Housing and Economic Recovery Act of 2008/Division A

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—

``(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.

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.

Sec. 1116. Inclusion of minorities and women; diversity in Agency workforce.

Sec. 1117. Temporary authority for purchase of obligations of regulated entities by Secretary of Treasury.

Sec. 1118. Consultation between the Director of the Federal Housing Finance Agency and the Board of Governors of the Federal Reserve System to ensure financial market stability .

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 database; 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.