(i) by striking ``bank or banks'' each place that term
appears and inserting ``depository institution or
institutions'';
(ii) by striking ``of a bank''; and
(iii) by striking ``of that bank'';
(K) in paragraph (1)(E), by inserting before the period ``,
in the case of 1 or more insured banks, and as a Federal
savings association, in the case of 1 or more insured savings
associations'';
(L) in paragraph (2)--
(i) in subparagraph by inserting ``or Federal savings
association'' after ``national bank'' each place that term
appears; and
(ii) by inserting ``or the Director of the Office of Thrift
Supervision'' after ``Comptroller of the Currency'';
(M) in paragraph (4)--
(i) in subparagraph (C), by striking ``under section 5138
of the Revised Statutes or any other'' and inserting ``under
any'';
(ii) by inserting ``and the Director of the Office of
Thrift Supervision, as appropriate,'' after ``Comptroller of
the Currency'' each place that term appears;
(iii) in subparagraph (D), by striking ``bank's'' and
inserting ``depository institution's''; and
(iv) in subparagraph (F), by inserting before the period
``or Federal home loan bank'';
(N) in paragraph (8)--
(i) in subparagraph (A), by striking ``the banks'' and
inserting ``the depository institutions'';
(ii) in subparagraph (B), by striking ``bank's'' and
inserting ``depository institution's'';
(O) in paragraph (11), by inserting ``or a Federal savings
association, as the case may be,'' after ``national bank''
each place that term appears;
(P) in paragraph (12)--
(i) by inserting ``or the Director of the Office of Thrift
Supervision, as appropriate,'' after ``Comptroller of the
Currency'' each place that term appears; and
(ii) by inserting ``or Federal savings associations, as
appropriate'' after ``national banks''; and
(Q) in paragraph (13), by striking ``single bank'' and
inserting ``single depository institution''.
(b) Other Conforming Amendments.--
(1) Federal deposit insurance act.--The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended--
(A) in section 3 (12 U.S.C. 1813), by striking subsection
(i) and inserting the following:
``(i) New Depository Institution and Bridge Depository
Institution Defined.--
``(1) New depository institution.--The term `new depository
institution' means a new national bank or Federal savings
association, other than a bridge depository institution,
organized by the Corporation in accordance with section
11(m).
``(2) Bridge depository institution.--The term `bridge
depository institution' means a new national bank or Federal
savings association organized by the Corporation in
accordance with section 11(n).'';
(B) in section 10(d)(5)(B) (12 U.S.C. 1820(d)(5)(B)), by
striking ``bridge bank'' and inserting ``bridge depository
institution'';
(C) in section 12 (12 U.S.C. 1822), by striking ``new
bank'' each place that term appears and inserting ``new
depository institution''; and
(D) in section 38(j)(2) (12 U.S.C. 1831o(j)(2)), by
striking ``bridge bank'' and inserting ``bridge depository
institution''.
(2) Federal credit union act.--Section 207(c)(10)(C)(i) of
the Federal Credit Union Act (12 U.S.C. 1787(c)(10)(C)(i)) is
amended by striking ``bridge bank'' and inserting ``bridge
depository institution''.
(3) Title 11.--Section 783 of title 11, United States Code,
is amended by striking ``bridge bank'' and inserting ``bridge
depository institution''.
(4) Title 26.--Section 414(l)(2)(G) of the Internal Revenue
Code of 1986, is amended by striking ``bridge bank'' and
inserting ``bridge depository institution''.

SEC. 1605. SENSE OF THE SENATE.

It is the sense of the Senate that in implementing or
carrying out any provision of this Act, or any amendment made
by this Act, the Senate supports a policy of noninterference
regarding local government requirements that the holder of a
foreclosed property maintain that property.

DIVISION B--FORECLOSURE PREVENTION

SECTION 2001. SHORT TITLE.

This division may be cited as the ``Foreclosure Prevention
Act of 2008''.

SEC. 2002. EMERGENCY DESIGNATION.

For purposes of Senate enforcement, all provisions of this
division are designated as emergency requirements and
necessary to meet emergency needs pursuant to section 204 of
S. Con. Res. 21 (110th Congress), the concurrent resolution
on the budget for fiscal year 2008.

TITLE I--FHA MODERNIZATION ACT OF 2008

SEC. 2101. SHORT TITLE.

This title may be cited as the ``FHA Modernization Act of
2008''.

Subtitle A--Building American Homeownership

SEC. 2111. SHORT TITLE.

This subtitle may be cited as the ``Building American
Homeownership Act of 2008''.

SEC. 2112. MAXIMUM PRINCIPAL LOAN OBLIGATION.

(a) In General.--Paragraph (2) of section 203(b)(2) of the
National Housing Act (12 U.S.C. 1709(b)(2)) is amended--
(1) by amending subparagraphs (A) and (B) to read as
follows:
``(A) not to exceed the lesser of--
``(i) in the case of a 1-family residence, 110 percent of
the median 1-family house price in the area, as determined by
the Secretary; and in the case of a 2-, 3-, or 4-family
residence, the percentage of such median price that bears the
same ratio to such median price as the dollar amount
limitation determined under section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for
a 2-, 3-, or 4-family residence, respectively, bears to the
dollar amount limitation determined under such section for a
1-family residence; or
``(ii) 150 percent of the dollar amount limitation
determined under section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act for a residence of applicable size,

except that the dollar amount limitation in effect under this
subparagraph for any size residence for any area may not be
less than the greater of: (I) the dollar amount limitation in
effect under this section for the area on October 21, 1998;
or (II) 65 percent of the dollar amount limitation determined
under such section 305(a)(2) for a residence of the
applicable size; and
``(B) not to exceed 100 percent of the appraised value of
the property.''; and
(2) in the matter following subparagraph (B), by striking
the second sentence (relating to a definition of ``average
closing cost'') and all that follows through ``section
3103A(d) of title 38, United States Code.''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect upon the expiration of the date described
in section 202(a) of the Economic Stimulus Act of 2008
(Public Law 110-185).

SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF
SELLER-FUNDED DOWN PAYMENT ASSISTANCE.

Paragraph (9) of section 203(b) of the National Housing Act
(12 U.S.C. 1709(b)(9)) is amended to read as follows:
``(9) Cash investment requirement.--
``(A) In general.--A mortgage insured under this section
shall be executed by a mortgagor who shall have paid, in
cash, on account of the property an amount equal to not less
than 3.5 percent of the appraised value of the property or
such larger amount as the Secretary may determine.
``(B) Family members.--For purposes of this paragraph, the
Secretary shall consider as cash or its equivalent any
amounts borrowed from a family member (as such term is
defined in section 201), subject only to the requirements
that, in any case in which the repayment of such borrowed
amounts is secured by a lien against the property, that--
``(i) such lien shall be subordinate to the mortgage; and
``(ii) the sum of the principal obligation of the mortgage
and the obligation secured by such lien may not exceed 100
percent of the appraised value of the property.
``(C) Prohibited sources.--In no case shall the funds
required by subparagraph (A) consist, in whole or in part, of
funds provided by any of the following parties before,
during, or after closing of the property sale:
``(i) The seller or any other person or entity that
financially benefits from the transaction.
``(ii) Any third party or entity that is reimbursed,
directly or indirectly, by any of the parties described in
clause (i).''.

SEC. 2114. MORTGAGE INSURANCE PREMIUMS.

Section 203(c)(2) of the National Housing Act (12 U.S.C.
1709(c)(2)) is amended--
(1) in the matter preceding subparagraph (A), by striking
``or of the General Insurance Fund'' and all that follows
through ``section 234(c),,''; and
(2) in subparagraph (A)--
(A) by striking ``2.25 percent'' and inserting ``3
percent''; and
(B) by striking ``2.0 percent'' and inserting ``2.75
percent''.

SEC. 2115. REHABILITATION LOANS.

Subsection (k) of section 203 of the National Housing Act
(12 U.S.C. 1709(k)) is amended--
(1) in paragraph (1), by striking ``on'' and all that
follows through ``1978''; and
(2) in paragraph (5)--
(A) by striking ``General Insurance Fund'' the first place
it appears and inserting ``Mutual Mortgage Insurance Fund'';
and
(B) in the second sentence, by striking the comma and all
that follows through ``General Insurance Fund''.

SEC. 2116. DISCRETIONARY ACTION.

The National Housing Act is amended--
(1) in subsection (e) of section 202 (12 U.S.C. 1708(e))--
(A) in paragraph (3)(B), by striking ``section 202(e) of
the National Housing Act'' and inserting ``this subsection'';
and
(B) by redesignating such subsection as subsection (f);
(2) by striking paragraph (4) of section 203(s) (12 U.S.C.
1709(s)(4)) and inserting the following new paragraph:
``(4) the Secretary of Agriculture;''; and
(3) by transferring subsection (s) of section 203 (as
amended by paragraph (2) of this section) to section 202,
inserting such subsection after subsection (d) of section
202, and redesignating such subsection as subsection (e).

SEC. 2117. INSURANCE OF CONDOMINIUMS.

(a) In General.--Section 234 of the National Housing Act
(12 U.S.C. 1715y) is amended--

[[Page S5887]]

(1) in subsection (c), in the first sentence--
(A) by striking ``and'' before ``(2)''; and
(B) by inserting before the period at the end the
following: ``, and (3) the project has a blanket mortgage
insured by the Secretary under subsection (d)''; and
(2) in subsection (g), by striking ``, except that'' and
all that follows and inserting a period.
(b) Definition of Mortgage.--Section 201(a) of the National
Housing Act (12 U.S.C. 1707(a)) is amended--
(1) before ``a first mortgage'' insert ``(A)'';
(2) by striking ``or on a leasehold (1)'' and inserting
``(B) a first mortgage on a leasehold on real estate (i)'';
(3) by striking ``or (2)'' and inserting ``, or (ii)''; and
(4) by inserting before the semicolon the following: ``, or
(C) a first mortgage given to secure the unpaid purchase
price of a fee interest in, or long-term leasehold interest
in, real estate consisting of a one-family unit in a
multifamily project, including a project in which the
dwelling units are attached, or are manufactured housing
units, semi-detached, or detached, and an undivided interest
in the common areas and facilities which serve the project''.
(c) Definition of Real Estate.--Section 201 of the National
Housing Act (12 U.S.C. 1707) is amended by adding at the end
the following new subsection:
``(g) The term `real estate' means land and all natural
resources and structures permanently affixed to the land,
including residential buildings and stationary manufactured
housing. The Secretary may not require, for treatment of any
land or other property as real estate for purposes of this
title, that such land or property be treated as real estate
for purposes of State taxation.''.

SEC. 2118. MUTUAL MORTGAGE INSURANCE FUND.

(a) In General.--Subsection (a) of section 202 of the
National Housing Act (12 U.S.C. 1708(a)) is amended to read
as follows:
``(a) Mutual Mortgage Insurance Fund.--
``(1) Establishment.--Subject to the provisions of the
Federal Credit Reform Act of 1990, there is hereby created a
Mutual Mortgage Insurance Fund (in this title referred to as
the `Fund'), which shall be used by the Secretary to carry
out the provisions of this title with respect to mortgages
insured under section 203. The Secretary may enter into
commitments to guarantee, and may guarantee, such insured
mortgages.
``(2) Limit on loan guarantees.--The authority of the
Secretary to enter into commitments to guarantee such insured
mortgages shall be effective for any fiscal year only to the
extent that the aggregate original principal loan amount
under such mortgages, any part of which is guaranteed, does
not exceed the amount specified in appropriations Acts for
such fiscal year.
``(3) Fiduciary responsibility.--The Secretary has a
responsibility to ensure that the Mutual Mortgage Insurance
Fund remains financially sound.
``(4) Annual independent actuarial study.--The Secretary
shall provide for an independent actuarial study of the Fund
to be conducted annually, which shall analyze the financial
position of the Fund. The Secretary shall submit a report
annually to the Congress describing the results of such study
and assessing the financial status of the Fund. The report
shall recommend adjustments to underwriting standards,
program participation, or premiums, if necessary, to ensure
that the Fund remains financially sound. The report shall
also include an evaluation of the quality control procedures
and accuracy of information utilized in the process of
underwriting loans guaranteed by the Fund. Such evaluation
shall include a review of the risk characteristics of loans
based not only on borrower information and performance, but
on risks associated with loans originated or funded by
various entities or financial institutions.
``(5) Quarterly reports.--During each fiscal year, the
Secretary shall submit a report to the Congress for each
calendar quarter, which shall specify for mortgages that are
obligations of the Fund--
``(A) the cumulative volume of loan guarantee commitments
that have been made during such fiscal year through the end
of the quarter for which the report is submitted;
``(B) the types of loans insured, categorized by risk;
``(C) any significant changes between actual and projected
claim and prepayment activity;
``(D) projected versus actual loss rates; and
``(E) updated projections of the annual subsidy rates to
ensure that increases in risk to the Fund are identified and
mitigated by adjustments to underwriting standards, program
participation, or premiums, and the financial soundness of
the Fund is maintained.

The first quarterly report under this paragraph shall be
submitted on the last day of the first quarter of fiscal year
2008, or on the last day of the first full calendar quarter
following the enactment of the Building American
Homeownership Act of 2008, whichever is later.
``(6) Adjustment of premiums.--If, pursuant to the
independent actuarial study of the Fund required under
paragraph (4), the Secretary determines that the Fund is not
meeting the operational goals established under paragraph (7)
or there is a substantial probability that the Fund will not
maintain its established target subsidy rate, the Secretary
may either make programmatic adjustments under this title as
necessary to reduce the risk to the Fund, or make appropriate
premium adjustments.
``(7) Operational goals.--The operational goals for the
Fund are--
``(A) to minimize the default risk to the Fund and to
homeowners by among other actions instituting fraud
prevention quality control screening not later than 18 months
after the date of enactment of the Building American
Homeownership Act of 2008; and
``(B) to meet the housing needs of the borrowers that the
single family mortgage insurance program under this title is
designed to serve.''.
(b) Obligations of Fund.--The National Housing Act is
amended as follows:
(1) Homeownership voucher program mortgages.--In section
203(v) (12 U.S.C. 1709(v))--
(A) by striking ``Notwithstanding section 202 of this
title, the'' and inserting ``The''; and
(B) by striking ``General Insurance Fund'' the first place
such term appears and all that follows through the end of the
subsection and inserting ``Mutual Mortgage Insurance Fund.''.
(2) Home equity conversion mortgages.--Section 255(i)(2)(A)
of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is
amended by striking ``General Insurance Fund'' and inserting
``Mutual Mortgage Insurance Fund''.
(c) Conforming Amendments.--The National Housing Act is
amended--
(1) in section 205 (12 U.S.C. 1711), by striking
subsections (g) and (h); and
(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking
``203(b)'' and all that follows through ``203(i)'' and
inserting ``203, except as determined by the Secretary''.

SEC. 2119. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

(a) Hawaiian Home Lands.--Section 247(c) of the National
Housing Act (12 U.S.C. 1715z-12(c)) is amended--
(1) by striking ``General Insurance Fund established in
section 519'' and inserting ``Mutual Mortgage Insurance
Fund''; and
(2) in the second sentence, by striking ``(1) all
references'' and all that follows through ``and (2)''.
(b) Indian Reservations.--Section 248(f) of the National
Housing Act (12 U.S.C. 1715z-13(f)) is amended--
(1) by striking ``General Insurance Fund'' the first place
it appears through ``519'' and inserting ``Mutual Mortgage
Insurance Fund''; and
(2) in the second sentence, by striking ``(1) all
references'' and all that follows through ``and (2)''.

SEC. 2120. CONFORMING AND TECHNICAL AMENDMENTS.

(a) Repeals.--The following provisions of the National
Housing Act are repealed:
(1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).
(2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).
(3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).
(4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).
(5) Section 222 (12 U.S.C. 1715m).
(6) Section 237 (12 U.S.C. 1715z-2).
(7) Section 245 (12 U.S.C. 1715z-10).
(b) Definition of Area.--Section 203(u)(2)(A) of the
National Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by
striking ``shall'' and all that follows and inserting ``means
a metropolitan statistical area as established by the Office
of Management and Budget;''.
(c) Definition of State.--Section 201(d) of the National
Housing Act (12 U.S.C. 1707(d)) is amended by striking ``the
Trust Territory of the Pacific Islands'' and inserting ``the
Commonwealth of the Northern Mariana Islands''.

SEC. 2121. INSURANCE OF MORTGAGES.

Subsection (n)(2) of section 203 of the National Housing
Act (12 U.S.C. 1709(n)(2)) is amended--
(1) in subparagraph (A), by inserting ``or subordinate
mortgage or'' before ``lien given''; and
(2) in subparagraph (C), by inserting ``or subordinate
mortgage or'' before ``lien''.

SEC. 2122. HOME EQUITY CONVERSION MORTGAGES.

(a) In General.--Section 255 of the National Housing Act
(12 U.S.C. 1715z-20) is amended--
(1) in subsection (b)(2), insert `` `real estate,' '' after
`` `mortgagor','';
(2) by amending subsection (d)(1) to read as follows:
``(1) have been originated by a mortgagee approved by the
Secretary;'';
(3) by amending subsection (d)(2)(B) to read as follows:
``(B) has received adequate counseling, as provided in
subsection (f), by an independent third party that is not,
either directly or indirectly, associated with or compensated
by a party involved in--
``(i) originating or servicing the mortgage;
``(ii) funding the loan underlying the mortgage; or
``(iii) the sale of annuities, investments, long-term care
insurance, or any other type of financial or insurance
product;'';
(4) in subsection (f)--
(A) by striking ``(f) Information Services for
Mortgagors.--'' and inserting ``(f) Counseling Services and
Information for Mortgagors.--''; and

[[Page S5888]]

(B) by amending the matter preceding paragraph (1) to read
as follows: ``The Secretary shall provide or cause to be
provided adequate counseling for the mortgagor, as described
in subsection (d)(2)(B). Such counseling shall be provided by
counselors that meet qualification standards and follow
uniform counseling protocols. The qualification standards and
counseling protocols shall be established by the Secretary
within 12 months of the date of enactment of the Building
American Homeownership Act of 2008. The protocols shall
require a qualified counselor to discuss with each mortgagor
information which shall include--''
(5) in subsection (g), by striking ``established under
section 203(b)(2)'' and all that follows through ``located''
and inserting ``limitation established under section
305(a)(2) of the Federal Home Loan Mortgage Corporation Act
for a 1-family residence'';
(6) by striking subsection (l);
(7) by redesignating subsection (m) as subsection (l);
(8) by amending subsection (l), as so redesignated, to read
as follows:
``(l) Funding for Counseling.--The Secretary may use a
portion of the mortgage insurance premiums collected under
the program under this section to adequately fund the
counseling and disclosure activities required under
subsection (f), including counseling for those homeowners who
elect not to take out a home equity conversion mortgage,
provided that the use of such funds is based upon accepted
actuarial principles.''; and
(9) by adding at the end the following new subsection:
``(m) Authority To Insure Home Purchase Mortgage.--
``(1) In general.--Notwithstanding any other provision of
this section, the Secretary may insure, upon application by a
mortgagee, a home equity conversion mortgage upon such terms
and conditions as the Secretary may prescribe, when the home
equity conversion mortgage will be used to purchase a 1- to
4-family dwelling unit, one unit of which the mortgagor will
occupy as a primary residence, and to provide for any future
payments to the mortgagor, based on available equity, as
authorized under subsection (d)(9).
``(2) Limitation on principal obligation.--A home equity
conversion mortgage insured pursuant to paragraph (1) shall
involve a principal obligation that does not exceed the
dollar amount limitation determined under section 305(a)(2)
of the Federal Home Loan Mortgage Corporation Act for a 1-
family residence.
``(n) Requirements on Mortgage Originators.--
``(1) In general.--The mortgagee and any other party that
participates in the origination of a mortgage to be insured
under this section shall--
``(A) not participate in, be associated with, or employ any
party that participates in or is associated with any other
financial or insurance activity; or
``(B) demonstrate to the Secretary that the mortgagee or
other party maintains, or will maintain, firewalls and other
safeguards designed to ensure that--
``(i) individuals participating in the origination of the
mortgage shall have no involvement with, or incentive to
provide the mortgagor with, any other financial or insurance
product; and
``(ii) the mortgagor shall not be required, directly or
indirectly, as a condition of obtaining a mortgage under this
section, to purchase any other financial or insurance
product.
``(2) Approval of other parties.--All parties that
participate in the origination of a mortgage to be insured
under this section shall be approved by the Secretary.
``(o) Prohibition Against Requirements To Purchase
Additional Products.--The mortgagee or any other party shall
not be required by the mortgagor or any other party to
purchase an insurance, annuity, or other additional product
as a requirement or condition of eligibility for insurance
under subsection (c).
``(p) Study To Determine Consumer Protections and
Underwriting Standards.--The Secretary shall conduct a study
to examine and determine appropriate consumer protections and
underwriting standards to ensure that the purchase of
products referred to in subsection (o) is appropriate for the
consumer. In conducting such study, the Secretary shall
consult with consumer advocates (including recognized experts
in consumer protection), industry representatives,
representatives of counseling organizations, and other
interested parties.''.
(b) Mortgages for Cooperatives.--Subsection (b) of section
255 of the National Housing Act (12 U.S.C. 1715z-20(b)) is
amended--
(1) in paragraph (4)--
(A) by inserting ``a first or subordinate mortgage or
lien'' before ``on all stock'';
(B) by inserting ``unit'' after ``dwelling''; and
(C) by inserting ``a first mortgage or first lien'' before
``on a leasehold''; and
(2) in paragraph (5), by inserting ``a first or subordinate
lien on'' before ``all stock''.
(c) Limitation on Origination Fees.--Section 255 of the
National Housing Act (12 U.S.C. 1715z-20), as amended by the
preceding provisions of this section, is further amended by
adding at the end the following new subsection:
``(r) Limitation on Origination Fees.--The Secretary shall
establish limits on the origination fee that may be charged
to a mortgagor under a mortgage insured under this section,
which limitations shall--
``(1) equal 1.5 percent of the maximum claim amount of the
mortgage unless adjusted thereafter on the basis of--
``(A) the costs to the mortgagor; and
``(B) the impact of such fees on the reverse mortgage
market;
``(2) be subject to a minimum allowable amount;
``(3) provide that the origination fee may be fully
financed with the mortgage;
``(4) include any fees paid to correspondent mortgagees
approved by the Secretary; and
``(5) have the same effective date as subsection (m)(2)
regarding the limitation on principal obligation.''.
(d) Study Regarding Program Costs and Credit
Availability.--
(1) In general.--The Comptroller General of the United
States shall conduct a study regarding the costs and
availability of credit under the home equity conversion
mortgages for elderly homeowners program under section 255 of
the National Housing Act (12 U.S.C. 1715z-20) (in this
subsection referred to as the ``program'').
(2) Purpose.--The purpose of the study required under
paragraph (1) is to help Congress analyze and determine the
effects of limiting the amounts of the costs or fees under
the program from the amounts charged under the program as of
the date of the enactment of this title.
(3) Content of report.--The study required under paragraph
(1) should focus on--
(A) the cost to mortgagors of participating in the program;
(B) the financial soundness of the program;
(C) the availability of credit under the program; and
(D) the costs to elderly homeowners participating in the
program, including--
(i) mortgage insurance premiums charged under the program;
(ii) up-front fees charged under the program; and
(iii) margin rates charged under the program.
(4) Timing of report.--Not later than 12 months after the
date of the enactment of this title, the Comptroller General
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 setting
forth the results and conclusions of the study required under
paragraph (1).

SEC. 2123. ENERGY EFFICIENT MORTGAGES PROGRAM.

Section 106(a)(2) of the Energy Policy Act of 1992 (42
U.S.C. 12712 note) is amended--
(1) by amending subparagraph (C) to read as follows:
``(C) Costs of improvements.--The cost of cost-effective
energy efficiency improvements shall not exceed the greater
of--
``(i) 5 percent of the property value (not to exceed 5
percent of the limit established under section 203(b)(2)(A))
of the National Housing Act (12 U.S.C. 1709(b)(2)(A); or
``(ii) 2 percent of the limit established under section
203(b)(2)(B) of such Act.''; and
(2) by adding at the end the following:
``(D) Limitation.--In any fiscal year, the aggregate number
of mortgages insured pursuant to this section may not exceed
5 percent of the aggregate number of mortgages for 1- to 4-
family residences insured by the Secretary of Housing and
Urban Development under title II of the National Housing Act
(12 U.S.C. 1707 et seq.) during the preceding fiscal year.''.

SEC. 2124. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS
WITHOUT SUFFICIENT CREDIT HISTORY.

(a) Establishment.--Title II of the National Housing Act
(12 U.S.C. 1707 et seq.) is amended by adding at the end the
following new section:

``SEC. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS
WITHOUT SUFFICIENT CREDIT HISTORY.

``(a) Establishment.--The Secretary shall carry out a pilot
program to establish, and make available to mortgagees, an
automated process for providing alternative credit rating
information for mortgagors and prospective mortgagors under
mortgages on 1- to 4-family residences to be insured under
this title who have insufficient credit histories for
determining their creditworthiness. Such alternative credit
rating information may include rent, utilities, and insurance
payment histories, and such other information as the
Secretary considers appropriate.
``(b) Scope.--The Secretary may carry out the pilot program
under this section on a limited basis or scope, and may
consider limiting the program to first-time homebuyers.
``(c) Limitation.--In any fiscal year, the aggregate number
of mortgages insured pursuant to the automated process
established under this section may not exceed 5 percent of
the aggregate number of mortgages for 1- to 4-family
residences insured by the Secretary under this title during
the preceding fiscal year.
``(d) Sunset.--After the expiration of the 5-year period
beginning on the date of the enactment of the Building
American Homeownership Act of 2008, the Secretary may not
enter into any new commitment to insure any mortgage, or
newly insure any mortgage, pursuant to the automated process
established under this section.''.
(b) GAO Report.--Not later than the expiration of the two-
year period beginning on the date of the enactment of this
subtitle, the Comptroller General of the United States shall
submit to the Congress a report identifying the number of
additional mortgagors

[[Page S5889]]

served using the automated process established pursuant to
section 257 of the National Housing Act (as added by the
amendment made by subsection (a) of this section) and the
impact of such process and the insurance of mortgages
pursuant to such process on the safety and soundness of the
insurance funds under the National Housing Act of which such
mortgages are obligations.

SEC. 2125. HOMEOWNERSHIP PRESERVATION.

The Secretary of Housing and Urban Development and the
Commissioner of the Federal Housing Administration, in
consultation with industry, the Neighborhood Reinvestment
Corporation, and other entities involved in foreclosure
prevention activities, shall--
(1) develop and implement a plan to improve the Federal
Housing Administration's loss mitigation process; and
(2) report such plan to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.

SEC. 2126. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA
TECHNOLOGIES, PROCEDURES, PROCESSES, PROGRAM
PERFORMANCE, STAFFING, AND SALARIES.

(a) Authorization of Appropriations.--There is authorized
to be appropriated for each of fiscal years 2009 through
2013, $25,000,000, from negative credit subsidy for the
mortgage insurance programs under title II of the National
Housing Act, to the Secretary of Housing and Urban
Development for increasing funding for the purpose of
improving technology, processes, program performance,
eliminating fraud, and for providing appropriate staffing in
connection with the mortgage insurance programs under title
II of the National Housing Act.
(b) Certification.--The authorization under subsection (a)
shall not be effective for a fiscal year unless the Secretary
of Housing and Urban Development has, by rulemaking in
accordance with section 553 of title 5, United States Code
(notwithstanding subsections (a)(2), (b)(B), and (d)(3) of
such section), made a determination that--
(1) premiums being, or to be, charged during such fiscal
year for mortgage insurance under title II of the National
Housing Act are established at the minimum amount sufficient
to--
(A) comply with the requirements of section 205(f) of such
Act (relating to required capital ratio for the Mutual
Mortgage Insurance Fund); and
(B) ensure the safety and soundness of the other mortgage
insurance funds under such Act; and
(2) any negative credit subsidy for such fiscal year
resulting from such mortgage insurance programs adequately
ensures the efficient delivery and availability of such
programs.
(c) Study and Report.--The Secretary of Housing and Urban
Development shall conduct a study to obtain recommendations
from participants in the private residential (both single
family and multifamily) mortgage lending business and the
secondary market for such mortgages on how best to update and
upgrade processes and technologies for the mortgage insurance
programs under title II of the National Housing Act so that
the procedures for originating, insuring, and servicing of
such mortgages conform with those customarily used by
secondary market purchasers of residential mortgage loans.
Not later than the expiration of the 12-month period
beginning on the date of the enactment of this title, the
Secretary shall submit a report to the Congress describing
the progress made and to be made toward updating and
upgrading such processes and technology, and providing
appropriate staffing for such mortgage insurance programs.

SEC. 2127. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY
IMPROVEMENTS.

Section 106(c)(4) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(c)(4)) is amended:
(1) in subparagraph (C)--
(A) in clause (i), by striking ``; or'' and inserting a
semicolon;
(B) in clause (ii), by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following:
``(iii) a significant reduction in the income of the
household due to divorce or death; or
``(iv) a significant increase in basic expenses of the
homeowner or an immediate family member of the homeowner
(including the spouse, child, or parent for whom the
homeowner provides substantial care or financial assistance)
due to--

``(I) an unexpected or significant increase in medical
expenses;
``(II) a divorce;
``(III) unexpected and significant damage to the property,
the repair of which will not be covered by private or public
insurance; or
``(IV) a large property-tax increase; or'';

(2) by striking the matter that follows subparagraph (C);
and
(3) by adding at the end the following:
``(D) the Secretary of Housing and Urban Development
determines that the annual income of the homeowner is no
greater than the annual income established by the Secretary
as being of low- or moderate-income.''.

SEC. 2128. PRE-PURCHASE HOMEOWNERSHIP COUNSELING
DEMONSTRATION.

(a) Establishment of Program.--For the period beginning on
the date of enactment of this title and ending on the date
that is 3 years after such date of enactment, the Secretary
of Housing and Urban Development shall establish and conduct
a demonstration program to test the effectiveness of
alternative forms of pre-purchase homeownership counseling
for eligible homebuyers.
(b) Forms of Counseling.--The Secretary of Housing and
Urban Development shall provide to eligible homebuyers pre-
purchase homeownership counseling under this section in the
form of--
(1) telephone counseling;
(2) individualized in-person counseling;
(3) web-based counseling;
(4) counseling classes; or
(5) any other form or type of counseling that the Secretary
may, in his discretion, determine appropriate.
(c) Size of Program.--The Secretary shall make available
the pre-purchase homeownership counseling described in
subsection (b) to not more than 3,000 eligible homebuyers in
any given year.
(d) Incentive to Participate.--The Secretary of Housing and
Urban Development may provide incentives to eligible
homebuyers to participate in the demonstration program
established under subsection (a). Such incentives may include
the reduction of any insurance premium charges owed by the
eligible homebuyer to the Secretary.
(e) Eligible Homebuyer Defined.--For purposes of this
section an ``eligible homebuyer'' means a first-time
homebuyer who has been approved for a home loan with a loan-
to-value ratio between 97 percent and 98.5 percent.
(f) Report to Congress.--The Secretary of Housing and Urban
Development shall report to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representative--
(1) on an annual basis, on the progress and results of the
demonstration program established under subsection (a); and
(2) for the period beginning on the date of enactment of
this title and ending on the date that is 5 years after such
date of enactment, on the payment history and delinquency
rates of eligible homebuyers who participated in the
demonstration program.

SEC. 2129. FRAUD PREVENTION.

Section 1014 of title 18, United States Code, is amended in
the first sentence--
(1) by inserting ``the Federal Housing Administration,''
before ``the Farm Credit Administration''; and
(2) by striking ``commitment, or loan'' and inserting
``commitment, loan, or insurance agreement or application for
insurance or a guarantee''.

SEC. 2130. LIMITATION ON MORTGAGE INSURANCE PREMIUM
INCREASES.

(a) In General.--Notwithstanding any other provision of
law, including any provision of this title and any amendment
made by this title--
(1) for the period beginning on the date of the enactment
of this title and ending on October 1, 2009, the premiums
charged for mortgage insurance under multifamily housing
programs under the National Housing Act may not be increased
above the premium amounts in effect under such program on
October 1, 2006, unless the Secretary of Housing and Urban
Development determines that, absent such increase, insurance
of additional mortgages under such program would, under the
Federal Credit Reform Act of 1990, require the appropriation
of new budget authority to cover the costs (as such term is
defined in section 502 of the Federal Credit Reform Act of
1990 (2 U.S.C. 661a) of such insurance; and
(2) a premium increase pursuant to paragraph (1) may be
made only if not less than 30 days prior to such increase
taking effect, the Secretary of Housing and Urban
Development--
(A) notifies the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives of such increase; and
(B) publishes notice of such increase in the Federal
Register.
(b) Waiver.--The Secretary of Housing and Urban Development
may waive the 30-day notice requirement under subsection
(a)(2), if the Secretary determines that waiting 30-days
before increasing premiums would cause substantial damage to
the solvency of multifamily housing programs under the
National Housing Act.

SEC. 2131. SAVINGS PROVISION.

Any mortgage insured under title II of the National Housing
Act before the date of enactment of this subtitle shall
continue to be governed by the laws, regulations, orders, and
terms and conditions to which it was subject on the day
before the date of the enactment of this subtitle.

SEC. 2132. IMPLEMENTATION.

The Secretary of Housing and Urban Development shall by
notice establish any additional requirements that may be
necessary to immediately carry out the provisions of this
subtitle. The notice shall take effect upon issuance.

SEC. 2133. MORATORIUM ON IMPLEMENTATION OF RISK-BASED
PREMIUMS.

(a) In General.--During the 12-month period beginning on
the date of enactment of this Act, the Secretary of Housing
and Urban Development shall not enact, execute, or take any
action to make effective the planned implementation of risk-
based premiums, which are designed for mortgage lenders to
offer borrowers an FHA-insured product that provides a range
of mortgage insurance premium pricing, based on the risk that
the insurance contract represents, as

[[Page S5890]]

such planned implementation was set forth in the Notice
published in the Federal Register on May 13, 2008 (Vol. 73,
No. 93, Pages 27703 through 27711)(effective July 14, 2008).
(b) Insurance of Mortgages Under the National Housing
Act.--During the 12-month period beginning on the date of
enactment of this Act, the Secretary of Housing and Urban
Development shall not enact, execute, or take any action to
make effective the implementation of any other new risk-based
premium product related to the insurance of any mortgage on a
single family residence under title II of the National
Housing Act, where the premium price for such new product is
based in whole or in part on a borrower's Decision Credit
Score, as that term is defined in the Notice described under
subsection (a), or any successor thereto.

Subtitle B--Manufactured Housing Loan Modernization

SEC. 2141. SHORT TITLE.

This subtitle may be cited as the ``FHA Manufactured
Housing Loan Modernization Act of 2008''.

SEC. 2142. PURPOSES.

The purposes of this subtitle are--
(1) to provide adequate funding for FHA-insured
manufactured housing loans for low- and moderate-income
homebuyers during all economic cycles in the manufactured
housing industry;
(2) to modernize the FHA title I insurance program for
manufactured housing loans to enhance participation by Ginnie
Mae and the private lending markets; and
(3) to adjust the low loan limits for title I manufactured
home loan insurance to reflect the increase in costs since
such limits were last increased in 1992 and to index the
limits to inflation.

SEC. 2143. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION
PORTFOLIO.

The second sentence of section 2(a) of the National Housing
Act (12 U.S.C. 1703(a)) is amended--
(1) by striking ``In no case'' and inserting ``Other than
in connection with a manufactured home or a lot on which to
place such a home (or both), in no case''; and
(2) by striking ``: Provided, That with'' and inserting ``.
With''.

SEC. 2144. INSURANCE BENEFITS.

(a) In General.--Subsection (b) of section 2 of the
National Housing Act (12 U.S.C. 1703(b)), is amended by
adding at the end the following new paragraph:
``(8) Insurance benefits for manufactured housing loans.--
Any contract of insurance with respect to loans, advances of
credit, or purchases in connection with a manufactured home
or a lot on which to place a manufactured home (or both) for
a financial institution that is executed under this title
after the date of the enactment of the FHA Manufactured
Housing Loan Modernization Act of 2008 by the Secretary shall
be conclusive evidence of the eligibility of such financial
institution for insurance, and the validity of any contract
of insurance so executed shall be incontestable in the hands
of the bearer from the date of the execution of such
contract, except for fraud or misrepresentation on the part
of such institution.''.
(b) Applicability.--The amendment made by subsection (a)
shall only apply to loans that are registered or endorsed for
insurance after the date of the enactment of this title.

SEC. 2145. MAXIMUM LOAN LIMITS.

(a) Dollar Amounts.--Paragraph (1) of section 2(b) of the
National Housing Act (12 U.S.C. 1703(b)(1)) is amended--
(1) in clause (ii) of subparagraph (A), by striking
``$17,500'' and inserting ``$25,090'';
(2) in subparagraph (C) by striking ``$48,600'' and
inserting ``$69,678'';
(3) in subparagraph (D) by striking ``$64,800'' and
inserting ``$92,904'';
(4) in subparagraph (E) by striking ``$16,200'' and
inserting ``$23,226''; and
(5) by realigning subparagraphs (C), (D), and (E) 2 ems to
the left so that the left margins of such subparagraphs are
aligned with the margins of subparagraphs (A) and (B).
(b) Annual Indexing.--Subsection (b) of section 2 of the
National Housing Act (12 U.S.C. 1703(b)), as amended by the
preceding provisions of this title, is further amended by
adding at the end the following new paragraph:
``(9) Annual indexing of manufactured housing loans.--The
Secretary shall develop a method of indexing in order to
annually adjust the loan limits established in subparagraphs
(A)(ii), (C), (D), and (E) of this subsection. Such index
shall be based on the manufactured housing price data
collected by the United States Census Bureau. The Secretary
shall establish such index no later than 1 year after the
date of the enactment of the FHA Manufactured Housing Loan
Modernization Act of 2008.''
(c) Technical and Conforming Changes.--Paragraph (1) of
section 2(b) of the National Housing Act (12 U.S.C.
1703(b)(1)) is amended--
(1) by striking ``No'' and inserting ``Except as provided
in the last sentence of this paragraph, no''; and
(2) by adding after and below subparagraph (G) the
following:
``The Secretary shall, by regulation, annually increase the
dollar amount limitations in subparagraphs (A)(ii), (C), (D),
and (E) (as such limitations may have been previously
adjusted under this sentence) in accordance with the index
established pursuant to paragraph (9).''.

SEC. 2146. INSURANCE PREMIUMS.

Subsection (f) of section 2 of the National Housing Act (12
U.S.C. 1703(f)) is amended--
(1) by inserting ``(1) Premium charges.--'' after ``(f)'';
and
(2) by adding at the end the following new paragraph:
``(2) Manufactured Home Loans.--Notwithstanding paragraph
(1), in the case of a loan, advance of credit, or purchase in
connection with a manufactured home or a lot on which to
place such a home (or both), the premium charge for the
insurance granted under this section shall be paid by the
borrower under the loan or advance of credit, as follows:
``(A) At the time of the making of the loan, advance of
credit, or purchase, a single premium payment in an amount
not to exceed 2.25 percent of the amount of the original
insured principal obligation.
``(B) In addition to the premium under subparagraph (A),
annual premium payments during the term of the loan, advance,
or obligation purchased in an amount not exceeding 1.0
percent of the remaining insured principal balance (excluding
the portion of the remaining balance attributable to the
premium collected under subparagraph (A) and without taking
into account delinquent payments or prepayments).
``(C) Premium charges under this paragraph shall be
established in amounts that are sufficient, but do not exceed
the minimum amounts necessary, to maintain a negative credit
subsidy for the program under this section for insurance of
loans, advances of credit, or purchases in connection with a
manufactured home or a lot on which to place such a home (or
both), as determined based upon risk to the Federal
Government under existing underwriting requirements.
``(D) The Secretary may increase the limitations on premium
payments to percentages above those set forth in
subparagraphs (A) and (B), but only if necessary, and not in
excess of the minimum increase necessary, to maintain a
negative credit subsidy as described in subparagraph (C).''.

SEC. 2147. TECHNICAL CORRECTIONS.

(a) Dates.--Subsection (a) of section 2 of the National
Housing Act (12 U.S.C. 1703(a)) is amended--
(1) by striking ``on and after July 1, 1939,'' each place
such term appears; and
(2) by striking ``made after the effective date of the
Housing Act of 1954''.
(b) Authority of Secretary.--Subsection (c) of section 2 of
the National Housing Act (12 U.S.C. 1703(c)) is amended to
read as follows:
``(c) Handling and Disposal of Property.--
``(1) Authority of secretary.--Notwithstanding any other
provision of law, the Secretary may--
``(A) deal with, complete, rent, renovate, modernize,
insure, or assign or sell at public or private sale, or
otherwise dispose of, for cash or credit in the Secretary's
discretion, and upon such terms and conditions and for such
consideration as the Secretary shall determine to be
reasonable, any real or personal property conveyed to or
otherwise acquired by the Secretary, in connection with the
payment of insurance heretofore or hereafter granted under
this title, including any evidence of debt, contract, claim,
personal property, or security assigned to or held by him in
connection with the payment of insurance heretofore or
hereafter granted under this section; and
``(B) pursue to final collection, by way of compromise or
otherwise, all claims assigned to or held by the Secretary
and all legal or equitable rights accruing to the Secretary
in connection with the payment of such insurance, including
unpaid insurance premiums owed in connection with insurance
made available by this title.
``(2) Advertisements for proposals.--Section 3709 of the
Revised Statutes shall not be construed to apply to any
contract of hazard insurance or to any purchase or contract
for services or supplies on account of such property if the
amount thereof does not exceed $25,000.
``(3) Delegation of authority.--The power to convey and to
execute in the name of the Secretary, deeds of conveyance,
deeds of release, assignments and satisfactions of mortgages,
and any other written instrument relating to real or personal
property or any interest therein heretofore or hereafter
acquired by the Secretary pursuant to the provisions of this
title may be exercised by an officer appointed by the
Secretary without the execution of any express delegation of
power or power of attorney. Nothing in this subsection shall
be construed to prevent the Secretary from delegating such
power by order or by power of attorney, in the Secretary's
discretion, to any officer or agent the Secretary may
appoint.''.

SEC. 2148. REVISION OF UNDERWRITING CRITERIA.

(a) In General.--Subsection (b) of section 2 of the
National Housing Act (12 U.S.C. 1703(b)), as amended by the
preceding provisions of this title, is further amended by
adding at the end the following new paragraph:
``(10) Financial soundness of manufactured housing
program.--The Secretary shall establish such underwriting
criteria for loans and advances of credit in connection with
a manufactured home or a lot on which to place a manufactured
home (or both), including such loans and advances represented
by obligations purchased by financial institutions, as may be
necessary to ensure that the program under this title for
insurance for financial institutions against losses from

[[Page S5891]]

such loans, advances of credit, and purchases is financially
sound.''.
(b) Timing.--Not later than the expiration of the 6-month
period beginning on the date of the enactment of this title,
the Secretary of Housing and Urban Development shall revise
the existing underwriting criteria for the program referred
to in paragraph (10) of section 2(b) of the National Housing
Act (as added by subsection (a) of this section) in
accordance with the requirements of such paragraph.

SEC. 2149. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

Title I of the National Housing Act is amended by adding at
the end of section 9 the following new section:

``SEC. 10. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

``(a) In General.--Except as provided in subsection (b),
the provisions of sections 3, 8, 16, 17, 18, and 19 of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601
et seq.) shall apply to each sale of a manufactured home
financed with an FHA-insured loan or extension of credit, as
well as to services rendered in connection with such
transactions.
``(b) Authority of the Secretary.--The Secretary is
authorized to determine the manner and extent to which the
provisions of sections 3, 8, 16, 17, 18, and 19 of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et
seq.) may reasonably be applied to the transactions described
in subsection (a), and to grant such exemptions as may be
necessary to achieve the purposes of this section.
``(c) Definitions.--For purposes of this section--
``(1) the term `federally related mortgage loan' as used in
sections 3, 8, 16, 17, 18, and 19 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.)
shall include an FHA-insured loan or extension of credit made
to a borrower for the purpose of purchasing a manufactured
home that the borrower intends to occupy as a personal
residence; and
``(2) the term `real estate settlement service' as used in
sections 3, 8, 16, 17, 18, and 19 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.)
shall include any service rendered in connection with a loan
or extension of credit insured by the Federal Housing
Administration for the purchase of a manufactured home.
``(d) Unfair and Deceptive Practices.--In connection with
the purchase of a manufactured home financed with a loan or
extension of credit insured by the Federal Housing
Administration under this title, the Secretary shall prohibit
acts or practices in connection with loans or extensions of
credit that the Secretary finds to be unfair, deceptive, or
otherwise not in the interests of the borrower.''.

SEC. 2150. LEASEHOLD REQUIREMENTS.

Subsection (b) of section 2 of the National Housing Act (12
U.S.C. 1703(b)), as amended by the preceding provisions of
this title, is further amended by adding at the end the
following new paragraph:
``(11) Leasehold requirements.--No insurance shall be
granted under this section to any such financial institution
with respect to any obligation representing any such loan,
advance of credit, or purchase by it, made for the purposes
of financing a manufactured home which is intended to be
situated in a manufactured home community pursuant to a
lease, unless such lease--
``(A) expires not less than 3 years after the origination
date of the obligation;
``(B) is renewable upon the expiration of the original 3
year term by successive 1 year terms; and
``(C) requires the lessor to provide the lessee written
notice of termination of the lease not less than 180 days
prior to the expiration of the current lease term in the
event the lessee is required to move due to the closing of
the manufactured home community, and further provides that
failure to provide such notice to the mortgagor in a timely
manner will cause the lease term, at its expiration, to
automatically renew for an additional 1 year term.''.

TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS

SEC. 2201. TEMPORARY INCREASE IN MAXIMUM LOAN GUARANTY AMOUNT
FOR CERTAIN HOUSING LOANS GUARANTEED BY THE
SECRETARY OF VETERANS AFFAIRS.

Notwithstanding subparagraph (C) of section 3703(a)(1) of
title 38, United States Code, for purposes of any loan
described in subparagraph (A)(i)(IV) of such section that is
originated during the period beginning on the date of the
enactment of this Act and ending on December 31, 2008, the
term ``maximum guaranty amount'' shall mean an amount equal
to 25 percent of the higher of--
(1) the limitation determined under section 305(a)(2) of
the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)) for the calendar year in which the loan is
originated for a single-family residence; or
(2) 125 percent of the area median price for a single-
family residence, but in no case to exceed 175 percent of the
limitation determined under such section 305(a)(2) for the
calendar year in which the loan is originated for a single-
family residence.

SEC. 2202. COUNSELING ON MORTGAGE FORECLOSURES FOR MEMBERS OF
THE ARMED FORCES RETURNING FROM SERVICE ABROAD.

(a) In General.--The Secretary of Defense shall develop and
implement a program to advise members of the Armed Forces
(including members of the National Guard and Reserve) who are
returning from service on active duty abroad (including
service in Operation Iraqi Freedom and Operation Enduring
Freedom) on actions to be taken by such members to prevent or
forestall mortgage foreclosures.
(b) Elements.--The program required by subsection (a) shall
include the following:
(1) Credit counseling.
(2) Home mortgage counseling.
(3) Such other counseling and information as the Secretary
considers appropriate for purposes of the program.
(c) Timing of Provision of Counseling.--Counseling and
other information under the program required by subsection
(a) shall be provided to a member of the Armed Forces covered
by the program as soon as practicable after the return of the
member from service as described in subsection (a).

SEC. 2203. ENHANCEMENT OF PROTECTIONS FOR SERVICEMEMBERS
RELATING TO MORTGAGES AND MORTGAGE
FORECLOSURES.

(a) Extension of Period of Protections Against Mortgage
Foreclosures.--
(1) Extension of protection period.--Subsection (c) of
section 303 of the Servicemembers Civil Relief Act (50 U.S.C.
App. 533) is amended by striking ``90 days'' and inserting
``9 months''.
(2) Extension of stay of proceedings period.--Subsection
(b) of such section is amended by striking ``90 days'' and
inserting ``9 months''.
(b) Treatment of Mortgages as Obligations Subject to
Interest Rate Limitation.--Section 207 of the Servicemembers
Civil Relief Act (50 U.S.C. App. 527) is amended--
(1) in subsection (a)(1), by striking ``in excess of 6
percent'' the second place it appears and all that follows
and inserting ``in excess of 6 percent--
``(A) during the period of military service and one year
thereafter, in the case of an obligation or liability
consisting of a mortgage, trust deed, or other security in
the nature of a mortgage; or
``(B) during the period of military service, in the case of
any other obligation or liability.''; and
(2) by striking subsection (d) and inserting the following
new subsection:
``(d) Definitions.--In this section:
``(1) Interest.--The term `interest' includes service
charges, renewal charges, fees, or any other charges (except
bona fide insurance) with respect to an obligation or
liability.
``(2) Obligation or liability.--The term `obligation or
liability' includes an obligation or liability consisting of
a mortgage, trust deed, or other security in the nature of a
mortgage.''.
(c) Effective Date; Sunset.--
(1) Effective date.--The amendment made by subsection (a)
shall take effect on the date of enactment of this Act.
(2) Sunset.--The amendments made by subsection (a) shall
expire on December 31, 2010. Effective January 1, 2011, the
provisions of subsections (b) and (c) of section 303 of the
Servicemembers Civil Relief Act, as in effect on the day
before the date of the enactment of this Act, are hereby
revived.

TITLE III--EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND
FORECLOSED HOMES

SEC. 2301. EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF
ABANDONED AND FORECLOSED HOMES.

(a) Direct Appropriations.--There are appropriated out of
any money in the Treasury not otherwise appropriated for the
fiscal year 2008, $4,000,000,000, to remain available until
expended, for assistance to States and units of general local
government (as such terms are defined in section 102 of the
Housing and Community Development Act of 1974 (42 U.S.C.
5302)) for the redevelopment of abandoned and foreclosed upon
homes and residential properties.
(b) Allocation of Appropriated Amounts.--
(1) In general.--The amounts appropriated or otherwise made
available to States and units of general local government
under this section shall be allocated based on a funding
formula established by the Secretary of Housing and Urban
Development (in this title referred to as the ``Secretary'').
(2) Formula to be devised swiftly.--The funding formula
required under paragraph (1) shall be established not later
than 60 days after the date of enactment of this section.
(3) Criteria.--The funding formula required under paragraph
(1) shall ensure that any amounts appropriated or otherwise
made available under this section are allocated to States and
units of general local government with the greatest need, as
such need is determined in the discretion of the Secretary
based on--
(A) the number and percentage of home foreclosures in each
State or unit of general local government;
(B) the number and percentage of homes financed by a
subprime mortgage related loan in each State or unit of
general local government; and
(C) the number and percentage of homes in default or
delinquency in each State or unit of general local
government.
(4) Distribution.--Amounts appropriated or otherwise made
available under this section shall be distributed according
to the funding formula established by the Secretary under
paragraph (1) not later than 30 days after the establishment
of such formula.

[[Page S5892]]

(c) Use of Funds.--
(1) In general.--Any State or unit of general local
government that receives amounts pursuant to this section
shall, not later than 18 months after the receipt of such
amounts, use such amounts to purchase and redevelop abandoned
and foreclosed homes and residential properties.
(2) Priority.--Any State or unit of general local
government that receives amounts pursuant to this section
shall in distributing such amounts give priority emphasis and
consideration to those metropolitan areas, metropolitan
cities, urban areas, rural areas, low- and moderate-income
areas, and other areas with the greatest need, including
those--
(A) with the greatest percentage of home foreclosures;
(B) with the highest percentage of homes financed by a
subprime mortgage related loan; and
(C) identified by the State or unit of general local
government as likely to face a significant rise in the rate
of home foreclosures.
(3) Eligible uses.--Amounts made available under this
section may be used to--
(A) establish financing mechanisms for purchase and
redevelopment of foreclosed upon homes and residential
properties, including such mechanisms as soft-seconds, loan
loss reserves, and shared-equity loans for low- and moderate-
income homebuyers;
(B) purchase and rehabilitate homes and residential
properties that have been abandoned or foreclosed upon, in
order to sell, rent, or redevelop such homes and properties;
(C) establish land banks for homes that have been
foreclosed upon;
(D) demolish blighted structures; and
(E) redevelop demolished or vacant properties.
(d) Limitations.--
(1) On purchases.--Any purchase of a foreclosed upon home
or residential property under this section shall be at a
discount from the current market appraised value of the home
or property, taking into account its current condition, and
such discount shall ensure that purchasers are paying below-
market value for the home or property.
(2) Sale of homes.--If an abandoned or foreclosed upon home
or residential property is purchased, redeveloped, or
otherwise sold to an individual as a primary residence, then
such sale shall be in an amount equal to or less than the
cost to acquire and redevelop or rehabilitate such home or
property up to a decent, safe, and habitable condition.
(3) Reinvestment of profits.--
(A) Profits from sales, rentals, and redevelopment.--
(i) 5-year reinvestment period.--During the 5-year period
following the date of enactment of this Act, any revenue
generated from the sale, rental, redevelopment,
rehabilitation, or any other eligible use that is in excess
of the cost to acquire and redevelop (including reasonable
development fees) or rehabilitate an abandoned or foreclosed
upon home or residential property shall be provided to and
used by the State or unit of general local government in
accordance with, and in furtherance of, the intent and
provisions of this section.
(ii) Deposits in the treasury.--

(I) Profits.--Upon the expiration of the 5-year period set
forth under clause (i), any revenue generated from the sale,
rental, redevelopment, rehabilitation, or any other eligible
use that is in excess of the cost to acquire and redevelop
(including reasonable development fees) or rehabilitate an
abandoned or foreclosed upon home or residential property
shall be deposited in the Treasury of the United States as
miscellaneous receipts, unless the Secretary approves a
request to use the funds for purposes under this Act.
(II) Other amounts.--Upon the expiration of the 5-year
period set forth under clause (i), any other revenue not
described under subclause (I) generated from the sale,
rental, redevelopment, rehabilitation, or any other eligible
use of an abandoned or foreclosed upon home or residential
property shall be deposited in the Treasury of the United
States as miscellaneous receipts.

(B) Other revenues.--Any revenue generated under
subparagraphs (A), (C) or (D) of subsection (c)(3) shall be
provided to and used by the State or unit of general local
government in accordance with, and in furtherance of, the
intent and provisions of this section.
(e) Rules of Construction.--
(1) In general.--Except as otherwise provided by this
section, amounts appropriated, revenues generated, or amounts
otherwise made available to States and units of general local
government under this section shall be treated as though such
funds were community development block grant funds under
title I of the Housing and Community Development Act of 1974
(42 U.S.C. 5301 et seq.).
(2) No match.--No matching funds shall be required in order
for a State or unit of general local government to receive
any amounts under this section.
(f) Authority to Specify Alternative Requirements.--
(1) In general.--In administering any amounts appropriated
or otherwise made available under this section, the Secretary
may specify alternative requirements to any provision under
title I of the Housing and Community Development Act of 1974
(except for those related to fair housing, nondiscrimination,
labor standards, and the environment) in accordance with the
terms of this section and for the sole purpose of expediting
the use of such funds.
(2) Notice.--The Secretary shall provide written notice of
its intent to exercise the authority to specify alternative
requirements under paragraph (1) to the Committee on Banking,
Housing and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives not later
than 10 business days before such exercise of authority is to
occur.
(3) Low and moderate income requirement.--
(A) In general.--Notwithstanding the authority of the
Secretary under paragraph (1)--
(i) all of the funds appropriated or otherwise made
available under this section shall be used with respect to
individuals and families whose income does not exceed 120
percent of area median income; and
(ii) not less than 25 percent of the funds appropriated or
otherwise made available under this section shall be used for
the purchase and redevelopment of abandoned or foreclosed
upon homes or residential properties that will be used to
house individuals or families whose incomes do not exceed 50
percent of area median income.
(B) Recurrent requirement.--The Secretary shall, by rule or
order, ensure, to the maximum extent practicable and for the
longest feasible term, that the sale, rental, or
redevelopment of abandoned and foreclosed upon homes and
residential properties under this section remain affordable
to individuals or families described in subparagraph (A).
(g) Periodic Audits.--In consultation with the Secretary of
Housing and Urban Development, the Comptroller General of the
United States shall conduct periodic audits to ensure that
funds appropriated, made available, or otherwise distributed
under this section are being used in a manner consistent with
the criteria provided in this section.

SEC. 2302. NATIONWIDE DISTRIBUTION OF RESOURCES.

Notwithstanding any other provision of this Act or the
amendments made by this Act, each State shall receive not
less than 0.5 percent of funds made available under section
2301 (relating to emergency assistance for the redevelopment
of abandoned and foreclosed homes).

SEC. 2303. LIMITATION ON USE OF FUNDS WITH RESPECT TO EMINENT
DOMAIN.

No State or unit of general local government may use any
amounts received pursuant to section 2301 to fund any project
that seeks to use the power of eminent domain, unless eminent
domain is employed only for a public use: Provided, That for
purposes of this section, public use shall not be construed
to include economic development that primarily benefits
private entities.

SEC. 2304. LIMITATION ON DISTRIBUTION OF FUNDS.

(a) In General.--None of the funds made available under
this title or title IV shall be distributed to--
(1) an organization which has been indicted for a violation
under Federal law relating to an election for Federal office;
or
(2) an organization which employs applicable individuals.
(b) Applicable Individuals Defined.--In this section, the
term ``applicable individual'' means an individual who--
(1) is--
(A) employed by the organization in a permanent or
temporary capacity;
(B) contracted or retained by the organization; or
(C) acting on behalf of, or with the express or apparent
authority of, the organization; and
(2) has been indicted for a violation under Federal law
relating to an election for Federal office.

SEC. 2305. COUNSELING INTERMEDIARIES.

Notwithstanding any other provision of this Act, the amount
appropriated under section 2301(a) of this Act shall be
$3,920,000,000 and the amount appropriated under section 2401
of this Act shall be $180,000,000: Provided, That of amounts
appropriated under such section 2401 $30,000,000 shall be
used by the Neighborhood Reinvestment Corporation (referred
to in this section as the ``NRC'') to make grants to
counseling intermediaries approved by the Department of
Housing and Urban Development or the NRC to hire attorneys to
assist homeowners who have legal issues directly related to
the homeowner's foreclosure, delinquency or short sale. Such
attorneys shall be capable of assisting homeowners of owner-
occupied homes with mortgages in default, in danger of
default, or subject to or at risk of foreclosure and who have
legal issues that cannot be handled by counselors already
employed by such intermediaries: Provided, That of the
amounts provided for in the prior provisos the NRC shall give
priority consideration to counseling intermediaries and legal
organizations that (1) provide legal assistance in the 100
metropolitan statistical areas (as defined by the Director of
the Office of Management and Budget) with the highest home
foreclosure rates, and (2) have the capacity to begin using
the financial assistance within 90 days after receipt of the
assistance: Provided further, That no funds provided under
this Act shall be used to provide, obtain, or arrange on
behalf of a homeowner, legal representation involving or for
the purposes of civil litigation.

[[Page S5893]]

TITLE IV--HOUSING COUNSELING RESOURCES

SEC. 2401. HOUSING COUNSELING RESOURCES.

There are appropriated out of any money in the Treasury not
otherwise appropriated for the fiscal year 2008, for an
additional amount for the ``Neighborhood Reinvestment
Corporation--Payment to the Neighborhood Reinvestment
Corporation'' $100,000,000, to remain available until
September 30, 2008, for foreclosure mitigation activities
under the terms and conditions contained in the second
undesignated paragraph (beginning with the phrase ``For an
additional amount'') under the heading ``Neighborhood
Reinvestment Corporation--Payment to the Neighborhood
Reinvestment Corporation'' of Public Law 110-161.

SEC. 2402. CREDIT COUNSELING.

(a) In General.--Entities approved by the Neighborhood
Reinvestment Corporation or the Secretary and State housing
finance entities receiving funds under this title shall work
to identify and coordinate with non-profit organizations
operating national or statewide toll-free foreclosure
prevention hotlines, including those that--
(1) serve as a consumer referral source and data repository
for borrowers experiencing some form of delinquency or
foreclosure;
(2) connect callers with local housing counseling agencies
approved by the Neighborhood Reinvestment Corporation or the
Secretary to assist with working out a positive resolution to
their mortgage delinquency or foreclosure; or
(3) facilitate or offer free assistance to help homeowners
to understand their options, negotiate solutions, and find
the best resolution for their particular circumstances.

TITLE V--MORTGAGE DISCLOSURE IMPROVEMENT ACT

SEC. 2501. SHORT TITLE.

This title may be cited as the ``Mortgage Disclosure
Improvement Act of 2008''.

SEC. 2502. ENHANCED MORTGAGE LOAN DISCLOSURES.

(a) Truth in Lending Act Disclosures.--Section 128(b)(2) of
the Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended--
(1) by inserting ``(A)'' before ``In the'';
(2) by striking ``a residential mortgage transaction, as
defined in section 103(w)'' and inserting ``any extension of
credit that is secured by the dwelling of a consumer'';
(3) by striking ``before the credit is extended, or'';
(4) by inserting ``, which shall be at least 7 business
days before consummation of the transaction'' after ``written
application'';
(5) by striking ``, whichever is earlier''; and
(6) by striking ``If the'' and all that follows through the
end of the paragraph and inserting the following:
``(B) In the case of an extension of credit that is secured
by the dwelling of a consumer, the disclosures provided under
subparagraph (A), shall be in addition to the other
disclosures required by subsection (a), and shall--
``(i) state in conspicuous type size and format, the
following: `You are not required to complete this agreement
merely because you have received these disclosures or signed
a loan application.'; and
``(ii) be provided in the form of final disclosures at the
time of consummation of the transaction, in the form and
manner prescribed by this section.
``(C) In the case of an extension of credit that is secured
by the dwelling of a consumer, under which the annual rate of
interest is variable, or with respect to which the regular
payments may otherwise be variable, in addition to the other
disclosures required by subsection (a), the disclosures
provided under this subsection shall do the following:
``(i) Label the payment schedule as follows: `Payment
Schedule: Payments Will Vary Based on Interest Rate Changes'.
``(ii) State in conspicuous type size and format examples
of adjustments to the regular required payment on the
extension of credit based on the change in the interest rates
specified by the contract for such extension of credit. Among
the examples required to be provided under this clause is an
example that reflects the maximum payment amount of the
regular required payments on the extension of credit, based
on the maximum interest rate allowed under the contract, in
accordance with the rules of the Board. Prior to issuing any
rules pursuant to this clause, the Board shall conduct
consumer testing to determine the appropriate format for
providing the disclosures required under this subparagraph to
consumers so that such disclosures can be easily understood.
``(D) In any case in which the disclosure statement under
subparagraph (A) contains an annual percentage rate of
interest that is no longer accurate, as determined under
section 107(c), the creditor shall furnish an additional,
corrected statement to the borrower, not later than 3
business days before the date of consummation of the
transaction.
``(E) The consumer shall receive the disclosures required
under this paragraph before paying any fee to the creditor or
other person in connection with the consumer's application
for an extension of credit that is secured by the dwelling of
a consumer. If the disclosures are mailed to the consumer,
the consumer is considered to have received them 3 business
days after they are mailed. A creditor or other person may
impose a fee for obtaining the consumer's credit report
before the consumer has received the disclosures under this
paragraph, provided the fee is bona fide and reasonable in
amount.
``(F) Waiver of timeliness of disclosures.--To expedite
consummation of a transaction, if the consumer determines
that the extension of credit is needed to meet a bona fide
personal financial emergency, the consumer may waive or
modify the timing requirements for disclosures under
subparagraph (A), provided that--
``(i) the term `bona fide personal emergency' may be
further defined in regulations issued by the Board;
``(ii) the consumer provides to the creditor a dated,
written statement describing the emergency and specifically
waiving or modifying those timing requirements, which
statement shall bear the signature of all consumers entitled
to receive the disclosures required by this paragraph; and
``(iii) the creditor provides to the consumers at or before
the time of such waiver or modification, the final
disclosures required by paragraph (1).
``(G) The requirements of subparagraphs (B), (C), (D) and
(E) shall not apply to extensions of credit relating to plans
described in section 101(53D) of title 11, United States
Code.''.
(b) Civil Liability.--Section 130(a) of the Truth in
Lending Act (15 U.S.C. 1640(a)) is amended--
(1) in paragraph (2)(A)(iii), by striking ``not less than
$200 or greater than $2,000'' and inserting ``not less than
$400 or greater than $4,000''; and
(2) in the penultimate sentence of the undesignated matter
following paragraph (4)--
(A) by inserting ``or section 128(b)(2)(C)(ii),'' after
``128(a),''; and
(B) by inserting ``or section 128(b)(2)(C)(ii)'' before the
period.
(c) Effective Dates.--
(1) General disclosures.--Except as provided in paragraph
(2), the amendments made by subsection (a) shall become
effective 12 months after the date of enactment of this Act.
(2) Variable interest rates.--Subparagraph (C) of section
128(b)(2) of the Truth in Lending Act (15 U.S.C.
1638(b)(2)(C)), as added by subsection (a) of this section,
shall become effective on the earlier of--
(A) the compliance date established by the Board for such
purpose, by regulation; or
(B) 30 months after the date of enactment of this Act.

SEC. 2503. COMMUNITY DEVELOPMENT INVESTMENT AUTHORITY FOR
DEPOSITORY INSTITUTIONS.

(a) National Banks.--The first sentence of the paragraph
designated as the ``Eleventh'' of section 5136 of the Revised
Statutes of the United States (12 U.S.C. 24) is amended by
striking ``promotes the public welfare by benefitting
primarily'' and inserting ``is designed primarily to promote
the public welfare, including the welfare of''.
(b) State Member Banks.--The first sentence of the 23rd
paragraph of section 9 of the Federal Reserve Act (12 U.S.C.
338a) is amended by striking ``promotes the public welfare by
benefitting primarily'' and inserting ``is designed primarily
to promote the public welfare, including the welfare of''.

TITLE VI--VETERANS HOUSING MATTERS

SEC. 2601. HOME IMPROVEMENTS AND STRUCTURAL ALTERATIONS FOR
TOTALLY DISABLED MEMBERS OF THE ARMED FORCES
BEFORE DISCHARGE OR RELEASE FROM THE ARMED
FORCES.

Section 1717 of title 38, United States Code, is amended by
adding at the end the following new subsection:
``(d)(1) In the case of a member of the Armed Forces who,
as determined by the Secretary, has a disability permanent in
nature incurred or aggravated in the line of duty in the
active military, naval, or air service, the Secretary may
furnish improvements and structural alterations for such
member for such disability or as otherwise described in
subsection (a)(2) while such member is hospitalized or
receiving outpatient medical care, services, or treatment for
such disability if the Secretary determines that such member
is likely to be discharged or released from the Armed Forces
for such disability.
``(2) The furnishing of improvements and alterations under
paragraph (1) in connection with the furnishing of medical
services described in subparagraph (A) or (B) of subsection
(a)(2) shall be subject to the limitation specified in the
applicable subparagraph.''.

SEC. 2602. ELIGIBILITY FOR SPECIALLY ADAPTED HOUSING BENEFITS
AND ASSISTANCE FOR MEMBERS OF THE ARMED FORCES
WITH SERVICE-CONNECTED DISABILITIES AND
INDIVIDUALS RESIDING OUTSIDE THE UNITED STATES.

(a) Eligibility.--Chapter 21 of title 38, United States
Code, is amended by inserting after section 2101 the
following new section:

``Sec. 2101A. Eligibility for benefits and assistance:
members of the Armed Forces with service-connected
disabilities; individuals residing outside the United
States

``(a) Members With Service-Connected Disabilities.--(1) The
Secretary may provide assistance under this chapter to a
member of the Armed Forces serving on active duty who is
suffering from a disability that meets applicable criteria
for benefits under this chapter if the disability is incurred
or aggravated in line of duty in the active military, naval,
or air service. Such assistance shall be provided to the same
extent as assistance is provided under this chapter to
veterans eligible for assistance under this chapter and
subject to the same requirements as veterans under this
chapter.

[[Page S5894]]

``(2) For purposes of this chapter, any reference to a
veteran or eligible individual shall be treated as a
reference to a member of the Armed Forces described in
subsection (a) who is similarly situated to the veteran or
other eligible individual so referred to.
``(b) Benefits and Assistance for Individuals Residing
Outside the United States.--(1) Subject to paragraph (2), the
Secretary may, at the Secretary's discretion, provide
benefits and assistance under this chapter (other than
benefits under section 2106 of this title) to any individual
otherwise eligible for such benefits and assistance who
resides outside the United States.
``(2) The Secretary may provide benefits and assistance to
an individual under paragraph (1) only if--
``(A) the country or political subdivision in which the
housing or residence involved is or will be located permits
the individual to have or acquire a beneficial property
interest (as determined by the Secretary) in such housing or
residence; and
``(B) the individual has or will acquire a beneficial
property interest (as so determined) in such housing or
residence.
``(c) Regulations.--Benefits and assistance under this
chapter by reason of this section shall be provided in
accordance with such regulations as the Secretary may
prescribe.''.
(b) Conforming Amendments.--
(1) Repeal of superseded authority.--Section 2101 of title
38, United States Code, is amended--
(A) by striking subsection (c); and
(B) by redesignating subsection (d) as subsection (c).
(2) Limitations on assistance.--Section 2102 of title 38,
United States Code, is amended--
(A) in subsection (a)--
(i) by striking ``veteran'' each place it appears and
inserting ``individual''; and
(ii) in paragraph (3), by striking ``veteran's'' and
inserting ``individual's'';
(B) in subsection (b)(1), by striking ``a veteran'' and
inserting ``an individual'';
(C) in subsection (c)--
(i) by striking ``a veteran'' and inserting ``an
individual''; and
(ii) by striking ``the veteran'' each place it appears and
inserting ``the individual''; and
(D) in subsection (d), by striking ``a veteran'' each place
it appears and inserting ``an individual''.
(3) Assistance for individuals temporarily residing in
housing of family member.--Section 2102A of title 38, United
States Code, is amended--
(A) by striking ``veteran'' each place it appears (other
than in subsection (b)) and inserting ``individual'';
(B) in subsection (a), by striking ``veteran's'' each place
it appears and inserting ``individual's''; and
(C) in subsection (b), by striking ``a veteran'' each place
it appears and inserting ``an individual''.
(4) Furnishing of plans and specifications.--Section 2103
of title 38, United States Code, is amended by striking
``veterans'' both places it appears and inserting
``individuals''.
(5) Construction of benefits.--Section 2104 of title 38,
United States Code, is amended--
(A) in subsection (a), by striking ``veteran'' each place
it appears and inserting ``individual''; and
(B) in subsection (b)--
(i) in the first sentence, by striking ``A veteran'' and
inserting ``An individual'';
(ii) in the second sentence, by striking ``a veteran'' and
inserting ``an individual''; and
(iii) by striking ``such veteran'' each place it appears
and inserting ``such individual''.
(6) Veterans' mortgage life insurance.--Section 2106 of
title 38, United States Code, is amended--
(A) in subsection (a)--
(i) by striking ``any eligible veteran'' and inserting
``any eligible individual''; and
(ii) by striking ``the veterans' '' and inserting ``the
individual's'';
(B) in subsection (b), by striking ``an eligible veteran''
and inserting ``an eligible individual'';
(C) in subsection (e), by striking ``an eligible veteran''
and inserting ``an individual'';
(D) in subsection (h), by striking ``each veteran'' and
inserting ``each individual'';
(E) in subsection (i), by striking ``the veteran's'' each
place it appears and inserting ``the individual's'';
(F) by striking ``the veteran'' each place it appears and
inserting ``the individual''; and
(G) by striking ``a veteran'' each place it appears and
inserting ``an individual''.
(7) Heading amendments.--(A) The heading of section 2101 of
title 38, United States Code, is amended to read as follows:

``Sec. 2101. Acquisition and adaptation of housing: eligible
veterans''.

(B) The heading of section 2102A of such title is amended
to read as follows:

``Sec. 2102A. Assistance for individuals residing temporarily
in housing owned by a family member''.

(8) Clerical amendments.--The table of sections at the
beginning of chapter 21 of title 38, United States Code, is
amended--
(A) by striking the item relating to section 2101 and
inserting the following new item:

``2101. Acquisition and adaptation of housing: eligible veterans.'';

(B) by inserting after the item relating to section 2101,
as so amended, the following new item:

``2101A. Eligibility for benefits and assistance: members of the Armed
Forces with service-connected disabilities; individuals
residing outside the United States.'';

and
(C) by striking the item relating to section 2102A and
inserting the following new item:

``2102A. Assistance for individuals residing temporarily in housing
owned by a family member.''.

SEC. 2603. SPECIALLY ADAPTED HOUSING ASSISTANCE FOR
INDIVIDUALS WITH SEVERE BURN INJURIES.

Section 2101 of title 38, United States Code, is amended--
(1) in subsection (a)(2), by adding at the end the
following new subparagraph:
``(E) The disability is due to a severe burn injury (as
determined pursuant to regulations prescribed by the
Secretary).''; and
(2) in subsection (b)(2)--
(A) by striking ``either'' and inserting ``any''; and
(B) by adding at the end the following new subparagraph:
``(C) The disability is due to a severe burn injury (as so
determined).''.

SEC. 2604. EXTENSION OF ASSISTANCE FOR INDIVIDUALS RESIDING
TEMPORARILY IN HOUSING OWNED BY A FAMILY
MEMBER.

Section 2102A(e) of title 38, United States Code, is
amended by striking ``after the end of the five-year period
that begins on the date of the enactment of the Veterans'
Housing Opportunity and Benefits Improvement Act of 2006''
and inserting ``after December 31, 2011''.

SEC. 2605. INCREASE IN SPECIALLY ADAPTED HOUSING BENEFITS FOR
DISABLED VETERANS.

(a) In General.--Section 2102 of title 38, United States
Code, is amended--
(1) in subsection (b)(2), by striking ``$10,000'' and
inserting ``$12,000'';
(2) in subsection (d)--
(A) in paragraph (1), by striking ``$50,000'' and inserting
``$60,000''; and
(B) in paragraph (2), by striking ``$10,000'' and inserting
``$12,000''; and
(3) by adding at the end the following new subsection:
``(e)(1) Effective on October 1 of each year (beginning in
2009), the Secretary shall increase the amounts described in
subsection (b)(2) and paragraphs (1) and (2) of subsection
(d) in accordance with this subsection.
``(2) The increase in amounts under paragraph (1) to take
effect on October 1 of a year shall be by an amount of such
amounts equal to the percentage by which--
``(A) the residential home cost-of-construction index for
the preceding calendar year, exceeds
``(B) the residential home cost-of-construction index for
the year preceding the year described in subparagraph (A).
``(3) The Secretary shall establish a residential home
cost-of-construction index for the purposes of this
subsection. The index shall reflect a uniform, national
average change in the cost of residential home construction,
determined on a calendar year basis. The Secretary may use an
index developed in the private sector that the Secretary
determines is appropriate for purposes of this subsection.''.
(b) Effective Date.--The amendments made by this section
shall take effect on July 1, 2008, and shall apply with
respect to payments made in accordance with section 2102 of
title 38, United States Code, on or after that date.

SEC. 2606. REPORT ON SPECIALLY ADAPTED HOUSING FOR DISABLED
INDIVIDUALS.

(a) In General.--Not later than December 31, 2008, the
Secretary of Veterans Affairs shall submit to the Committee
on Veterans' Affairs of the Senate and the Committee on
Veterans' Affairs of the House of Representatives a report
that contains an assessment of the adequacy of the
authorities available to the Secretary under law to assist
eligible disabled individuals in acquiring--
(1) suitable housing units with special fixtures or movable
facilities required for their disabilities, and necessary
land therefor;
(2) such adaptations to their residences as are reasonably
necessary because of their disabilities; and
(3) residences already adapted with special features
determined by the Secretary to be reasonably necessary as a
result of their disabilities.
(b) Focus on Particular Disabilities.--The report required
by subsection (a) shall set forth a specific assessment of
the needs of--
(1) veterans who have disabilities that are not described
in subsections (a)(2) and (b)(2) of section 2101 of title 38,
United States Code; and
(2) other disabled individuals eligible for specially
adapted housing under chapter 21 of such title by reason of
section 2101A of such title (as added by section 2602(a) of
this Act) who have disabilities that are not described in
such subsections.

SEC. 2607. REPORT ON SPECIALLY ADAPTED HOUSING ASSISTANCE FOR
INDIVIDUALS WHO RESIDE IN HOUSING OWNED BY A
FAMILY MEMBER ON PERMANENT BASIS.

Not later than December 31, 2008, the Secretary of Veterans
Affairs shall submit to the Committee on Veterans' Affairs of
the Senate and the Committee on Veterans' Affairs of the
House of Representatives a report on the advisability of
providing assistance under section 2102A of title 38, United

[[Page S5895]]

States Code, to veterans described in subsection (a) of such
section, and to members of the Armed Forces covered by such
section 2102A by reason of section 2101A of title 38, United
States Code (as added by section 2602(a) of this Act), who
reside with family members on a permanent basis.

SEC. 2608. DEFINITION OF ANNUAL INCOME FOR PURPOSES OF
SECTION 8 AND OTHER PUBLIC HOUSING PROGRAMS.

Section 3(b)(4) of the United States Housing Act of 1937
(42 U.S.C. 1437a(3)(b)(4)) is amended by inserting ``or any
deferred Department of Veterans Affairs disability benefits
that are received in a lump sum amount or in prospective
monthly amounts'' before ``may not be considered''.

SEC. 2609. PAYMENT OF TRANSPORTATION OF BAGGAGE AND HOUSEHOLD
EFFECTS FOR MEMBERS OF THE ARMED FORCES WHO
RELOCATE DUE TO FORECLOSURE OF LEASED HOUSING.

Section 406 of title 37, United States Code, is amended--
(1) by redesignating subsections (k) and (l) as subsections
(l) and (m), respectively; and
(2) by inserting after subsection (j) the following new
subsection (k):
``(k) A member of the armed forces who relocates from
leased or rental housing by reason of the foreclosure of such
housing is entitled to transportation of baggage and
household effects under subsection (b)(1) in the same manner,
and subject to the same conditions and limitations, as
similarly circumstanced members entitled to transportation of
baggage and household effects under that subsection.''.

DIVISION C--TAX-RELATED PROVISIONS

SECTION 3000. SHORT TITLE; ETC.

(a) Short Title.--This division may be cited as the
``Housing Assistance Tax Act of 2008''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this division an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.

TITLE I--HOUSING TAX INCENTIVES

Subtitle A--Multi-Family Housing

PART I--LOW-INCOME HOUSING TAX CREDIT

SEC. 3001. TEMPORARY INCREASE IN VOLUME CAP FOR LOW-INCOME
HOUSING TAX CREDIT.

Paragraph (3) of section 42(h) is amended by adding at the
end the following new subparagraph:
``(I) Increase in state housing credit ceiling for 2008 and
2009.--In the case of calendar years 2008 and 2009--
``(i) the dollar amount in effect under subparagraph
(C)(ii)(I) for such calendar year (after any increase under
subparagraph (H)) shall be increased by $0.20, and
``(ii) the dollar amount in effect under subparagraph
(C)(ii)(II) for such calendar year (after any increase under
subparagraph (H)) shall be increased by an amount equal to 10
percent of such dollar amount (rounded to the next lowest
multiple of $5,000).''.

SEC. 3002. DETERMINATION OF CREDIT RATE.

(a) Temporary Minimum Credit Rate for Non-Federally
Subsidized New Buildings.--Subsection (b) of section 42 is
amended by redesignating paragraph (3) as paragraph (4) and
by inserting after paragraph (2) the following new paragraph:
``(3) Temporary minimum credit rate for non-federally
subsidized new buildings.--In the case of any new building--
``(A) which is placed in service by the taxpayer after the
date of the enactment of this paragraph and before December
31, 2013, and
``(B) which is not federally subsidized for the taxable
year,
the applicable percentage shall not be less than 9
percent.''.
(b) Modifications to Definition of Federally Subsidized
Building.--
(1) In general.--Subparagraph (A) of section 42(i)(2) is
amended by striking ``, or any below market Federal loan,''.
(2) Conforming amendments.--
(A) Subparagraph (B) of section 42(i)(2) is amended--
(i) by striking ``balance of loan or'' in the heading
thereof,
(ii) by striking ``loan or'' in the matter preceding clause
(i), and
(iii) by striking ``subsection (d)--'' and all that follows
and inserting ``subsection (d) the proceeds of such
obligation.''.
(B) Subparagraph (C) of section 42(i)(2) is amended--
(i) by striking ``or below market Federal loan'' in the
matter preceding clause (i),
(ii) in clause (i)--

(I) by striking ``or loan (when issued or made)'' and
inserting ``(when issued)'', and
(II) by striking ``the proceeds of such obligation or
loan'' and inserting ``the proceeds of such obligation'', and

(iii) by striking ``, and such loan is repaid,'' in clause
(ii).
(C) Paragraph (2) of section 42(i) is amended by striking
subparagraphs (D) and (E).
(c) Effective Date.--The amendments made by this subsection
shall apply to buildings placed in service after the date of
the enactment of this Act.

SEC. 3003. MODIFICATIONS TO DEFINITION OF ELIGIBLE BASIS.

(a) Increase in Credit for Certain State Designated
Buildings.--Subparagraph (C) of section 42(d)(5) (relating to
increase in credit for buildings in high cost areas), before
redesignation under subsection (g), is amended by adding at
the end the following new clause:
``(v) Buildings designated by state housing credit
agency.--Any building which is designated by the State
housing credit agency as requiring the increase in credit
under this subparagraph in order for such building to be
financially feasible as part of a qualified low-income
housing project shall be treated for purposes of this
subparagraph as located in a difficult development area which
is designated for purposes of this subparagraph. The
preceding sentence shall not apply to any building if
paragraph (1) of subsection (h) does not apply to any portion
of the eligible basis of such building by reason of paragraph
(4) of such subsection.''.
(b) Modification to Rehabilitation Requirements.--
(1) In general.--Clause (ii) of section 42(e)(3)(A) is
amended--
(A) by striking ``10 percent'' in subclause (I) and
inserting ``20 percent'', and
(B) by striking ``$3,000'' in subclause (II) and inserting
``$6,000''.
(2) Inflation adjustment.--Paragraph (3) of section 42(e)
is amended by adding at the end the following new
subparagraph:
``(D) Inflation adjustment.--In the case of any
expenditures which are treated under paragraph (4) as placed
in service during any calendar year after 2009, the $6,000
amount in subparagraph (A)(ii)(II) shall be increased by an
amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2008' for `calendar year 1992' in subparagraph
(B) thereof.

Any increase under the preceding sentence which is not a
multiple of $100 shall be rounded to the nearest multiple of
$100.''.
(3) Conforming amendment.--Subclause (II) of section
42(f)(5)(B)(ii) is amended by striking ``if subsection
(e)(3)(A)(ii)(II)'' and all that follows and inserting ``if
the dollar amount in effect under subsection
(e)(3)(A)(ii)(II) were two-thirds of such amount.''.
(c) Increase in Allowable Community Service Facility Space
for Small Projects.--Clause (ii) of section 42(d)(4)(C)
(relating to limitation) is amended by striking ``10 percent
of the eligible basis of the qualified low-income housing
project of which it is a part. For purposes of'' and
inserting ``the sum of--

``(I) 25 percent of so much of the eligible basis of the
qualified low-income housing project of which it is a part as
does not exceed $15,000,000, plus
``(II) 10 percent of so much of the eligible basis of such
project as is not taken into account under subclause (I).

For purposes of''.
(d) Clarification of Treatment of Federal Grants.--
Subparagraph (A) of section 42(d)(5) is amended to read as
follows:
``(A) Federal grants not taken into account in determining
eligible basis.--The eligible basis of a building shall not
include any costs financed with the proceeds of a Federally
funded grant.''.
(e) Simplification of Related Party Rules.--Clause (iii) of
section 42(d)(2)(D), before redesignation under subsection
(g)(2), is amended--
(1) by striking all that precedes subclause (II),
(2) by redesignating subclause (II) as clause (iii) and
moving such clause two ems to the left, and
(3) by striking the last sentence thereof.
(f) Exception to 10-Year Nonacquisition Period for Existing
Buildings Applicable to Federally- or State-Assisted
Buildings.--Paragraph (6) of section 42(d) is amended to read
as follows:
``(6) Credit allowable for certain buildings acquired
during 10-year period described in paragraph (2)(B)(ii).--
``(A) In general.--Paragraph (2)(B)(ii) shall not apply to
any Federally- or State-assisted building.
``(B) Buildings acquired from insured depository
institutions in default.--On application by the taxpayer, the
Secretary may waive paragraph (2)(B)(ii) with respect to any
building acquired from an insured depository institution in
default (as defined in section 3 of the Federal Deposit
Insurance Act) or from a receiver or conservator of such an
institution.
``(C) Federally- or state-assisted building.--For purposes
of this paragraph--
``(i) Federally-assisted building.--The term `Federally-
assisted building' means any building which is substantially
assisted, financed, or operated under section 8 of the United
States Housing Act of 1937, section 221(d)(3), 221(d)(4), or
236 of the National Housing Act, or section 515 of the
Housing Act of 1949 (as such Acts are in effect on the date
of the enactment of the Tax Reform Act of 1986).
``(ii) State-assisted building.--The term `State-assisted
building' means any building which is substantially assisted,
financed, or operated under any State law similar in purposes
to any of the laws referred to in clause (i).''.
(g) Repeal of Deadwood.--
(1) Clause (ii) of section 42(d)(2)(B) is amended by
striking ``the later of--'' and all that follows and
inserting ``the date the building was last placed in
service,''.

[[Page S5896]]

(2) Subparagraph (D) of section 42(d)(2) is amended by
striking clause (i) and by redesignating clauses (ii) and
(iii) as clauses (i) and (ii), respectively.
(3) Paragraph (5) of section 42(d) is amended by striking
subparagraph (B) and by redesignating subparagraph (C) as
subparagraph (B).
(h) Effective Date.--
(1) In general.--Except as otherwise provided in paragraph
(2), the amendments made by this subsection shall apply to
buildings placed in service after the date of the enactment
of this Act.
(2) Rehabilitation requirements.--
(A) In general.--The amendments made by subsection (b)
shall apply with respect to housing credit dollar amounts
allocated after the date of the enactment of this Act.
(B) Buildings not subject to allocation limits.--To the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to any building by reason of
paragraph (4) thereof, the amendments made by subsection (b)
shall apply to buildings placed in service after the date of
the enactment of this Act.

SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME
HOUSING TAX INCENTIVES.

(a) Repeal Prohibition on Moderate Rehabilitation
Assistance.--Paragraph (2) of section 42(c) (defining
qualified low-income building) is amended by striking the
flush sentence at the end.
(b) Modification of Time Limit for Incurring 10 Percent of
Project's Cost.--Clause (ii) of section 42(h)(1)(E) is
amended by striking ``(as of the later of the date which is 6
months after the date that the allocation was made or the
close of the calendar year in which the allocation is made)''
and inserting ``(as of the date which is 1 year after the
date that the allocation was made)''.
(c) Repeal of Bonding Requirement on Disposition of
Building.--Paragraph (6) of section 42(j) (relating to no
recapture on disposition of building (or interest therein)
where bond posted) is amended to read as follows:
``(6) No recapture on disposition of building which
continues in qualified use.--
``(A) In general.--The increase in tax under this
subsection shall not apply solely by reason of the
disposition of a building (or an interest therein) if it is
reasonably expected that such building will continue to be
operated as a qualified low-income building for the remaining
compliance period with respect to such building.
``(B) Statute of limitations.--If a building (or an
interest therein) is disposed of during any taxable year and
there is any reduction in the qualified basis of such
building which results in an increase in tax under this
subsection for such taxable or any subsequent taxable year,
then--
``(i) the statutory period for the assessment of any
deficiency with respect to such increase in tax shall not
expire before the expiration of 3 years from the date the
Secretary is notified by the taxpayer (in such manner as the
Secretary may prescribe) of such reduction in qualified
basis, and
``(ii) such deficiency may be assessed before the
expiration of such 3-year period notwithstanding the
provisions of any other law or rule of law which would
otherwise prevent such assessment.''.
(d) Energy Efficiency and Historic Nature Taken Into
Account in Making Allocations.--Subparagraph (C) of section
42(m)(1) (relating to plans for allocation of credit among
projects) is amended by striking ``and'' at the end of clause
(vii), by striking the period at the end of clause (viii) and
inserting a comma, and by adding at the end the following new
clauses:
``(ix) the energy efficiency of the project, and
``(x) the historic nature of the project.''.
(e) Continued Eligibility for Students Who Received Foster
Care Assistance.--Clause (i) of section 42(i)(3)(D) is
amended by striking ``or'' at the end of subclause (I), by
redesignating subclause (II) as subclause (III), and by
inserting after subclause (I) the following new subclause:

``(II) a student who was previously under the care and
placement responsibility of the State agency responsible for
administering a plan under part B or part E of title IV of
the Social Security Act, or''.

(f) Treatment of Rural Projects.--Section 42(i) (relating
to definitions and special rules) is amended by adding at the
end the following new paragraph:
``(8) Treatment of rural projects.--For purposes of this
section, in the case of any project for residential rental
property located in a rural area (as defined in section 520
of the Housing Act of 1949), any income limitation measured
by reference to area median gross income shall be measured by
reference to the greater of area median gross income or
national non-metropolitan median income. The preceding
sentence shall not apply with respect to any building if
paragraph (1) of section 42(h) does not apply by reason of
paragraph (4) thereof to any portion of the credit determined
under this section with respect to such building.''.
(g) Clarification of General Public Use Requirement.--
Subsection (c) of section 42 is amended by adding at the end
the following new paragraph:
``(3) Clarification of general public use requirement.--
``(A) In general.--A building which meets the requirements
of subparagraph (B) shall not fail to be treated as a
qualified low-income building solely because occupancy in
such building is restricted to individuals who have special
needs, share a common occupation or common interests, or are
members of a specified group based on Federal, State, or
local programs or requirements.
``(B) Basic public use requirements.--A building meets the
requirements of this subparagraph if--
``(i) such building is used consistent with housing policy
governing non-discrimination as evidenced by rules and
regulations of the Department of Housing and Urban
Development,
``(ii) occupancy in such building is not restricted on the
basis of membership in a social organization or on the basis
of employment by specific employers, and
``(iii) such building is not part of a hospital, nursing
home, sanitarium, lifecare facility, trailer park, or
intermediate care facility for the mentally or physically
handicapped.''.
(h) GAO Study Regarding Modifications to Low-Income Housing
Tax Credit.--Not later than December 31, 2012, the
Comptroller General of the United States shall submit to
Congress a report which analyzes the implementation of the
modifications made by this subtitle to the low-income housing
tax credit under section 42 of the Internal Revenue Code of
1986. Such report shall include an analysis of the
distribution of credit allocations before and after the
effective date of such modifications.
(i) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to buildings placed in service after the date of the
enactment of this Act.
(2) Repeal of bonding requirement on disposition of
building.--The amendment made by subsection (c) shall apply
to--
(A) interests in buildings disposed after the date of the
enactment of this Act, and
(B) interests in buildings disposed of on or before such
date if--
(i) it is reasonably expected that such building will
continue to be operated as a qualified low-income building
(within the meaning of section 42 of the Internal Revenue
Code of 1986) for the remaining compliance period (within the
meaning of such section) with respect to such building, and
(ii) the taxpayer elects the application of this
subparagraph with respect to such disposition.
(3) Energy efficiency and historic nature taken into
account in making allocations.--The amendments made by
subsection (d) shall apply to allocations made after December
31, 2008.
(4) Continued eligibility for students who received foster
care assistance.--The amendments made by subsection (e) shall
apply to determinations made after the date of the enactment
of this Act.
(5) Treatment of rural projects.--The amendment made by
subsection (f) shall apply to determinations made after the
date of the enactment of this Act.
(6) Clarification of general public use requirement.--The
amendment made by subsection (g) shall apply to buildings
placed in service before, on, or after the date of the
enactment of this Act.

SEC. 3005. TREATMENT OF MILITARY BASIC PAY.

(a) In General.--Subparagraph (B) of section 142(d)(2)
(relating to income of individuals; area median gross income)
is amended--
(1) by striking ``The income'' and inserting the following:
``(i) In general.--The income'', and
(2) by adding at the end the following:
``(ii) Special rule relating to basic housing allowances.--
For purposes of determining income under this subparagraph,
payments under section 403 of title 37, United States Code,
as a basic pay allowance for housing shall be disregarded
with respect to any qualified building.
``(iii) Qualified building.--For purposes of clause (ii),
the term `qualified building' means any building located--

``(I) in any county in which is located a qualified
military installation to which the number of members of the
Armed Forces of the United States assigned to units based out
of such qualified military installation, as of June 1, 2008,
has increased by not less than 20 percent, as compared to
such number on December 31, 2005, or
``(II) in any county adjacent to a county described in
subclause (I).

``(iv) Qualified military installation.--For purposes of
clause (iii), the term `qualified military installation'
means any military installation or facility the number of
members of the Armed Forces of the United States assigned to
which, as of June 1, 2008, is not less than 1,000.''.
(b) Effective Date.--The amendments made by this section
shall apply to--
(1) determinations made after the date of the enactment of
this Act and before January 1, 2012, in the case of any
qualified building (as defined in section 142(d)(2)(B)(iii)
of the Internal Revenue Code of 1986)--
(A) with respect to which housing credit dollar amounts
have been allocated before the date of the enactment of this
Act, or
(B) with respect to buildings placed in service before such
date of enactment, to the extent paragraph (1) of section
42(h) of such Code does not apply to such building by reason
of paragraph (4) thereof, but only with respect to bonds
issued before such date of enactment, and
(2) determinations made after the date of enactment of this
Act, in the case of qualified buildings (as so defined)--

[[Page S5897]]

(A) with respect to which housing credit dollar amounts are
allocated after the date of the enactment of this Act and
before January 1, 2012, or
(B) with respect to which buildings placed in service after
the date of enactment of this Act and before January 1, 2012,
to the extent paragraph (1) of section 42(h) of such Code
does not apply to such building by reason of paragraph (4)
thereof, but only with respect to bonds issued after such
date of enactment and before January 1, 2012.

PART II--MODIFICATIONS TO TAX-EXEMPT HOUSING BOND RULES

SEC. 3007. RECYCLING OF TAX-EXEMPT DEBT FOR FINANCING
RESIDENTIAL RENTAL PROJECTS.

(a) In General.--Subsection (i) of section 146 (relating to
treatment of refunding issues) is amended by adding at the
end the following new paragraph:
``(6) Treatment of certain residential rental project bonds
as refunding bonds irrespective of obligor.--
``(A) In general.--If, during the 6-month period beginning
on the date of a repayment of a loan financed by an issue 95
percent or more of the net proceeds of which are used to
provide projects described in section 142(d), such repayment
is used to provide a new loan for any project so described,
any bond which is issued to refinance such issue shall be
treated as a refunding issue to the extent the principal
amount of such refunding issue does not exceed the principal
amount of the bonds refunded.
``(B) Limitations.--Subparagraph (A) shall apply to only
one refunding of the original issue and only if--
``(i) the refunding issue is issued not later than 4 years
after the date on which the original issue was issued,
``(ii) the latest maturity date of any bond of the
refunding issue is not later than 34 years after the date on
which the refunded bond was issued, and
``(iii) the refunding issue is approved in accordance with
section 147(f) before the issuance of the refunding issue.''.
(b) Low-Income Housing Credit.--Clause (ii) of section
42(h)(4)(A) is amended by inserting ``or such financing is
refunded as described in section 146(i)(6)'' before the
period at the end.
(c) Effective Date.--The amendments made by this section
shall apply to repayments of loans received after the date of
the enactment of this Act.

SEC. 3008. COORDINATION OF CERTAIN RULES APPLICABLE TO LOW-
INCOME HOUSING CREDIT AND QUALIFIED RESIDENTIAL
RENTAL PROJECT EXEMPT FACILITY BONDS.

(a) Determination of Next Available Unit.--Paragraph (3) of
section 142(d) (relating to current income determinations) is
amended by adding at the end the following new subparagraph:
``(C) Exception for projects with respect to which
affordable housing credit is allowed.--In the case of a
project with respect to which credit is allowed under section
42, the second sentence of subparagraph (B) shall be applied
by substituting `building (within the meaning of section 42)'
for `project'.''.
(b) Students.--Paragraph (2) of section 142(d) (relating to
definitions and special rules) is amended by adding at the
end the following new subparagraph:
``(C) Students.--Rules similar to the rules of 42(i)(3)(D)
shall apply for purposes of this subsection.''.
(c) Single-Room Occupancy Units.--Paragraph (2) of section
142(d) (relating to definitions and special rules), as
amended by subsection (b), is amended by adding at the end
the following new subparagraph:
``(D) Single-room occupancy units.--A unit shall not fail
to be treated as a residential unit merely because such unit
is a single-room occupancy unit (within the meaning of
section 42).''.
(d) Effective Date.--The amendments made by this section
shall apply to determinations of the status of qualified
residential rental projects for periods beginning after the
date of the enactment of this Act, with respect to bonds
issued before, on, or after such date.

PART III--REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND TAX-
EXEMPT HOUSING BONDS

SEC. 3009. HOLD HARMLESS FOR REDUCTIONS IN AREA MEDIAN GROSS
INCOME.

(a) In General.--Paragraph (2) of section 142(d), as
amended by section 3008, is amended by adding at the end the
following new subparagraph:
``(E) Hold harmless for reductions in area median gross
income.--
``(i) In general.--Any determination of area median gross
income under subparagraph (B) with respect to any project for
any calendar year after 2008 shall not be less than the area
median gross income determined under such subparagraph with
respect to such project for the calendar year preceding the
calendar year for which such determination is made.
``(ii) Special rule for certain census changes.--In the
case of a HUD hold harmless impacted project, the area median
gross income with respect to such project for any calendar
year after 2008 (hereafter in this clause referred to as the
current calendar year) shall be the greater of the amount
determined without regard to this clause or the sum of--

``(I) the area median gross income determined under the HUD
hold harmless policy with respect to such project for
calendar year 2008, plus
``(II) any increase in the area median gross income
determined under subparagraph (B) (determined without regard
to the HUD hold harmless policy and this subparagraph) with
respect to such project for the current calendar year over
the area median gross income (as so determined) with respect
to such project for calendar year 2008.

``(iii) HUD hold harmless policy.--The term `HUD hold
harmless policy' means the regulations under which a policy
similar to the rules of clause (i) applied to prevent a
change in the method of determining area median gross income
from resulting in a reduction in the area median gross income
determined with respect to certain projects in calendar years
2007 and 2008.
``(iv) HUD hold harmless impacted project.--The term `HUD
hold harmless impacted project' means any project with
respect to which area median gross income was determined
under subparagraph (B) for calendar year 2007 or 2008 if such
determination would have been less but for the HUD hold
harmless policy.''.
(b) Effective Date.--The amendment made by this section
shall apply to determinations of area median gross income for
calendar years after 2008.

SEC. 3010. EXCEPTION TO ANNUAL CURRENT INCOME DETERMINATION
REQUIREMENT WHERE DETERMINATION NOT RELEVANT.

(a) In General.--Subparagraph (A) of section 142(d)(3) is
amended by adding at the end the following new sentence:
``The preceding sentence shall not apply with respect to any
project for any year if during such year no residential unit
in the project is occupied by a new resident whose income
exceeds the applicable income limit.''.
(b) Effective Date.--The amendment made by this section
shall apply to years ending after the date of the enactment
of this Act.

Subtitle B--Single Family Housing

SEC. 3011. FIRST-TIME HOMEBUYER CREDIT.

(a) In General.--Subpart C of part IV of subchapter A of
chapter 1 is amended by redesignating section 36 as section
37 and by inserting after section 35 the following new
section:

``SEC. 36. FIRST-TIME HOMEBUYER CREDIT.

``(a) Allowance of Credit.--In the case of an individual
who is a first-time homebuyer of a principal residence in the
United States during a taxable year, there shall be allowed
as a credit against the tax imposed by this subtitle for such
taxable year an amount equal to 10 percent of the purchase
price of the residence.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--Except as otherwise provided in this
paragraph, the credit allowed under subsection (a) shall not
exceed $8,000.
``(B) Married individuals filing separately.--In the case
of a married individual filing a separate return,
subparagraph (A) shall be applied by substituting `$4,000'
for `$8,000'.
``(C) Other individuals.--If two or more individuals who
are not married purchase a principal residence, the amount of
the credit allowed under subsection (a) shall be allocated
among such individuals in such manner as the Secretary may
prescribe, except that the total amount of the credits
allowed to all such individuals shall not exceed $8,000.
``(2) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit under
subsection (a) (determined without regard to this paragraph)
for the taxable year shall be reduced (but not below zero) by
the amount which bears the same ratio to the amount which is
so allowable as--
``(i) the excess (if any) of--

``(I) the taxpayer's modified adjusted gross income for
such taxable year, over
``(II) $75,000 ($150,000 in the case of a joint return),
bears to

``(ii) $20,000.
``(B) Modified adjusted gross income.--For purposes of
subparagraph (A), the term `modified adjusted gross income'
means the adjusted gross income of the taxpayer for the
taxable year increased by any amount excluded from gross
income under section 911, 931, or 933.
``(c) Definitions.--For purposes of this section--
``(1) First-time homebuyer.--The term `first-time
homebuyer' means any individual if such individual (and if
married, such individual's spouse) had no present ownership
interest in a principal residence during the 3-year period
ending on the date of the purchase of the principal residence
to which this section applies.
``(2) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121.
``(3) Purchase.--
``(A) In general.--The term `purchase' means any
acquisition, but only if--
``(i) the property is not acquired from a person related to
the person acquiring it, and
``(ii) the basis of the property in the hands of the person
acquiring it is not determined--

``(I) in whole or in part by reference to the adjusted
basis of such property in the hands of the person from whom
acquired, or
``(II) under section 1014(a) (relating to property acquired
from a decedent).

``(B) Construction.--A residence which is constructed by
the taxpayer shall be treated

[[Page S5898]]

as purchased by the taxpayer on the date the taxpayer first
occupies such residence.
``(4) Purchase price.--The term `purchase price' means the
adjusted basis of the principal residence on the date such
residence is purchased.
``(5) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons would result in the disallowance of losses under
section 267 or 707(b) (but, in applying section 267(b) and
(c) for purposes of this section, paragraph (4) of section
267(c) shall be treated as providing that the family of an
individual shall include only his spouse, ancestors, and
lineal descendants).
``(d) Exceptions.--No credit under subsection (a) shall be
allowed to any taxpayer for any taxable year with respect to
the purchase of a residence if--
``(1) a credit under section 1400C (relating to first-time
homebuyer in the District of Columbia) is allowable to the
taxpayer (or the taxpayer's spouse) for such taxable year or
any prior taxable year,
``(2) the residence is financed by the proceeds of a
qualified mortgage issue the interest on which is exempt from
tax under section 103,
``(3) the taxpayer is a nonresident alien, or
``(4) the taxpayer disposes of such residence (or such
residence ceases to be the principal residence of the
taxpayer (and, if married, the taxpayer's spouse)) before the
close of such taxable year.
``(e) Reporting.--If the Secretary requires information
reporting under section 6045 by a person described in
subsection (e)(2) thereof to verify the eligibility of
taxpayers for the credit allowable by this section, the
exception provided by section 6045(e) shall not apply.
``(f) Recapture of Credit.--
``(1) In general.--Except as otherwise provided in this
subsection, if a credit under subsection (a) is allowed to a
taxpayer, the tax imposed by this chapter shall be increased
by 6\2/3\ percent of the amount of such credit for each
taxable year in the recapture period.
``(2) Acceleration of recapture.--If a taxpayer disposes of
the principal residence with respect to which a credit was
allowed under subsection (a) (or such residence ceases to be
the principal residence of the taxpayer (and, if married, the
taxpayer's spouse)) before the end of the recapture period--
``(A) the tax imposed by this chapter for the taxable year
of such disposition or cessation, shall be increased by the
excess of the amount of the credit allowed over the amounts
of tax imposed by paragraph (1) for preceding taxable years,
and
``(B) paragraph (1) shall not apply with respect to such
credit for such taxable year or any subsequent taxable year.
``(3) Limitation based on gain.--In the case of the sale of
the principal residence to a person who is not related to the
taxpayer, the increase in tax determined under paragraph (2)
shall not exceed the amount of gain (if any) on such sale.
Solely for purposes of the preceding sentence, the adjusted
basis of such residence shall be reduced by the amount of the
credit allowed under subsection (a) to the extent not
previously recaptured under paragraph (1).
``(4) Exceptions.--
``(A) Death of taxpayer.--Paragraphs (1) and (2) shall not
apply to any taxable year ending after the date of the
taxpayer's death.
``(B) Involuntary conversion.--Paragraph (2) shall not
apply in the case of a residence which is compulsorily or
involuntarily converted (within the meaning of section
1033(a)) if the taxpayer acquires a new principal residence
during the 2-year period beginning on the date of the
disposition or cessation referred to in paragraph (2).
Paragraph (2) shall apply to such new principal residence
during the recapture period in the same manner as if such new
principal residence were the converted residence.
``(C) Transfers between spouses or incident to divorce.--In
the case of a transfer of a residence to which section
1041(a) applies--
``(i) paragraph (2) shall not apply to such transfer, and
``(ii) in the case of taxable years ending after such
transfer, paragraphs (1) and (2) shall apply to the
transferee in the same manner as if such transferee were the
transferor (and shall not apply to the transferor).
``(5) Joint returns.--In the case of a credit allowed under
subsection (a) with respect to a joint return, half of such
credit shall be treated as having been allowed to each
individual filing such return for purposes of this
subsection.
``(6) Recapture period.--For purposes of this subsection,
the term `recapture period' means the 15 taxable years
beginning with the second taxable year following the taxable
year in which the purchase of the principal residence for
which a credit is allowed under subsection (a) was made.
``(g) Application of Section.--This section shall only
apply to a principal residence purchased by the taxpayer on
or after April 9, 2008, and before April 1, 2009.''.
(b) Conforming Amendments.--
(1) Section 26(b)(2) is amended by striking ``and'' at the
end of subparagraph (U), by striking the period and inserting
``, and'' and the end of subparagraph (V), and by inserting
after subparagraph (V) the following new subparagraph:
``(W) section 36(f) (relating to recapture of homebuyer
credit).''.
(2) Section 6211(b)(4)(A) is amended by striking ``34,''
and all that follows through ``6428'' and inserting ``34, 35,
36, 53(e), and 6428''.
(3) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ``, 36,'' after ``section 35''.
(4) The table of sections for subpart C of part IV of
subchapter A of chapter 1 is amended by redesignating the
item relating to section 36 as an item relating to section 37
and by inserting before such item the following new item:

``Sec. 36. First-time homebuyer credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to residences purchased on or after April 9,
2008, in taxable years ending on or after such date.

SEC. 3012. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY
TAXES FOR NONITEMIZERS.

(a) In General.--Section 63(c)(1) (defining standard
deduction) is amended by striking ``and'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, and'', and by adding at
the end the following new subparagraph:
``(C) in the case of any taxable year beginning in 2008,
the real property tax deduction.''.
(b) Definition.--Section 63(c) is amended by adding at the
end the following new paragraph:
``(8) Real property tax deduction.--
``(A) In general.--For purposes of paragraph (1), the real
property tax deduction is the lesser of--
``(i) the amount allowable as a deduction under this
chapter for State and local taxes described in section
164(a)(1), or
``(ii) $500 ($1,000 in the case of a joint return).
Any taxes taken into account under section 62(a) shall not be
taken into account under this paragraph.
``(B) Exception.--The real property tax deduction shall not
be allowed in the case of a taxpayer living in a jurisdiction
in which the rate of tax for all residential real property
taxes is increased, net of any tax rebates, through rate
increases or the repeal or reduction of otherwise applicable
deductions, credits, or offsets, at any time after the date
of the enactment of this paragraph and before December 31,
2008. This subparagraph shall not apply in the case of a
jurisdiction in which the rate of tax for all residential
real property taxes is increased pursuant to an equalization
policy in effect before the date of the enactment of this
paragraph or as a result of any votes of the residents of
such jurisdiction to increase funding for pre-school,
primary, secondary, or higher education.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

Subtitle C--General Provisions

SEC. 3021. TEMPORARY LIBERALIZATION OF TAX-EXEMPT HOUSING
BOND RULES.

(a) Temporary Increase in Volume Cap.--
(1) In general.--Subsection (d) of section 146 is amended
by adding at the end the following new paragraph:
``(5) Increase and set aside for housing bonds for 2008.--
``(A) Increase for 2008.--In the case of calendar year
2008, the State ceiling for each State shall be increased by
an amount equal to $11,000,000,000 multiplied by a fraction--
``(i) the numerator of which is the State ceiling
applicable to the State for calendar year 2008, determined
without regard to this paragraph, and
``(ii) the denominator of which is the sum of the State
ceilings determined under clause (i) for all States.
``(B) Set aside.--
``(i) In general.--Any amount of the State ceiling for any
State which is attributable to an increase under this
paragraph shall be allocated solely for one or more qualified
housing issues.
``(ii) Qualified housing issue.--For purposes of this
paragraph, the term `qualified housing issue' means--

``(I) an issue described in section 142(a)(7) (relating to
qualified residential rental projects), or
``(II) a qualified mortgage issue (determined by
substituting `12-month period' for `42-month period' each
place it appears in section 143(a)(2)(D)(i)).''.

(2) Carryforward of unused limitations.--Subsection (f) of
section 146 is amended by adding at the end the following new
paragraph:
``(6) Special rules for increased volume cap under
subsection (d)(5).--No amount which is attributable to the
increase under subsection (d)(5) may be used--
``(A) for any issue other than a qualified housing issue
(as defined in subsection (d)(5)), or
``(B) to issue any bond after calendar year 2010.''.
(b) Temporary Rule for Use of Qualified Mortgage Bonds
Proceeds for Subprime Refinancing Loans.--
(1) In general.--Section 143(k) (relating to other
definitions and special rules) is amended by adding at the
end the following new paragraph:
``(12) Special rules for subprime refinancings.--
``(A) In general.--Notwithstanding the requirements of
subsection (i)(1), the proceeds of a qualified mortgage issue
may be used to refinance a mortgage on a residence which was
originally financed by the mortgagor through a qualified
subprime loan.
``(B) Special rules.--In applying subparagraph (A) to any
refinancing--

[[Page S5899]]

``(i) subsection (a)(2)(D)(i) shall be applied by
substituting `12-month period' for `42-month period' each
place it appears,
``(ii) subsection (d) (relating to 3-year requirement)
shall not apply, and
``(iii) subsection (e) (relating to purchase price
requirement) shall be applied by using the market value of
the residence at the time of refinancing in lieu of the
acquisition cost.
``(C) Qualified subprime loan.--The term `qualified
subprime loan' means an adjustable rate single-family
residential mortgage loan made after December 31, 2001, and
before January 1, 2008, that the bond issuer determines would
be reasonably likely to cause financial hardship to the
borrower if not refinanced.
``(D) Termination.--This paragraph shall not apply to any
bonds issued after December 31, 2010.''.
(c) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of the enactment
of this Act.

SEC. 3022. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITATIONS ON
TAX-EXEMPT HOUSING BONDS, LOW-INCOME HOUSING
TAX CREDIT, AND REHABILITATION CREDIT.

(a) Tax-Exempt Interest on Certain Housing Bonds Exempted
From Alternative Minimum Tax.--
(1) In general.--Subparagraph (C) of section 57(a)(5)
(relating to specified private activity bonds) is amended by
redesignating clauses (iii) and (iv) as clauses (iv) and (v),
respectively, and by inserting after clause (ii) the
following new clause:
``(iii) Exception for certain housing bonds.--For purposes
of clause (i), the term `private activity bond' shall not
include any bond issued after the date of the enactment of
this clause if such bond is--

``(I) an exempt facility bond issued as part of an issue 95
percent or more of the net proceeds of which are to be used
to provide qualified residential rental projects (as defined
in section 142(d)),
``(II) a qualified mortgage bond (as defined in section
143(a)), or
``(III) a qualified veterans' mortgage bond (as defined in
section 143(b)).

The preceding sentence shall not apply to any refunding bond
unless such preceding sentence applied to the refunded bond
(or in the case of a series of refundings, the original
bond).''.
(2) No adjustment to adjusted current earnings.--
Subparagraph (B) of section 56(g)(4) is amended by adding at
the end the following new clause:
``(iii) Tax exempt interest on certain housing bonds.--
Clause (i) shall not apply in the case of any interest on a
bond to which section 57(a)(5)(C)(iii) applies.''.
(b) Allowance of Low-Income Housing Credit Against
Alternative Minimum Tax.--Subparagraph (B) of section
38(c)(4) (relating to specified credits) is amended by
redesignating clauses (ii) through (iv) as clauses (iii)
through (v) and inserting after clause (i) the following new
clause:
``(ii) the credit determined under section 42 to the extent
attributable to buildings placed in service after December
31, 2007,''.
(c) Allowance of Rehabilitation Credit Against Alternative
Minimum Tax.--Subparagraph (B) of section 38(c)(4), as
amended by subsection (b), is amended by striking ``and'' at
the end of clause (iv), by redesignating clause (v) as clause
(vi), and by inserting after clause (iv) the following new
clause:
``(v) the credit determined under section 47 to the extent
attributable to qualified rehabilitation expenditures
properly taken into account for periods after December 31,
2007, and''.
(d) Effective Date.--
(1) Housing bonds.--The amendments made by subsection (a)
shall apply to bonds issued after the date of the enactment
of this Act.
(2) Low income housing credit.--The amendments made by
subsection (b) shall apply to credits determined under
section 42 of the Internal Revenue Code of 1986 to the extent
attributable to buildings placed in service after December
31, 2007.
(3) Rehabilitation credit.--The amendments made by
subsection (c) shall apply to credits determined under
section 47 of the Internal Revenue Code of 1986 to the extent
attributable to qualified rehabilitation expenditures
properly taken into account for periods after December 31,
2007.

SEC. 3023. BONDS GUARANTEED BY FEDERAL HOME LOAN BANKS
ELIGIBLE FOR TREATMENT AS TAX-EXEMPT BONDS.

(a) In General.--Subparagraph (A) of section 149(b)(3)
(relating to exceptions for certain insurance programs) is
amended by striking ``or'' at the end of clause (ii), by
striking the period at the end of clause (iii) and inserting
``, or'' and by adding at the end the following new clause:
``(iv) subject to subparagraph (E), any guarantee by a
Federal home loan bank made in connection with the original
issuance of a bond during the period beginning on the date of
the enactment of this clause and ending on December 31, 2010
(or a renewal or extension of a guarantee so made).''.
(b) Safety and Soundness Requirements.--Paragraph (3) of
section 149(b) is amended by adding at the end the following
new subparagraph:
``(E) Safety and soundness requirements for federal home
loan banks.--Clause (iv) of subparagraph (A) shall not apply
to any guarantee by a Federal home loan bank unless such bank
meets safety and soundness collateral requirements for such
guarantees which are at least as stringent as such
requirements which apply under regulations applicable to such
guarantees by Federal home loan banks as in effect on April
9, 2008.''.
(c) Effective Date.--The amendments made by this section
shall apply to guarantees made after the date of the
enactment of this Act.

SEC. 3024. MODIFICATION OF RULES PERTAINING TO FIRPTA
NONFOREIGN AFFIDAVITS.

(a) In General.--Subsection (b) of section 1445 (relating
to exemptions) is amended by adding at the end the following:
``(9) Alternative procedure for furnishing nonforeign
affidavit.--For purposes of paragraphs (2) and (7)--
``(A) In general.--Paragraph (2) shall be treated as
applying to a transaction if, in connection with a
disposition of a United States real property interest--
``(i) the affidavit specified in paragraph (2) is furnished
to a qualified substitute, and
``(ii) the qualified substitute furnishes a statement to
the transferee stating, under penalty of perjury, that the
qualified substitute has such affidavit in his possession.
``(B) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
this paragraph.''.
(b) Qualified Substitute.--Subsection (f) of section 1445
(relating to definitions) is amended by adding at the end the
following new paragraph:
``(6) Qualified substitute.--The term `qualified
substitute' means, with respect to a disposition of a United
States real property interest--
``(A) the person (including any attorney or title company)
responsible for closing the transaction, other than the
transferor's agent, and
``(B) the transferee's agent.''.
(c) Exemption Not To Apply if Knowledge or Notice That
Affidavit or Statement Is False.--
(1) In general.--Paragraph (7) of section 1445(b) (relating
to special rules for paragraphs (2) and (3)) is amended to
read as follows:
``(7) Special rules for paragraphs (2), (3), and (9).--
Paragraph (2), (3), or (9) (as the case may be) shall not
apply to any disposition--
``(A) if--
``(i) the transferee or qualified substitute has actual
knowledge that the affidavit referred to in such paragraph,
or the statement referred to in paragraph (9)(A)(ii), is
false, or
``(ii) the transferee or qualified substitute receives a
notice (as described in subsection (d)) from a transferor's
agent, transferee's agent, or qualified substitute that such
affidavit or statement is false, or
``(B) if the Secretary by regulations requires the
transferee or qualified substitute to furnish a copy of such
affidavit or statement to the Secretary and the transferee or
qualified substitute fails to furnish a copy of such
affidavit or statement to the Secretary at such time and in
such manner as required by such regulations.''.
(2) Liability.--
(A) Notice.--Paragraph (1) of section 1445(d) (relating to
notice of false affidavit; foreign corporations) is amended
to read as follows:
``(1) Notice of false affidavit; foreign corporations.--
If--
``(A) the transferor furnishes the transferee or qualified
substitute an affidavit described in paragraph (2) of
subsection (b) or a domestic corporation furnishes the
transferee an affidavit described in paragraph (3) of
subsection (b), and
``(B) in the case of--
``(i) any transferor's agent--

``(I) such agent has actual knowledge that such affidavit
is false, or
``(II) in the case of an affidavit described in subsection
(b)(2) furnished by a corporation, such corporation is a
foreign corporation, or

``(ii) any transferee's agent or qualified substitute, such
agent or substitute has actual knowledge that such affidavit
is false,
such agent or qualified substitute shall so notify the
transferee at such time and in such manner as the Secretary
shall require by regulations.''.
(B) Failure to furnish notice.--Paragraph (2) of section
1445(d) (relating to failure to furnish notice) is amended to
read as follows:
``(2) Failure to furnish notice.--
``(A) In general.--If any transferor's agent, transferee's
agent, or qualified substitute is required by paragraph (1)
to furnish notice, but fails to furnish such notice at such
time or times and in such manner as may be required by
regulations, such agent or substitute shall have the same
duty to deduct and withhold that the transferee would have
had if such agent or substitute had complied with paragraph
(1).
``(B) Liability limited to amount of compensation.--An
agent's or substitute's liability under subparagraph (A)
shall be limited to the amount of compensation the agent or
substitute derives from the transaction.''.
(C) Conforming amendment.--The heading for section 1445(d)
is amended by striking ``or Transferee's Agents'' and
inserting ``, Transferee's Agents, or Qualified
Substitutes''.
(d) Effective Date.--The amendments made by this section
shall apply to dispositions of United States real property
interests after the date of the enactment of this Act.

[[Page S5900]]

SEC. 3025. MODIFICATION OF DEFINITION OF TAX-EXEMPT USE
PROPERTY FOR PURPOSES OF THE REHABILITATION
CREDIT.

(a) In General.--Subclause (I) of section 47(c)(2)(B)(v) is
amended by striking ``section 168(h)'' and inserting
``section 168(h), except that `50 percent' shall be
substituted for `35 percent' in paragraph (1)(B)(iii)
thereof''.
(b) Effective Date.--The amendments made by this section
shall apply to expenditures properly taken into account for
periods after December 31, 2007.

SEC. 3026. EXTENSION OF SPECIAL RULE FOR MORTGAGE REVENUE
BONDS FOR RESIDENCES LOCATED IN DISASTER AREAS.

(a) In General.--Paragraph (11) of section 143(k) is
amended--
(1) by striking ``December 31, 1996'' and inserting ``May
1, 2008'', and
(2) by striking ``January 1, 1999'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section
shall apply to bonds issued after May 1, 2008.

TITLE II--REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

Subtitle A--Foreign Currency and Other Qualified Activities

SEC. 3031. REVISIONS TO REIT INCOME TESTS.

(a) Foreign Currency Gains Not Gross Income in Applying
REIT Income Tests.--Section 856 (defining real estate
investment trust) is amended by adding at the end the
following new subsection:
``(n) Rules Regarding Foreign Currency Transactions.--
``(1) In general.--For purposes of this part--
``(A) passive foreign exchange gain for any taxable year
shall not constitute gross income for purposes of subsection
(c)(2), and
``(B) real estate foreign exchange gain for any taxable
year shall not constitute gross income for purposes of
subsection (c)(3).
``(2) Real estate foreign exchange gain.--For purposes of
this subsection, the term `real estate foreign exchange gain'
means--
``(A) foreign currency gain (as defined in section
988(b)(1)) which is attributable to--
``(i) any item of income or gain described in subsection
(c)(3),
``(ii) the acquisition or ownership of obligations secured
by mortgages on real property or on interests in real
property (other than foreign currency gain attributable to
any item of income or gain described in clause (i)), or
``(iii) becoming or being the obligor under obligations
secured by mortgages on real property or on interests in real
property (other than foreign currency gain attributable to
any item of income or gain described in clause (i)),
``(B) section 987 gain attributable to a qualified business
unit (as defined by section 989) of the real estate
investment trust, but only if such qualified business unit
meets the requirements under--
``(i) subsection (c)(3) for the taxable year, and
``(ii) subsection (c)(4)(A) at the close of each quarter
that the real estate investment trust has directly or
indirectly held the qualified business unit, and
``(C) any other foreign currency gain as determined by the
Secretary.
``(3) Passive foreign exchange gain.--For purposes of this
subsection, the term `passive foreign exchange gain' means--
``(A) real estate foreign exchange gain,
``(B) foreign currency gain (as defined in section
988(b)(1)) which is not described in subparagraph (A) and
which is attributable to--
``(i) any item of income or gain described in subsection
(c)(2),
``(ii) the acquisition or ownership of obligations (other
than foreign currency gain attributable to any item of income
or gain described in clause (i)), or
``(iii) becoming or being the obligor under obligations
(other than foreign currency gain attributable to any item of
income or gain described in clause (i)), and
``(C) any other foreign currency gain as determined by the
Secretary.
``(4) Exception for income from substantial and regular
trading.--Notwithstanding this subsection or any other
provision of this part, any section 988 gain derived by a
corporation, trust, or association from engaging in
substantial and regular trading or dealing in securities (as
defined in section 475(c)(2)) shall constitute gross income
which does not qualify under paragraph (2) or (3) of
subsection (c). This paragraph shall not apply to income
which does not constitute gross income by reason of
subsection (c)(5)(G).''.
(b) Addition to REIT Hedging Rule.--Subparagraph (G) of
section 856(c)(5) is amended to read as follows:
``(G) Treatment of certain hedging instruments.--Except to
the extent as determined by the Secretary--
``(i) any income of a real estate investment trust from a
hedging transaction (as defined in clause (ii) or (iii) of
section 1221(b)(2)(A)) which is clearly identified pursuant
to section 1221(a)(7), including gain from the sale or
disposition of such a transaction, shall not constitute gross
income under paragraphs (2) and (3) to the extent that the
transaction hedges any indebtedness incurred or to be
incurred by the trust to acquire or carry real estate assets,
and
``(ii) any income of a real estate investment trust from a
transaction entered into by the trust primarily to manage
risk of currency fluctuations with respect to any item of
income or gain described in paragraph (2) or (3) (or any
property which generates such income or gain), including gain
from the termination of such a transaction, shall not
constitute gross income under paragraphs (2) and (3), but
only if such transaction is clearly identified as such before
the close of the day on which it was acquired, originated, or
entered into (or such other time as the Secretary may
prescribe).''.
(c) Authority To Exclude Items of Income From REIT Income
Tests.--Section 856(c)(5), as amended by the Heartland,
Habitat, Harvest, and Horticulture Act of 2008, is amended by
adding at the end the following new subparagraph:
``(J) Secretarial authority to exclude other items of
income.--To the extent necessary to carry out the purposes of
this part, the Secretary is authorized to determine, solely
for purposes of this part, whether any item of income or gain
which--
``(i) does not otherwise qualify under paragraph (2) or (3)
may be considered as not constituting gross income, or
``(ii) otherwise constitutes gross income not qualifying
under paragraph (2) or (3) may be considered as gross income
which qualifies under paragraph (2) or (3).''.

SEC. 3032. REVISIONS TO REIT ASSET TESTS.

(a) Clarification of Valuation Test.--The first sentence in
the matter following section 856(c)(4)(B)(iii)(III) is
amended by inserting ``(including a discrepancy caused solely
by the change in the foreign currency exchange rate used to
value a foreign asset)'' after ``such requirements''.
(b) Clarification of Permissible Asset Category.--Section
856(c)(5), as amended by section 3031(c), is amended by
adding at the end the following new subparagraph:
``(K) Cash.--If the real estate investment trust or its
qualified business unit (as defined in section 989) uses any
foreign currency as its functional currency (as defined in
section 985(b)), the term `cash' includes such foreign
currency but only to the extent such foreign currency--
``(i) is held for use in the normal course of the
activities of the trust or qualified business unit which give
rise to items of income or gain described in paragraph (2) or
(3) of subsection (c) or are directly related to acquiring or
holding assets described in subsection (c)(4), and
``(ii) is not held in connection with an activity described
in subsection (n)(4).''.

SEC. 3033. CONFORMING FOREIGN CURRENCY REVISIONS.

(a) Net Income From Foreclosure Property.--Clause (i) of
section 857(b)(4)(B) is amended to read as follows:
``(i) gain (including any foreign currency gain, as defined
in section 988(b)(1)) from the sale or other disposition of
foreclosure property described in section 1221(a)(1) and the
gross income for the taxable year derived from foreclosure
property (as defined in section 856(e)), but only to the
extent such gross income is not described in (or, in the case
of foreign currency gain, not attributable to gross income
described in) section 856(c)(3) other than subparagraph (F)
thereof, over''.
(b) Net Income From Prohibited Transactions.--Clause (i) of
section 857(b)(6)(B) is amended to read as follows:
``(i) the term `net income derived from prohibited
transactions' means the excess of the gain (including any
foreign currency gain, as defined in section 988(b)(1)) from
prohibited transactions over the deductions (including any
foreign currency loss, as defined in section 988(b)(2))
allowed by this chapter which are directly connected with
prohibited transactions;''.

Subtitle B--Taxable REIT Subsidiaries

SEC. 3041. CONFORMING TAXABLE REIT SUBSIDIARY ASSET TEST.

Section 856(c)(4)(B)(ii) is amended--
(1) by striking ``20 percent'' and inserting ``25
percent'', and
(2) by striking ``REIT subsidiaries'' and all that follows,
and inserting ``REIT subsidiaries,''.

Subtitle C--Dealer Sales

SEC. 3051. HOLDING PERIOD UNDER SAFE HARBOR.

Section 857(b)(6) (relating to income from prohibited
transactions) is amended--
(1) by striking ``4 years'' in subparagraphs (C)(i),
(C)(iv), and (D)(i) and inserting ``2 years'',
(2) by striking ``4-year period'' in subparagraphs (C)(ii),
(D)(ii), and (D)(iii) and inserting ``2-year period'', and
(3) by striking ``real estate asset''and all that follows
through ``if'' in the matter preceding clause (i) of
subparagraphs (C) and (D), respectively, and inserting ``real
estate asset (as defined in section 856(c)(5)(B)) and which
is described in section 1221(a)(1) if''.

SEC. 3052. DETERMINING VALUE OF SALES UNDER SAFE HARBOR.

Section 857(b)(6) is amended--
(1) by striking the semicolon at the end of subparagraph
(C)(iii) and inserting ``, or (III) the fair market value of
property (other than sales of foreclosure property or sales
to which section 1033 applies) sold during the taxable year
does not exceed 10 percent of the fair market value of all of
the assets of the trust as of the beginning of the taxable
year;'', and
(2) by adding ``or'' at the end of subclause (II) of
subparagraph (D)(iv) and by adding at the end of such
subparagraph the following new subclause:

[[Page S5901]]

``(III) the fair market value of property (other than sales
of foreclosure property or sales to which section 1033
applies) sold during the taxable year does not exceed 10
percent of the fair market value of all of the assets of the
trust as of the beginning of the taxable year,''.

Subtitle D--Health Care REITs

SEC. 3061. CONFORMITY FOR HEALTH CARE FACILITIES.

(a) Related Party Rentals.--Subparagraph (B) of section
856(d)(8) (relating to special rule for taxable REIT
subsidiaries) is amended to read as follows:
``(B) Exception for certain lodging facilities and health
care property.--The requirements of this subparagraph are met
with respect to an interest in real property which is a
qualified lodging facility (as defined in paragraph (9)(D))
or a qualified health care property (as defined in subsection
(e)(6)(D)(i)) leased by the trust to a taxable REIT
subsidiary of the trust if the property is operated on behalf
of such subsidiary by a person who is an eligible independent
contractor. For purposes of this section, a taxable REIT
subsidiary is not considered to be operating or managing a
qualified health care property or qualified lodging facility
solely because it--
``(i) directly or indirectly possesses a license, permit,
or similar instrument enabling it to do so, or
``(ii) employs individuals working at such facility or
property located outside the United States, but only if an
eligible independent contractor is responsible for the daily
supervision and direction of such individuals on behalf of
the taxable REIT subsidiary pursuant to a management
agreement or similar service contract.''.
(b) Eligible Independent Contractor.--Subparagraphs (A) and
(B) of section 856(d)(9) (relating to eligible independent
contractor) are amended to read as follows:
``(A) In general.--The term `eligible independent
contractor' means, with respect to any qualified lodging
facility or qualified health care property (as defined in
subsection (e)(6)(D)(i)), any independent contractor if, at
the time such contractor enters into a management agreement
or other similar service contract with the taxable REIT
subsidiary to operate such qualified lodging facility or
qualified health care property, such contractor (or any
related person) is actively engaged in the trade or business
of operating qualified lodging facilities or qualified health
care properties, respectively, for any person who is not a
related person with respect to the real estate investment
trust or the taxable REIT subsidiary.
``(B) Special rules.--Solely for purposes of this paragraph
and paragraph (8)(B), a person shall not fail to be treated
as an independent contractor with respect to any qualified
lodging facility or qualified health care property (as so
defined) by reason of the following:
``(i) The taxable REIT subsidiary bears the expenses for
the operation of such qualified lodging facility or qualified
health care property pursuant to the management agreement or
other similar service contract.
``(ii) The taxable REIT subsidiary receives the revenues
from the operation of such qualified lodging facility or
qualified health care property, net of expenses for such
operation and fees payable to the operator pursuant to such
agreement or contract.
``(iii) The real estate investment trust receives income
from such person with respect to another property that is
attributable to a lease of such other property to such person
that was in effect as of the later of--

``(I) January 1, 1999, or
``(II) the earliest date that any taxable REIT subsidiary
of such trust entered into a management agreement or other
similar service contract with such person with respect to
such qualified lodging facility or qualified health care
property.''.

(c) Taxable Reit Subsidiaries.--The last sentence of
section 856(l)(3) is amended--
(1) by inserting ``or a health care facility'' after ``a
lodging facility'', and
(2) by inserting ``or health care facility'' after ``such
lodging facility''.

Subtitle E--Effective Dates

SEC. 3071. EFFECTIVE DATES.

(a) In General.--Except as otherwise provided in this
section, the amendments made by this title shall apply to
taxable years beginning after the date of the enactment of
this Act.
(b) REIT Income Tests.--
(1) The amendments made by section 3031(a) and (c) shall
apply to gains and items of income recognized after the date
of the enactment of this Act.
(2) The amendment made by section 3031(b) shall apply to
transactions entered into after the date of the enactment of
this Act.
(c) Conforming Foreign Currency Revisions.--
(1) The amendment made by section 3033(a) shall apply to
gains recognized after the date of the enactment of this Act.
(2) The amendment made by section 3033(b) shall apply to
gains and deductions recognized after the date of the
enactment of this Act.
(d) Dealer Sales.--The amendments made by subtitle C shall
apply to sales made after the date of the enactment of this
Act.

TITLE III--REVENUE PROVISIONS

Subtitle A--General Provisions

SEC. 3081. ELECTION TO ACCELERATE AMT AND R AND D CREDITS IN
LIEU OF BONUS DEPRECIATION.

(a) In General.--Section 168(k) is amended by adding at the
end the following new paragraph:
``(4) Election to accelerate amt and r and d credits in
lieu of bonus depreciation.--
``(A) In general.--If a corporation elects to have this
paragraph apply--
``(i) no additional depreciation shall be allowed under
paragraph (1) for any eligible qualified property placed in
service during any taxable year to which paragraph (1) would
otherwise apply,
``(ii) the applicable depreciation method used under this
section with respect to such eligible qualified property
shall be the straight line method rather than the method that
would otherwise be used, and
``(iii) the limitations described in subparagraph (B) for
such taxable year shall be increased by an aggregate amount
not in excess of the bonus depreciation amount for such
taxable year.
``(B) Limitations to be increased.--The limitations
described in this subparagraph are--
``(i) the limitation under section 38(c), and
``(ii) the limitation under section 53(c).
``(C) Bonus depreciation amount.--For purposes of this
paragraph--
``(i) In general.--The bonus depreciation amount for any
applicable taxable year is an amount equal to the product of
20 percent and the excess (if any) of--

``(I) the aggregate amount of depreciation which would be
determined under this section for property placed in service
during the taxable year if no election under this paragraph
were made, over
``(II) the aggregate amount of depreciation allowable under
this section for property placed in service during the
taxable year.

In the case of property which is a passenger aircraft, the
amount determined under subclause (I) shall be calculated
without regard to the written binding contract limitation
under paragraph (2)(A)(iii)(I).
``(ii) Maximum amount.--The bonus depreciation amount for
any applicable taxable year shall not exceed the applicable
limitation under clause (iii), reduced (but not below zero)
by the bonus depreciation amount for any preceding taxable
year.
``(iii) Applicable limitation.--For purposes of clause
(ii), the term `applicable limitation' means, with respect to
any eligible taxpayer, the lesser of--

``(I) $30,000,000, or
``(II) 6 percent of the sum of the amounts determined with
respect to the taxpayer under clauses (ii) and (iii) of
subparagraph (E).

``(iv) Aggregation rule.--All corporations which are
treated as a single employer under section 52(a) shall be
treated as 1 taxpayer for purposes of applying the limitation
under this subparagraph and determining the applicable
limitation under clause (iii).
``(D) Eligible qualified property.--For purposes of this
paragraph, the term `eligible qualified property' means
qualified property under paragraph (2), except that in
applying paragraph (2) for purposes of this clause--
``(i) `March 31, 2008' shall be substituted for `December
31, 2007' each place it appears in subparagraph (A) and
clauses (i) and (ii) of subparagraph (E) thereof,
``(ii) only adjusted basis attributable to manufacture,
construction, or production after March 31, 2008, and before
January 1, 2009, shall be taken into account under
subparagraph (B)(ii) thereof, and
``(iii) in the case of property which is a passenger
aircraft, the written binding contract limitation under
subparagraph (A)(iii)(I) thereof shall not apply.
``(E) Allocation of bonus depreciation amounts.--
``(i) In general.--Subject to clauses (ii) and (iii), the
taxpayer shall, at such time and in such manner as the
Secretary may prescribe, specify the portion (if any) of the
bonus depreciation amount which is to be allocated to each of
the limitations described in subparagraph (B).
``(ii) Business credit limitation.--The portion of the
bonus depreciation amount allocated to the limitation
described in subparagraph (B)(i) shall not exceed an amount
equal to the portion of the credit allowable under section 38
for the taxable year which is allocable to business credit
carryforwards to such taxable year which are--

``(I) from taxable years beginning before January 1, 2006,
and
``(II) properly allocable (determined under the rules of
section 38(d)) to the research credit determined under
section 41(a).

``(iii) Alternative minimum tax credit limitation.--The
portion of the bonus depreciation amount allocated to the
limitation described in subparagraph (B)(ii) shall not exceed
an amount equal to the portion of the minimum tax credit
allowable under section 53 for the taxable year which is
allocable to the adjusted minimum tax imposed for taxable
years beginning before January 1, 2006. For purposes of the
preceding sentence, credits shall be treated as allowed on a
first-in, first-out basis.
``(F) Credit refundable.--Any aggregate increases in the
credits allowed under section 38 or 53 by reason of this
paragraph shall, for purposes of this title, be treated as a
credit allowed to the taxpayer under subpart C of part IV of
subchapter A.
``(G) Other rules.--
``(i) Election.--Any election under this paragraph
(including any allocation under subparagraph (E)) may be
revoked only with the consent of the Secretary.

[[Page S5902]]

``(ii) Deduction allowed in computing minimum tax.--
Notwithstanding this paragraph, paragraph (2)(G) shall apply
with respect to the deduction computed under this section
(after application of this paragraph) with respect to
property placed in service during any applicable taxable
year.''.
(b) Application to Certain Automotive Partnerships.--
(1) In general.--If an applicable partnership elects the
application of this subsection--
(A) the partnership shall be treated as having made a
payment against the tax imposed by chapter 1 of the Internal
Revenue Code of 1986 for any applicable taxable year of the
partnership in the amount determined under paragraph (3),
(B) in the case of any eligible qualified property placed
in service by the partnership during any applicable taxable
year--
(i) section 168(k) of such Code shall not apply in
determining the amount of the deduction allowable to the
partnership or any partner with respect to such property
under section 168 of such Code,
(ii) the applicable depreciation method used by the
partnership or any partner under such section with respect to
such property shall be the straight line method rather than
the method that would otherwise be used,
(C) no election may be made under section 168(k)(4) of such
Code with respect to the partnership, and
(D) the amount of the credit determined under section 41 of
such Code for any applicable taxable year with respect to the
partnership shall be reduced by the amount of the deemed
payment under subparagraph (A) for the taxable year.
(2) Treatment of deemed payment.--
(A) In general.--Notwithstanding any other provision of the
Internal Revenue Code of 1986, the Secretary of the Treasury
or his delegate shall not use the payment of tax described in
paragraph (1) as an offset or credit against any tax
liability of the applicable partnership or any partner but
shall refund such payment to the applicable partnership.
(B) No interest.--The payment described in paragraph (1)
shall not be taken into account in determining any amount of
interest under such Code.
(3) Amount of deemed payment.--The amount determined under
this paragraph for any applicable taxable year shall be the
least of the following:
(A) The amount which would be determined for the taxable
year under section 168(k)(4)(C)(i) of the Internal Revenue
Code of 1986 (as added by the amendments made by this
section) if an election under such section were in effect
with respect to the partnership.
(B) The amount of the credit determined under section 41 of
such Code for the taxable year with respect to the
partnership.
(C) $30,000,000, reduced by the amount of any payment under
this subsection for any preceding taxable year.
(4) Definitions.--For purposes of this subsection--
(A) Applicable partnership.--The term ``applicable
partnership'' means a domestic partnership that--
(i) was formed effective on August 3, 2007, and
(ii) will produce in excess of 675,000 automobiles during
the period beginning on January 1, 2008, and ending on June
30, 2008.
(B) Applicable taxable year.--The term ``applicable taxable
year'' means any taxable year during which eligible qualified
property is placed in service.
(C) Eligible qualified property.--The term ``eligible
qualified property'' has the meaning given such term by
section 168(k)(4)(D) of the Internal Revenue Code of 1986 (as
added by the amendments made by this section).
(c) Conforming Amendment.--Section 1324(b)(2) of title 31,
United States Code, as amended by this Act, is amended--
(1) by inserting ``168(k)(4)(F),'' after ``36,'', and
(2) by inserting ``, or due under section 3081(b)(2) of the
Housing Assistance Tax Act of 2008'' before the period at the
end.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years ending after March 31, 2008.

SEC. 3082. CERTAIN GO ZONE INCENTIVES.

(a) Use of Amended Income Tax Returns to Take Into Account
Receipt of Certain Hurricane-Related Casualty Loss Grants by
Disallowing Previously Taken Casualty Loss Deductions.--
(1) In general.--Notwithstanding any other provision of the
Internal Revenue Code of 1986, if a taxpayer claims a
deduction for any taxable year with respect to a casualty
loss to a principal residence (within the meaning of section
121 of such Code) resulting from Hurricane Katrina, Hurricane
Rita, or Hurricane Wilma and in a subsequent taxable year
receives a grant under Public Law 109-148, 109-234, or 110-
116 as reimbursement for such loss, such taxpayer may elect
to file an amended income tax return for the taxable year in
which such deduction was allowed (and for any taxable year to
which such deduction is carried) and reduce (but not below
zero) the amount of such deduction by the amount of such
reimbursement.
(2) Time of filing amended return.--Paragraph (1) shall
apply with respect to any grant only if any amended income
tax returns with respect to such grant are filed not later
than the later of--
(A) the due date for filing the tax return for the taxable
year in which the taxpayer receives such grant, or
(B) the date which is 1 year after the date of the
enactment of this Act.
(3) Waiver of penalties and interest.--Any underpayment of
tax resulting from the reduction under paragraph (1) of the
amount otherwise allowable as a deduction shall not be
subject to any penalty or interest under such Code if such
tax is paid not later than 1 year after the filing of the
amended return to which such reduction relates.
(b) Waiver of Deadline on Construction of GO Zone Property
Eligible for Bonus Depreciation.--
(1) In general.--Subparagraph (B) of section 1400N(d)(3) is
amended to read as follows:
``(B) without regard to `and before January 1, 2009' in
clause (i) thereof, and''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2007.
(c) Inclusion of Certain Counties in Gulf Opportunity Zone
for Purposes of Tax-Exempt Bond Financing.--
(1) In general.--Subsection (a) of section 1400N is amended
by adding at the end the following new paragraph:
``(8) Inclusion of certain counties.--For purposes of this
subsection, the Gulf Opportunity Zone includes Colbert
County, Alabama and Dallas County, Alabama.''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if included in the provisions of the
Gulf Opportunity Zone Act of 2005 to which it relates.

Subtitle B--Revenue Offsets

SEC. 3091. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT OF
PAYMENT CARD AND THIRD PARTY NETWORK
TRANSACTIONS.

(a) In General.--Subpart B of part III of subchapter A of
chapter 61 is amended by adding at the end the following new
section:

``SEC. 6050W. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT
OF PAYMENT CARD AND THIRD PARTY NETWORK
TRANSACTIONS.

``(a) In General.--Each payment settlement entity shall
make a return for each calendar year setting forth--
``(1) the name, address, and TIN of each participating
payee to whom one or more payments in settlement of
reportable transactions are made, and
``(2) the gross amount of the reportable transactions with
respect to each such participating payee.

Such return shall be made at such time and in such form and
manner as the Secretary may require by regulations.
``(b) Payment Settlement Entity.--For purposes of this
section--
``(1) In general.--The term `payment settlement entity'
means--
``(A) in the case of a payment card transaction, the
merchant acquiring bank, and
``(B) in the case of a third party network transaction, the
third party settlement organization.
``(2) Merchant acquiring bank.--The term `merchant
acquiring bank' means the bank or other organization which
has the contractual obligation to make payment to
participating payees in settlement of payment card
transactions.
``(3) Third party settlement organization.--The term `third
party settlement organization' means the central organization
which has the contractual obligation to make payment to
participating payees of third party network transactions.
``(4) Special rules related to intermediaries.--For
purposes of this section--
``(A) Aggregated payees.--In any case where reportable
transactions of more than one participating payee are settled
through an intermediary--
``(i) such intermediary shall be treated as the
participating payee for purposes of determining the reporting
obligations of the payment settlement entity with respect to
such transactions, and
``(ii) such intermediary shall be treated as the payment
settlement entity with respect to the settlement of such
transactions with the participating payees.
``(B) Electronic payment facilitators.--In any case where
an electronic payment facilitator or other third party makes
payments in settlement of reportable transactions on behalf
of the payment settlement entity, the return under subsection
(a) shall be made by such electronic payment facilitator or
other third party in lieu of the payment settlement entity.
``(c) Reportable Transaction.--For purposes of this
section--
``(1) In general.--The term `reportable transaction' means
any payment card transaction and any third party network
transaction.
``(2) Payment card transaction.--The term `payment card
transaction' means any transaction in which a payment card is
accepted as payment.
``(3) Third party network transaction.--The term `third
party network transaction' means any transaction which is
settled through a third party payment network.
``(d) Other Definitions.--For purposes of this section--
``(1) Participating payee.--
``(A) In general.--The term `participating payee' means--

[[Page S5903]]

``(i) in the case of a payment card transaction, any person
who accepts a payment card as payment, and
``(ii) in the case of a third party network transaction,
any person who accepts payment from a third party settlement
organization in settlement of such transaction.
``(B) Exclusion of foreign persons.--To the extent provided
by the Secretary in regulations or other guidance, such term
shall not include any foreign person.
``(C) Inclusion of governmental units.--The term `person'
includes any governmental unit (and any agency or
instrumentality thereof).
``(2) Payment card.--The term `payment card' means any card
which is issued pursuant to an agreement or arrangement which
provides for--
``(A) one or more issuers of such cards,
``(B) a network of persons unrelated to each other, and to
the issuer, who agree to accept such cards as payment, and
``(C) standards and mechanisms for settling the
transactions between the merchant acquiring banks and the
persons who agree to accept such cards as payment.

The acceptance as payment of any account number or other
indicia associated with a payment card shall be treated for
purposes of this section in the same manner as accepting such
payment card as payment.
``(3) Third party payment network.--The term `third party
payment network' means any agreement or arrangement--
``(A) which involves the establishment of accounts with a
central organization for the purpose of settling transactions
between persons who establish such accounts,
``(B) which provides for standards and mechanisms for
settling such transactions,
``(C) which involves a substantial number of persons
unrelated to such central organization who provide goods or
services and who have agreed to settle transactions for the
provision of such goods or services pursuant to such
agreement or arrangement, and
``(D) which guarantees persons providing goods or services
pursuant to such agreement or arrangement that such persons
will be paid for providing such goods or services.

Such term shall not include any agreement or arrangement
which provides for the issuance of payment cards.
``(e) Exception for De Minimis Payments by Third Party
Settlement Organizations.--A third party settlement
organization shall not be required to report any information
under subsection (a) with respect to third party network
transactions of any participating payee if the amount which
would otherwise be reported under subsection (a)(2) with
respect to such transactions does not exceed $10,000 and the
aggregate number of such transactions does not exceed 200.
``(f) Statements to Be Furnished to Persons With Respect to
Whom Information Is Required.--Every person required to make
a return under subsection (a) shall furnish to each person
with respect to whom such a return is required a written
statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such
return, and
``(2) the gross amount of payments made to the person
required to be shown on the return.

The written statement required under the preceding sentence
shall be furnished to the person on or before January 31 of
the year following the calendar year for which the return
under subsection (a) was required to be made.
``(g) Regulations.--The Secretary may prescribe such
regulations or other guidance as may be necessary or
appropriate to carry out this section, including rules to
prevent the reporting of the same transaction more than
once.''.
(b) Penalty for Failure to File.--
(1) Return.--Subparagraph (B) of section 6724(d)(1) is
amended--
(A) by striking ``or'' at the end of clause (xx),
(B) by redesignating the clause (xix) that follows clause
(xx) as clause (xxi),
(C) by striking ``and'' at the end of clause (xxi), as
redesignated by subparagraph (B) and inserting ``or'', and
(D) by adding at the end the following:
``(xxii) section 6050W (relating to returns to payments
made in settlement of payment card transactions), and''.
(2) Statement.--Paragraph (2) of section 6724(d) is amended
by striking ``or'' at the end of subparagraph (BB), by
striking the period at the end of the subparagraph (CC) and
inserting ``, or'', and by inserting after subparagraph (CC)
the following:
``(DD) section 6050W(c) (relating to returns relating to
payments made in settlement of payment card transactions).''.
(c) Application of Backup Withholding.--Paragraph (3) of
section 3406(b) is amended by striking ``or'' at the end of
subparagraph (D), by striking the period at the end of
subparagraph (E) and inserting ``, or'', and by adding at the
end the following new subparagraph:
``(F) section 6050W (relating to returns relating to
payments made in settlement of payment card transactions).''.
(d) Clerical Amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 is amended by
inserting after the item relating to section 6050V the
following:

``Sec. 6050W. Returns relating to payments made in settlement of
payment card transactions.''.

(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to returns for calendar years beginning after December 31,
2010.
(2) Application of backup withholding.--The amendment made
by subsection (c) shall apply to amounts paid after December
31, 2011.

SEC. 3092. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO
NONQUALIFIED USE NOT EXCLUDED FROM INCOME.

(a) In General.--Subsection (b) of section 121 of the
Internal Revenue Code of 1986 (relating to limitations) is
amended by adding at the end the following new paragraph:
``(4) Exclusion of gain allocated to nonqualified use.--
``(A) In general.--Subsection (a) shall not apply to so
much of the gain from the sale or exchange of property as is
allocated to periods of nonqualified use.
``(B) Gain allocated to periods of nonqualified use.--For
purposes of subparagraph (A), gain shall be allocated to
periods of nonqualified use based on the ratio which--
``(i) the aggregate periods of nonqualified use during the
period such property was owned by the taxpayer, bears to
``(ii) the period such property was owned by the taxpayer.
``(C) Period of nonqualified use.--For purposes of this
paragraph--
``(i) In general.--The term `period of nonqualified use'
means any period (other than the portion of any period
preceding January 1, 2009) during which the property is not
used as the principal residence of the taxpayer or the
taxpayer's spouse or former spouse.
``(ii) Exceptions.--The term `period of nonqualified use'
does not include--

``(I) any portion of the 5-year period described in
subsection (a) which is after the last date that such
property is used as the principal residence of the taxpayer
or the taxpayer's spouse,
``(II) any period (not to exceed an aggregate period of 10
years) during which the taxpayer or the taxpayer's spouse is
serving on qualified official extended duty (as defined in
subsection (d)(9)(C)) described in clause (i), (ii), or (iii)
of subsection (d)(9)(A), and
``(III) any other period of temporary absence (not to
exceed an aggregate period of 2 years) due to change of
employment, health conditions, or such other unforeseen
circumstances as may be specified by the Secretary.

``(D) Coordination with recognition of gain attributable to
depreciation.--For purposes of this paragraph--
``(i) subparagraph (A) shall be applied after the
application of subsection (d)(6), and
``(ii) subparagraph (B) shall be applied without regard to
any gain to which subsection (d)(6) applies.''.
(b) Effective Date.--The amendment made by this section
shall apply to sales and exchanges after December 31, 2008.

SEC. 3093. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure to File Correct Information Returns.--
(1) In general.--Subsections (a)(1), (b)(1)(A), and
(b)(2)(A) of section 6721 are each amended by striking
``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a)(1),
(d)(1)(A), and (e)(3)(A) of section 6721 are each amended by
striking ``$250,000'' and inserting ``$1,500,000''.
(b) Reduction Where Correction Within 30 Days.--
(1) In general.--Subparagraph (A) of section 6721(b)(1) is
amended by striking ``$15'' and inserting ``$50''.
(2) Aggregate annual limitation.--Subsections (b)(1)(B) and
(d)(1)(B) of section 6721 are each amended by striking
``$75,000'' and inserting ``$500,000''.
(c) Reduction Where Correction on or Before August 1.--
(1) In general.--Subparagraph (A) of section 6721(b)(2) is
amended by striking ``$30'' and inserting ``$75''.
(2) Aggregate annual limitation.--Subsections (b)(2)(B) and
(d)(1)(C) of section 6721are each amended by striking
``$150,000'' and inserting ``$1,000,000''.
(d) Aggregate Annual Limitations for Persons With Gross
Receipts of Not More Than $5,000,000.--Paragraph (1) of
section 6721(d) is amended--
(1) by striking ``$100,000'' in subparagraph (A) and
inserting ``$500,000'',
(2) by striking ``$25,000'' in subparagraph (B) and
inserting ``$100,000'', and
(3) by striking ``$50,000'' in subparagraph (C) and
inserting ``$250,000''.
(e) Penalty in Case of Intentional Disregard.--Paragraph
(2) of section 6721(e) is amended by striking ``$100'' and
inserting ``$250''.
(f) Failure to Furnish Correct Payee Statements.--
(1) In general.--Subsection (a) of section 6722 is amended
by striking ``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a) and
(c)(2)(A) of section 6722 are each amended by striking
``$100,000'' and inserting ``$500,000''.
(3) Penalty in case of intentional disregard.--Paragraph
(1) of section 6722(c) is amended by striking ``$100'' and
inserting ``$250''.

[[Page S5904]]

(g) Failure To Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$100'', and
(2) by striking ``$100,000'' and inserting ``$500,000''.
(h) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2009.

SEC. 3094. INCREASE IN PENALTY FOR FAILURE TO FILE S
CORPORATION RETURNS.

(a) In General.--Paragraph (1) of section 6699(b) (relating
to amount per month) is amended by striking ``$85'' and
inserting ``$100''.
(b) Effective Date.--The amendment made by this section
shall apply to returns the due date for the filing of which
(including extensions) is after the date of the enactment of
this Act.

SEC. 3095. INCREASE IN PENALTY FOR FAILURE TO FILE
PARTNERSHIP RETURNS.

(a) Increase in Penalty Amount.--Paragraph (1) of section
6698(b) (relating to amount per month) is amended by striking
``$85'' and inserting ``$100''.
(b) Effective Date.--The amendment made by this section
shall apply to returns the due date for the filing of which
(including extensions) is after the date of the enactment of
this Act.

SEC. 3096. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A
RETURN OF TAX.

(a) In General.--Subsection (a) of section 6651, as amended
by section 303(a) of the Heroes Earnings Assistance and
Relief Tax Act of 2008, is amended by striking ``$135'' in
the last sentence and inserting ``$225''.
(b) Effective Date.--The amendment made by this section
shall apply to returns the due date for the filing of which
(including extensions) is after the date of the enactment of
this Act.
______