Housing and Economic Recovery Act of 2008/Division A/Title I/Subtitle B

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 12 USC 4541. striking the heading for the part and inserting the following:

"PART 2—ADDITIONAL AUTHORITIES OF THE DIRECTOR";

and

(2) by striking 12 USC 4541, 4542. 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 12 USC 4543, 4546-4548, 4566. 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:

12 USC 4541.

``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 Publication. Notice. 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 Deadline. 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). Regulations. The Director shall establish, by regulation, the form and content of such written notice.

``{B) Director determination.—Not Deadline. Notification. 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 Effective dates. 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 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 4-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 4-quarter period ending before the time of determining such annual adjustment is a decrease, then no adjustment shall be made for the next year, and the next adjustment shall take into account prior declines in the house price index, so that any adjustment shall reflect the net change in the house price index since the last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.´´.

(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 115 percent of the median house price for such size residence exceeds the foregoing limitation for such size residence, to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.´´.

(3) Effective 12 USC 1717 note. 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 Effective dates. 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 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 4-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 4-quarter period ending before the time of determining such annual adjustment is a decrease, then no adjustment shall be made for the next year, and the next adjustment shall take into account prior declines in the house price index, so that any adjustment shall reflect the net change in the house price index since the last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.´´.

(2) High-cost area limit.—Section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(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 115 percent of the median house price for such size residence exceeds the foregoing limitation for such size residence, to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.´´.

(3) Effective 12 USC 1454 note. 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. 12 USC 4542. HOUSING PRICE INDEX.

``The Assessments. 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. 12 USC 4544. 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 Deadlines. Surveys. 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 Deadline. 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.´´.|7|-2}}

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 Public information. Regulations. Order. 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 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 Goals.—

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 is amended by inserting before section 1335 the following:

``SEC. 1331. 12 USC 4561. ESTABLISHMENT OF HOUSING GOALS.

``{a) In General.—The Regulations. Effective date. Director shall, by regulation, establish effective for 2010 and each year thereafter, annual housing goals, with respect to the mortgage purchases by the enterprises, as follows:

``(1) Single-family housing goals.—Four single-family housing goals under section 1332.

``(2) Multifamily special affordable housing goal.—One multifamily special affordable housing goal under section 1333.

``{b) Timing.—The Deadline. Regulations. Director shall, by regulation, establish an annual deadline by which the Director shall establish the annual housing goals under this subpart for each year, 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 annual goals.

``{c) Transition.—The Deadline. Review. annual housing goals effective for 2008 pursuant to this subpart, as in effect before the enactment of the Federal Housing Finance Regulatory Reform Act of 2008, shall remain in effect for 2009, except that not later than the expiration of the 270-day period beginning on the date of the enactment of such Act, the Director shall review such goals applicable for 2009 to determine the feasibility of such goals given the market conditions current at such time and, after seeking public comment for a period not to exceed 30 days, may make appropriate adjustments consistent with such market conditions.

``{d) Eliminating Interest Rate Disparities.—

``(1) In general.—Upon Records. request by the Director, an enterprise shall provide to the Director, in a form determined by the Director, data the Director may review to determine whether there exist disparities in interest rates charged on mortgages to borrowers who are minorities as compared with comparable mortgages to borrowers of similar creditworthiness who are not minorities.

``(2) Remedial actions upon preliminary finding.—Upon a preliminary finding by the Director that a pattern of disparities in interest rates with respect to any lender or lenders exists pursuant to the data provided by an enterprise in paragraph (1), the Director shall—

``{A) refer the preliminary finding to the appropriate regulatory or enforcement agency for further review; and

``{B) require the enterprise to submit additional data with respect to any lender or lenders, as appropriate and to the extent practicable, to the Director who shall submit any such additional data to the regulatory or enforcement agency for appropriate action.

``(3) Annual report to congress.—The Director shall submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report describing the actions taken, and being taken, by the Director to carry out this subsection. No such report shall identify any lender or lenders who have not been found to have engaged in discriminatory lending practices pursuant to a final adjudication on the record, and after opportunity for an administrative hearing, in accordance with subchapter II of chapter 5 of title 5, United States Code.

``(4) Protection of identity of individuals.—In carrying out this subsection, the Director shall ensure that no property-related or financial information that would enable a borrower to be identified shall be made public.

``SEC. 1332. 12 USC 4562. SINGLE-FAMILY HOUSING GOALS.

``{a) In General.—The Regulations. Director shall, by regulation, establish annual goals for the purchase by each enterprise of the following types of mortgages for the following categories of families:

``(1) Purchase-money mortgages.—A goal for purchase of conventional, conforming, single-family, purchase money mortgages financing owner-occupied housing for each of the following categories of families:

``{A) Low-income families.

``{B) Families that reside in low-income areas.

``{C) Very low-income families.

``(2) Refinancing mortgages.—A goal for purchase of conventional, conforming mortgages on owner-occupied, single-family housing for low-income families that are given to pay off or prepay an existing loan secured by the same property.

``{b) Goals as a Percentage of Total Mortgage Purchases.—The goals established under paragraphs (1) and (2) of subsection (a) shall be established as a percentage of the total number of conventional, conforming, single-family, owner-occupied, purchase money mortgages purchased by the enterprise, or as percentage of the total number of conventional, single-family, owner-occupied refinance mortgages purchased by the enterprise, as applicable, that are mortgages for the types of families specified in paragraphs (1) and (2) of subsection (a).

``{c) Single-Family, Owner-Occupied Rental Housing Units.—The Reports. Deadline. Director shall require each enterprise to report the number of rental housing units affordable to low-income families each year which are contained in mortgages purchased by the enterprise financing 2- to 4-unit single-family, owner-occupied properties and may, by regulation, establish additional requirements relating to such units.

``{d) 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 each such goal established under subsection (a) of this section and any additional requirements which may be established under subsection (c) of this section.

``(2) Purchase-money mortgage goals.—An enterprise shall be considered to be in compliance with a housing goal under subparagraph (A), (B), or (C) of subsection (a)(1) for a year only if, for the type of family described in such subparagraph, 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 for the year for such type of family that is established under subsection (e).

``(3) Refinance goal.—An enterprise shall be considered to be in compliance with the refinance goal under subsection (a)(2) for a year only if the percentage of the number of conventional, conforming, single-family, owner-occupied refinance mortgages purchased by the enterprise in such year that serve low-income families meets or exceeds the target for the year that is established under subsection (e).

``{e) Annual Targets.—

``(1) In general.—The Regulations. Director shall, by regulation, establish annual targets for each goal and subgoal under this section, provided that the Director shall not set prospective targets longer than three years. In establishing such targets, the Director shall not consider segments of the market determined to be unacceptable or contrary to good lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises.

``(2) Goals targets.—

``{A) Calculation.—The Director shall calculate, for each of the types of families described in subsection (a), the percentage, for each of the three years that most recently precede such year and for which information under the Home Mortgage Disclosure Act of 1975 is publicly available—

``(i) of the number of conventional, conforming, single-family, owner-occupied purchase money mortgages originated in such year that serve such type of family, or

``(ii) the number of conventional, conforming, single-family, owner-occupied refinance mortgages originated in such year that serve low-income families, as applicable, as determined by the Director using the information obtained and determined pursuant to paragraphs (4) and (5).

``{B) Establishment of goal targets.—The Regulations. Director shall, by regulation, establish targets for each of the goal categories, taking into consideration the calculations under subparagraph (A) and the following factors:

``(i) National housing needs.

``(ii) Economic, housing, and demographic conditions, including expected market developments.

``(iii) The performance and effort of the enterprises toward achieving the housing goals under this section in previous years.

``(iv) The ability of the enterprise to lead the industry in making mortgage credit available.

``(v) Such other reliable mortgage data as may be available.

``(vi) The size of the purchase money conventional mortgage market, or refinance conventional mortgage market, as applicable, serving each of the types of families described in subsection (a), relative to the size of the overall purchase money mortgage market or the overall refinance mortgage market, respectively.

``(vii) The need to maintain the sound financial condition of the enterprises.

``(3) Authority to adjust targets.—The Director may, by regulation, adjust the percentage targets previously established by regulation pursuant to paragraph (2)(B) for any year, to reflect subsequent available data and market developments.

``(4) HMDA information.—The Deadline. Director shall annually obtain information submitted in compliance with the Home Mortgage Disclosure Act of 1975 regarding conventional, conforming, single-family, owner-occupied, purchase money and refinance mortgages originated and purchased for the previous year.

``(5) Conforming mortgages.—In determining whether a mortgage is a conforming mortgage for purposes of this paragraph, the Director shall consider the original principal balance of the mortgage loan to be the principal balance as reported in the information referred to in paragraph (4), as rounded to the nearest thousand dollars.

``{f) Notice of Determination and Enterprise Comment.—

``(1) Notice.—Within Deadline. 30 days of making a determination under subsection (d) regarding compliance of an enterprise for a year with a 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 targets for the year under subsection (e).

``(2) Comment period.—The Director shall provide each enterprise an opportunity to comment on the determination during the 30-day period beginning upon receipt by the enterprise of the notice.

``{g) 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 such income at the time of origination of the mortgage.

``{h) Consideration of Properties With Rental Units.—Mortgages financing two- to four-unit owner-occupied properties shall count toward the achievement of the single-family housing goals under this section, if such properties otherwise meet the requirements under this section, notwithstanding the use of one or more units for rental purposes.

``{i) Goals Credit.—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 section 1332 and 1333. In making any such determination, the Director shall consider whether a transaction or activity of an enterprise is substantially equivalent to a mortgage purchase and either (1) creates a new market, or (2) adds liquidity to an existing market. No credit toward the achievement of the housing goals and subgoals established under this section may be given to the purchase of mortgages, including any transaction or activity of an enterprise determined to be substantially equivalent to a mortgage purchase, that is determined to be unacceptable or contrary to good lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises, pursuant to regulations issued by the Director.

``SEC. 1333. 12 USC 4563. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

``{a) Establishment of Goal.—

``(1) In general.—The Regulations. Director shall, by regulation, establish a single annual goal, by either unit or dollar volume, of purchases by each enterprise of mortgages on multifamily housing that finance dwelling units affordable to low-income families.

``(2) Additional requirements for units affordable to very low-income families.—When establishing the goal under this section, the Director shall establish additional requirements for the purchase by each enterprise of mortgages on multifamily housing that finance dwelling units affordable to very low-income families.

``(3) Reporting on smaller properties.—The Director shall require each enterprise to report on the purchase by each enterprise of multifamily housing of a smaller or limited size that is affordable to low-income families, which may be based on multifamily projects of 5 to 50 units (as such numbers may be adjusted by the Director) or on mortgages of up to $5,000,000 (as such amount may be adjusted by the Director), and may, by regulation, establish such aditional requirements related to such units.

``(4) Factors.—In establishing the goal and additional requirements under this section, the Director shall not consider segments of the market determined to be inconsistent with safety and soundness or unauthorized for purchase by the enterprises, and shall take into consideration—

``{A) national multifamily mortgage credit needs and the ability of the enterprise to provide additional liquidity and stability for the multifamily mortgage market;

``{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 for housing affordable to low-income and very low-income families, including the size of the multifamily markets for housing of a smaller or limited size;

``{D) the ability of the enterprise to lead the market in making multifamily mortgage credit available, especially for multifamily housing described in paragraphs (1) and (2);

``{E) the availability of public subsidies; and

``{F) the need to maintain the sound financial condition of the enterprise.

``{b) Units Financed by Housing Finance Agency Bonds.—The Director shall give full 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 that otherwise qualifies under such goal and that is financed by tax-exempt or taxable bonds issued by a State or local housing finance agency, if such bonds, in whole or in part—

``(1) are secured by a guarantee of the enterprise; or

``(2) are purchased by the enterprise, except that the Director may give less than full credit for purchases of investment grade bonds, to the extent that such purchases do not provide a new market or add liquidity to an existing market.

``{c) Measurement of Performance.—The Director shall monitor the performance of each enterprise in meeting the goals established under this section and shall evaluate such performance (for purposes of section 1336) based on whether the rent levels are affordable. A rent level shall be considered to be affordable for purposes of this subsection for low-income families 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.—The Director shall determine, for each year that the housing goal under this section is in effect pursuant to section 1331(a), whether each enterprise has complied with such goal and the additional requirements under subsection (a)(2).

``SEC. 1334. 12 USC 4564. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

``{a) Authority.—An enterprise may petition the Director in writing at any time during a year to reduce the level of any goal or subgoal for such year established pursuant to this subpart.

``{b) Standard for Reduction.—The Director may reduce the level for a goal or subgoal 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 or subgoal would result in the constraint of liquidity, over-investment in certain market segments, or other consequences contrary to the intent of this subpart, or 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.—The Public comment. Director shall, promptly upon receipt of a petition regarding a reduction, seek public comment on the reduction for a period of 30 days. Deadline. The Director shall make a determination regarding any proposed reduction within 30 days after the expiration of such public comment period. The Director may extend such determination period for a single additional 15-day period, but only if the Director requests additional information from the enterprise.´´.

(c) Conforming Amendments.—The Housing and Community Development 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-incomehousing 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|7|-2}}

(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 dollar amount limitation in effect at the time of such origination and applicable to such mortgage, under, as applicable—

``{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.

``(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)(1)(B), shall include families having incomes not greater than 100 percent of the area median income who reside in minority census tracts and shall include families having incomes not greater than 100 percent of the area median income who reside in designated disaster areas.

``(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.—To increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets, each enterprise shall provide leadership to the market in developing loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages for very low-, low-, and moderate-income families with respect to the following underserved markets:

``{A) Manufactured housing.—The enterprise shall develop 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 develop 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;

``(vii) the rural rental housing program under section 515 of the Housing Act of 1949;

``(viii) the low-income housing tax credit under section 42 of the Internal Revenue Code of 1986; and

``(ix) comparable state and local affordable housing programs.

``{C) Rural markets.—The Guidelines. enterprise shall develop loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages on housing for very low-, and low-, and moderate-income families in rural areas.´´; and

(5) by adding at the end the following new subsections:

``{c) Additional Categories.—The Director may submit recommendations to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate for the establishment of additional categories under subsection (a), provided that the Director makesa preliminary determination that any such category is important to the mission of the enterprises, that the category is an underserved market, and that the establishment of such category is warranted.

``{d) Evaluation and Reporting of Compliance.—

``(1) In general.—The Regulations. Director shall, by regulation, establish effective for 2010 and thereafter 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 2010 and each year thereafter, 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, more flexible underwriting guidelines, and other innovative approaches to providing financing to each of such underserved markets;

``{B) the extent of outreach to qualified loan sellers and other market participants in each of such underserved markets;

``{C) the volume of loans purchased in each of such underserved markets relative to the market opportunities available to the enterprise, except that the Director shall not establish specific quantitative targets nor evaluate the enterprises based solely on the volume of loans purchased; and

``{D) the amount of investments and grants in projects which assist in meeting the needs of such underserved markets.

``(3) Manufactured housing market.—In determining whether an enterprise has complied with the duty under subparagraph (A) of subsection (a)(1), the Director may consider loans secured by both real and personal property.

``(4) Prohibition of consideration of affordable housing fund grants for meeting duty to serve.— In determining whether an enterprise has complied with the duty referred to in paragraph (1), the Director may not consider any affordable housing fund grant amounts used under section 1337 for eligible activities under subsection (g) of such section.´´.

(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 title, 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 be enforceable only under this section, except that such duty shall not be subject to subsection (c)(7) of this section and shall not be enforceable under any other provision of this title (including subpart C of this part) or under any provision of the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act.´´.

(c) Additional Credit for Certain Mortgages.—Section 1336(a) of the Housing and Community Development Act of 1992 (12 U.S.C. 4566(a)) is amended—

(1) in paragraph (2), by inserting ", except as provided in paragraph (5)," after "which"; and

(2) by adding at the end the following new paragraph:

``(5) Additional credit.—The Director may assign additional credit toward achievement, under this section, of the housing goals for mortgage purchase activities of the enterprises that comply with the requirements of such goals and support housing that includes a licensed childcare center. The availability of additional credit under this paragraph shall not be used to increase any housing goal, subgoal, or target established under this subpart.´´.

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.

``{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, or fails to comply with the plan, the Director may issue a cease and desist order in accordance with section 1341 and impose civil money penalties in accordance with section 1345.

``(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 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 Review. Deadline. 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 Deadline. 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) Cease and desist orders; civil money penalties.—Solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), if the Director requires an enterprise to submit a housing plan under this subsection and the enterprise refuses to submit such a plan, submits an unacceptable plan, or fails to comply with the plan, the Director may issue a cease and desist order in accordance with section 1341, impose civil money penalties in accordance with section 1345, exercise other appropriate enforcement authority or seek other appropriate actions.´´.

(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:

12 USC 4581.

``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 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;

``(2) 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, or subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act;

``(3) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), the enterprise has failed to submit a housing plan that complies with section 1336(c) within the applicable period; or

``(4) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), 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) submit a report under section 1327;

``{B) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), submit a housing plan in compliance with section 1336(c);

``{C) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), comply with the housing plan in compliance with section 1336(c); or

``{D) 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. 12 USC 4585. 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) 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;

``(2) 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;

``(3) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), submit a housing plan or perform its responsibilities under a remedial order issued pursuant to section 1336(c) within the required period; or

``(4) solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), 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 Standards. Director shall establish standards and procedures governing the imposition of civil money penalties under this section. Such standards and procedures—

``{A) Records. 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. 12 USC 4567. 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) Regulations. 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. 12 USC 4568. HOUSING TRUST FUND.

``{a) Establishment and Purpose.—

``(1) In general.—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 (as such term is defined in section 1303) for use—

``{A) to increase and preserve the supply of rental housing for extremely low- and very low-income families, including homeless families; and

``{B) to increase homeownership for extremely low- and very low-income families.

``(2) Federal assistance.—For purposes of the application of Federal civil rights laws, all assistance provided from the Housing Trust Fund shall be considered Federal financial assistance.

``{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 Regulations. Deadline. Disadvantaged persons. 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 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 Deadline. Federal Register, publication. 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 State and local governments. 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 of the 50 States of the United States or the District of Columbia, the allocation for such State of the United States or the District of Columbia shall be $3,000,000, and the increase shall be deducted pro rata from the allocations made to all other of the States (as such term is defined in section 1303).

``(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)(D);

``(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 Notification. Public comments. 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 Public information. 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)(D).

``(7) Disadvantaged persons. 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 or families with incomes at or below the poverty line (as such term is defined in section 673 of the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 9902), including any revision required by such section) applicable to a family of the size involved, 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) Tenant protections and public participation.—All amounts from the Trust Fund shall be allocated in accordance with, and any eligible activities carried out in whole or in part with grant amounts under this subtitle (including housing provided with such grant amounts) shall comply with and be operated in compliance with—

``{A) laws relating to tenant protections and tenant rights to participate in decision making regarding their residences;

``{B) laws requiring public participation, including laws relating to Consolidated Plans, Qualified Allocation Plans, and Public Housing Agency Plans; and

``{C) fair housing laws and laws regarding accessibility in federally assisted housing, including section 504 of the Rehabilitation Act of 1973.

``(9) 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 Regulations. 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.

``(10) 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 Regulations. 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 Regulations. Secretary shall, by regulation—

``(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;

``and for the purposes of this subparagraph, the prohibited use of funds for political activities includes influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State or local office as codified in section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501);

``(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) Payments. 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) Requirements. establish minimum requirements for agreements, between the State or State designated entity and recipients, regarding assistance under this section, which shall include—

``(I) Reports. Recordkeeping. 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 Deadline. 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) Notification. 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 Notification. 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) Deadline. a requirement that the Secretary ensure that the use of grant amounts under this section by States or State designated 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) a requirement that, for the purposes of subparagraphs (A) and (B), any financial statement submitted by a grantee or recipient to the Secretary shall be reviewed by an independent certified public accountant in accordance with Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public Accountants;

``{D) 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;

``{E) 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

``{F) 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 Records. 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. 12 USC 4569. 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 Grants. 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.—For purposes of the application of Federal civil rights laws, all assistance provided using amounts in the Capital Magnet Fund shall be considered Federal financial assistance.

``{e) Eligible Grantees.—A Requirements. 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 Regulations. 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) Prohibited uses.—The Regulations. Secretary shall, by regulation, set forth prohibited uses of grant amounts awarded under this section, which shall include use for—

``{A) political activities;

``{B) advocacy;

``{C) lobbying, whether directly or through other parties;

``{D) counseling services;

``{E) travel expenses; and

``{F) preparing or providing advice on tax returns;

``and for the purposes of this paragraph, the prohibited use of funds for political activities includes influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State or local office as codified in section Sec. 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501).

``(6) Additional 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.

``(7) 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.

``(8) Accountability of recipients and grantees.—

``{A) Tracking of funds.—The Secretary of the Treasury shall—

``(i) Records. 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 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) Deadline. a requirement that the Secretary ensure that the allocation of each enterprise is audited not less than annually to ensure compliance with this section;

``{C) a requirement that, for the purposes of subparagraphs (A) and (B), any financial statement submitted by a grantee to the Secretary shall be reviewed by an independent certified public accountant in accordance with Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public Accountants; and

``{D) 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.

12 USC 1701x note.

(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 Grants. 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. 12 USC 4511 note. TRANSFER AND RIGHTS OF CERTAIN HUD EMPLOYEES.

(a) Transfer.—Each Deadline. 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 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 Payments. 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 Deadline. 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.