[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1048 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 1048
To revoke the charters for the Federal National Mortgage Corporation
and the Federal Home Loan Mortgage Corporation upon resolution of their
obligations, to create a new Mortgage Finance Agency for the
securitization of single family and multifamily mortgages, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 23, 2013
Mr. Isakson introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To revoke the charters for the Federal National Mortgage Corporation
and the Federal Home Loan Mortgage Corporation upon resolution of their
obligations, to create a new Mortgage Finance Agency for the
securitization of single family and multifamily mortgages, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Mortgage Finance
Act of 2013''.
(b) Findings.--Congress finds that--
(1) dependable, transparent, and liquid primary and
secondary markets for high-quality residential and multifamily
mortgages are critical to a safe and sound housing market;
(2) Congress wishes to terminate the Congressional charters
and operations of the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation, and to wind them
down through an orderly receivership process, without
disrupting the housing markets;
(3) taxpayers have expended billions of dollars on behalf
of the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation during the period of their
conservatorship, and such expenditures should be recouped;
(4) increased participation by the private sector to
provide mortgage market liquidity and credit risk mitigation is
necessary and desirable to reduce dependence on Government
guarantees, and to make remote any future needs for taxpayer
assistance;
(5) this Act creates a new transitional facility to
guarantee securitizations of high-quality residential
mortgages, to ensure a sound and stable housing market;
(6) multiple layers of private capital and the creation of
an industry-funded Catastrophic Fund will make future risk to
taxpayers highly remote; and
(7) this Act provides for the privatization of the
transitional facility after 10 years, with proceeds being paid
to the United States Treasury.
SEC. 2. DEFINITIONS.
For purposes of this Act, unless the context otherwise requires,
the following definitions shall apply:
(1) Board of directors.--The term ``Board of Directors''
means the Board of Directors of the Mortgage Finance Agency.
(2) Charter.--The term ``charter'' means--
(A) with respect to the Federal National Mortgage
Association, the Federal National Mortgage Association
Charter Act (12 U.S.C. 1716 et seq.); and
(B) with respect to the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1451 et seq.).
(3) Director.--The term ``Director'', other than in the
context of the Director of the Federal Housing Finance Agency,
means the Director of the Mortgage Finance Agency.
(4) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association; and
(B) the Federal Home Loan Mortgage Corporation.
(5) FHFA.--The term ``FHFA'' means the Federal Housing
Finance Agency.
(6) Mortgage finance agency; mfa.--The terms ``Mortgage
Finance Agency'' and ``MFA'' mean the agency established under
title II.
(7) MFA certification date.--The term ``MFA certification
date'' means the date on which the Director certifies that the
MFA is operational and able to perform the guarantee function
for qualified mortgage-backed securities collateralized by
qualified residential mortgages, as provided in this Act, which
date shall be not later than 18 months after the date of
enactment of this Act.
(8) Qualified issuer.--The term ``qualified issuer'' means
a person who originates or purchases, and services, a qualified
residential mortgage or a qualified multifamily mortgage, and
is approved to issue securities guaranteed by the MFA, in
accordance with this Act and with the guidelines issued by the
MFA under section 302.
(9) Qualified mortgage-backed securities.--The term
``qualified mortgage-backed securities'' means securities
collateralized by qualified residential mortgages or qualified
multifamily mortgages, as the case may be, issued by a
qualified issuer and guaranteed by the MFA with respect to the
timely payment of principal and interest, all in accordance
with this Act.
(10) Qualified multifamily mortgage.--The term ``qualified
multifamily mortgage'' means a commercial real estate loan
secured by a property with 5 or more single family units, the
primary source of repayment for which is expected to be derived
from the proceeds of the sale, refinancing, or permanent
financing of the property, or rental income generated by the
property, that--
(A) has been originated with an initial loan to
value ratio of not more than 75 percent and with an
initial debt service coverage ratio of at least 1.25;
or
(B) with respect to which, the mortgage lender
retains a pro rata vertical slice of credit risk in an
amount to be determined by the MFA.
(11) Qualified residential mortgage.--The term ``qualified
residential mortgage'' means a residential real estate loan
secured by a property with 1 to 4 single family units that has
been originated in compliance with the following underwriting
standards and product features:
(A) Documentation and verification of the financial
resources relied upon to qualify the mortgagor.
(B) Standards with respect to the income and
scheduled debt payments of the mortgagor, including--
(i) one or more of--
(I) the residual income of the
mortgagor after all monthly
obligations;
(II) the ratio of the housing
payments of the mortgagor to the
monthly income of the mortgagor; and
(III) the ratio of total monthly
installment payments of the mortgagor
to the income of the mortgagor; and
(ii) mitigation of the potential for
payment shock on adjustable rate mortgages.
(C) Downpayments which shall be equal to not less
than 5 percent of purchase price, and--
(i) in the case of such mortgages with
downpayments equal to not less than 5 percent
but less than 30 percent of the purchase price,
the mortgage is covered by private mortgage
insurance purchased at the time of origination
in an amount sufficient to cover each loan to
the equivalent of not less than a 30 percent
downpayment; and
(ii) such mortgage insurance is issued by
an entity that is subject to regulation as a
mortgage guaranty insurer by the State of
domicile of such entity or by the Federal
Insurance Office (which regulation includes
risk-based capital and reserve requirements).
(D) Prohibition of or restrictions on the use of
balloon payments, negative amortization, prepayment
penalties, interest-only payments, and other features
that have been demonstrated to exhibit a higher risk of
borrower default.
(12) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
TITLE I--TERMINATION OF FANNIE MAE AND FREDDIE MAC CHARTERS
SEC. 101. RECEIVERSHIP OF THE ENTERPRISES.
(a) Irrevocable Receivership.--
(1) In general.--Effective on the MFA certification date,
the FHFA is appointed receiver of the enterprises, and the
enterprises shall be placed into irrevocable receivership by
the FHFA, in accordance with section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4617), except that--
(A) paragraphs (1) through (5) of subsection (a) of
that section 1367 do not apply with respect to such
appointment; and
(B) prior to the MFA certification date, the
enterprises shall be permitted to engage in the
business of guaranteeing the timely payment of
principal and interest on qualified mortgage-backed
securities and to undertake all functions necessary to
carry out such business, to the extent that such
guarantees are necessary to provide a dependable,
transparent, and liquid market for high quality
mortgages for securitization.
(2) Commencement of liquidation.--Immediately upon
placement of the enterprises into receivership, the FHFA shall
commence liquidation of the enterprises.
(b) Repeal of GSE Charters.--
(1) Fannie mae.--The charter of the Federal National
Mortgage Association, is repealed, effective 90 days after the
date on which liquidation thereof is complete, in accordance
with this Act.
(2) Freddie mac.--The charter of the Federal Home Loan
Mortgage Corporation, is repealed, effective 90 days after the
date on which liquidation thereof is complete, in accordance
with this Act.
(c) Rule of Construction.--For purposes of any provision of Federal
law that refers to or relies on a decision by the Director of the FHFA
to place an enterprise into receivership, such determination shall be
deemed to have been made by operation of the placement of the
enterprises into receivership under subsection (a).
SEC. 102. REPAYMENT OF GOVERNMENT ASSISTANCE; MAXIMIZING RETURN TO
TAXPAYERS.
(a) In General.--After fully satisfying the outstanding obligations
of the enterprises in a manner consistent with their receivership
status, all remaining proceeds from the operations of the enterprises
in receivership shall be paid by the FHFA to the General Fund of the
United States Treasury in repayment of Government assistance provided
in connection with ensuring the solvency and resolution of the
enterprises prior to the date of enactment of this Act.
(b) Maximum Return to Taxpayer.--The combined assets of the
enterprises, including on-balance sheet portfolios, shall be managed by
the FHFA as receiver to obtain resolutions that maximize the return for
the taxpayer, to the extent that--
(1) such resolutions are consistent with the goal of
supporting a sound, stable, and liquid housing market; and
(2) such resolutions are consistent with applicable law.
(c) Transfer of Proceeds of Privatization and Catastrophic Fund.--
The proceeds from privatization of the MFA upon termination of its
authority in accordance with section 304 shall be deposited into the
General Fund of the United States Treasury. Upon such termination of
the authority of the MFA, the Catastrophic Fund shall be transferred to
the General Fund of the United States Treasury, and the United States
Treasury shall assume responsibility for and honor any remaining
obligations of the MFA, of whatever nature and until such time as they
are extinguished.
SEC. 103. REPORT TO CONGRESS.
Upon the resolution of all valid claims of the enterprises, the
Director of the FHFA shall submit a report by the FHFA as receiver of
the enterprises to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives, certifying the completion of the receivership.
TITLE II--MORTGAGE FINANCE AGENCY
SEC. 201. ESTABLISHMENT OF MFA.
There is established the Mortgage Finance Agency, which shall be an
independent agency of the Federal Government.
SEC. 202. GOVERNANCE.
(a) Director.--
(1) In general.--The MFA shall be headed, on a day-to-day
basis, by a Director, appointed by the President, by and with
the advice and consent of the Senate. Such appointment shall be
made not later than 6 months after the date of enactment of
this Act.
(2) Regulatory authority.--The Director shall have general
regulatory authority over the MFA, and shall exercise such
general regulatory authority as necessary to carry out this
Act.
(3) Term.--The Director shall serve for a term of 5 years.
An individual may serve as Director after the expiration of the
term for which appointed, until a successor has been appointed
and qualified.
(4) Vacancies.--A vacancy in the office of the Director
shall be filled in the same manner as the original appointment.
(5) Compensation.--The Director shall be compensated at the
rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(b) Board of Directors.--
(1) Members.--The operations of the MFA shall be directed
by a 5-member Board of Directors, including the Director, who
shall serve as the chairperson of the Board of Directors, a
Vice Chairman, who shall be appointed by the President, the
Chairman of the Securities and Exchange Commission, or a
designee thereof, the Secretary of Housing and Urban
Development, or a designee thereof, and the Chairman of the
Board of Governors of the Federal Reserve System, or a designee
thereof.
(2) Majority vote.--A majority vote of all members of the
Board of Directors is necessary to resolve all voting issues of
the MFA.
(3) Meetings.--The Board of Directors shall meet at the
call of the Director, but in no event less frequently than once
in each calendar quarter.
(4) Federal employees.--The members of the Board of
Directors shall serve without additional pay (or benefits in
the nature of compensation) for service as a member of the
Board of Directors.
(5) Travel expenses.--Members of the Board of Directors
shall be entitled to receive travel expenses, including per
diem in lieu of subsistence, equivalent to those set forth in
subchapter I of chapter 57 of title 5, United States Code.
(6) Bylaws.--The Board of Directors may prescribe, amend,
and repeal such bylaws as may be necessary for carrying out the
functions of the Board of Directors.
(7) Quorum.--A majority of the Board of Directors shall
constitute a quorum.
(c) Privatization Advisory Board.--
(1) Members.--There shall be appointed by the President a
10-member privatization advisory board. To the extent
practicable, the President shall seek at all times to have
advisory board members with expertise in--
(A) single family housing finance;
(B) multifamily housing finance;
(C) residential real estate development and sales;
(D) secondary market structuring and pricing;
(E) private mortgage insurance;
(F) privatization structuring and execution; and
(G) macroeconomic policy.
(2) Role.--The roles of the advisory board shall be--
(A) to advise the Board of Directors on the
privatization of the MFA upon termination of its
authority under this Act, including how best to
facilitate a smooth, efficient, and orderly transition
of the guarantee business;
(B) to review and opine on the status of the
planning for privatization; and
(C) concurrently with the plan and annual and
quarterly reports presented by the MFA to Congress
under section 304(c), to present to Congress its own
independent reports on the plan for privatization and
the status thereof.
(d) Inspector General.--There shall be within the MFA an Inspector
General, who shall be appointed by the President in accordance with
section 3(a) of the Inspector General Act of 1978 (5 U.S.C. App.) not
later than 6 months after the date of enactment of this Act.
SEC. 203. FUNDING.
Annual appropriations to the MFA shall be based upon a budget
submitted to Congress by the MFA and approved by the Board of
Directors. In accordance with section 303(a)(2), amounts appropriated
shall be recouped through collection of the guarantee fee.
SEC. 204. REGULATIONS; REPORTS.
(a) Startup.--Not later than 12 months after the date of the
appointment of the Director, the MFA shall issue such regulations,
guidelines, orders, requirements, and standards as may be necessary for
the establishment and operation of the MFA.
(b) Report to Congress.--Not later than 6 months after the date of
the appointment of the Director, the Board of Directors shall provide
to Congress a progress report on the drafting of regulations and other
conditions precedent to the MFA becoming fully operational.
SEC. 205. APPEARANCES BEFORE CONGRESS.
The Director shall appear before Congress annually regarding--
(1) the safety and soundness of the MFA and the
Catastrophic Fund, including, beginning 1 year after the date
on which the MFA becomes operational, a report by the Inspector
General of the MFA, and a report of an independent actuary
regarding the adequacy of guarantee fees, the adequacy of the
Catastrophic Fund, and the adequacy of the percentage of the
guarantee fee that is being allocated to the Catastrophic Fund;
(2) any material deficiencies in the conduct of the
operations of the MFA;
(3) the overall operational status of the MFA;
(4) operations, resources, and performance of the Board of
Directors; and
(5) such other relevant matters relating to the Board of
Directors and the MFA.
SEC. 206. STAFF, EXPERTS, AND CONSULTANTS.
(a) Compensation.--
(1) In general.--The MFA may appoint and fix the
compensation of such officers, attorneys, economists,
examiners, and other employees as may be necessary for carrying
out its functions. The MFA shall appoint a Chief Risk Officer
not later than 90 days after the date of the appointment of the
Director.
(2) Rates of pay.--Rates of basic pay for all employees of
the MFA may be set and adjusted by the MFA without regard to
the provisions of chapter 51 or subchapter III of chapter 53 of
title 5, United States Code.
(3) Parity.--The MFA may provide additional compensation
and benefits to employees of the MFA, if the same type of
compensation or benefits are then being provided by any agency
referred to under section 1206 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b)
or, if not then being provided, could be provided by such an
agency under applicable provisions of law, rule, or regulation.
In setting and adjusting the total amount of compensation and
benefits for employees, the MFA shall consult with, and seek to
maintain comparability with, the agencies referred to under
section 1206 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 1833b).
(b) Detail of Government Employees.--Upon request of the Director,
any Federal Government employee may be detailed to the MFA or the Board
of Directors without reimbursement, and such detail shall be without
interruption or loss of civil service status or privilege.
(c) Experts and Consultants.--The Director shall procure the
services of experts and consultants as the Director considers necessary
or appropriate.
TITLE III--DUTIES AND RESPONSIBILITIES OF THE MFA
SEC. 301. MFA RESPONSIBILITIES.
The MFA is authorized--
(1) to guarantee securities issued by qualified issuers and
collateralized by pools of qualified residential mortgages in
order to provide a dependable, transparent, and liquid market
for high quality mortgages for securitization;
(2) to guarantee securities issued by qualified issuers and
collateralized by pools of qualified multifamily mortgages, in
order to provide a dependable, transparent, and liquid market
for high quality multifamily mortgages for securitization;
(3) to charge and collect a guarantee fee sufficient to
protect the MFA and the United States Treasury from the risks
of guaranteeing the timely payment of principal and interest on
qualified mortgage-backed securities;
(4) to establish and maintain a Catastrophic Fund to
minimize the burden on the Federal Government, by setting aside
amounts that will be available solely to pay obligations under
the MFA guarantee in the event of any future mortgage market
collapse; and
(5) to purchase supplemental insurance coverage, as
provided in section 303(d).
SEC. 302. MFA GUARANTEE BUSINESS.
(a) In General.--The MFA shall guarantee the timely payment of
principal and interest to holders of qualified mortgage-backed
securities. In the event of a payment default on a mortgage that
collateralizes a qualified mortgage-backed security, the MFA guarantee
shall cover any shortfalls to security holders after giving effect to
proceeds, if any, from liquidation of the property securing the
mortgage and from claims paid pursuant to any private mortgage
insurance coverage (including supplemental insurance coverage, if any).
The MFA guarantee of timely payment of principal and interest on
qualified mortgage-backed securities shall be backed by the full faith
and credit of the United States Government. The MFA shall charge a fee
for such guarantee in accordance with section 303.
(b) Qualified Residential Mortgages and Qualified Multifamily
Mortgages.--The MFA shall issue guidelines consistent with this Act
specifying the terms and conditions of mortgages that satisfy--
(1) the definition of a qualified residential mortgage, not
later than 6 months after the date of confirmation of the
Director; and
(2) the definition of a qualified multifamily mortgage, not
later than 1 year after the date of confirmation of the
Director.
(c) Guidelines.--
(1) In general.--Not later than 12 months after the date of
confirmation of the Director, the MFA shall issue guidelines
designed to oversee the financial condition and origination and
servicing standards of qualified issuers and servicers of
qualified residential mortgages and qualified multifamily
mortgages that collateralize qualified mortgage-backed
securities.
(2) Inclusions.--Guidelines issued under this subsection
shall--
(A) include specific financial and operational
standards for such qualified issuers and such
servicers; and
(B) ensure--
(i) broad participation in the issuance of
qualified mortgage-backed securities by
community banks, credit unions, national banks,
and State-licensed mortgage lenders;
(ii) that qualified issuers bear the risk
of noncompliance with representations and
warranties made in connection with the issuance
of qualified mortgage-backed securities; and
(iii) that qualified issuers have the
financial resources to support any obligations
arising from any violations of representations
and warranties made in connection with the
issuance of qualified mortgage-backed
securities.
(d) Limitations.--
(1) Qualified residential mortgage loan limits.--The MFA
shall set loan limits for qualified residential mortgages that
secure qualified mortgage-backed securities. Such loan limits
shall be calculated and set annually, on a county-by-county
basis, at an amount equal to not more than 150 percent of the
area median home price for the preceding year, and not less
than the national median home price for such year, in each case
calculated using home price data compiled by the FHFA or, if
the FHFA no longer compiles such data, by the MFA. In no event
shall the loan limits in effect under this section in any
county be lower than amounts applicable to single family
mortgages insured by the Federal Housing Administration under
title II of the National Housing Act (12 U.S.C. 1707 et seq.)
in such county.
(2) Qualified multifamily mortgage loan limits.--The MFA,
in consultation with the Board of Directors, shall consider
setting loan limits for qualified multifamily mortgages that
secure qualified mortgage-backed securities, if such limits
would foster competition between the MFA and private issuers in
advance of the privatization of the MFA.
(3) Prohibition on investment portfolio.--The MFA shall not
invest in mortgage-backed securities or otherwise maintain an
investment portfolio, other than to the extent necessary for
the MFA to carry out its responsibilities as guarantor of
qualified mortgage-backed securities.
SEC. 303. GUARANTEE FEES; CATASTROPHIC FUND; SUPPLEMENTAL INSURANCE.
(a) Guarantee Fees.--
(1) Guarantee fees.--The MFA shall charge a guarantee fee
under this section in connection with any guarantee issued by
the MFA of timely payment of principal and interest on the
qualified mortgage-backed securities. At all times, the
guarantee fee shall be set at an equal amount for all qualified
issuers. The amount of the guarantee fee shall be adjusted
periodically, as necessary to fulfill the purposes described in
paragraph (2).
(2) Purposes.--The purposes of the guarantee fees are--
(A) to fund the operations of the MFA;
(B) to capitalize the Catastrophic Fund;
(C) to cover any losses; and
(D) to purchase supplemental insurance coverage, as
provided in subsection (d).
(3) Approval.--The Board of Directors shall approve the
amount of guarantee fees and any adjustments thereto, and shall
determine the percentage of the guarantee fees, if any, that
will be allocated to the Catastrophic Fund in accordance with
subsection (b). Such percentage may be adjusted by the Board of
Directors semiannually, as necessary to ensure that the
Catastrophic Fund is adequately capitalized.
(b) Creation of Catastrophic Fund.--
(1) Establishment.--There is established in the Treasury of
the United States a fund to be known as the ``Catastrophic
Fund'', which the MFA shall--
(A) maintain and administer;
(B) use to carry out its insurance and guarantee
functions, in the manner provided by this Act; and
(C) invest in accordance with subsection (c).
(2) Deposits.--The Catastrophic Fund shall be credited
with--
(A) the amount of guarantee fees, if any, that the
Board of Directors determines should be allocated to
the Catastrophic Fund to protect against catastrophic
losses;
(B) any amounts earned on investments of the
Catastrophic Fund, other than as needed in connection
with the routine operation of the guarantee business;
and
(C) such other amounts as may otherwise be credited
to the Catastrophic Fund by the Board of Directors.
(3) Uses.--The Catastrophic Fund shall be solely available
to the MFA for use by the MFA to satisfy obligations under its
guarantee in accordance with this Act. Amounts remaining in the
Catastrophic Fund following the repayment of all qualified
mortgage-backed securities shall be distributed to the United
States Treasury in accordance with section 102(c).
(c) Actuarial Review.--Beginning 1 year after the date on which the
MFA becomes fully operational, and each year thereafter, the Board of
Directors shall commission an independent actuarial study to determine
the adequacy of the guarantee fees and of the capitalization of the
Catastrophic Fund, the results of which study shall be made available
to the public by the Board of Directors. The Board of Directors shall
rely on such study to determine the amount of the guarantee fee that
shall be charged and the percentage of the guarantee fees that shall be
allocated to the Catastrophic Fund.
(d) Investments.--
(1) Authority.--Amounts in the Catastrophic Fund that are
not otherwise employed shall be invested in obligations of the
United States or in obligations guaranteed as to principal and
interest by the United States.
(2) Limitation.--The MFA may not sell or purchase any
obligations described in paragraph (1) for its own account, at
any one time aggregating in excess of $1,000,000, without the
approval of the Secretary. The Secretary may approve a
transaction or class of transactions subject to the provisions
of this paragraph under such conditions as the Secretary may
determine.
(e) Supplemental Coverage.--
(1) In general.--The MFA may use a portion of the guarantee
fee to purchase supplemental insurance coverage on offerings of
qualified mortgage-backed securities. The guarantee fee shall
be set in an amount that is sufficient to cover the cost of
such supplemental insurance, in addition to the other purposes
set forth in subsection (a)(2). The supplemental insurance
shall insure against losses, if any, after giving effect to the
primary, first loss mortgage insurance coverage on mortgages
collateralizing the mortgage-backed securities.
(2) Reduced exposure.--The supplemental insurance shall be
structured to further reduce the exposure of the United States
Government to losses arising under its guarantee on qualified
mortgage-backed securities that are covered by supplemental
insurance. Separate insurance coverage shall be provided for
each new offering of qualified mortgage-backed securities.
(3) Purchase of supplemental coverage required.--
(A) In general.--Not later than 1 year after the
MFA certification date, the Board of Directors shall
issue guidelines to determine whether supplemental
coverage--
(i) is being offered on commercially
reasonable terms; and
(ii) is reasonably likely to mitigate the
risk that the MFA will have to make any payment
pursuant to its guarantee.
(B) Coverage required.--Beginning not later than 3
years after the MFA certification date, the MFA shall
purchase supplemental coverage for each offering of
qualified mortgage-backed securities if the MFA
determines that the supplemental coverage meets the
guidelines issued by the Board of Directors under
subparagraph (A).
(4) Authority to purchase supplemental coverage.--The MFA
may purchase supplemental coverage from any mortgage insurance
company authorized to provide mortgage insurance on a qualified
residential mortgage, or from any other licensed insurance
company with comparable regulatory oversight, capital, and
reserve requirements.
SEC. 304. NO LIMIT ON PRIVATE SECTOR INVOLVEMENT; TERMINATION OF
AUTHORITY.
(a) Private Entities Encouraged.--Nothing in this Act shall be
construed as preventing the private sector from securitizing qualified
residential mortgages, qualified multifamily mortgages, or other non-
qualified residential single family or multifamily mortgages. The MFA
shall encourage robust competition between the MFA and private issuers
to facilitate the soonest possible privatization of the MFA.
(b) Termination of Authority.--The authority granted to the MFA
under this Act shall expire 10 years after the date of enactment of
this Act, and the MFA shall be terminated on that date. The MFA, in
consultation with the Board of Directors, shall begin planning for such
termination during the third year following the date of enactment of
this Act.
(c) Periodic Reports on Privatization.--
(1) Initial report.--During the fifth year following the
date of enactment of this Act, the MFA shall present to
Congress a detailed plan for privatization of the MFA upon
termination of its authority in accordance with subsection (b).
(2) Regular reports.--To ensure the transfer to
privatization, the MFA shall report to Congress on the
implementation of the detailed plan for privatization submitted
under paragraph (1)--
(A) annually through the seventh year following the
date of enactment of this Act; and
(B) quarterly, beginning in the eighth year
following the date of enactment of this Act.
TITLE IV--CONFORMING AMENDMENTS
SEC. 401. AMENDMENTS TO DODD-FRANK ACT.
Section 15G of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
11) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (3) and (4) as
paragraphs (4) and (5), respectively; and
(B) by inserting after paragraph (2) the following:
``(3) the term `qualified residential mortgage' has the
same meaning as in section 2 of the Mortgage Finance Act of
2013;''; and
(2) by adding at the end the following:
``(j) Exemption for Qualified Mortgage-Backed Securities.--
Qualified mortgage-backed securities, as defined in section 2 of the
Mortgage Finance Act of 2013, and any other securitizations of
qualified residential mortgages, shall be exempt from the risk
retention provisions of subsection (c)(1)(B)(i).''.
SEC. 402. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND SOUNDNESS
ACT OF 1992.
(a) Definitions.--Section 1303(20) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4502(20)) is amended by striking ``means--'' and all that follows
through ``(C) any'' and inserting ``means any''.
(b) Transfer of Functions.--All functions of the FHFA with respect
to the enterprises, as that term is defined in section 1303 of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4502), other than any function related to receivership of
the enterprises, are transferred to the MFA, effective 90 days after
the date on which liquidation of the enterprises is complete, in
accordance with this Act.
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