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113th Congress (2013-2014)
S.1048.IS
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S.1048
Mortgage Finance Act of 2013 (Introduced in Senate - IS)
TITLE I--TERMINATION OF FANNIE MAE AND FREDDIE MAC CHARTERS
SEC. 101. RECEIVERSHIP OF THE ENTERPRISES.
(a) Irrevocable Receivership-
(1) IN GENERAL- Effective on the MFA certification date, the FHFA is appointed receiver of the enterprises, and the enterprises shall be placed into irrevocable receivership by the FHFA, in accordance with section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617), except that--
(A) paragraphs (1) through (5) of subsection (a) of that section 1367 do not apply with respect to such appointment; and
(B) prior to the MFA certification date, the enterprises shall be permitted to engage in the business of guaranteeing the timely payment of principal and interest on qualified mortgage-backed securities and to undertake all functions necessary to carry out such business, to the extent that such guarantees are necessary to provide a dependable, transparent, and liquid market for high quality mortgages for securitization.
(2) COMMENCEMENT OF LIQUIDATION- Immediately upon placement of the enterprises into receivership, the FHFA shall commence liquidation of the enterprises.
(b) Repeal of GSE Charters-
(1) FANNIE MAE- The charter of the Federal National Mortgage Association, is repealed, effective 90 days after the date on which liquidation thereof is complete, in accordance with this Act.
(2) FREDDIE MAC- The charter of the Federal Home Loan Mortgage Corporation, is repealed, effective 90 days after the date on which liquidation thereof is complete, in accordance with this Act.
(c) Rule of Construction- For purposes of any provision of Federal law that refers to or relies on a decision by the Director of the FHFA to place an enterprise into receivership, such determination shall be deemed to have been made by operation of the placement of the enterprises into receivership under subsection (a).
SEC. 102. REPAYMENT OF GOVERNMENT ASSISTANCE; MAXIMIZING RETURN TO TAXPAYERS.
(a) In General- After fully satisfying the outstanding obligations of the enterprises in a manner consistent with their receivership status, all remaining proceeds from the operations of the enterprises in receivership shall be paid by the FHFA to the General Fund of the United States Treasury in repayment of Government assistance provided in connection with ensuring the solvency and resolution of the enterprises prior to the date of enactment of this Act.
(b) Maximum Return to Taxpayer- The combined assets of the enterprises, including on-balance sheet portfolios, shall be managed by the FHFA as receiver to obtain resolutions that maximize the return for the taxpayer, to the extent that--
(1) such resolutions are consistent with the goal of supporting a sound, stable, and liquid housing market; and
(2) such resolutions are consistent with applicable law.
(c) Transfer of Proceeds of Privatization and Catastrophic Fund- The proceeds from privatization of the MFA upon termination of its authority in accordance with section 304 shall be deposited into the General Fund of the United States Treasury. Upon such termination of the authority of the MFA, the Catastrophic Fund shall be transferred to the General Fund of the United States Treasury, and the United States Treasury shall assume responsibility for and honor any remaining obligations of the MFA, of whatever nature and until such time as they are extinguished.
SEC. 103. REPORT TO CONGRESS.
Upon the resolution of all valid claims of the enterprises, the Director of the FHFA shall submit a report by the FHFA as receiver of the enterprises to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, certifying the completion of the receivership.
TITLE II--MORTGAGE FINANCE AGENCY
SEC. 201. ESTABLISHMENT OF MFA.
There is established the Mortgage Finance Agency, which shall be an independent agency of the Federal Government.
SEC. 202. GOVERNANCE.
(a) Director-
(1) IN GENERAL- The MFA shall be headed, on a day-to-day basis, by a Director, appointed by the President, by and with the advice and consent of the Senate. Such appointment shall be made not later than 6 months after the date of enactment of this Act.
(2) REGULATORY AUTHORITY- The Director shall have general regulatory authority over the MFA, and shall exercise such general regulatory authority as necessary to carry out this Act.
(3) TERM- The Director shall serve for a term of 5 years. An individual may serve as Director after the expiration of the term for which appointed, until a successor has been appointed and qualified.
(4) VACANCIES- A vacancy in the office of the Director shall be filled in the same manner as the original appointment.
(5) COMPENSATION- The Director shall be compensated at the rate prescribed for level II of the Executive Schedule under section 5313 of title 5, United States Code.
(b) Board of Directors-
(1) MEMBERS- The operations of the MFA shall be directed by a 5-member Board of Directors, including the Director, who shall serve as the chairperson of the Board of Directors, a Vice Chairman, who shall be appointed by the President, the Chairman of the Securities and Exchange Commission, or a designee thereof, the Secretary of Housing and Urban Development, or a designee thereof, and the Chairman of the Board of Governors of the Federal Reserve System, or a designee thereof.
(2) MAJORITY VOTE- A majority vote of all members of the Board of Directors is necessary to resolve all voting issues of the MFA.
(3) MEETINGS- The Board of Directors shall meet at the call of the Director, but in no event less frequently than once in each calendar quarter.
(4) FEDERAL EMPLOYEES- The members of the Board of Directors shall serve without additional pay (or benefits in the nature of compensation) for service as a member of the Board of Directors.
(5) TRAVEL EXPENSES- Members of the Board of Directors 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.
(6) BYLAWS- The Board of Directors may prescribe, amend, and repeal such bylaws as may be necessary for carrying out the functions of the Board of Directors.
(7) QUORUM- A majority of the Board of Directors shall constitute a quorum.
(c) Privatization Advisory Board-
(1) MEMBERS- There shall be appointed by the President a 10-member privatization advisory board. To the extent practicable, the President shall seek at all times to have advisory board members with expertise in--
(A) single family housing finance;
(B) multifamily housing finance;
(C) residential real estate development and sales;
(D) secondary market structuring and pricing;
(E) private mortgage insurance;
(F) privatization structuring and execution; and
(G) macroeconomic policy.
(2) ROLE- The roles of the advisory board shall be--
(A) to advise the Board of Directors on the privatization of the MFA upon termination of its authority under this Act, including how best to facilitate a smooth, efficient, and orderly transition of the guarantee business;
(B) to review and opine on the status of the planning for privatization; and
(C) concurrently with the plan and annual and quarterly reports presented by the MFA to Congress under section 304(c), to present to Congress its own independent reports on the plan for privatization and the status thereof.
(d) Inspector General- There shall be within the MFA an Inspector General, who shall be appointed by the President in accordance with section 3(a) of the Inspector General Act of 1978 (5 U.S.C. App.) not later than 6 months after the date of enactment of this Act.
SEC. 203. FUNDING.
Annual appropriations to the MFA shall be based upon a budget submitted to Congress by the MFA and approved by the Board of Directors. In accordance with section 303(a)(2), amounts appropriated shall be recouped through collection of the guarantee fee.
SEC. 204. REGULATIONS; REPORTS.
(a) Startup- Not later than 12 months after the date of the appointment of the Director, the MFA shall issue such regulations, guidelines, orders, requirements, and standards as may be necessary for the establishment and operation of the MFA.
(b) Report to Congress- Not later than 6 months after the date of the appointment of the Director, the Board of Directors shall provide to Congress a progress report on the drafting of regulations and other conditions precedent to the MFA becoming fully operational.
SEC. 205. APPEARANCES BEFORE CONGRESS.
The Director shall appear before Congress annually regarding--
(1) the safety and soundness of the MFA and the Catastrophic Fund, including, beginning 1 year after the date on which the MFA becomes operational, a report by the Inspector General of the MFA, and a report of an independent actuary regarding the adequacy of guarantee fees, the adequacy of the Catastrophic Fund, and the adequacy of the percentage of the guarantee fee that is being allocated to the Catastrophic Fund;
(2) any material deficiencies in the conduct of the operations of the MFA;
(3) the overall operational status of the MFA;
(4) operations, resources, and performance of the Board of Directors; and
(5) such other relevant matters relating to the Board of Directors and the MFA.
SEC. 206. STAFF, EXPERTS, AND CONSULTANTS.
(a) Compensation-
(1) IN GENERAL- The MFA may appoint and fix the compensation of such officers, attorneys, economists, examiners, and other employees as may be necessary for carrying out its functions. The MFA shall appoint a Chief Risk Officer not later than 90 days after the date of the appointment of the Director.
(2) RATES OF PAY- Rates of basic pay for all employees of the MFA may be set and adjusted by the MFA without regard to the provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code.
(3) PARITY- The MFA may provide additional compensation and benefits to employees of the MFA, if the same type of compensation or benefits are then being provided by any agency referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees, the MFA shall consult with, and seek to maintain comparability with, the agencies referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).
(b) Detail of Government Employees- Upon request of the Director, any Federal Government employee may be detailed to the MFA or the Board of Directors without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.
(c) Experts and Consultants- The Director shall procure the services of experts and consultants as the Director considers necessary or appropriate.
TITLE III--DUTIES AND RESPONSIBILITIES OF THE MFA
SEC. 301. MFA RESPONSIBILITIES.
The MFA is authorized--
(1) to guarantee securities issued by qualified issuers and collateralized by pools of qualified residential mortgages in order to provide a dependable, transparent, and liquid market for high quality mortgages for securitization;
(2) to guarantee securities issued by qualified issuers and collateralized by pools of qualified multifamily mortgages, in order to provide a dependable, transparent, and liquid market for high quality multifamily mortgages for securitization;
(3) to charge and collect a guarantee fee sufficient to protect the MFA and the United States Treasury from the risks of guaranteeing the timely payment of principal and interest on qualified mortgage-backed securities;
(4) to establish and maintain a Catastrophic Fund to minimize the burden on the Federal Government, by setting aside amounts that will be available solely to pay obligations under the MFA guarantee in the event of any future mortgage market collapse; and
(5) to purchase supplemental insurance coverage, as provided in section 303(d).
SEC. 302. MFA GUARANTEE BUSINESS.
(a) In General- The MFA shall guarantee the timely payment of principal and interest to holders of qualified mortgage-backed securities. In the event of a payment default on a mortgage that collateralizes a qualified mortgage-backed security, the MFA guarantee shall cover any shortfalls to security holders after giving effect to proceeds, if any, from liquidation of the property securing the mortgage and from claims paid pursuant to any private mortgage insurance coverage (including supplemental insurance coverage, if any). The MFA guarantee of timely payment of principal and interest on qualified mortgage-backed securities shall be backed by the full faith and credit of the United States Government. The MFA shall charge a fee for such guarantee in accordance with section 303.
(b) Qualified Residential Mortgages and Qualified Multifamily Mortgages- The MFA shall issue guidelines consistent with this Act specifying the terms and conditions of mortgages that satisfy--
(1) the definition of a qualified residential mortgage, not later than 6 months after the date of confirmation of the Director; and
(2) the definition of a qualified multifamily mortgage, not later than 1 year after the date of confirmation of the Director.
(c) Guidelines-
(1) IN GENERAL- Not later than 12 months after the date of confirmation of the Director, the MFA shall issue guidelines designed to oversee the financial condition and origination and servicing standards of qualified issuers and servicers of qualified residential mortgages and qualified multifamily mortgages that collateralize qualified mortgage-backed securities.
(2) INCLUSIONS- Guidelines issued under this subsection shall--
(A) include specific financial and operational standards for such qualified issuers and such servicers; and
(B) ensure--
(i) broad participation in the issuance of qualified mortgage-backed securities by community banks, credit unions, national banks, and State-licensed mortgage lenders;
(ii) that qualified issuers bear the risk of noncompliance with representations and warranties made in connection with the issuance of qualified mortgage-backed securities; and
(iii) that qualified issuers have the financial resources to support any obligations arising from any violations of representations and warranties made in connection with the issuance of qualified mortgage-backed securities.
(d) Limitations-
(1) QUALIFIED RESIDENTIAL MORTGAGE LOAN LIMITS- The MFA shall set loan limits for qualified residential mortgages that secure qualified mortgage-backed securities. Such loan limits shall be calculated and set annually, on a county-by-county basis, at an amount equal to not more than 150 percent of the area median home price for the preceding year, and not less than the national median home price for such year, in each case calculated using home price data compiled by the FHFA or, if the FHFA no longer compiles such data, by the MFA. In no event shall the loan limits in effect under this section in any county be lower than amounts applicable to single family mortgages insured by the Federal Housing Administration under title II of the National Housing Act (12 U.S.C. 1707 et seq.) in such county.
(2) QUALIFIED MULTIFAMILY MORTGAGE LOAN LIMITS- The MFA, in consultation with the Board of Directors, shall consider setting loan limits for qualified multifamily mortgages that secure qualified mortgage-backed securities, if such limits would foster competition between the MFA and private issuers in advance of the privatization of the MFA.
(3) PROHIBITION ON INVESTMENT PORTFOLIO- The MFA shall not invest in mortgage-backed securities or otherwise maintain an investment portfolio, other than to the extent necessary for the MFA to carry out its responsibilities as guarantor of qualified mortgage-backed securities.
SEC. 303. GUARANTEE FEES; CATASTROPHIC FUND; SUPPLEMENTAL INSURANCE.
(a) Guarantee Fees-
(1) GUARANTEE FEES- The MFA shall charge a guarantee fee under this section in connection with any guarantee issued by the MFA of timely payment of principal and interest on the qualified mortgage-backed securities. At all times, the guarantee fee shall be set at an equal amount for all qualified issuers. The amount of the guarantee fee shall be adjusted periodically, as necessary to fulfill the purposes described in paragraph (2).
(2) PURPOSES- The purposes of the guarantee fees are--
(A) to fund the operations of the MFA;
(B) to capitalize the Catastrophic Fund;
(C) to cover any losses; and
(D) to purchase supplemental insurance coverage, as provided in subsection (d).
(3) APPROVAL- The Board of Directors shall approve the amount of guarantee fees and any adjustments thereto, and shall determine the percentage of the guarantee fees, if any, that will be allocated to the Catastrophic Fund in accordance with subsection (b). Such percentage may be adjusted by the Board of Directors semiannually, as necessary to ensure that the Catastrophic Fund is adequately capitalized.
(b) Creation of Catastrophic Fund-
(1) ESTABLISHMENT- There is established in the Treasury of the United States a fund to be known as the `Catastrophic Fund', which the MFA shall--
(A) maintain and administer;
(B) use to carry out its insurance and guarantee functions, in the manner provided by this Act; and
(C) invest in accordance with subsection (c).
(2) DEPOSITS- The Catastrophic Fund shall be credited with--
(A) the amount of guarantee fees, if any, that the Board of Directors determines should be allocated to the Catastrophic Fund to protect against catastrophic losses;
(B) any amounts earned on investments of the Catastrophic Fund, other than as needed in connection with the routine operation of the guarantee business; and
(C) such other amounts as may otherwise be credited to the Catastrophic Fund by the Board of Directors.
(3) USES- The Catastrophic Fund shall be solely available to the MFA for use by the MFA to satisfy obligations under its guarantee in accordance with this Act.
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