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PUBLIC LAW 110–289—JULY 30, 2008

HOUSING AND ECONOMIC RECOVERY ACT

OF 2008

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122 STAT. 2654 PUBLIC LAW 110–289—JULY 30, 2008

Public Law 110–289

110th Congress

An Act

To provide needed housing reform 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; TABLE OF CONTENTS.

(a) S

HORT

ITLE

.—This Act may be cited as the ‘‘Housing and

Economic Recovery Act of 2008’’.

(b) T

ABLE OF

ONTENT

.—The table of contents for this Act

is as follows:

Sec. 1. Short title; table of contents.

DIVISION A—HOUSING FINANCE REFORM

Sec. 1001. Short title.

Sec. 1002. Definitions.

TITLE I—REFORM OF REGULATION OF ENTERPRISES

Subtitle A—Improvement of Safety and Soundness Supervision

Sec. 1101. Establishment of the Federal Housing Finance Agency.

Sec. 1102. Duties and authorities of the Director.

Sec. 1103. Federal Housing Finance Oversight Board.

Sec. 1104. Authority to require reports by regulated entities.

Sec. 1105. Examiners and accountants; authority to contract for reviews of regu-

lated entities; ombudsman.

Sec. 1106. Assessments.

Sec. 1107. Regulations and orders.

Sec. 1108. Prudential management and operations standards.

Sec. 1109. Review of and authority over enterprise assets and liabilities.

Sec. 1110. Risk-based capital requirements.

Sec. 1111. Minimum capital levels.

Sec. 1112. Registration under the securities laws.

Sec. 1113. Prohibition and withholding of executive compensation.

Sec. 1114. Limit on golden parachutes.

Sec. 1115. Reporting of fraudulent loans.

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

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

Secretary of Treasury.

Sec. 1118. Consultation between the Director of the Federal Housing Finance Agen-

cy and the Board of Governors of the Federal Reserve System to ensure

financial market stability .

Subtitle B—Improvement of Mission Supervision

Sec. 1121. Transfer of program approval and housing goal oversight.

Sec. 1122. Assumption by the Director of certain other HUD responsibilities.

Sec. 1123. Review of enterprise products.

Sec. 1124. Conforming loan limits.

Sec. 1125. Annual housing report.

Sec. 1126. Public use database.

Sec. 1127. Reporting of mortgage data.

Sec. 1128. Revision of housing goals.

Sec. 1129. Duty to serve underserved markets.

Sec. 1130. Monitoring and enforcing compliance with housing goals.

42 USC 4501

note.

Housing and

Economic

Recovery Act

of 2008.

July 30, 2008

[H.R. 3221]

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122 STAT. 2655 PUBLIC LAW 110–289—JULY 30, 2008

Sec. 1131. Affordable housing programs.

Sec. 1132. Financial education and counseling.

Sec. 1133. Transfer and rights of certain HUD employees.

Subtitle C—Prompt Corrective Action

Sec. 1141. Critical capital levels.

Sec. 1142. Capital classifications.

Sec. 1143. Supervisory actions applicable to undercapitalized regulated entities.

Sec. 1144. Supervisory actions applicable to significantly undercapitalized regu-

lated entities.

Sec. 1145. Authority over critically undercapitalized regulated entities.

Subtitle D—Enforcement Actions

Sec. 1151. Cease and desist proceedings.

Sec. 1152. Temporary cease and desist proceedings.

Sec. 1153. Removal and prohibition authority.

Sec. 1154. Enforcement and jurisdiction.

Sec. 1155. Civil money penalties.

Sec. 1156. Criminal penalty.

Sec. 1157. Notice after separation from service.

Sec. 1158. Subpoena authority.

Subtitle E—General Provisions

Sec. 1161. Conforming and technical amendments.

Sec. 1162. Presidentially-appointed directors of enterprises.

Sec. 1163. Effective date.

TITLE II—FEDERAL HOME LOAN BANKS

Sec. 1201. Recognition of distinctions between the enterprises and the Federal

Home Loan Banks.

Sec. 1202. Directors.

Sec. 1203. Definitions.

Sec. 1204. Agency oversight of Federal Home Loan Banks.

Sec. 1205. Housing goals.

Sec. 1206. Community development financial institutions.

Sec. 1207. Sharing of information among Federal Home Loan Banks.

Sec. 1208. Exclusion from certain requirements.

Sec. 1209. Voluntary mergers.

Sec. 1210. Authority to reduce districts.

Sec. 1211. Community financial institution members.

Sec. 1212. Public use database; reports to Congress.

Sec. 1213. Semiannual reports.

Sec. 1214. Liquidation or reorganization of a Federal Home Loan Bank.

Sec. 1215. Study and report to Congress on securitization of acquired member as-

sets.

Sec. 1216. Technical and conforming amendments.

Sec. 1217. Study on Federal Home Loan Bank advances.

Sec. 1218. Federal Home Loan Bank refinancing authority for certain residential

mortgage loans.

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF

OFHEO AND THE FEDERAL HOUSING FINANCE BOARD

Subtitle A—OFHEO

Sec. 1301. Abolishment of OFHEO.

Sec. 1302. Continuation and coordination of certain actions.

Sec. 1303. Transfer and rights of employees of OFHEO.

Sec. 1304. Transfer of property and facilities.

Subtitle B—Federal Housing Finance Board

Sec. 1311. Abolishment of the Federal Housing Finance Board.

Sec. 1312. Continuation and coordination of certain actions.

Sec. 1313. Transfer and rights of employees of the Federal Housing Finance Board.

Sec. 1314. Transfer of property and facilities.

TITLE IV—HOPE FOR HOMEOWNERS

Sec. 1401. Short title.

Sec. 1402. Establishment of HOPE for Homeowners Program.

Sec. 1403. Fiduciary duty of servicers of pooled residential mortgage loans.

Sec. 1404. Revised standards for FHA appraisers.

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122 STAT. 2656 PUBLIC LAW 110–289—JULY 30, 2008

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

Sec. 1501. Short title.

Sec. 1502. Purposes and methods for establishing a mortgage licensing system and

registry.

Sec. 1503. Definitions.

Sec. 1504. License or registration required.

Sec. 1505. State license and registration application and issuance.

Sec. 1506. Standards for State license renewal.

Sec. 1507. System of registration administration by Federal agencies.

Sec. 1508. Secretary of Housing and Urban Development backup authority to es-

tablish a loan originator licensing system.

Sec. 1509. Backup authority to establish a nationwide mortgage licensing and reg-

istry system.

Sec. 1510. Fees.

Sec. 1511. Background checks of loan originators.

Sec. 1512. Confidentiality of information.

Sec. 1513. Liability provisions.

Sec. 1514. Enforcement under HUD backup licensing system.

Sec. 1515. State examination authority.

Sec. 1516. Reports and recommendations to Congress.

Sec. 1517. Study and reports on defaults and foreclosures.

TITLE VI—MISCELLANEOUS

Sec. 1601. Study and reports on guarantee fees.

Sec. 1602. Study and report on default risk evaluation.

Sec. 1603. Conversion of HUD contracts.

Sec. 1604. Bridge depository institutions.

Sec. 1605. Sense of the Senate.

DIVISION B—FORECLOSURE PREVENTION

Sec. 2001. Short title.

Sec. 2002. Emergency designation.

TITLE I—FHA MODERNIZATION ACT OF 2008

Sec. 2101. Short title.

Subtitle A—Building American Homeownership

Sec. 2111. Short title.

Sec. 2112. Maximum principal loan obligation.

Sec. 2113. Cash investment requirement and prohibition of seller-funded down pay-

ment assistance.

Sec. 2114. Mortgage insurance premiums.

Sec. 2115. Rehabilitation loans.

Sec. 2116. Discretionary action.

Sec. 2117. Insurance of condominiums.

Sec. 2118. Mutual Mortgage Insurance Fund.

Sec. 2119. Hawaiian home lands and Indian reservations.

Sec. 2120. Conforming and technical amendments.

Sec. 2121. Insurance of mortgages.

Sec. 2122. Home equity conversion mortgages.

Sec. 2123. Energy efficient mortgages program.

Sec. 2124. Pilot program for automated process for borrowers without sufficient

credit history.

Sec. 2125. Homeownership preservation.

Sec. 2126. Use of FHA savings for improvements in FHA technologies, procedures,

processes, program performance, staffing, and salaries.

Sec. 2127. Post-purchase housing counseling eligibility improvements.

Sec. 2128. Pre-purchase homeownership counseling demonstration.

Sec. 2129. Fraud prevention.

Sec. 2130. Limitation on mortgage insurance premium increases.

Sec. 2131. Savings provision.

Sec. 2132. Implementation.

Sec. 2133. Moratorium on implementation of risk-based premiums.

Subtitle B—Manufactured Housing Loan Modernization

Sec. 2141. Short title.

Sec. 2142. Purposes.

Sec. 2143. Exception to limitation on financial institution portfolio.

Sec. 2144. Insurance benefits.

Sec. 2145. Maximum loan limits.

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122 STAT. 2657 PUBLIC LAW 110–289—JULY 30, 2008

Sec. 2146. Insurance premiums.

Sec. 2147. Technical corrections.

Sec. 2148. Revision of underwriting criteria.

Sec. 2149. Prohibition against kickbacks and unearned fees.

Sec. 2150. Leasehold requirements.

TITLE II—MORTGAGE FORECLOSURE PROTECTIONS FOR

SERVICEMEMBERS

Sec. 2201. Temporary increase in maximum loan guaranty amount for certain

housing loans guaranteed by the Secretary of Veterans Affairs.

Sec. 2202. Counseling on mortgage foreclosures for members of the Armed Forces

returning from service abroad.

Sec. 2203. Enhancement of protections for servicemembers relating to mortgages

and mortgage foreclosures.

TITLE III—EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF

ABANDONED AND FORECLOSED HOMES

Sec. 2301. Emergency assistance for the redevelopment of abandoned and fore-

closed homes.

Sec. 2302. Nationwide distribution of resources.

Sec. 2303. Limitation on use of funds with respect to eminent domain.

Sec. 2304. Limitation on distribution of funds.

Sec. 2305. Counseling intermediaries.

TITLE IV—HOUSING COUNSELING RESOURCES

Sec. 2401. Housing counseling resources.

Sec. 2402. Credit counseling.

TITLE V—MORTGAGE DISCLOSURE IMPROVEMENT ACT

Sec. 2501. Short title.

Sec. 2502. Enhanced mortgage loan disclosures.

Sec. 2503. Community Development Investment Authority for depository institu-

tions.

TITLE VI—VETERANS HOUSING MATTERS

Sec. 2601. Home improvements and structural alterations for totally disabled mem-

bers of the Armed Forces before discharge or release from the Armed

Forces.

Sec. 2602. Eligibility for specially adapted housing benefits and assistance for

members of the Armed Forces with service-connected disabilities and in-

dividuals residing outside the United States.

Sec. 2603. Specially adapted housing assistance for individuals with severe burn in-

juries.

Sec. 2604. Extension of assistance for individuals residing temporarily in housing

owned by a family member.

Sec. 2605. Increase in specially adapted housing benefits for disabled veterans.

Sec. 2606. Report on specially adapted housing for disabled individuals.

Sec. 2607. Report on specially adapted housing assistance for individuals who re-

side in housing owned by a family member on permanent basis.

Sec. 2608. Definition of annual income for purposes of section 8 and other public

housing programs.

Sec. 2609. Payment of transportation of baggage and household effects for members

of the Armed Forces who relocate due to foreclosure of leased housing.

TITLE VII—SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK

REDUCTION ACT

Sec. 2701. Short title.

Sec. 2702. Public housing agency plans for certain qualified public housing agen-

cies.

TITLE VIII—HOUSING PRESERVATION

Subtitle A—Preservation Under Federal Housing Programs

Sec. 2801. Clarification of disposition of certain properties.

Sec. 2802. Eligibility of certain projects for enhanced voucher assistance.

Sec. 2803. Transfer of certain rental assistance contracts.

Sec. 2804. Public housing disaster relief.

Sec. 2805. Preservation of certain affordable housing.

Subtitle B—Coordination of Federal Housing Programs and Tax Incentives for

Housing

Sec. 2831. Short title.

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122 STAT. 2658 PUBLIC LAW 110–289—JULY 30, 2008

Sec. 2832. Approvals by Department of Housing and Urban Development.

Sec. 2833. Project approvals by rural housing service.

Sec. 2834. Use of FHA loans with housing tax credits.

Sec. 2835. Other HUD programs.

TITLE IX—MISCELLANEOUS

Sec. 2901. Homeless assistance.

Sec. 2902. Increasing access and understanding of energy efficient mortgages.

DIVISION C—TAX-RELATED PROVISIONS

Sec. 3000. Short title; etc.

TITLE I—HOUSING TAX INCENTIVES

Subtitle A—Multi-Family Housing

ART

I—L

-I

NCOME

OUSING

REDIT

Sec. 3001. Temporary increase in volume cap for low-income housing tax credit.

Sec. 3002. Determination of credit rate.

Sec. 3003. Modifications to definition of eligible basis.

Sec. 3004. Other simplification and reform of low-income housing tax incentives.

Sec. 3005. Treatment of military basic pay.

ART

II—M

ODIFICATIONS TO

-E

XEMPT

OUSING

OND

ULES

Sec. 3007. Recycling of tax-exempt debt for financing residential rental projects.

Sec. 3008. Coordination of certain rules applicable to low-income housing credit and

qualified residential rental project exempt facility bonds.

ART

III—R

EFORMS

ELATED TO THE

-I

NCOME

OUSING

REDIT AND

XEMPT

OUSING

ONDS

Sec. 3009. Hold harmless for reductions in area median gross income.

Sec. 3010. Exception to annual current income determination requirement where

determination not relevant.

Subtitle B—Single Family Housing

Sec. 3011. First-time homebuyer credit.

Sec. 3012. Additional standard deduction for real property taxes for nonitemizers.

Subtitle C—General Provisions

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules.

Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt housing

bonds, low-income housing tax credit, and rehabilitation credit.

Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for treatment as

tax-exempt bonds.

Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign affidavits.

Sec. 3025. Modification of definition of tax-exempt use property for purposes of the

rehabilitation credit.

Sec. 3026. Extension of special rule for mortgage revenue bonds for residences lo-

cated in disaster areas.

Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery rebates for in-

dividuals.

TITLE II—REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

Subtitle A—Foreign Currency and Other Qualified Activities

Sec. 3031. Revisions to REIT income tests.

Sec. 3032. Revisions to REIT asset tests.

Sec. 3033. Conforming foreign currency revisions.

Subtitle B—Taxable REIT Subsidiaries

Sec. 3041. Conforming taxable REIT subsidiary asset test.

Subtitle C—Dealer Sales

Sec. 3051. Holding period under safe harbor.

Sec. 3052. Determining value of sales under safe harbor.

Subtitle D—Health Care REITs

Sec. 3061. Conformity for health care facilities.

Subtitle E—Effective Dates

Sec. 3071. Effective dates.

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122 STAT. 2659 PUBLIC LAW 110–289—JULY 30, 2008

TITLE III—REVENUE PROVISIONS

Subtitle A—General Provisions

Sec. 3081. Election to accelerate the AMT and research credits in lieu of bonus de-

preciation.

Sec. 3082. Certain GO Zone incentives.

Sec. 3083. Increase in statutory limit on the public debt.

Subtitle B—Revenue Offsets

Sec. 3091. Returns relating to payments made in settlement of payment card and

third party network transactions.

Sec. 3092. Gain from sale of principal residence allocated to nonqualified use not

excluded from income.

Sec. 3093. Delay in application of worldwide allocation of interest.

Sec. 3094. Time for payment of corporate estimated taxes.

DIVISION A—HOUSING FINANCE

REFORM

SEC. 1001. SHORT TITLE.

This division may be cited as the ‘‘Federal Housing Finance

Regulatory Reform Act of 2008’’.

SEC. 1002. DEFINITIONS.

(a) F

EDERAL

AFETY AND

OUNDNESS

EFINITIONS

.—Sec-

tion 1303 of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992 (12 U.S.C. 4502) is amended—

(1) in each of paragraphs (8), (9), (10), and (19), by striking

‘‘Secretary’’ each place that term appears and inserting

‘‘Director’’;

(2) by redesignating paragraphs (16) through (19) as para-

graphs (21) through (24), respectively;

(3) by striking paragraphs (13) through (15) and inserting

the following:

‘‘(19) O

FFICE OF FINANCE

.—The term ‘Office of Finance’

means the Office of Finance of the Federal Home Loan Bank

System (or any successor thereto).

‘‘(20) R

EGULATED ENTITY

.—The term ‘regulated entity’

means—

‘‘(A) the Federal National Mortgage Association and

any affiliate thereof;

‘‘(B) the Federal Home Loan Mortgage Corporation

and any affiliate thereof; and

‘‘(C) any Federal Home Loan Bank.’’;

(4) by redesignating paragraphs (11) and (12) as paragraphs

(17) and (18), respectively;

(5) by redesignating paragraph (7) as paragraph (12);

(6) by redesignating paragraphs (8) through (10) as para-

graphs (14) through (16), respectively;

(7) in paragraph (5)—

(A) by striking ‘‘(5)’’ and inserting ‘‘(9)’’; and

(B) by striking ‘‘Office of Federal Housing Enterprise

Oversight of the Department of Housing and Urban

Development’’ and inserting ‘‘Federal Housing Finance

Agency’’;

(8) by redesignating paragraph (6) as paragraph (10);

(9) by redesignating paragraphs (2) through (4) as para-

graphs (5) through (7), respectively;

12 USC 4501

note.

Federal Housing

Finance

Regulatory

Reform Act of

2008.

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122 STAT. 2660 PUBLIC LAW 110–289—JULY 30, 2008

(10) by inserting after paragraph (7), as redesignated, the

following:

‘‘(8) D

EFAULT

;

IN DANGER OF DEFAULT

.—

‘‘(A) D

EFAULT

.—The term ‘default’ means, with respect

to a regulated entity, any adjudication or other official

determination by any court of competent jurisdiction, or

the Agency, pursuant to which a conservator, receiver,

limited-life regulated entity, or legal custodian is appointed

for a regulated entity.

‘‘(B) I

N DANGER OF DEFAULT

.—The term ‘in danger

of default’ means a regulated entity with respect to which,

in the opinion of the Agency—

‘‘(i) the regulated entity is not likely to be able

to pay the obligations of the regulated entity in the

normal course of business; or

‘‘(ii) the regulated entity—

‘‘(I) has incurred or is likely to incur losses

that will deplete all or substantially all of its cap-

ital; and

‘‘(II) there is no reasonable prospect that the

capital of the regulated entity will be replenished.’’;

(11) by inserting after paragraph (1) the following:

‘‘(2) A

GENCY

.—The term ‘Agency’ means the Federal

Housing Finance Agency established under section 1311.

‘‘(3) A

UTHORIZING STATUTES

.—The term ‘authorizing stat-

utes’ means—

‘‘(A) the Federal National Mortgage Association

Charter Act;

‘‘(B) the Federal Home Loan Mortgage Corporation

Act; and

‘‘(C) the Federal Home Loan Bank Act.

‘‘(4) B

OARD

.—The term ‘Board’ means the Federal Housing

Finance Oversight Board established under section 1313A.’’;

(12) by inserting after paragraph (10), as redesignated by

this section, the following:

‘‘(11) E

NTITY

AFFILIATED PARTY

.—The term ‘entity-affiliated

party’ means—

‘‘(A) any director, officer, employee, or controlling stock-

holder of, or agent for, a regulated entity;

‘‘(B) any shareholder, affiliate, consultant, or joint ven-

ture partner of a regulated entity, and any other person,

as determined by the Director (by regulation or on a case-

by-case basis) that participates in the conduct of the affairs

of a regulated entity, provided that a member of a Federal

Home Loan Bank shall not be deemed to have participated

in the affairs of that Bank solely by virtue of being a

shareholder of, and obtaining advances from, that Bank;

‘‘(C) any independent contractor for a regulated entity

(including any attorney, appraiser, or accountant), if—

‘‘(i) the independent contractor knowingly or reck-

lessly participates in—

‘‘(I) any violation of any law or regulation;

‘‘(II) any breach of fiduciary duty; or

‘‘(III) any unsafe or unsound practice; and

‘‘(ii) such violation, breach, or practice caused, or

is likely to cause, more than a minimal financial loss

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122 STAT. 2661 PUBLIC LAW 110–289—JULY 30, 2008

to, or a significant adverse effect on, the regulated

entity;

‘‘(D) any not-for-profit corporation that receives its

principal funding, on an ongoing basis, from any regulated

entity; and

‘‘(E) the Office of Finance.’’;

(13) by inserting after paragraph (12), as redesignated by

this section, the following:

‘‘(13) L

IMITED

LIFE REGULATED ENTITY

.—The term ‘limited-

life regulated entity’ means an entity established by the Agency

under section 1367(i) with respect to a Federal Home Loan

Bank in default or in danger of default or with respect to

an enterprise in default or in danger of default.’’; and

(14) by adding at the end the following:

‘‘(25) V

IOLATION

.—The term ‘violation’ includes any action

(alone or in combination with another or others) for or toward

causing, bringing about, participating in, counseling, or aiding

or abetting a violation.’’.

(b) R

EFERENCES IN

HIS

.—As used in this Act, unless

otherwise specified—

(1) the term ‘‘Agency’’ means the Federal Housing Finance

Agency;

(2) the term ‘‘Director’’ means the Director of the Agency;

and (3) the terms ‘‘enterprise’’, ‘‘regulated entity’’, and ‘‘author-

izing statutes’’ have the same meanings as in section 1303

of the Federal Housing Enterprises Financial Safety and Sound-

ness Act of 1992, as amended by this Act.

TITLE I—REFORM OF REGULATION OF

ENTERPRISES

Subtitle A—Improvement of Safety and

Soundness Supervision

SEC. 1101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE

AGENCY.

The Federal Housing Enterprises Financial Safety and Sound-

ness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking

sections 1311 and 1312 and inserting the following:

‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE

AGENCY.

‘‘(a) E

STABLISHMENT

.—There is established the Federal Housing

Finance Agency, which shall be an independent agency of the Fed-

eral Government.

‘‘(b) G

ENERAL

UPERVISORY AND

EGULATORY

UTHORITY

.—

‘‘(1) I

N GENERAL

.—Each regulated entity shall, to the extent

provided in this title, be subject to the supervision and regula-

tion of the Agency.

‘‘(2) A

UTHORITY OVER FANNIE MAE

FREDDIE MAC

THE FED

ERAL HOME LOAN BANKS

AND THE OFFICE OF FINANCE

.—The

Director shall have general regulatory authority over each regu-

lated entity and the Office of Finance, and shall exercise such

12 USC 4511,

4512.

12 USC 4511

note.

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122 STAT. 2662 PUBLIC LAW 110–289—JULY 30, 2008

general regulatory authority, including such duties and authori-

ties set forth under section 1313, to ensure that the purposes

of this Act, the authorizing statutes, and any other applicable

law are carried out.

‘‘(c) S

AVINGS

ROVISION

.—The authority of the Director to take

actions under subtitles B and C shall not in any way limit the

general supervisory and regulatory authority granted to the Director

under subsection (b).

‘‘SEC. 1312. DIRECTOR.

‘‘(a) E

STABLISHMENT OF

OSITION

.—There is established the

position of the Director of the Agency, who shall be the head

of the Agency.

‘‘(b) A

PPOINTMENT

; T

ERM

.—

‘‘(1) A

PPOINTMENT

.—The Director shall be appointed by

the President, by and with the advice and consent of the Senate,

from among individuals who are citizens of the United States,

have a demonstrated understanding of financial management

or oversight, and have a demonstrated understanding of capital

markets, including the mortgage securities markets and

housing finance.

‘‘(2) T

ERM

.—The Director shall be appointed for a term

of 5 years, unless removed before the end of such term for

cause by the President.

‘‘(3) V

ACANCY

.—A vacancy in the position of Director that

occurs before the expiration of the term for which a Director

was appointed shall be filled in the manner established under

paragraph (1), and the Director appointed to fill such vacancy

shall be appointed only for the remainder of such term.

‘‘(4) S

ERVICE AFTER END OF TERM

.—An individual may serve

as the Director after the expiration of the term for which

appointed until a successor has been appointed.

‘‘(5) T

RANSITIONAL PROVISION

.—Notwithstanding para-

graphs (1) and (2), during the period beginning on the effective

date of the Federal Housing Finance Regulatory Reform Act

of 2008, and ending on the date on which the Director is

appointed and confirmed, the person serving as the Director

of the Office of Federal Housing Enterprise Oversight of the

Department of Housing and Urban Development on that effec-

tive date shall act for all purposes as, and with the full powers

of, the Director.

‘‘(c) D

EPUTY

IRECTOR OF THE

IVISION OF

NTERPRISE

EGULA

TION

.—

‘‘(1) I

N GENERAL

.—The Agency shall have a Deputy Director

of the Division of Enterprise Regulation, who shall be des-

ignated by the Director from among individuals who are citizens

of the United States, have a demonstrated understanding of

financial management or oversight, and have a demonstrated

understanding of mortgage securities markets and housing

finance.

‘‘(2) F

UNCTIONS

.—The Deputy Director of the Division of

Enterprise Regulation shall have such functions, powers, and

duties with respect to the oversight of the enterprises as the

Director shall prescribe.

‘‘(d) D

EPUTY

IRECTOR

IVISION

EDERAL

OME

OAN

ANK

EGULATION

.—

Effective date.

Termination

date.

President.

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122 STAT. 2663 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) I

N GENERAL

.—The Agency shall have a Deputy Director

of the Division of Federal Home Loan Bank Regulation, who

shall be designated by the Director from among individuals

who are citizens of the United States, have a demonstrated

understanding of financial management or oversight, and have

a demonstrated understanding of the Federal Home Loan Bank

System and housing finance.

‘‘(2) F

UNCTIONS

.—The Deputy Director of the Division of

Federal Home Loan Bank Regulation shall have such functions,

powers, and duties with respect to the oversight of the Federal

Home Loan Banks as the Director shall prescribe.

‘‘(e) D

EPUTY

IRECTOR FOR

OUSING

ISSION AND

OALS

.—

‘‘(1) I

N GENERAL

.—The Agency shall have a Deputy Director

for Housing Mission and Goals, who shall be designated by

the Director from among individuals who are citizens of the

United States, and have a demonstrated understanding of the

housing markets and housing finance.

‘‘(2) F

UNCTIONS

.—The Deputy Director for Housing Mission

and Goals shall have such functions, powers, and duties with

respect to the oversight of the housing mission and goals of

the enterprises, and with respect to oversight of the housing

finance and community and economic development mission of

the Federal Home Loan Banks, as the Director shall prescribe.

‘‘(3) C

ONSIDERATIONS

.—In exercising such functions,

powers, and duties, the Deputy Director for Housing Mission

and Goals shall consider the differences between the enterprises

and the Federal Home Loan Banks, including those described

in section 1313(d).

‘‘(f) A

CTING

IRECTOR

.—In the event of the death, resignation,

sickness, or absence of the Director, the President shall designate

either the Deputy Director of the Division of Enterprise Regulation,

the Deputy Director of the Division of Federal Home Loan Bank

Regulation, or the Deputy Director for Housing Mission and Goals,

to serve as acting Director until the return of the Director, or

the appointment of a successor pursuant to subsection (b).

‘‘(g) L

IMITATIONS

.—The Director and each of the Deputy Direc-

tors may not—

‘‘(1) have any direct or indirect financial interest in any

regulated entity or entity-affiliated party;

‘‘(2) hold any office, position, or employment in any regu-

lated entity or entity-affiliated party; or

‘‘(3) have served as an executive officer or director of any

regulated entity or entity-affiliated party at any time during

the 3-year period preceding the date of appointment or designa-

tion of such individual as Director or Deputy Director, as

applicable.’’.

SEC. 1102. DUTIES AND AUTHORITIES OF THE DIRECTOR.

(a) I

ENERAL

.—Section 1313 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513)

is amended to read as follows:

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

‘‘(a) D

UTIES

.—

‘‘(1) P

RINCIPAL DUTIES

.—The principal duties of the Director

shall be—

‘‘(A) to oversee the prudential operations of each regu-

lated entity; and

President.

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122 STAT. 2664 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) to ensure that—

‘‘(i) each regulated entity operates in a safe and

sound manner, including maintenance of adequate cap-

ital and internal controls;

‘‘(ii) the operations and activities of each regulated

entity foster liquid, efficient, competitive, and resilient

national housing finance markets (including activities

relating to mortgages on housing for low- and mod-

erate-income families involving a reasonable economic

return that may be less than the return earned on

other activities);

‘‘(iii) each regulated entity complies with this title

and the rules, regulations, guidelines, and orders

issued under this title and the authorizing statutes;

‘‘(iv) each regulated entity carries out its statutory

mission only through activities that are authorized

under and consistent with this title and the authorizing

statutes; and

‘‘(v) the activities of each regulated entity and

the manner in which such regulated entity is operated

are consistent with the public interest.

‘‘(2) S

COPE OF AUTHORITY

.—The authority of the Director

shall include the authority—

‘‘(A) to review and, if warranted based on the principal

duties described in paragraph (1), reject any acquisition

or transfer of a controlling interest in a regulated entity;

and ‘‘(B) to exercise such incidental powers as may be nec-

essary or appropriate to fulfill the duties and responsibil-

ities of the Director in the supervision and regulation of

each regulated entity.

‘‘(b) D

ELEGATION OF

UTHORITY

.—The Director may delegate

to officers and employees of the Agency any of the functions, powers,

or duties of the Director, as the Director considers appropriate.

‘‘(c) L

ITIGATION

UTHORITY

.—

‘‘(1) I

N GENERAL

.—In enforcing any provision of this title,

any regulation or order prescribed under this title, or any

other provision of law, rule, regulation, or order, or in any

other action, suit, or proceeding to which the Director is a

party or in which the Director is interested, and in the adminis-

tration of conservatorships and receiverships, the Director may

act in the Director’s own name and through the Director’s

own attorneys.

‘‘(2) S

UBJECT TO SUIT

.—Except as otherwise provided by

law, the Director shall be subject to suit (other than suits

on claims for money damages) by a regulated entity with respect

to any matter under this title or any other applicable provision

of law, rule, order, or regulation under this title, in the United

States district court for the judicial district in which the regu-

lated entity has its principal place of business, or in the United

States District Court for the District of Columbia, and the

Director may be served with process in the manner prescribed

by the Federal Rules of Civil Procedure.’’.

(b) I

NDEPENDENCE IN

ONGRESSIONAL

ESTIMONY AND

OMMENDATIONS

.—Section 111 of Public Law 93–495 (12 U.S.C. 250)

is amended by striking ‘‘the Federal Housing Finance Board’’ and

inserting ‘‘the Director of the Federal Housing Finance Agency’’.

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122 STAT. 2665 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1103. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

(a) I

ENERAL

.—The Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is

amended by inserting after section 1313 the following:

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

‘‘(a) I

ENERAL

.—There is established the Federal Housing

Finance Oversight Board, which shall advise the Director with

respect to overall strategies and policies in carrying out the duties

of the Director under this title.

‘‘(b) L

IMITATIONS

.—The Board may not exercise any executive

authority, and the Director may not delegate to the Board any

of the functions, powers, or duties of the Director.

‘‘(c) C

OMPOSITION

.—The Board shall be comprised of 4 members,

of whom—

‘‘(1) 1 member shall be the Secretary of the Treasury;

‘‘(2) 1 member shall be the Secretary of Housing and Urban

Development;

‘‘(3) 1 member shall be the Chairman of the Securities

and Exchange Commission; and

‘‘(4) 1 member shall be the Director, who shall serve as

the Chairperson of the Board.

‘‘(d) M

EETINGS

.—

‘‘(1) I

N GENERAL

.—The Board shall meet upon notice by

the Director, but in no event shall the Board meet less fre-

quently than once every 3 months.

‘‘(2) S

PECIAL MEETINGS

.—Either the Secretary of the

Treasury, the Secretary of Housing and Urban Development,

or the Chairman of the Securities and Exchange Commission

may, upon giving written notice to the Director, require a

special meeting of the Board.

‘‘(e) T

ESTIMONY

.—On an annual basis, the Board shall testify

before Congress regarding—

‘‘(1) the safety and soundness of the regulated entities;

‘‘(2) any material deficiencies in the conduct of the oper-

ations of the regulated entities;

‘‘(3) the overall operational status of the regulated entities;

‘‘(4) an evaluation of the performance of the regulated

entities in carrying out their respective missions;

‘‘(5) operations, resources, and performance of the Agency;

and

‘‘(6) such other matters relating to the Agency and its

fulfillment of its mission, as the Board determines appro-

priate.’’.

(b) A

NNUAL

EPORT OF THE

IRECTOR

.—Section 1319B(a) of

the Federal Housing Enterprises Financial Safety and Soundness

Act of 1992 (12 U.S.C. 4521(a)) is amended—

(1) by striking ‘‘enterprise’’ each place that term appears

and inserting ‘‘regulated entity’’;

(2) by striking ‘‘enterprises’’ each place that term appears

and inserting ‘‘regulated entities’’;

(3) in paragraph (3), by striking ‘‘; and’’ and inserting

a semicolon;

(4) in paragraph (4), by striking ‘‘1994.’’ and inserting

‘‘1994; and’’; and

(5) by adding at the end the following:

Deadline.

Deadlines.

Notices.

Establishment.

12 USC 4513a.

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122 STAT. 2666 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(5) the assessment of the Board or any of its members

with respect to—

‘‘(A) the safety and soundness of the regulated entities;

‘‘(B) any material deficiencies in the conduct of the

operations of the regulated entities;

‘‘(C) the overall operational status of the regulated

entities; and

‘‘(D) an evaluation of the performance of the regulated

entities in carrying out their respective missions;

‘‘(6) operations, resources, and performance of the Agency;

and ‘‘(7) such other matters relating to the Agency and the

fulfillment of its mission.’’.

SEC. 1104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTI-

TIES.

(a) I

ENERAL

.—Section 1314 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4514)

is amended—

(1) in the section heading, by striking ‘‘

ENTERPRISES

’’ and

inserting ‘‘

REGULATED ENTITIES

’’;

(2) by striking ‘‘an enterprise’’ each place that term appears

and inserting ‘‘a regulated entity’’;

(3) by striking ‘‘the enterprise’’ and inserting ‘‘the regulated

entity’’;

(4) in subsection (a)—

(A) by striking the subsection heading and all that

follows through ‘‘and operations’’ in paragraph (1) and

inserting the following:

‘‘(a) R

EGULAR AND

PECIAL

EPORTS

.—

‘‘(1) R

EGULAR REPORTS

.—The Director may require, by gen-

eral or specific orders, a regulated entity to submit regular

reports, including financial statements determined on a fair

value basis, on the condition (including financial condition),

management, activities, or operations of the regulated entity,

as the Director considers appropriate’’; and

(B) in paragraph (2)—

(i) by inserting ‘‘, by general or specific orders,’’

after ‘‘may also require’’; and

(ii) by striking ‘‘whenever’’ and inserting ‘‘on any

of the topics specified in paragraph (1) or any other

relevant topics, if’’; and

(5) by adding at the end the following:

‘‘(c) P

ENALTIES FOR

AILURE

AKE

EPORTS

.—

‘‘(1) V

IOLATIONS

.—It shall be a violation of this section

for any regulated entity—

‘‘(A) to fail to make, transmit, or publish any report

or obtain any information required by the Director under

this section, section 309(k) of the Federal National Mort-

gage Association Charter Act, section 307(c) of the Federal

Home Loan Mortgage Corporation Act, or section 20 of

the Federal Home Loan Bank Act, within the period of

time specified in such provision of law or otherwise by

the Director; or

‘‘(B) to submit or publish any false or misleading report

or information under this section.

‘‘(2) P

ENALTIES

.—

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122 STAT. 2667 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) F

IRST TIER

.—

‘‘(i) I

N GENERAL

.—A violation described in para-

graph (1) shall be subject to a penalty of not more

than $2,000 for each day during which such violation

continues, in any case in which—

‘‘(I) the subject regulated entity maintains

procedures reasonably adapted to avoid any inad-

vertent error and the violation was unintentional

and a result of such an error; or

‘‘(II) the violation was an inadvertent trans-

mittal or publication of any report which was mini-

mally late.

‘‘(ii) B

URDEN OF PROOF

.—For purposes of this

subparagraph, the regulated entity shall have the bur-

den of proving that the error was inadvertent or that

a report was inadvertently transmitted or published

late.

‘‘(B) S

ECOND TIER

.—A violation described in paragraph

(1) shall be subject to a penalty of not more than $20,000

for each day during which such violation continues or such

false or misleading information is not corrected, in any

case that is not addressed in subparagraph (A) or (C).

‘‘(C) T

HIRD TIER

.—A violation described in paragraph

(1) shall be subject to a penalty of not more than $1,000,000

per day for each day during which such violation continues

or such false or misleading information is not corrected,

in any case in which the subject regulated entity committed

such violation knowingly or with reckless disregard for

the accuracy of any such information or report.

‘‘(3) A

SSESSMENTS

.—Any penalty imposed under this sub-

section shall be in lieu of a penalty under section 1376, but

shall be assessed and collected by the Director in the manner

provided in section 1376 for penalties imposed under that sec-

tion, and any such assessment (including the determination

of the amount of the penalty) shall be otherwise subject to

the provisions of section 1376.

‘‘(4) H

EARING

.—A regulated entity against which a penalty

is assessed under this section shall be afforded an agency

hearing if the regulated entity submits a request for a hearing

not later than 20 days after the date of the issuance of the

notice of assessment. Section 1374 shall apply to any such

proceedings.’’.

(b) C

ONFORMING

MENDMENT

.—The Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501

et seq.) is amended by striking sections 1327 and 1328.

SEC. 1105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT

FOR REVIEWS OF REGULATED ENTITIES; OMBUDSMAN.

(a) I

ENERAL

.—Section 1317 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517)

is amended—

(1) in subsection (a), by striking ‘‘enterprise’’ each place

that term appears and inserting ‘‘regulated entity’’;

(2) in subsection (b)—

(A) by inserting ‘‘of a regulated entity’’ after ‘‘under

this section’’; and

12 USC 4547,

4548.

Applicability.

Deadline.

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122 STAT. 2668 PUBLIC LAW 110–289—JULY 30, 2008

(B) by striking ‘‘to determine the condition of an enter-

prise for the purpose of ensuring its financial safety and

soundness’’ and inserting ‘‘or appropriate’’;

(3) in subsection (c), in the second sentence, by inserting

before the period ‘‘to conduct examinations under this section’’;

(4) by redesignating subsections (d) through (f) as sub-

sections (e) through (g), respectively; and

(5) by inserting after subsection (c) the following:

‘‘(d) I

NSPECTOR

ENERAL

.—There shall be within the Agency

an Inspector General, who shall be appointed in accordance with

section 3(a) of the Inspector General Act of 1978.’’.

(b) D

IRECT

IRE

UTHORITY

IRE

CCOUNTANTS

, E

CONO

MISTS

AND

XAMINERS

.—Section 1317 of the Federal Housing

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.

4517) is amended by adding at the end the following:

‘‘(h) A

PPOINTMENT OF

CCOUNTANTS

, E

CONOMISTS

AND

XAM

INERS

.—

‘‘(1) A

PPLICABILITY

.—This section shall apply with respect

to any position of examiner, accountant, economist, and spe-

cialist in financial markets and in technology at the Agency,

with respect to supervision and regulation of the regulated

entities, that is in the competitive service.

‘‘(2) A

PPOINTMENT AUTHORITY

.—The Director may appoint

candidates to any position described in paragraph (1)—

‘‘(A) in accordance with the statutes, rules, and regula-

tions governing appointments in the excepted service; and

‘‘(B) notwithstanding any statutes, rules, and regula-

tions governing appointments in the competitive service.’’.

MENDMENTS TO

NSPECTOR

ENERAL

.—Section 11 of

the Inspector General Act of 1978 (5 U.S.C. App.) is amended—

(1) in paragraph (1), by inserting ‘‘; the Director of the

Federal Housing Finance Agency’’ after ‘‘Social Security

Administration’’; and

(2) in paragraph (2), by inserting ‘‘, the Federal Housing

Finance Agency’’ after ‘‘Social Security Administration’’.

(d) A

UTHORITY

ONTRACT FOR

EVIEWS OF

EGULATED

NTI

TIES

.—Section 1319 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended—

(1) in the section heading, by striking ‘‘

ENTERPRISES BY

RATING ORGANIZATION

’’ and inserting ‘‘

REGULATED ENTITIES

’’;

and

(2) by striking ‘‘enterprises’’ and inserting ‘‘regulated enti-

ties’’.

(e) O

FFICE OF THE

MBUDSMAN

.—Section 1317 of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(12 U.S.C. 4517) is amended by adding at the end the following:

‘‘(i) O

MBUDSMAN

.—The Director shall establish, by regulation,

an Office of the Ombudsman within the Agency, which shall be

responsible for considering complaints and appeals, from any regu-

lated entity and any person that has a business relationship with

a regulated entity, regarding any matter relating to the regulation

and supervision of such regulated entity by the Agency. The regula-

tion issued by the Director under this subsection shall specify

the authority and duties of the Office of the Ombudsman.’’.

Establishment.

Regulations.

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122 STAT. 2669 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1106. ASSESSMENTS.

Section 1316 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) A

NNUAL

SSESSMENTS

.—The Director shall establish and

collect from the regulated entities annual assessments in an amount

not exceeding the amount sufficient to provide for reasonable costs

(including administrative costs) and expenses of the Agency,

including—

‘‘(1) the expenses of any examinations under section 1317

of this Act and under section 20 of the Federal Home Loan

Bank Act;

‘‘(2) the expenses of obtaining any reviews and credit

assessments under section 1319;

‘‘(3) such amounts in excess of actual expenses for any

given year as deemed necessary by the Director to maintain

a working capital fund in accordance with subsection (e); and

‘‘(4) the windup of the affairs of the Office of Federal

Housing Enterprise Oversight and the Federal Housing Finance

Board under title III of the Federal Housing Finance Regulatory

Reform Act of 2008.’’;

(2) in subsection (b)—

(A) by realigning the margins of paragraph (2) two

ems from the left, so as to align the left margin of such

paragraph with the left margins of paragraph (1);

(B) by redesignating paragraphs (2) and (3) as para-

graphs (3) and (4), respectively; and

‘‘(2) S

EPARATE TREATMENT OF FEDERAL HOME LOAN BANK

AND ENTERPRISE ASSESSMENTS

.—Assessments collected from the

enterprises shall not exceed the amounts sufficient to provide

for the costs and expenses described in subsection (a) relating

to the enterprises. Assessments collected from the Federal

Home Loan Banks shall not exceed the amounts sufficient

to provide for the costs and expenses described in subsection

(a) relating to the Federal Home Loan Banks.’’;

(3) by striking subsection (c) and inserting the following:

‘‘(c) I

NCREASED

OSTS OF

EGULATION

.—

‘‘(1) I

NCREASE FOR INADEQUATE CAPITALIZATION

.—The semi-

annual payments made pursuant to subsection (b) by any regu-

lated entity that is not classified (for purposes of subtitle B)

as adequately capitalized may be increased, as necessary, in

the discretion of the Director to pay additional estimated costs

of regulation of the regulated entity.

‘‘(2) A

DJUSTMENT FOR ENFORCEMENT ACTIVITIES

.—The

Director may adjust the amounts of any semiannual payments

for an assessment under subsection (a) that are to be paid

pursuant to subsection (b) by a regulated entity, as necessary

in the discretion of the Director, to ensure that the costs of

enforcement activities under this Act for a regulated entity

are borne only by such regulated entity.

‘‘(3) A

DDITIONAL ASSESSMENT FOR DEFICIENCIES

.—If at any

time, as a result of increased costs of regulation of a regulated

entity that is not classified (for purposes of subtitle B) as

adequately capitalized or as the result of supervisory or enforce-

ment activities under this Act for a regulated entity, the amount

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122 STAT. 2670 PUBLIC LAW 110–289—JULY 30, 2008

available from any semiannual payment made by such regu-

lated entity pursuant to subsection (b) is insufficient to cover

the costs of the Agency with respect to such entity, the Director

may make and collect from such regulated entity an immediate

assessment to cover the amount of such deficiency for the

semiannual period. If, at the end of any semiannual period

during which such an assessment is made, any amount remains

from such assessment, such remaining amount shall be

deducted from the assessment for such regulated entity for

the following semiannual period.’’;

(4) in subsection (d), by striking ‘‘If’’ and inserting ‘‘Except

with respect to amounts collected pursuant to subsection (a)(3),

if’’; and

(5) by striking subsections (e) through (g) and inserting

the following:

‘‘(e) W

ORKING

APITAL

UND

.—At the end of each year for

which an assessment under this section is made, the Director shall

remit to each regulated entity any amount of assessment collected

from such regulated entity that is attributable to subsection (a)(3)

and is in excess of the amount the Director deems necessary to

maintain a working capital fund.

‘‘(f) T

REATMENT OF

SSESSMENTS

.—

‘‘(1) D

EPOSIT

.—Amounts received by the Director from

assessments under this section may be deposited by the Director

in the manner provided in section 5234 of the Revised Statutes

of the United States (12 U.S.C. 192) for monies deposited by

the Comptroller of the Currency.

‘‘(2) N

OT GOVERNMENT FUNDS

.—The amounts received by

the Director from any assessment under this section shall not

be construed to be Government or public funds or appropriated

money.

‘‘(3) N

O APPORTIONMENT OF FUNDS

.—Notwithstanding any

other provision of law, the amounts received by the Director

from any assessment under this section shall not be subject

to apportionment for the purpose of chapter 15 of title 31,

United States Code, or under any other authority.

‘‘(4) U

SE OF FUNDS

.—The Director may use any amounts

received by the Director from assessments under this section

for compensation of the Director and other employees of the

Agency and for all other expenses of the Director and the

Agency.

‘‘(5) A

VAILABILITY OF OVERSIGHT FUND AMOUNTS

.—Notwith-

standing any other provision of law, any amounts remaining

in the Federal Housing Enterprises Oversight Fund established

under this section (as in effect before the effective date of

the Federal Housing Finance Regulatory Reform Act of 2008,

and any amounts remaining from assessments on the Federal

Home Loan Banks pursuant to section 18(b) of the Federal

Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon such

effective date, be treated for purposes of this subsection as

amounts received from assessments under this section.

‘‘(6) T

REASURY INVESTMENTS

.—

‘‘(A) A

UTHORITY

.—The Director may request the Sec-

retary of the Treasury to invest such portions of amounts

received by the Director from assessments paid under this

section that, in the Director’s discretion, are not required

to meet the current working needs of the Agency.

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122 STAT. 2671 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) G

OVERNMENT OBLIGATIONS

.—Pursuant to a

request under subparagraph (A), the Secretary of the

Treasury shall invest such amounts in Government obliga-

tions guaranteed as to principal and interest by the United

States with maturities suitable to the needs of the Agency

and bearing interest at a rate determined by the Secretary

of the Treasury taking into consideration current market

yields on outstanding marketable obligations of the United

States of comparable maturity.

‘‘(g) B

UDGET AND

INANCIAL

ANAGEMENT

.—

‘‘(1) F

INANCIAL OPERATING PLANS AND FORECASTS

.—The

Director shall provide to the Director of the Office of Manage-

ment and Budget copies of the Director’s financial operating

plans and forecasts, as prepared by the Director in the ordinary

course of the Agency’s operations, and copies of the quarterly

reports of the Agency’s financial condition and results of oper-

ations, as prepared by the Director in the ordinary course

of the Agency’s operations.

‘‘(2) F

INANCIAL STATEMENTS

.—The Agency shall prepare

annually a statement of—

‘‘(A) assets and liabilities and surplus or deficit;

‘‘(B) income and expenses; and

‘‘(C) sources and application of funds.

‘‘(3) F

INANCIAL MANAGEMENT SYSTEMS

.—The Agency shall

implement and maintain financial management systems that—

‘‘(A) comply substantially with Federal financial

management systems requirements and applicable Federal

accounting standards; and

‘‘(B) use a general ledger system that accounts for

activity at the transaction level.

‘‘(4) A

SSERTION OF INTERNAL CONTROLS

.—The Director shall

provide to the Comptroller General of the United States an

assertion as to the effectiveness of the internal controls that

apply to financial reporting by the Agency, using the standards

established in section 3512(c) of title 31, United States Code.

‘‘(5) R

ULE OF CONSTRUCTION

.—This subsection may not be

construed as implying any obligation on the part of the Director

to consult with or obtain the consent or approval of the Director

of the Office of Management and Budget with respect to any

report, plan, forecast, or other information referred to in para-

graph (1) or any jurisdiction or oversight over the affairs or

operations of the Agency.

‘‘(h) A

UDIT OF

GENCY

.—

‘‘(1) I

N GENERAL

.—The Comptroller General shall annually

audit the financial transactions of the Agency in accordance

with the United States generally accepted government auditing

standards as may be prescribed by the Comptroller General

of the United States. The audit shall be conducted at the

place or places where accounts of the Agency are normally

kept. The representatives of the Government Accountability

Office shall have access to the personnel and to all books,

accounts, documents, papers, records (including electronic

records), reports, files, and all other papers, automated data,

things, or property belonging to or under the control of or

used or employed by the Agency pertaining to its financial

transactions and necessary to facilitate the audit, and such

representatives shall be afforded full facilities for verifying

Deadline.

Records.

Deadline.

Reports.

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122 STAT. 2672 PUBLIC LAW 110–289—JULY 30, 2008

transactions with the balances or securities held by deposi-

tories, fiscal agents, and custodians. All such books, accounts,

documents, records, reports, files, papers, and property of the

Agency shall remain in possession and custody of the Agency.

The Comptroller General may obtain and duplicate any such

books, accounts, documents, records, working papers, auto-

mated data and files, or other information relevant to such

audit without cost to the Comptroller General and the Comp-

troller General’s right of access to such information shall be

enforceable pursuant to section 716(c) of title 31, United States

Code.

‘‘(2) R

EPORT

.—The Comptroller General shall submit to

the Congress a report of each annual audit conducted under

this subsection. The report to the Congress shall set forth

the scope of the audit and shall include the statement of assets

and liabilities and surplus or deficit, the statement of income

and expenses, the statement of sources and application of funds,

and such comments and information as may be deemed nec-

essary to inform Congress of the financial operations and condi-

tion of the Agency, together with such recommendations with

respect thereto as the Comptroller General may deem advisable.

A copy of each report shall be furnished to the President and

to the Agency at the time submitted to the Congress.

‘‘(3) A

SSISTANCE AND COSTS

.—For the purpose of conducting

an audit under this subsection, the Comptroller General may,

in the discretion of the Comptroller General, employ by con-

tract, without regard to section 3709 of the Revised Statutes

of the United States (41 U.S.C. 5), professional services of

firms and organizations of certified public accountants for tem-

porary periods or for special purposes. Upon the request of

the Comptroller General, the Director of the Agency shall

transfer to the Government Accountability Office from funds

available, the amount requested by the Comptroller General

to cover the full costs of any audit and report conducted by

the Comptroller General. The Comptroller General shall credit

funds transferred to the account established for salaries and

expenses of the Government Accountability Office, and such

amount shall be available upon receipt and without fiscal year

limitation to cover the full costs of the audit and report.’’.

SEC. 1107. REGULATIONS AND ORDERS.

Section 1319G of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4526) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) A

UTHORITY

.—The Director shall issue any regulations,

guidelines, or orders necessary to carry out the duties of the Director

under this title or the authorizing statutes, and to ensure that

the purposes of this title and the authorizing statutes are accom-

plished.’’; and

(2) by striking subsection (c).

SEC. 1108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

The Federal Housing Enterprises Financial Safety and Sound-

ness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting

after section 1313A, as added by this Act, the following new section:

Guidelines.

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122 STAT. 2673 PUBLIC LAW 110–289—JULY 30, 2008

‘‘SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STAND-

ARDS.

‘‘(a) S

TANDARDS

.—The Director shall establish standards, by

regulation or guideline, for each regulated entity relating to—

‘‘(1) adequacy of internal controls and information systems

taking into account the nature and scale of business operations;

‘‘(2) independence and adequacy of internal audit systems;

‘‘(3) management of interest rate risk exposure;

‘‘(4) management of market risk, including standards that

provide for systems that accurately measure, monitor, and con-

trol market risks and, as warranted, that establish limitations

on market risk;

‘‘(5) adequacy and maintenance of liquidity and reserves;

‘‘(6) management of asset and investment portfolio growth;

‘‘(7) investments and acquisitions of assets by a regulated

entity, to ensure that they are consistent with the purposes

of this title and the authorizing statutes;

‘‘(8) overall risk management processes, including adequacy

of oversight by senior management and the board of directors

and of processes and policies to identify, measure, monitor,

and control material risks, including reputational risks, and

for adequate, well-tested business resumption plans for all

major systems with remote site facilities to protect against

disruptive events;

‘‘(9) management of credit and counterparty risk, including

systems to identify concentrations of credit risk and prudential

limits to restrict exposure of the regulated entity to a single

counterparty or groups of related counterparties;

‘‘(10) maintenance of adequate records, in accordance with

consistent accounting policies and practices that enable the

Director to evaluate the financial condition of the regulated

entity; and

‘‘(11) such other operational and management standards

as the Director determines to be appropriate.

‘‘(b) F

AILURE

EET

TANDARDS

.—

‘‘(1) P

LAN REQUIREMENT

.—

‘‘(A) I

N GENERAL

.—If the Director determines that a

regulated entity fails to meet any standard established

under subsection (a)—

‘‘(i) if such standard is established by regulation,

the Director shall require the regulated entity to

submit an acceptable plan to the Director within the

time allowed under subparagraph (C); and

‘‘(ii) if such standard is established by guideline,

the Director may require the regulated entity to submit

a plan described in clause (i).

‘‘(B) C

ONTENTS

.—Any plan required under subpara-

graph (A) shall specify the actions that the regulated entity

will take to correct the deficiency. If the regulated entity

is undercapitalized, the plan may be a part of the capital

restoration plan for the regulated entity under section

1369C.

‘‘(C) D

EADLINES FOR SUBMISSION AND REVIEW

.—The

Director shall by regulation establish deadlines that—

‘‘(i) provide the regulated entities with reasonable

time to submit plans required under subparagraph

(A), and generally require a regulated entity to submit

Regulations.

Guidelines.

12 USC 4513b.

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122 STAT. 2674 PUBLIC LAW 110–289—JULY 30, 2008

a plan not later than 30 days after the Director deter-

mines that the entity fails to meet any standard estab-

lished under subsection (a); and

‘‘(ii) require the Director to act on plans expedi-

tiously, and generally not later than 30 days after

the plan is submitted.

‘‘(2) R

EQUIRED ORDER UPON FAILURE TO SUBMIT OR IMPLE

MENT PLAN

.—If a regulated entity fails to submit an acceptable

plan within the time allowed under paragraph (1)(C), or fails

in any material respect to implement a plan accepted by the

Director, the following shall apply:

‘‘(A) R

EQUIRED CORRECTION OF DEFICIENCY

.—The

Director shall, by order, require the regulated entity to

correct the deficiency.

‘‘(B) O

THER AUTHORITY

.—The Director may, by order,

take one or more of the following actions until the deficiency

is corrected:

‘‘(i) Prohibit the regulated entity from permitting

its average total assets (as such term is defined in

section 1316(b)) during any calendar quarter to exceed

its average total assets during the preceding calendar

quarter, or restrict the rate at which the average total

assets of the entity may increase from one calendar

quarter to another.

‘‘(ii) Require the regulated entity—

‘‘(I) in the case of an enterprise, to increase

its ratio of core capital to assets.

‘‘(II) in the case of a Federal Home Loan Bank,

to increase its ratio of total capital (as such term

is defined in section 6(a)(5) of the Federal Home

Loan Bank Act (12 U.S.C. 1426(a)(5)) to assets.

‘‘(iii) Require the regulated entity to take any other

action that the Director determines will better carry

out the purposes of this section than any of the actions

described in this subparagraph.

‘‘(3) M

ANDATORY RESTRICTIONS

.—In complying with para-

graph (2), the Director shall take one or more of the actions

described in clauses (i) through (iii) of paragraph (2)(B) if—

‘‘(A) the Director determines that the regulated entity

fails to meet any standard prescribed under subsection

(a);

‘‘(B) the regulated entity has not corrected the defi-

ciency; and

‘‘(C) during the 18-month period before the date on

which the regulated entity first failed to meet the standard,

the entity underwent extraordinary growth, as defined by

the Director.

‘‘(c) O

THER

NFORCEMENT

UTHORITY

FFECTED

.—The

authority of the Director under this section is in addition to any

other authority of the Director.’’.

SEC. 1109. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS

AND LIABILITIES.

(a) I

ENERAL

.—Subtitle B of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611 et

seq.) is amended—

Applicability.

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122 STAT. 2675 PUBLIC LAW 110–289—JULY 30, 2008

(1) by striking the subtitle designation and heading and

inserting the following:

‘‘Subtitle B—Required Capital Levels for

Regulated Entities, Special Enforcement

Powers, and Reviews of Assets and Li-

abilities’’;

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

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

‘‘(a) I

ENERAL

.—The Director shall, by regulation, establish

criteria governing the portfolio holdings of the enterprises, to ensure

that the holdings are backed by sufficient capital and consistent

with the mission and the safe and sound operations of the enter-

prises. In establishing such criteria, the Director shall consider

the ability of the enterprises to provide a liquid secondary market

through securitization activities, the portfolio holdings in relation

to the overall mortgage market, and adherence to the standards

specified in section 1313B.

‘‘(b) T

EMPORARY

DJUSTMENTS

.—The Director may, by order,

make temporary adjustments to the established standards for an

enterprise or both enterprises, such as during times of economic

distress or market disruption.

‘‘(c) A

UTHORITY

EQUIRE

ISPOSITION OR

CQUISITION

.—

The Director shall monitor the portfolio of each enterprise. Pursuant

to subsection (a) and notwithstanding the capital classifications

of the enterprises, the Director may, by order, require an enterprise,

under such terms and conditions as the Director determines to

be appropriate, to dispose of or acquire any asset, if the Director

determines that such action is consistent with the purposes of

this Act or any of the authorizing statutes.’’.

(b) R

EGULATIONS

.—Not later than the expiration of the 180-

day period beginning on the effective date of this Act, the Director

shall issue regulations pursuant to section 1369E(a) of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(as added by subsection (a) of this section) establishing the portfolio

holdings standards under such section.

SEC. 1110. RISK-BASED CAPITAL REQUIREMENTS.

(a) I

ENERAL

.—Section 1361 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611)

is amended to read as follows:

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

‘‘(a) I

ENERAL

.—

‘‘(1) E

NTERPRISES

.—The Director shall, by regulation, estab-

lish risk-based capital requirements for the enterprises to

ensure that the enterprises operate in a safe and sound manner,

maintaining sufficient capital and reserves to support the risks

that arise in the operations and management of the enterprises.

‘‘(2) F

EDERAL HOME LOAN BANKS

.—The Director shall estab-

lish risk-based capital standards under section 6 of the Federal

Home Loan Bank Act for the Federal Home Loan Banks.

Standards.

Regulations.

Deadline.

Standards.

12 USC 4624

note.

Regulations.

Criteria.

12 USC 4624.

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122 STAT. 2676 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(b) N

IMITATION

.—Nothing in this section shall limit the

authority of the Director to require other reports or undertakings,

or take other action, in furtherance of the responsibilities of the

Director under this Act.’’.

(b) F

EDERAL

OME

OAN

ANKS

ISK

-B

ASED

APITAL

.—Section

6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3))

is amended—

(1) by striking subparagraph (A) and inserting the fol-

lowing:

‘‘(A) R

ISK

BASED CAPITAL STANDARDS

.—The Director

shall, by regulation, establish risk-based capital standards

for the Federal Home Loan Banks to ensure that the Fed-

eral Home Loan Banks operate in a safe and sound manner,

with sufficient permanent capital and reserves to support

the risks that arise in the operations and management

of the Federal Home Loans Banks.’’; and

(2) in subparagraph (B), by striking ‘‘(A)(ii)’’ and inserting

‘‘(A)’’.

SEC. 1111. MINIMUM CAPITAL LEVELS.

Section 1362 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4612) is amended—

(1) in subsection (a), by striking ‘‘I

ENERAL

’’ and inserting

‘‘E

NTERPRISES

’’; and

(2) by striking subsection (b) and inserting the following:

‘‘(b) F

EDERAL

OME

OAN

ANKS

.—For purposes of this subtitle,

the minimum capital level for each Federal Home Loan Bank shall

be the minimum capital required to be maintained to comply with

the leverage requirement for the bank established under section

6(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)).

‘‘(c) E

STABLISHMENT OF

EVISED

INIMUM

APITAL

EVELS

.—

Notwithstanding subsections (a) and (b) and notwithstanding the

capital classifications of the regulated entities, the Director may,

by regulations issued under section 1319G, establish a minimum

capital level for the enterprises, for the Federal Home Loan Banks,

or for both the enterprises and the banks, that is higher than

the level specified in subsection (a) for the enterprises or the level

specified in subsection (b) for the Federal Home Loan Banks, to

the extent needed to ensure that the regulated entities operate

in a safe and sound manner.

‘‘(d) A

UTHORITY

EQUIRE

EMPORARY

NCREASE

.—

‘‘(1) I

N GENERAL

.—Notwithstanding subsections (a) and (b)

and any minimum capital level established pursuant to sub-

section (c), the Director may, by order, increase the minimum

capital level for a regulated entity on a temporary basis, when

the Director determines that such an increase is necessary

and consistent with the prudential regulation and the safe

and sound operations of a regulated entity.

‘‘(2) R

ESCISSION

.—The Director shall rescind any temporary

minimum capital level established under paragraph (1) when

the Director determines that the circumstances or facts no

longer justify the temporary minimum capital level.

‘‘(3) R

EGULATIONS REQUIRED

.—The Director shall issue

regulations establishing—

‘‘(A) standards for the imposition of a temporary

increase in minimum capital under paragraph (1);

Regulations.

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122 STAT. 2677 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) the standards and procedures that the Director

will use to make the determination referred to in paragraph

(2); and

‘‘(C) a reasonable time frame for periodic review of

any temporary increase in minimum capital for the purpose

of making the determination referred to in paragraph (2).

‘‘(e) A

UTHORITY

STABLISH

DDITIONAL

APITAL AND

ESERVE

EQUIREMENTS FOR

ARTICULAR

URPOSES

.—The Director

may, at any time by order or regulation, establish such capital

or reserve requirements with respect to any product or activity

of a regulated entity, as the Director considers appropriate to ensure

that the regulated entity operates in a safe and sound manner,

with sufficient capital and reserves to support the risks that arise

in the operations and management of the regulated entity.

‘‘(f) P

ERIODIC

EVIEW

.—The Director shall periodically review

the amount of core capital maintained by the enterprises, the

amount of capital retained by the Federal Home Loan Banks, and

the minimum capital levels established for such regulated entities

pursuant to this section.’’.

SEC. 1112. REGISTRATION UNDER THE SECURITIES LAWS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)

is amended by adding at the end the following:

‘‘SEC. 38. FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL

HOME LOAN MORTGAGE CORPORATION, FEDERAL HOME

LOAN BANKS.

‘‘(a) F

EDERAL

ATIONAL

ORTGAGE

SSOCIATION AND

EDERAL

OME

OAN

ORTGAGE

ORPORATION

.—No class of equity securities

of the Federal National Mortgage Association or the Federal Home

Loan Mortgage Corporation shall be treated as an exempted security

for purposes of section 12, 13, 14, or 16.

‘‘(b) F

EDERAL

OME

OAN

ANKS

.—

‘‘(1) R

EGISTRATION

.—Each Federal Home Loan Bank shall

later than 120 days after the date of enactment of the Federal

Housing Finance Regulatory Reform Act of 2008, and shall

thereafter maintain such registration and be treated for pur-

poses of this title as an ‘issuer’, the securities of which are

required to be registered under section 12, regardless of the

number of members holding such stock at any given time.

‘‘(2) S

TANDARDS RELATING TO AUDIT COMMITTEES

.—Each

Federal Home Loan Bank shall comply with the rules issued

by the Commission under section 10A(m).

‘‘(c) D

EFINITIONS

.—For purposes of this section, the following

definitions shall apply:

‘‘(1) F

EDERAL HOME LOAN BANK

;

MEMBER

.—The terms ‘Fed-

eral Home Loan Bank’ and ‘member’, have the same meanings

as in section 2 of the Federal Home Loan Bank Act.

‘‘(2) F

EDERAL NATIONAL MORTGAGE ASSOCIATION

.—The term

‘Federal National Mortgage Association’ means the corporation

created by the Federal National Mortgage Association Charter

Act. ‘‘(3) F

EDERAL HOME LOAN MORTGAGE CORPORATION

.—The

term ‘Federal Home Loan Mortgage Corporation’ means the

corporation created by the Federal Home Loan Mortgage Cor-

poration Act.’’.

Deadline.

15 USC 7800.

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122 STAT. 2678 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1113. PROHIBITION AND WITHHOLDING OF EXECUTIVE COM-

PENSATION.

(a) I

ENERAL

.—Section 1318 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518)

is amended—

(1) in the section heading, by striking ‘‘

OF EXCESSIVE

’’

and inserting ‘‘

AND WITHHOLDING OF EXECUTIVE

’’;

(2) in subsection (a)—

(A) by striking ‘‘enterprise’’ and inserting ‘‘regulated

entity’’; and

(B) by striking ‘‘enterprises’’ and inserting ‘‘regulated

entities’’;

(3) by redesignating subsection (b) as subsection (d); and

(4) by inserting after subsection (a) the following:

‘‘(b) F

ACTORS

.—In making any determination under subsection

(a), the Director may take into consideration any factors the Director

considers relevant, including any wrongdoing on the part of the

executive officer, and such wrongdoing shall include any fraudulent

act or omission, breach of trust or fiduciary duty, violation of

law, rule, regulation, order, or written agreement, and insider abuse

with respect to the regulated entity. The approval of an agreement

or contract pursuant to section 309(d)(3)(B) of the Federal National

Mortgage Association Charter Act (12 U.S.C. 1723a(d)(3)(B)) or

section 303(h)(2) of the Federal Home Loan Mortgage Corporation

Act (12 U.S.C. 1452(h)(2)) shall not preclude the Director from

making any subsequent determination under subsection (a).

‘‘(c) W

ITHHOLDING OF

OMPENSATION

.—In carrying out sub-

section (a), the Director may require a regulated entity to withhold

any payment, transfer, or disbursement of compensation to an

executive officer, or to place such compensation in an escrow

account, during the review of the reasonableness and comparability

of compensation.’’.

(b) C

ONFORMING

MENDMENTS

.—

(1) F

ANNIE MAE

.—Section 309(d) of the Federal National

Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is

amended by adding at the end the following new paragraph:

‘‘(4) Notwithstanding any other provision of this section, the

corporation shall not transfer, disburse, or pay compensation to

any executive officer, or enter into an agreement with such executive

officer, without the approval of the Director, for matters being

reviewed under section 1318 of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).’’.

(2) F

REDDIE MAC

.—Section 303(h) of the Federal Home

Loan Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended

by adding at the end the following new paragraph:

‘‘(4) Notwithstanding any other provision of this section, the

Corporation shall not transfer, disburse, or pay compensation to

any executive officer, or enter into an agreement with such executive

officer, without the approval of the Director, for matters being

reviewed under section 1318 of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).’’.

(3) F

EDERAL HOME LOAN BANKS

.—Section 7 of the Federal

Home Loan Bank Act (12 U.S.C. 1427) is amended by adding

at the end the following new subsection:

‘‘(l) W

ITHHOLDING OF

OMPENSATION

.—Notwithstanding any

other provision of this section, a Federal Home Loan Bank shall

not transfer, disburse, or pay compensation to any executive officer,

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122 STAT. 2679 PUBLIC LAW 110–289—JULY 30, 2008

or enter into an agreement with such executive officer, without

the approval of the Director, for matters being reviewed under

section 1318 of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992 (12 U.S.C. 4518).’’.

SEC. 1114. LIMIT ON GOLDEN PARACHUTES.

Section 1318 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended

by adding at the end the following:

‘‘(e) A

UTHORITY

EGULATE OR

ROHIBIT

ERTAIN

ORMS

ENEFITS TO

FFILIATED

ARTIES

.—

‘‘(1) G

OLDEN PARACHUTES AND INDEMNIFICATION PAY

MENTS

.—The Director may prohibit or limit, by regulation or

order, any golden parachute payment or indemnification pay-

ment.

‘‘(2) F

ACTORS TO BE TAKEN INTO ACCOUNT

.—The Director

shall prescribe, by regulation, the factors to be considered by

the Director in taking any action pursuant to paragraph (1),

which may include such factors as—

‘‘(A) whether there is a reasonable basis to believe

that the affiliated party has committed any fraudulent

act or omission, breach of trust or fiduciary duty, or insider

abuse with regard to the regulated entity that has had

a material effect on the financial condition of the regulated

entity;

‘‘(B) whether there is a reasonable basis to believe

that the affiliated party is substantially responsible for

the insolvency of the regulated entity, the appointment

of a conservator or receiver for the regulated entity, or

the troubled condition of the regulated entity (as defined

in regulations prescribed by the Director);

‘‘(C) whether there is a reasonable basis to believe

that the affiliated party has materially violated any

applicable provision of Federal or State law or regulation

that has had a material effect on the financial condition

of the regulated entity;

‘‘(D) whether the affiliated party was in a position

of managerial or fiduciary responsibility; and

‘‘(E) the length of time that the party was affiliated

with the regulated entity, and the degree to which—

‘‘(i) the payment reasonably reflects compensation

earned over the period of employment; and

‘‘(ii) the compensation involved represents a

reasonable payment for services rendered.

‘‘(3) C

ERTAIN PAYMENTS PROHIBITED

.—No regulated entity

may prepay the salary or any liability or legal expense of

any affiliated party if such payment is made—

‘‘(A) in contemplation of the insolvency of such regu-

lated entity, or after the commission of an act of insolvency;

and ‘‘(B) with a view to, or having the result of—

‘‘(i) preventing the proper application of the assets

of the regulated entity to creditors; or

‘‘(ii) preferring one creditor over another.

‘‘(4) G

OLDEN PARACHUTE PAYMENT DEFINED

.—

‘‘(A) I

N GENERAL

.—For purposes of this subsection, the

term ‘golden parachute payment’ means any payment (or

Regulations.

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122 STAT. 2680 PUBLIC LAW 110–289—JULY 30, 2008

any agreement to make any payment) in the nature of

compensation by any regulated entity for the benefit of

any affiliated party pursuant to an obligation of such regu-

lated entity that—

‘‘(i) is contingent on the termination of such party’s

affiliation with the regulated entity; and

‘‘(ii) is received on or after the date on which—

‘‘(I) the regulated entity became insolvent;

‘‘(II) any conservator or receiver is appointed

for such regulated entity; or

‘‘(III) the Director determines that the regu-

lated entity is in a troubled condition (as defined

in the regulations of the Director).

‘‘(B) C

ERTAIN PAYMENTS IN CONTEMPLATION OF AN

EVENT

.—Any payment which would be a golden parachute

payment but for the fact that such payment was made

before the date referred to in subparagraph (A)(ii) shall

be treated as a golden parachute payment if the payment

was made in contemplation of the occurrence of an event

described in any subclause of such subparagraph.

‘‘(C) C

ERTAIN PAYMENTS NOT INCLUDED

.—For purposes

of this subsection, the term ‘golden parachute payment’

shall not include—

‘‘(i) any payment made pursuant to a retirement

plan which is qualified (or is intended to be qualified)

under section 401 of the Internal Revenue Code of

1986, or other nondiscriminatory benefit plan;

‘‘(ii) any payment made pursuant to a bona fide

deferred compensation plan or arrangement which the

Director determines, by regulation or order, to be

permissible; or

‘‘(iii) any payment made by reason of the death

or disability of an affiliated party.

‘‘(5) O

THER DEFINITIONS

.—For purposes of this subsection,

the following definitions shall apply:

‘‘(A) I

NDEMNIFICATION PAYMENT

.—Subject to paragraph

(6), the term ‘indemnification payment’ means any payment

(or any agreement to make any payment) by any regulated

entity for the benefit of any person who is or was an

affiliated party, to pay or reimburse such person for any

liability or legal expense with regard to any administrative

proceeding or civil action instituted by the Agency which

results in a final order under which such person—

‘‘(i) is assessed a civil money penalty;

‘‘(ii) is removed or prohibited from participating

in conduct of the affairs of the regulated entity; or

‘‘(iii) is required to take any affirmative action

to correct certain conditions resulting from violations

or practices, by order of the Director.

‘‘(B) L

IABILITY OR LEGAL EXPENSE

.—The term ‘liability

or legal expense’ means—

‘‘(i) any legal or other professional expense

incurred in connection with any claim, proceeding, or

action;

‘‘(ii) the amount of, and any cost incurred in

connection with, any settlement of any claim, pro-

ceeding, or action; and

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122 STAT. 2681 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(iii) the amount of, and any cost incurred in

connection with, any judgment or penalty imposed with

respect to any claim, proceeding, or action.

‘‘(C) P

AYMENT

.—The term ‘payment’ includes—

‘‘(i) any direct or indirect transfer of any funds

or any asset; and

‘‘(ii) any segregation of any funds or assets for

the purpose of making, or pursuant to an agreement

to make, any payment after the date on which such

funds or assets are segregated, without regard to

whether the obligation to make such payment is contin-

gent on—

‘‘(I) the determination, after such date, of the

liability for the payment of such amount; or

‘‘(II) the liquidation, after such date, of the

amount of such payment.

‘‘(6) C

ERTAIN COMMERCIAL INSURANCE COVERAGE NOT

TREATED AS COVERED BENEFIT PAYMENT

.—No provision of this

subsection shall be construed as prohibiting any regulated

entity from purchasing any commercial insurance policy or

fidelity bond, except that, subject to any requirement described

in paragraph (5)(A)(iii), such insurance policy or bond shall

not cover any legal or liability expense of the regulated entity

which is described in paragraph (5)(A).’’.

SEC. 1115. REPORTING OF FRAUDULENT LOANS.

Part 1 of subtitle C of the Federal Housing Enterprises Finan-

cial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.),

as amended by this Act, is amended by adding at the end the

following:

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

‘‘(a) R

EQUIREMENT TO

EPORT

.—The Director shall require a

regulated entity to submit to the Director a timely report upon

discovery by the regulated entity that it has purchased or sold

a fraudulent loan or financial instrument, or suspects a possible

fraud relating to the purchase or sale of any loan or financial

instrument. The Director shall require each regulated entity to

establish and maintain procedures designed to discover any such

transactions.

‘‘(b) P

ROTECTION

ROM

IABILITY FOR

EPORTS

.—Any regulated

entity that, in good faith, makes a report pursuant to subsection

(a), and any entity-affiliated party, that, in good faith, makes or

requires another to make any such report, shall not be liable

to any person under any provision of law or regulation, any constitu-

tion, law, or regulation of any State or political subdivision of

any State, or under any contract or other legally enforceable agree-

ment (including any arbitration agreement) for such report or for

any failure to provide notice of such report to the person who

is the subject of such report or any other persons identified in

the report.’’.

SEC. 1116. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN

AGENCY WORKFORCE.

Section 1319A of the Housing and Community Development

Act of 1992 (12 U.S.C. 4520) is amended—

(1) in the section heading, by striking ‘‘

EQUAL OPPOR

TUNITY IN SOLICITATION OF CONTRACTS

’’ and inserting

Procedures.

12 USC 4642.

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122 STAT. 2682 PUBLIC LAW 110–289—JULY 30, 2008

‘‘

MINORITY AND WOMEN INCLUSION

;

DIVERSITY REQUIRE

MENTS

’’;

(2) in subsection (a), by striking ‘‘(a) I

ENERAL

.—Each

enterprise’’ and inserting ‘‘(e) O

UTREACH

.—Each regulated

entity’’; and

(3) by striking subsection (b);

(4) by inserting before subsection (e), as so redesignated

by paragraph (2) of this section, the following new subsections:

‘‘(a) O

FFICE OF

INORITY AND

OMEN

NCLUSION

.—Each regu-

lated entity shall establish an Office of Minority and Women Inclu-

sion, or designate an office of the entity, that shall be responsible

for carrying out this section and all matters of the entity relating

to diversity in management, employment, and business activities

in accordance with such standards and requirements as the Director

shall establish.

‘‘(b) I

NCLUSION IN

EVELS OF

USINESS

CTIVITIES

.—Each

regulated entity shall develop and implement standards and proce-

dures to ensure, to the maximum extent possible, the inclusion

and utilization of minorities (as such term is defined in section

1204(c) of the Financial Institutions Reform, Recovery, and Enforce-

ment Act of 1989 (12 U.S.C. 1811 note)) and women, and minority-

and women-owned businesses (as such terms are defined in section

21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4))

(including financial institutions, investment banking firms, mort-

gage banking firms, asset management firms, broker-dealers, finan-

cial services firms, underwriters, accountants, brokers, investment

consultants, and providers of legal services) in all business and

activities of the regulated entity at all levels, including in procure-

ment, insurance, and all types of contracts (including contracts

for the issuance or guarantee of any debt, equity, or mortgage-

related securities, the management of its mortgage and securities

portfolios, the making of its equity investments, the purchase, sale

and servicing of single- and multi-family mortgage loans, and the

implementation of its affordable housing program and initiatives).

The processes established by each regulated entity for review and

evaluation for contract proposals and to hire service providers shall

include a component that gives consideration to the diversity of

the applicant.

‘‘(c) A

PPLICABILITY

.—This section shall apply to all contracts

of a regulated entity for services of any kind, including services

that require the services of investment banking, asset management

entities, broker-dealers, financial services entities, underwriters,

accountants, investment consultants, and providers of legal services.

‘‘(d) I

NCLUSION IN

NNUAL

EPORTS

.—Each regulated entity

shall include, in the annual report submitted by the entity to

the Director pursuant to section 309(k) of the Federal National

Mortgage Association Charter Act (12 U.S.C. 1723a(k)), section

307(c) of the Federal Home Loan Mortgage Corporation Act (12

U.S.C. 1456(c)), and section 20 of the Federal Home Loan Bank

Act (12 U.S.C. 1440), as applicable, detailed information describing

the actions taken by the entity pursuant to this section, which

shall include a statement of the total amounts paid by the entity

to third party contractors since the last such report and the percent-

age of such amounts paid to businesses described in subsection

(b) of this section.’’; and

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

Contracts.

Standards.

Procedures.

Establishment.

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122 STAT. 2683 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(f) D

IVERSITY IN

GENCY

ORKFORCE

.—The Agency shall take

affirmative steps to seek diversity in its workforce at all levels

of the agency consistent with the demographic diversity of the

United States, which shall include—

‘‘(1) heavily recruiting at historically Black colleges and

universities, Hispanic-serving institutions, women’s colleges,

and colleges that typically serve majority minority populations;

‘‘(2) sponsoring and recruiting at job fairs in urban commu-

nities, and placing employment advertisements in newspapers

and magazines oriented toward women and people of color;

‘‘(3) partnering with organizations that are focused on

developing opportunities for minorities and women to place

talented young minorities and women in industry internships,

summer employment, and full-time positions; and

‘‘(4) where feasible, partnering with inner-city high schools,

girls’ high schools, and high schools with majority minority

populations to establish or enhance financial literacy programs

and provide mentoring.’’.

SEC. 1117. TEMPORARY AUTHORITY FOR PURCHASE OF OBLIGATIONS

OF REGULATED ENTITIES BY SECRETARY OF TREASURY.

(a) F

ANNIE

.—Section 304 of the Federal National Mortgage

Association Charter Act (12 U.S.C. 1719) is amended by adding

at the end the following new subsection:

‘‘(g) T

EMPORARY

UTHORITY OF

REASURY TO

URCHASE

BLIGA

TIONS AND

ECURITIES

; C

ONDITIONS

.—

‘‘(1) A

UTHORITY TO PURCHASE

.—

‘‘(A) G

ENERAL AUTHORITY

.—In addition to the authority

under subsection (c) of this section, the Secretary of the

Treasury is authorized to purchase any obligations and

other securities issued by the corporation under any section

of this Act, on such terms and conditions as the Secretary

may determine and in such amounts as the Secretary may

determine. Nothing in this subsection requires the corpora-

tion to issue obligations or securities to the Secretary with-

out mutual agreement between the Secretary and the cor-

poration. Nothing in this subsection permits or authorizes

the Secretary, without the agreement of the corporation,

to engage in open market purchases of the common securi-

ties of the corporation.

‘‘(B) E

MERGENCY DETERMINATION REQUIRED

.—In

connection with any use of this authority, the Secretary

must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets;

‘‘(ii) prevent disruptions in the availability of mort-

gage finance; and

‘‘(iii) protect the taxpayer.

‘‘(C) C

ONSIDERATIONS

.—To protect the taxpayers, the

Secretary of the Treasury shall take into consideration

the following in connection with exercising the authority

contained in this paragraph:

‘‘(i) The need for preferences or priorities regarding

payments to the Government.

‘‘(ii) Limits on maturity or disposition of obligations

or securities to be purchased.

‘‘(iii) The corporation’s plan for the orderly resump-

tion of private market funding or capital market access.

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122 STAT. 2684 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(iv) The probability of the corporation fulfilling

the terms of any such obligation or other security,

including repayment.

‘‘(v) The need to maintain the corporation’s status

as a private shareholder-owned company.

‘‘(vi) Restrictions on the use of corporation

resources, including limitations on the payment of divi-

dends and executive compensation and any such other

terms and conditions as appropriate for those purposes.

‘‘(D) R

EPORTS TO CONGRESS

.—Upon exercise of this

authority, the Secretary shall report to the Committees

on the Budget, Financial Services, and Ways and Means

of the House of Representatives and the Committees on

the Budget, Finance, and Banking, Housing, and Urban

Affairs of the Senate as to the necessity for the purchase

and the determinations made by the Secretary under

subparagraph (B) and with respect to the considerations

required under subparagraph (C), and the size, terms, and

probability of repayment or fulfillment of other terms of

such purchase.

‘‘(2) R

IGHTS

;

SALE OF OBLIGATIONS AND SECURITIES

.—

‘‘(A) E

XERCISE OF RIGHTS

.—The Secretary of the

Treasury may, at any time, exercise any rights received

in connection with such purchases.

‘‘(B) S

ALE OF OBLIGATION AND SECURITIES

.—The Sec-

retary of the Treasury may, at any time, subject to the

terms of the security or otherwise upon terms and condi-

tions and at prices determined by the Secretary, sell any

obligation or security acquired by the Secretary under this

subsection.

‘‘(C) A

PPLICATION OF SUNSET TO PURCHASED OBLIGA

TIONS OR SECURITIES

.—The authority of the Secretary of

the Treasury to hold, exercise any rights received in connec-

tion with, or sell, any obligations or securities purchased

is not subject to the provisions of paragraph (4).

‘‘(3) F

UNDING

.—For the purpose of the authorities granted

in this subsection, the Secretary of the Treasury may use

the proceeds of the sale of any securities issued under chapter

31 of Title 31, and the purposes for which securities may

be issued under chapter 31 of Title 31 are extended to include

such purchases and the exercise of any rights in connection

with such purchases. Any funds expended for the purchase

of, or modifications to, obligations and securities, or the exercise

of any rights received in connection with such purchases under

this subsection shall be deemed appropriated at the time of

such purchase, modification, or exercise.

‘‘(4) T

ERMINATION OF AUTHORITY

.—The authority under this

subsection (g), with the exception of paragraphs (2) and (3)

of this subsection, shall expire December 31, 2009.

‘‘(5) A

UTHORITY OF THE DIRECTOR WITH RESPECT TO EXECU

TIVE COMPENSATION

.—The Director shall have the power to

approve, disapprove, or modify the executive compensation of

the corporation, as defined under Regulation S-K, 17 C.F.R.

229.’’.

(b) F

REDDIE

.—Section 306 of the Federal Home Loan

Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding

at the end the following new subsection:

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122 STAT. 2685 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(l) T

EMPORARY

UTHORITY OF

REASURY TO

URCHASE

BLIGA

TIONS AND

ECURITIES

; C

ONDITIONS

.—

‘‘(1) A

UTHORITY TO PURCHASE

.—

‘‘(A) G

ENERAL AUTHORITY

.—In addition to the authority

under subsection (c) of this section, the Secretary of the

Treasury is authorized to purchase any obligations and

other securities issued by the Corporation under any sec-

tion of this Act, on such terms and conditions as the Sec-

retary may determine and in such amounts as the Sec-

retary may determine. Nothing in this subsection requires

the Corporation to issue obligations or securities to the

Secretary without mutual agreement between the Secretary

and the Corporation. Nothing in this subsection permits

or authorizes the Secretary, without the agreement of the

Corporation, to engage in open market purchases of the

common securities of the Corporation.

‘‘(B) E

MERGENCY DETERMINATION REQUIRED

.—In

connection with any use of this authority, the Secretary

must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets;

‘‘(ii) prevent disruptions in the availability of mort-

gage finance; and

‘‘(iii) protect the taxpayer.

‘‘(C) C

ONSIDERATIONS

.—To protect the taxpayers, the

Secretary of the Treasury shall take into consideration

the following in connection with exercising the authority

contained in this paragraph:

‘‘(i) The need for preferences or priorities regarding

payments to the Government.

‘‘(ii) Limits on maturity or disposition of obligations

or securities to be purchased.

‘‘(iii) The Corporation’s plan for the orderly

resumption of private market funding or capital market

access.

‘‘(iv) The probability of the Corporation fulfilling

the terms of any such obligation or other security,

including repayment.

‘‘(v) The need to maintain the Corporation’s status

as a private shareholder-owned company.

‘‘(vi) Restrictions on the use of Corporation

resources, including limitations on the payment of divi-

dends and executive compensation and any such other

terms and conditions as appropriate for those purposes.

‘‘(D) R

EPORTS TO CONGRESS

.—Upon exercise of this

authority, the Secretary shall report to the Committees

on the Budget, Financial Services, and Ways and Means

of the House of Representatives and the Committees on

the Budget, Finance, and Banking, Housing, and Urban

Affairs of the Senate as to the necessity for the purchase

and the determinations made by the Secretary under

subparagraph (B) and with respect to the considerations

required under subparagraph (C), and the size, terms, and

probability of repayment or fulfillment of other terms of

such purchase.

‘‘(2) R

IGHTS

;

SALE OF OBLIGATIONS AND SECURITIES

.—

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122 STAT. 2686 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) E

XERCISE OF RIGHTS

.—The Secretary of the

Treasury may, at any time, exercise any rights received

in connection with such purchases.

‘‘(B) S

ALE OF OBLIGATION AND SECURITIES

.—The Sec-

retary of the Treasury may, at any time, subject to the

terms of the security or otherwise upon terms and condi-

tions and at prices determined by the Secretary, sell any

obligation or security acquired by the Secretary under this

subsection.

‘‘(C) A

PPLICATION OF SUNSET TO PURCHASED OBLIGA

TIONS OR SECURITIES

.—The authority of the Secretary of

the Treasury to hold, exercise any rights received in connec-

tion with, or sell, any obligations or securities purchased

is not subject to the provisions of paragraph (4).

‘‘(3) F

UNDING

.—For the purpose of the authorities granted

in this subsection, the Secretary of the Treasury may use

the proceeds of the sale of any securities issued under chapter

31 of Title 31, and the purposes for which securities may

be issued under chapter 31 of Title 31 are extended to include

such purchases and the exercise of any rights in connection

with such purchases. Any funds expended for the purchase

of, or modifications to, obligations and securities, or the exercise

of any rights received in connection with such purchases under

this subsection shall be deemed appropriated at the time of

such purchase, modification, or exercise.

‘‘(4) T

ERMINATION OF AUTHORITY

.—The authority under this

subsection (l), with the exception of paragraphs (2) and (3)

of this subsection, shall expire December 31, 2009.

‘‘(5) A

UTHORITY OF THE DIRECTOR WITH RESPECT TO EXECU

TIVE COMPENSATION

.—The Director shall have the power to

approve, disapprove, or modify the executive compensation of

the Corporation, as defined under Regulation S-K, 17 C.F.R.

229.’’.

EDERAL

OME

OAN

ANKS

.—Section 11 of the Federal

Home Loan Bank Act (12 U.S.C. 1431) is amended by adding

at the end the following new subsection:

‘‘(l) T

EMPORARY

UTHORITY OF

REASURY TO

URCHASE

BLIGA

TIONS

; C

ONDITIONS

.—

‘‘(1) A

UTHORITY TO PURCHASE

.—

‘‘(A) G

ENERAL AUTHORITY

.—In addition to the authority

under subsection (i) of this section, the Secretary of the

Treasury is authorized to purchase any obligations issued

by any Federal Home Loan Bank under any section of

this Act, on such terms and conditions as the Secretary

may determine and in such amounts as the Secretary may

determine. Nothing in this subsection requires a Federal

Home Loan Bank to issue obligations or securities to the

Secretary without mutual agreement between the Secretary

and the Federal Home Loan Bank. Nothing in this sub-

section permits or authorizes the Secretary, without the

agreement of the Federal Home Loan Bank, to engage

in open market purchases of the common securities of

any Federal Home Loan Bank.

‘‘(B) E

MERGENCY DETERMINATION REQUIRED

.—In

connection with any use of this authority, the Secretary

must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets;

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122 STAT. 2687 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) prevent disruptions in the availability of mort-

gage finance; and

‘‘(iii) protect the taxpayer.

‘‘(C) C

ONSIDERATIONS

.—To protect the taxpayers, the

Secretary of the Treasury shall take into consideration

the following in connection with exercising the authority

contained in this paragraph:

‘‘(i) The need for preferences or priorities regarding

payments to the Government.

‘‘(ii) Limits on maturity or disposition of obligations

or securities to be purchased.

‘‘(iii) The Federal Home Loan Bank’s plan for the

orderly resumption of private market funding or capital

market access.

‘‘(iv) The probability of the Federal Home Loan

Bank fulfilling the terms of any such obligation or

other security, including repayment.

‘‘(v) The need to maintain the Federal Home Loan

Bank’s status as a private shareholder-owned company.

‘‘(vi) Restrictions on the use of Federal Home Loan

Bank resources, including limitations on the payment

of dividends and executive compensation and any such

other terms and conditions as appropriate for those

purposes.

‘‘(D) R

EPORTS TO CONGRESS

.—Upon exercise of this

authority, the Secretary shall report to the Committees

on the Budget, Financial Services, and Ways and Means

of the House of Representatives and the Committees on

the Budget, Finance, and Banking, Housing, and Urban

Affairs of the Senate as to the necessity for the purchase

and the determinations made by the Secretary under

subparagraph (B) and with respect to the considerations

required under subparagraph (C), and the size, terms, and

probability of repayment or fulfillment of other terms of

such purchase.

‘‘(2) R

IGHTS

;

SALE OF OBLIGATIONS AND SECURITIES

.—

‘‘(A) E

XERCISE OF RIGHTS

.—The Secretary of the

Treasury may, at any time, exercise any rights received

in connection with such purchases.

‘‘(B) S

ALE OF OBLIGATIONS

.—The Secretary of the

Treasury may, at any time, subject to the terms of the

security or otherwise upon terms and conditions and at

prices determined by the Secretary, sell any obligation

acquired by the Secretary under this subsection.

‘‘(C) A

PPLICATION OF SUNSET TO PURCHASED OBLIGA

TIONS

.—The authority of the Secretary of the Treasury

to hold, exercise any rights received in connection with,

or sell, any obligations purchased is not subject to the

provisions of paragraph (4).

‘‘(3) F

UNDING

.—For the purpose of the authorities granted

in this subsection, the Secretary of the Treasury may use

the proceeds of the sale of any securities issued under chapter

31 of Title 31, and the purposes for which securities may

be issued under chapter 31 of Title 31 are extended to include

such purchases and the exercise of any rights in connection

with such purchases. Any funds expended for the purchase

of, or modifications to, obligations and securities, or the exercise

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122 STAT. 2688 PUBLIC LAW 110–289—JULY 30, 2008

of any rights received in connection with such purchases under

this subsection shall be deemed appropriated at the time of

such purchase, modification, or exercise.

‘‘(4) T

ERMINATION OF AUTHORITY

.—The authority under this

subsection (l), with the exception of paragraphs (2) and (3)

of this subsection, shall expire December 31, 2009.

‘‘(5) A

UTHORITY OF THE DIRECTOR WITH RESPECT TO EXECU

TIVE COMPENSATION

.—The Director shall have the power to

approve, disapprove, or modify the executive compensation of

the Federal Home Loan Bank, as defined under Regulation

S-K, 17 C.F.R. 229.’’.

SEC. 1118. CONSULTATION BETWEEN THE DIRECTOR OF THE FEDERAL

HOUSING FINANCE AGENCY AND THE BOARD OF GOV-

ERNORS OF THE FEDERAL RESERVE SYSTEM TO ENSURE

FINANCIAL MARKET STABILITY .

Subsection (a) of section 1313 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513),

as amended by the preceding provisions of this Act, is further

amended by adding at the end the following new paragraph:

‘‘(3) C

OORDINATION WITH THE CHAIRMAN OF THE BOARD

OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

.—

‘‘(A) C

ONSULTATION

.— The Director shall consult with,

and consider the views of, the Chairman of the Board

of Governors of the Federal Reserve System, with respect

to the risks posed by the regulated entities to the financial

system, prior to issuing any proposed or final regulations,

orders, and guidelines with respect to the exercise of the

additional authority provided in this Act regarding pruden-

tial management and operations standards, safe and sound

operations of, and capital requirements and portfolio stand-

ards applicable to the regulated entities (as such term

is defined in section 1303). The Director also shall consult

with the Chairman regarding any decision to place a regu-

lated entity into conservatorship or receivership.

‘‘(B) I

NFORMATION SHARING

.—To facilitate the consult-

ative process, the Director shall share information with

the Board of Governors of the Federal Reserve System

on a regular, periodic basis as determined by the Director

and the Board regarding the capital, asset and liabilities,

financial condition, and risk management practices of the

regulated entities as well as any information related to

financial market stability.

‘‘(C) T

ERMINATION OF CONSULTATION REQUIREMENT

.—

The requirement of the Director to consult with the Board

of Governors of the Federal Reserve System under this

paragraph shall expire at the conclusion of December 31,

2009.’’.

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122 STAT. 2689 PUBLIC LAW 110–289—JULY 30, 2008

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 Finan-

cial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.)

is amended—

(1) by striking the heading for the part and inserting the

following:

‘‘PART 2—ADDITIONAL AUTHORITIES OF THE

DIRECTOR’’;

and

(2) by striking sections 1321 and 1322.

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

RESPONSIBILITIES.

(a) I

ENERAL

.—Part 2 of subtitle A of the Federal Housing

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.

4541 et seq.) is amended—

(1) by striking ‘‘Secretary’’ each place that term appears

and inserting ‘‘Director’’ in each of sections 1323, 1326, 1327,

1328, and 1336; and

(2) by striking sections 1338 and 1349 (12 U.S.C. 4562

note and 4589).

(b) R

ETENTION OF

AIR

OUSING

ESPONSIBILITIES

.—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 Finan-

cial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.)

is amended by inserting before section 1323 the following:

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

‘‘(a) I

ENERAL

.—The Director shall require each enterprise

to obtain the approval of the Director for any product of the enter-

prise before initially offering the product.

‘‘(b) S

TANDARD FOR

PPROVAL

.—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 Mort-

gage 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 para-

graph (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

12 USC 4541.

12 USC 4543,

4546–4548, 4566.

12 USC 4541,

4542.

12 USC 4541.

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122 STAT. 2690 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(4) the product is consistent with the safety and soundness

of the enterprise or the mortgage finance system.

‘‘(c) P

ROCEDURE FOR

PPROVAL

.—

‘‘(1) S

UBMISSION 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) R

EQUEST FOR PUBLIC COMMENT

.—Immediately upon

receipt of a request for approval of a product, as required

under paragraph (1), the Director shall publish notice of such

request and of the period for public comment pursuant to

paragraph (3) regarding the product, and a description of the

product proposed by the request. The Director shall give

interested parties the opportunity to respond in writing to

the proposed product.

‘‘(3) P

UBLIC 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) O

FFERING OF PRODUCT

.—

‘‘(A) I

N GENERAL

.—Not later than 30 days after the

close of the public comment period described in paragraph

(3), the Director shall approve or deny the product, speci-

fying the grounds for such decision in writing.

‘‘(B) F

AILURE 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) T

EMPORARY 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) C

ONDITIONAL

PPROVAL

.—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) E

XCLUSIONS

.—

‘‘(1) I

N 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 condi-

tions or mortgage underwriting criteria relating to the

mortgages that are purchased or guaranteed by an enter-

prise, 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.

Deadline.

Publication.

Notice.

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122 STAT. 2691 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) E

XPEDITED REVIEW

.—

‘‘(A) E

NTERPRISE NOTICE

.—For any new activity that

an enterprise considers not to be a product, the enterprise

shall provide written notice to the Director of such activity,

and may not commence such activity until the date of

receipt of a notice under subparagraph (B) or the expiration

of the period described in subparagraph (C). The Director

shall establish, by regulation, the form and content of

such written notice.

‘‘(B) D

IRECTOR DETERMINATION

.—Not later than 15

days after the date of receipt of a notice under subpara-

graph (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) F

AILURE 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 com-

mence the new activity in accordance with subparagraph

(A).

‘‘(f) N

IMITATION

.—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) F

ANNIE

.—

(1) G

ENERAL 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 (pursu-

ant to section 1322 of the Federal Housing Enterprises Finan-

cial 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 deter-

mining such annual adjustment is a decrease, then no adjust-

ment 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

Effective dates.

Deadline.

Notification.

Regulations.

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122 STAT. 2692 PUBLIC LAW 110–289—JULY 30, 2008

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) H

IGH

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 limita-

tion 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) E

FFECTIVE DATE

.—The amendments made by para-

graphs (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) F

REDDIE

.—

(1) G

ENERAL 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) H

IGH

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

Effective dates.

12 USC 1717

note.

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122 STAT. 2693 PUBLIC LAW 110–289—JULY 30, 2008

the lesser of 150 percent of such limitation for such size resi-

dence or the amount that is equal to 115 percent of the median

house price in such area for such size residence.’’.

(3) E

FFECTIVE DATE

.—The amendments made by para-

graphs (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).

ENSE OF

ONGRESS

.—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 Cor-

poration to securitize mortgages acquired under the increased con-

forming loan limits established under this Act.

(d) H

OUSING

RICE

NDEX

.—Part 2 of subtitle A of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(12 U.S.C. 4541 et seq.) is amended by inserting after section

1321 (as added by section 1123 of this Act) the following new

section:

‘‘SEC. 1322. HOUSING PRICE INDEX.

‘‘The Director shall establish and maintain a method of

assessing the national average 1-family house price for use for

adjusting the conforming loan limitations of the enterprises. In

establishing such method, the Director shall take into consideration

the monthly survey of all major lenders conducted by the Federal

Housing Finance Agency to determine the national average 1-family

house price, the House Price Index maintained by the Office of

Federal Housing Enterprise Oversight of the Department of

Housing and Urban Development before the effective date of the

Federal Housing Finance Regulatory Reform Act of 2008, any appro-

priate 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) R

EPEAL

.—Section 1324 of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4544) is

hereby repealed.

(b) A

NNUAL

OUSING

EPORT

.—The Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 is amended

by inserting after section 1323 the following:

‘‘SEC. 1324. ANNUAL HOUSING REPORT.

‘‘(a) I

ENERAL

.—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 Com-

mittee on Financial Services of the House of Representatives, on

the activities of each enterprise.

‘‘(b) C

ONTENTS

.—The report required under subsection (a)

shall— ‘‘(1) discuss—

‘‘(A) the extent to and manner in which—

12 USC 4544.

Assessments.

12 USC 4542.

12 USC 1454

note.

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122 STAT. 2694 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(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 nontradi-

tional 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 pur-

chased 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) D

ATA

OLLECTION AND

EPORTING

.—

‘‘(1) I

N GENERAL

.—To assist the Director in analyzing the

matters described in subsection (b), the Director shall conduct,

on a monthly basis, a survey of mortgage markets in accordance

with this subsection.

‘‘(2) D

ATA 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 mort-

gage;

Deadlines.

Surveys.

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122 STAT. 2695 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) the loan-to-value ratio of the mortgage, which

shall reflect any secondary liens on the relevant prop-

erty;

‘‘(iii) the terms of the mortgage;

‘‘(iv) the creditworthiness of the borrower or bor-

rowers; and

‘‘(v) whether the mortgage, in the case of a con-

forming mortgage, was purchased by an enterprise;

‘‘(B) the characteristics of individual subprime and non-

traditional mortgages that are eligible for purchase by the

enterprises and the characteristics of borrowers under such

mortgages, including the creditworthiness of such bor-

rowers and determination whether such borrowers would

qualify for prime lending; and

‘‘(C) such other matters as the Director determines

to be appropriate.

‘‘(3) P

UBLIC 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) D

EFINITION

.—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) I

ENERAL

.—The Secretary’’ and

inserting the following:

‘‘(a) A

VAILABILITY

.—

‘‘(1) I

N GENERAL

.—The Director’’; and

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

‘‘(2) C

ENSUS 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) T

IMING

.—Data submitted under this section by an enter-

prise in connection with a provision referred to in subsection (a)

shall be made publicly available in accordance with this section

not later than September 30 of the year following the year to

which the data relates.’’.

SEC. 1127. REPORTING OF MORTGAGE DATA.

Section 1326 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4546) is amended—

(1) in subsection (a), by striking ‘‘The Director’’ and

inserting ‘‘Subject to subsection (d), the Director’’; and

(2) by adding at the end the following:

Deadline.

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122 STAT. 2696 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(d) M

ORTGAGE

NFORMATION

.—Subject to privacy consider-

ations, as described in section 304(j) of the Home Mortgage Disclo-

sure 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) R

EPEAL

.—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) H

OUSING

OALS

.—The Federal Housing Enterprises Finan-

cial Safety and Soundness Act of 1992 is amended by inserting

before section 1335 the following:

‘‘SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

‘‘(a) I

ENERAL

.—The 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) S

INGLE

FAMILY HOUSING GOALS

.—Four single-family

housing goals under section 1332.

‘‘(2) M

ULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL

.—

One multifamily special affordable housing goal under section

1333.

‘‘(b) T

IMING

.—The 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 consider-

ation 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) T

RANSITION

.—The 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 adjust-

ments consistent with such market conditions.

‘‘(d) E

LIMINATING

NTEREST

ATE

ISPARITIES

.—

‘‘(1) I

N GENERAL

.—Upon request by the Director, an enter-

prise 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) R

EMEDIAL ACTIONS UPON PRELIMINARY FINDING

.—Upon

a preliminary finding by the Director that a pattern of dispari-

ties in interest rates with respect to any lender or lenders

Records.

Deadline.

Review.

Deadline.

Regulations.

Effective date.

12 USC 4561.

Public

information.

Regulations.

Order.

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122 STAT. 2697 PUBLIC LAW 110–289—JULY 30, 2008

exists pursuant to the data provided by an enterprise in para-

graph (1), the Director shalll

‘‘(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) A

NNUAL 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 sub-

section. 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 accord-

ance with subchapter II of chapter 5 of title 5, United States

Code.

‘‘(4) P

ROTECTION 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. SINGLE-FAMILY HOUSING GOALS.

‘‘(a) I

ENERAL

.—The 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) P

URCHASE

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) R

EFINANCING 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) G

OALS AS A

ERCENTAGE OF

OTAL

ORTGAGE

CHASES

.—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) S

INGLE

-F

AMILY

, O

WNER

-O

CCUPIED

ENTAL

OUSING

NITS

.—The 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 prop-

erties and may, by regulation, establish additional requirements

relating to such units.

‘‘(d) D

ETERMINATION OF

OMPLIANCE

.—

Reports.

Deadline.

Regulations.

12 USC 4562.

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122 STAT. 2698 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) I

N 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 com-

plied 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) P

URCHASE

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 subpara-

graph, the percentage of the number of conventional, con-

forming, single-family, owner-occupied, purchase money mort-

gages 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) R

EFINANCE 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 conven-

tional, 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) A

NNUAL

ARGETS

.—

‘‘(1) I

N GENERAL

.—The Director shall, by regulation, estab-

lish 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, incon-

sistent with safety and soundness, or unauthorized for purchase

by the enterprises.

‘‘(2) G

OALS TARGETS

.—

‘‘(A) C

ALCULATION

.—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 avail-

able—

‘‘(i) of the number of conventional, conforming,

single-family, owner-occupied purchase money mort-

gages 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 para-

graphs (4) and (5).

‘‘(B) E

STABLISHMENT OF GOAL TARGETS

.—The 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 condi-

tions, including expected market developments.

Regulations.

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122 STAT. 2699 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(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) A

UTHORITY TO ADJUST TARGETS

.—The Director may,

by regulation, adjust the percentage targets previously estab-

lished by regulation pursuant to paragraph (2)(B) for any year,

to reflect subsequent available data and market developments.

‘‘(4) HMDA

INFORMATION

.—The Director shall annually

obtain information submitted in compliance with the Home

Mortgage Disclosure Act of 1975 regarding conventional, con-

forming, single-family, owner-occupied, purchase money and

refinance mortgages originated and purchased for the previous

year.

‘‘(5) C

ONFORMING MORTGAGES

.—In determining whether a

mortgage is a conforming mortgage for purposes of this para-

graph, 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) N

OTICE OF

ETERMINATION AND

NTERPRISE

OMMENT

.—

‘‘(1) N

OTICE

.—Within 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) C

OMMENT PERIOD

.—The Director shall provide each

enterprise an opportunity to comment on the determination

during the 30-day period beginning upon receipt by the enter-

prise of the notice.

‘‘(g) U

SE OF

ORROWER

NCOME

.—In monitoring the perform-

ance 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) C

ONSIDERATION OF

ROPERTIES

ITH

ENTAL

NITS

.—

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) G

OALS

REDIT

.—The Director shall determine whether an

enterprise shall receive full, partial, or no credit for a transaction

Deadline.

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122 STAT. 2700 PUBLIC LAW 110–289—JULY 30, 2008

toward achievement of any of the housing goals established pursu-

ant 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 con-

trary to good lending practices, inconsistent with safety and sound-

ness, or unauthorized for purchase by the enterprises, pursuant

to regulations issued by the Director.

‘‘SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

‘‘(a) E

STABLISHMENT OF

OAL

.—

‘‘(1) I

N GENERAL

.—The Director shall, by regulation, estab-

lish 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) A

DDITIONAL REQUIREMENTS FOR UNITS AFFORDABLE TO

VERY LOW

INCOME FAMILIES

.—When establishing the goal under

this section, the Director shall establish additional require-

ments for the purchase by each enterprise of mortgages on

multifamily housing that finance dwelling units affordable to

very low-income families.

‘‘(3) R

EPORTING 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) F

ACTORS

.—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 fami-

lies, 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

Regulations.

12 USC 4563.

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122 STAT. 2701 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(F) the need to maintain the sound financial condition

of the enterprise.

‘‘(b) U

NITS

INANCED BY

OUSING

INANCE

GENCY

ONDS

.—

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 invest-

ment grade bonds, to the extent that such purchases do not

provide a new market or add liquidity to an existing market.

‘‘(c) M

EASUREMENT OF

ERFORMANCE

.—The Director shall mon-

itor the performance of each enterprise in meeting the goals estab-

lished 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) D

ETERMINATION OF

OMPLIANCE

.—The Director shall deter-

mine, 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. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

‘‘(a) A

UTHORITY

.—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) S

TANDARD FOR

EDUCTION

.—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 condi-

tion 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) D

ETERMINATION

.—The Director shall, promptly upon receipt

of a petition regarding a reduction, seek public comment on the

reduction for a period of 30 days. The Director shall make a deter-

mination 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.’’.

ONFORMING

MENDMENTS

.—The Housing and Community

Development Act of 1992 is amendedl

(1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter

preceding paragraph (1), by striking ‘‘low- and moderate-income

Deadline.

Public comment.

12 USC 4564.

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122 STAT. 2702 PUBLIC LAW 110–289—JULY 30, 2008

housing goal’’ and all that follows through ‘‘section 1334’’ and

inserting ‘‘housing goals established under this subpart’’; and

(2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by striking

‘‘sections 1332, 1333, and 1334,’’ and inserting ‘‘this subpart’’.

(d) D

EFINITIONS

.—Section 1303 of the Federal Housing Enter-

prises 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) V

ERY LOW

INCOME

.—

‘‘(A) I

N 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 fami-

lies, as determined by the Director.

‘‘(B) R

ULE OF CONSTRUCTION

.—For purposes of section

1338 and 1339, the term ‘very low-income’ means—

‘‘(i) in the case of owner-occupied units, income

in excess of 30 percent but not greater than 50 percent

of the area median income; and

‘‘(ii) in the case of rental units, income in excess

of 30 percent but not greater than 50 percent of the

area median income, with adjustments for smaller and

larger families, as determined by the Director.’’; and

(2) by adding at the end the following:

‘‘(26) C

ONFORMING MORTGAGE

.—The term ‘conforming mort-

gage’ 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 Mort-

gage Corporation Act.

‘‘(27) E

XTREMELY 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) L

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.

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122 STAT. 2703 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(29) M

INORITY 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) S

HORTAGE OF STANDARD RENTAL UNITS BOTH AFFORD

ABLE AND AVAILABLE TO EXTREMELY LOW

INCOME RENTER

HOUSEHOLDS

.—

‘‘(A) I

N 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) R

ULE OF CONSTRUCTION

.—If the number of units

described in subparagraph (A)(i) exceeds the number of

extremely low-income households as described in subpara-

graph (A)(ii), there is no shortage.

‘‘(31) S

HORTAGE OF STANDARD RENTAL UNITS BOTH AFFORD

ABLE AND AVAILABLE TO VERY LOW

INCOME RENTER HOUSE

HOLDS

.—

‘‘(A) I

N 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) R

ULE 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) E

STABLISHMENT AND

VALUATION OF

ERFORMANCE

.—Sec-

tion 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 semi-

colon at the end;

a period;

(D) by striking paragraph (5); and

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122 STAT. 2704 PUBLIC LAW 110–289—JULY 30, 2008

(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 sub-

section:

‘‘(a) D

UTY TO

ERVE

NDERSERVED

ARKETS

.—

‘‘(1) D

UTY

.—To increase the liquidity of mortgage invest-

ments and improve the distribution of investment capital avail-

able 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 under-

served markets:

‘‘(A) M

ANUFACTURED HOUSING

.—The enterprise shall

develop loan products and flexible underwriting guidelines

to facilitate a secondary market for mortgages on manufac-

tured homes for very low-, low-, and moderate-income fami-

lies.

‘‘(B) A

FFORDABLE HOUSING PRESERVATION

.—The enter-

prise 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 underl

‘‘(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 pro-

gram under section 221(d)(4) of the National Housing

Act; ‘‘(iv) the supportive housing for the elderly pro-

gram 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 sec-

tion 515 of the Housing Act of 1949;

‘‘(viii) the low-income housing tax credit under sec-

tion 42 of the Internal Revenue Code of 1986; and

‘‘(ix) comparable state and local affordable housing

programs.

‘‘(C) R

URAL MARKETS

.—The enterprise shall develop

loan products and flexible underwriting guidelines to facili-

tate 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) A

DDITIONAL

ATEGORIES

.—The Director may submit rec-

ommendations 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 makes

Guidelines.

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122 STAT. 2705 PUBLIC LAW 110–289—JULY 30, 2008

a preliminary determination that any such category is important

to the mission of the enterprises, that the category is an under-

served market, and that the establishment of such category is

warranted.

‘‘(d) E

VALUATION AND

EPORTING OF

OMPLIANCE

.—

‘‘(1) I

N GENERAL

.—The Director shall, by regulation, estab-

lish 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 mar-

kets 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) S

EPARATE EVALUATIONS

.—In determining whether an

enterprise has complied with the duty referred to in paragraph

(1), the Director shall separately evaluate whether the enter-

prise has complied with such duty with respect to each of

the underserved markets identified in subsection (a), taking

into considerationl

‘‘(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) M

ANUFACTURED 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) P

ROHIBITION OF CONSIDERATION OF AFFORDABLE

HOUSING FUND GRANTS FOR MEETING DUTY TO SERVE

.— In deter-

mining 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) E

NFORCEMENT

.—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) E

NFORCEMENT OF DUTY TO PROVIDE MORTGAGE CREDIT

TO UNDERSERVED MARKETS

.—The duty under section 1335(a)

Regulations.

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122 STAT. 2706 PUBLIC LAW 110–289—JULY 30, 2008

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.’’.

DDITIONAL

REDIT FOR

ERTAIN

ORTGAGES

.—Section

1336(a) of the Housing and Community Development Act of 1992

(12 U.S.C. 4566(a)) is amendedl

(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) A

DDITIONAL CREDIT

.—The Director may assign addi-

tional 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 avail-

ability 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) I

ENERAL

.—Section 1336 of the Federal Housing Enter-

prises 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) N

OTICE AND

RELIMINARY

ETERMINATION OF

AILURE

EET

OALS

.—

‘‘(1) N

OTICE

.—If the Director preliminarily determines that

an enterprise has failed, or that there is a substantial prob-

ability 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 rea-

sons for such determination, and the information on which

the Director based the determination.

‘‘(2) R

ESPONSE PERIOD

.—

‘‘(A) I

N 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 con-

siders 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) E

XTENDED PERIOD

.—The Director may extend the

period under subparagraph (A) for good cause for not more

than 30 additional days.

‘‘(C) S

HORTENED PERIOD

.—The Director may shorten

the period under subparagraph (A) for good cause.

‘‘(D) F

AILURE 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

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122 STAT. 2707 PUBLIC LAW 110–289—JULY 30, 2008

of the enterprise to comment on the proposed determination

or action of the Director.

‘‘(3) C

ONSIDERATION OF INFORMATION AND FINAL DETER

MINATION

.—

‘‘(A) I

N 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) C

ONSIDERATIONS

.—In making a final determina-

tion under subparagraph (A), the Director shall take into

consideration any relevant information submitted by the

enterprise during the response period.

‘‘(C) N

OTICE

.—The Director shall provide written

notice, including a response to any information submitted

during the response period, to the enterprise, the Com-

mittee 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 substan-

tial 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) C

EASE AND

ESIST

, C

IVIL

ONEY

ENALTIES

AND

EMEDIES

NCLUDING

OUSING

LANS

.—

‘‘(1) R

EQUIREMENT

.—If the Director finds, pursuant to sub-

section (b), that there is a substantial probability that an enter-

prise 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) H

OUSING 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 improve-

ments and changes in its operations as are reasonable

in the remainder of such year; and

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122 STAT. 2708 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) sufficiently specific to enable the Director to mon-

itor compliance periodically.

‘‘(3) D

EADLINE FOR SUBMISSION

.—The Director shall estab-

lish 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 nec-

essary. Any extension of the deadline shall be in writing and

for a time certain.

‘‘(4) A

PPROVAL

.—The Director shall review each submission

by an enterprise, including a housing plan submitted under

this subsection, and, not later than 30 days after submission,

approve or disapprove the plan or other action. The Director

may extend the period for approval or disapproval for a single

additional 30-day period if the Director determines it necessary.

The Director shall approve any plan that the Director deter-

mines 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) N

OTICE 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) R

ESUBMISSION

.—If the initial housing plan submitted

by an enterprise under this section is disapproved, the enter-

prise 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) C

EASE 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) C

ONFORMING

MENDMENT

.—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’’.

EASE AND

ESIST

ROCEEDINGS

.—

(1) R

EPEAL

.—Section 1341 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C.

4581) is hereby repealed.

(2) C

EASE AND DESIST PROCEEDINGS

.—The Federal Housing

Enterprises Financial Safety and Soundness Act of 1992 is

amended by inserting before section 1342 the following:

‘‘SEC. 1341. CEASE AND DESIST PROCEEDINGS.

‘‘(a) G

ROUNDS FOR

SSUANCE

.—The Director may issue and

serve a notice of charges under this section upon an enterprise

if the Director determines that—

12 USC 4581.

Deadline.

Review.

Deadline.

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122 STAT. 2709 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(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 sub-

section (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) P

ROCEDURE

.—

‘‘(1) N

OTICE OF CHARGES

.—Each notice of charges issued

under this section shall contain a statement of the facts consti-

tuting 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) I

SSUANCE 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) E

FFECTIVE

ATE

.—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) C

IVIL

ONEY

ENALTIES

.—

(1) R

EPEAL

.—Section 1345 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C.

4585) is hereby repealed.

(2) C

IVIL MONEY PENALTIES

.—The Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 is amended

by inserting after section 1344 the following:

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122 STAT. 2710 PUBLIC LAW 110–289—JULY 30, 2008

‘‘SEC. 1345. CIVIL MONEY PENALTIES.

‘‘(a) A

UTHORITY

.—The Director may impose a civil money pen-

alty, 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 Associa-

tion 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) A

MOUNT OF

ENALTY

.—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) P

ROCEDURES

.—

‘‘(1) E

STABLISHMENT

.—The Director shall establish stand-

ards and procedures governing the imposition of civil money

penalties under this section. Such standards and procedures—

‘‘(A) shall provide for the Director to notify the enter-

prise 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) F

ACTORS 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) A

CTION TO

OLLECT

ENALTY

.—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,

Records.

Standards.

12 USC 4585.

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122 STAT. 2711 PUBLIC LAW 110–289—JULY 30, 2008

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 appro-

priateness of the order imposing the penalty shall not be subject

to review.

‘‘(e) S

ETTLEMENT BY

IRECTOR

.—The Director may compromise,

modify, or remit any civil money penalty which may be, or has

been, imposed under this section.

‘‘(f) D

EPOSIT OF

ENALTIES

.—The Director shall use any civil

money penalties collected under this section to help fund the

Housing Trust Fund established under section 1338.’’.

(e) D

IRECTOR

UTHORITY

.—

(1) A

UTHORITY TO BRING A CIVIL ACTION

.—Section 1344(a)

of the Federal Housing Enterprises Financial Safety and Sound-

ness 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) S

UBPOENA ENFORCEMENT

.—Section 1348(c) of the Fed-

eral 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) C

ONFORMING 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);

(D) section 1347 (12 U.S.C. 4587); and

(E) section 1348 (12 U.S.C. 4588).

SEC. 1131. AFFORDABLE HOUSING PROGRAMS.

(a) R

EPEAL

.—Section 1337 of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4567) is

hereby repealed.

(b) A

NNUAL

OUSING

EPORT

.—The Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 1301

et seq.) is amended by inserting after section 1336 the following:

‘‘SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS.

‘‘(a) S

SIDE AND

LLOCATION OF

MOUNTS BY

NTER

PRISES

.—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—

12 USC 4567.

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122 STAT. 2712 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(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) S

USPENSION OF

ONTRIBUTIONS

.—The Director shall tempo-

rarily 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 classi-

fied as undercapitalized; or

‘‘(3) are preventing, or would prevent, the enterprise from

successfully completing a capital restoration plan under section

1369C.

‘‘(c) P

ROHIBITION OF

ASS

-T

HROUGH OF

OST OF

LLOCATIONS

.—

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) E

NFORCEMENT OF

EQUIREMENTS ON

NTERPRISE

.—

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) R

EQUIRED

MOUNT FOR

HOPE R

ESERVE

UND

.—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) L

IMITATION

.—No funds under this title may be used in

conjunction with property taken by eminent domain, unless eminent

domain is employed only for a public use, except that, for purposes

of this section, public use shall not be construed to include economic

development that primarily benefits any private entity.

‘‘SEC. 1338. HOUSING TRUST FUND.

‘‘(a) E

STABLISHMENT AND

URPOSE

.—

‘‘(1) I

N 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

12 USC 4568.

Regulations.

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122 STAT. 2713 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) to increase homeownership for extremely low- and

very low-income families.

‘‘(2) F

EDERAL 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) A

LLOCATIONS FOR

HOPE B

OND

AYMENTS

.—

‘‘(1) I

N 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 cal-

endar 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) E

XCESS 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) T

REASURY FUND

.—The amounts referred to in subpara-

graphs (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) A

LLOCATION FOR

OUSING

RUST

UND IN

ISCAL

EAR

2010

AND

UBSEQUENT

EARS

.—

‘‘(1) I

N 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) P

ERMISSIBLE 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) D

ISTRIBUTION TO STATES BY NEEDS

BASED FORMULA

.—

‘‘(A) I

N GENERAL

.—The Secretary shall, by regulation,

establish a formula within 12 months of the date of enact-

ment 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) B

ASIS FOR FORMULA

.—The formula required under

subparagraph (A) shall include the following:

Regulations.

Deadline.

Disadvantaged

persons.

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122 STAT. 2714 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(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 short-

age of standard rental units both affordable and avail-

able 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) incom-

plete 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 house-

holds 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 construc-

tion’—

‘‘(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 construc-

tion costs are higher than the national average,

a value of 1.0 indicates that the State’s construc-

tion 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) P

RIORITY

.—The formula required under subpara-

graph (A) shall give priority emphasis and consideration

to the factor described in subparagraph (B)(i).

‘‘(4) A

LLOCATION OF GRANT AMOUNTS

.—

‘‘(A) N

OTICE

.—Not later than 60 days after the date

that the Secretary determines the formula amounts

described in paragraph (3), the Secretary shall caused to

be published in the Federal Register a notice that such

amounts shall be so available.

‘‘(B) G

RANT AMOUNT

.—In each fiscal year other than

fiscal year 2009, the Secretary shall make a grant to each

State in an amount that is equal to the formula amount

determined under paragraph (3) for that State.

State and local

governments.

Deadline.

Federal Register,

publication.

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122 STAT. 2715 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) M

INIMUM 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 alloca-

tion 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) A

LLOCATION PLANS REQUIRED

.—

‘‘(A) I

N 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 deter-

mined by the State or State designated entity in accord-

ance 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 pursu-

ant to subsection (g)(2).

‘‘(B) E

STABLISHMENT

.—In establishing an allocation

plan under this paragraph, a State or State designated

entity shall—

‘‘(i) notify the public of the establishment of the

plan;

‘‘(ii) provide an opportunity for public comments

regarding the plan;

‘‘(iii) consider any public comments received

regarding the plan; and

‘‘(iv) make the completed plan available to the

public.

‘‘(C) C

ONTENTS

.—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) S

ELECTION 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

Public

information.

Notification.

Public comments.

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122 STAT. 2716 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) are selected for funding by the State or State

designated entity in accordance with the process and cri-

teria for such selection established pursuant to subsection

(g)(2)(D).

‘‘(7) E

LIGIBLE 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 fami-

lies 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 assist-

ance under title II of such Act shall for purposes

of this subsection be considered to refer to assist-

ance 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 pur-

chase completed a program of independent financial

education and counseling from an eligible organization

that meets the requirements of section 132 of the Fed-

eral Housing Finance Regulatory Reform Act of 2008.

‘‘(8) T

ENANT 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

Disadvantaged

persons.

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122 STAT. 2717 PUBLIC LAW 110–289—JULY 30, 2008

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) E

LIGIBLE 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 con-

duct an eligible activity under paragraph (7), as evidenced

by its ability to—

‘‘(i) own, construct or rehabilitate, manage, and

operate an affordable multifamily rental housing

development;

‘‘(ii) design, construct or rehabilitate, and market

affordable housing for homeownership; or

‘‘(iii) provide forms of assistance, such as down

payments, closing costs, or interest rate buy-downs

for purchasers;

‘‘(B) demonstrates the ability and financial capacity

to undertake, comply, and manage the eligible activity;

‘‘(C) demonstrates its familiarity with the requirements

of any other Federal, State, or local housing program that

will be used in conjunction with such grant amounts to

ensure compliance with all applicable requirements and

regulations of such programs; and

‘‘(D) makes such assurances to the State or State des-

ignated entity as the Secretary shall, by regulation, require

to ensure that the recipient will comply with the require-

ments 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) L

IMITATIONS ON USE

.—

‘‘(A) R

EQUIRED AMOUNT FOR HOMEOWNERSHIP ACTIVI

TIES

.—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 subpara-

graph (B) of paragraph (7).

‘‘(B) D

EADLINE 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.

Regulations.

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122 STAT. 2718 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) U

SE OF RETURNS

.—The Secretary shall, by regula-

tion, 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 author-

ized under this subsection.

‘‘(D) P

ROHIBITED USES

.—The Secretary shall, by regula-

tion—

‘‘(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 prohib-

ited use of funds for political activities includes influ-

encing the selection, nomination, election, or appoint-

ment 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 des-

ignated 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) P

ROHIBITION OF CONSIDERATION OF USE FOR

MEETING HOUSING GOALS OR DUTY TO SERVE

.—In deter-

mining compliance with the housing goals under this sub-

part 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) R

EDUCTION FOR

AILURE TO

BTAIN

ETURN OF

ISUSED

UNDS

.—If in any year a State or State designated entity fails

to obtain reimbursement or return of the full amount required

Regulations.

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122 STAT. 2719 PUBLIC LAW 110–289—JULY 30, 2008

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 for-

mula established pursuant to this section to the total

amount of all reductions for all State or State designated

entities for such year pursuant to subparagraph (A); or

‘‘(2) in any case in which such failure to obtain reimburse-

ment 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 other-

wise apply under paragraph (1)(A).

‘‘(e) A

CCOUNTABILITY OF

ECIPIENTS AND

RANTEES

.—

‘‘(1) R

ECIPIENTS

.—

‘‘(A) T

RACKING 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 regula-

tions issued under this section, and any requirements

or conditions under which such amounts were provided;

and ‘‘(ii) establish minimum requirements for agree-

ments, between the State or State designated entity

and recipients, regarding assistance under this section,

which shall include—

‘‘(I) appropriate periodic financial and project

reporting, record retention, and audit require-

ments for the duration of the assistance to the

recipient to ensure compliance with the limitations

and requirements of this section and the regula-

tions under this section; and

‘‘(II) any other requirements that the Secretary

determines are necessary to ensure appropriate

administration and compliance.

‘‘(B) M

ISUSE OF FUNDS

.—

‘‘(i) R

EIMBURSEMENT REQUIREMENT

.—If any

recipient of assistance under this section is determined,

in accordance with clause (ii), to have used any such

amounts in a manner that is materially in violation

of this section, the regulations issued under this sec-

tion, or any requirements or conditions under which

such amounts were provided, the State or State des-

ignated entity shall require that, within 12 months

after the determination of such misuse, the recipient

shall reimburse the State or State designated entity

Deadline.

Reports.

Recordkeeping.

Requirements.

Payments.

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122 STAT. 2720 PUBLIC LAW 110–289—JULY 30, 2008

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) D

ETERMINATION

.—A determination is made in

accordance with this clause if the determination is

made by the Secretary or made by the State or State

designated entity, provided that—

‘‘(I) the State or State designated entity pro-

vides notification of the determination to the Sec-

retary for review, in the discretion of the Secretary,

of the determination; and

‘‘(II) the Secretary does not subsequently

reverse the determination.

‘‘(2) G

RANTEES

.—

‘‘(A) R

EPORT

.—

‘‘(i) I

N 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 sub-

section (c).

‘‘(ii) P

UBLIC AVAILABILITY

.—The Secretary shall

make such reports pursuant to this subparagraph pub-

licly available.

‘‘(B) M

ISUSE OF FUNDS

.—If the Secretary determines,

after reasonable notice and opportunity for hearing, that

a State or State designated entity has failed to comply

substantially with any provision of this section, and until

the Secretary is satisfied that there is no longer any such

failure to comply, the Secretary shall—

‘‘(i) reduce the amount of assistance under this

section to the State or State designated entity by an

amount equal to the amount of grant amounts which

were not used in accordance with this section;

‘‘(ii) require the State or State designated entity

to repay the Secretary any amount of the grant which

was not used in accordance with this section;

‘‘(iii) limit the availability of assistance under this

section to the State or State designated entity to activi-

ties 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) D

EFINITIONS

.—For purposes of this section, the following

definitions shall apply:

‘‘(1) E

XTREMELY LOW

INCOME RENTER HOUSEHOLD

.—The

term ‘extremely low-income renter household’ means a house-

hold whose income is not in excess of 30 percent of the area

median income, with adjustments for smaller and larger fami-

lies, as determined by the Secretary.

Notification.

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122 STAT. 2721 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) R

ECIPIENT

.—The term ‘recipient’ means an individual

or entity that receives assistance from a State or State des-

ignated entity from amounts made available to the State or

State designated entity under this section.

‘‘(3) S

HORTAGE OF STANDARD RENTAL UNITS BOTH AFFORD

ABLE AND AVAILABLE TO EXTREMELY LOW

INCOME RENTER

HOUSEHOLDS

.—

‘‘(A) I

N 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 occu-

pied by extremely low-income renter households or are

vacant for rent; and

‘‘(ii) the number of extremely low-income renter

households.

‘‘(B) R

ULE OF CONSTRUCTION

.—If the number of units

described in subparagraph (A)(i) exceeds the number of

extremely low-income households as described in subpara-

graph (A)(ii), there is no shortage.

‘‘(4) S

HORTAGE OF STANDARD RENTAL UNITS BOTH AFFORD

ABLE AND AVAILABLE TO VERY LOW

INCOME RENTER HOUSE

HOLDS

.—

‘‘(A) I

N 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 occu-

pied by very low-income renter households or are

vacant for rent; and

‘‘(ii) the number of very low-income renter house-

holds.

‘‘(B) R

ULE 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) V

ERY 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) V

ERY 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) R

EGULATIONS

.—

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122 STAT. 2722 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) I

N GENERAL

.—The Secretary shall issue regulations

to carry out this section.

‘‘(2) R

EQUIRED CONTENTS

.—The regulations issued under

this subsection shall include—

‘‘(A) a requirement that the Secretary ensure that the

use of grant amounts under this section by States or State

designated 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 subpara-

graphs (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 activi-

ties 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 pro-

vided 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, bench-

marks, and timetables for the production, preservation,

and rehabilitation of affordable rental and homeownership

housing with such grant amounts.

‘‘(h) A

FFORDABLE

OUSING

RUST

UND

.—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

Deadline.

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122 STAT. 2723 PUBLIC LAW 110–289—JULY 30, 2008

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) F

UNDING

CCOUNTABILITY AND

RANSPARENCY

.—Any grant

under this section to a grantee by a State or State designated

entity, any assistance provided to a recipient by a State or State

designated entity, and any grant, award, or other assistance from

an affordable housing trust fund referred to in subsection (h) shall

be considered a Federal award for purposes of the Federal Funding

Accountability and Transparency Act of 2006 (31 U.S.C. 6101 note).

Upon the request of the Director of the Office of Management

and Budget, the Secretary shall obtain and provide such information

regarding any such grants, assistance, and awards as the Director

of the Office of Management and Budget considers necessary to

comply with the requirements of such Act, as applicable, pursuant

to the preceding sentence.

‘‘SEC. 1339. CAPITAL MAGNET FUND.

‘‘(a) E

STABLISHMENT

.—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) D

EPOSITS TO

RUST

UND

.—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, trans-

ferred, or credited to such Fund under any other provisions

of law.

‘‘(c) E

XPENDITURES

ROM

RUST

UND

.—Amounts in the Capital

Magnet Fund shall be available to the Secretary of the Treasury

to carry out a competitive grant program to attract private capital

for and increase investment in—

‘‘(1) the development, preservation, rehabilitation, or pur-

chase 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 cen-

ters, and health care clinics, which in conjunction with afford-

able housing activities implement a concerted strategy to sta-

bilize or revitalize a low-income area or underserved rural

area.

‘‘(d) F

EDERAL

SSISTANCE

.—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) E

LIGIBLE

RANTEES

.—A grant under this section may be

made, pursuant to such requirements as the Secretary of the

Treasury shall establish for experience and success in attracting

private financing and carrying out the types of activities proposed

under the application of the grantee, only to—

‘‘(1) a Treasury certified community development financial

institution; or

Requirements.

Grants.

12 USC 4569.

Records.

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122 STAT. 2724 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) a nonprofit organization having as 1 of its principal

purposes the development or management of affordable

housing.

‘‘(f) E

LIGIBLE

SES

.—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) A

PPLICATIONS

.—

‘‘(1) I

N GENERAL

.—The Secretary of the Treasury shall pro-

vide, in a competitive application process established by regula-

tion, for eligible grantees under subsection (e) to submit applica-

tions for Capital Magnet Fund grants to the Secretary at such

time and in such manner as the Secretary shall determine.

‘‘(2) C

ONTENT 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) G

RANT

IMITATION

.—

‘‘(1) I

N GENERAL

.—Any 1 eligible grantee and its subsidi-

aries 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) G

EOGRAPHIC DIVERSITY

.—

‘‘(A) G

OAL

.—The Secretary of the Treasury shall seek

to fund activities in geographically diverse areas of eco-

nomic distress, including metropolitan and underserved

rural areas in every State.

‘‘(B) D

IVERSITY DEFINED

.—For purposes of this para-

graph, 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 underemploy-

ment;

‘‘(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) L

EVERAGE OF FUNDS

.—Each grant from the Capital

Magnet Fund awarded under this section shall be reasonably

Regulations.

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122 STAT. 2725 PUBLIC LAW 110–289—JULY 30, 2008

expected to result in eligible housing, or economic and commu-

nity 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) C

OMMITMENT 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) P

ROHIBITED USES

.—The 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 par-

ties;

‘‘(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 §501

of the Internal Revenue Code of 1986 (26 U.S.C. 501).

‘‘(6) A

DDITIONAL 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 modi-

fication 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) P

ROHIBITION OF CONSIDERATION OF USE FOR MEETING

HOUSING GOALS OR DUTY TO SERVE

.—In determining the compli-

ance 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 mort-

gages 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) A

CCOUNTABILITY OF RECIPIENTS AND GRANTEES

.—

‘‘(A) T

RACKING OF FUNDS

.—The Secretary of the

Treasury shall—

‘‘(i) require each grantee to develop and maintain

a system to ensure that each recipient of assistance

from the Capital Magnet Fund uses such amounts

in accordance with this section, the regulations issued

under this section, and any requirements or conditions

under which such amounts were provided; and

Records.

Regulations.

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122 STAT. 2726 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) establish minimum requirements for agree-

ments, 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 require-

ments 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) M

ISUSE OF FUNDS

.—If the Secretary of the

Treasury determines, after reasonable notice and oppor-

tunity 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) P

ERIODIC

EPORTS

.—

‘‘(1) I

N 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 Representa-

tives describing the activities to be funded under this section.

‘‘(2) R

EPORTS AVAILABLE TO PUBLIC

.—The Secretary of the

Treasury shall make the reports required under paragraph

(1) publicly available.

‘‘(j) R

EGULATIONS

.—

‘‘(1) I

N GENERAL

.—The Secretary of the Treasury shall issue

regulations to carry out this section.

‘‘(2) R

EQUIRED CONTENTS

.—The regulations issued under

this subsection shall include—

‘‘(A) authority for the Secretary to audit, provide for

an audit, or otherwise verify an enterprise’s activities, to

ensure compliance with this section;

‘‘(B) a requirement that the Secretary ensure that the

allocation of each enterprise is audited not less than

annually to ensure compliance with this section;

‘‘(C) a requirement that, for the purposes of subpara-

graphs (A) and (B), any financial statement submitted by

a grantee to the Secretary shall be reviewed by an inde-

pendent certified public accountant in accordance with

Deadline.

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122 STAT. 2727 PUBLIC LAW 110–289—JULY 30, 2008

Statements on Standards for Accounting and Review Serv-

ices, 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 pro-

vide 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 under-

take activities so funded in a timely manner.’’.

SEC. 1132. FINANCIAL EDUCATION AND COUNSELING.

(a) G

OALS

.—Financial education and counseling under this sec-

tion 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 pur-

chases, 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) G

RANTS

.—

(1) I

N 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) S

ELECTION

.—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.

LIGIBLE

RGANIZATIONS

.—

(1) I

N 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—

12 USC 1701x

note.

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122 STAT. 2728 PUBLIC LAW 110–289—JULY 30, 2008

(A) a housing counseling agency certified by the Sec-

retary 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;

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) A

UTHORITY FOR

ILOT

ROJECTS

.—

(1) I

N GENERAL

.—The Secretary of the Treasury shall

authorize not more than 5 pilot project grants to eligible

organizations under subsection (c) in order to—

(A) carry out the services under this section; and

(B) provide such other services that will improve the

financial stability and economic condition of low- and mod-

erate-income and low-wealth individuals.

(2) G

OAL

.—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) A

UTHORIZATION OF

PPROPRIATIONS

.—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) S

TUDY AND

EPORT ON

FFECTIVENESS AND

MPACT

.—

(1) I

N 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) C

ONTENT OF STUDY

.—The study required under para-

graph (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 coun-

seling services have resulted in positive behavioral changes.

organizations providing financial education and counseling

services under the grant program.

(g) R

EGULATIONS

.—The Secretary is authorized to promulgate

such regulations as may be necessary to implement and administer

the grant program authorized by this section.

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

(a) T

RANSFER

.—Each employee of the Department of Housing

and Urban Development whose position responsibilities primarily

involve the establishment and enforcement of the housing goals

under subpart B of part 2 of subtitle A of the Federal Housing

Deadline.

12 USC 4511

note.

Grants.

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122 STAT. 2729 PUBLIC LAW 110–289—JULY 30, 2008

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) G

UARANTEED

OSITIONS

.—

(1) I

N GENERAL

.—Each employee transferred under sub-

section (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) N

O 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 compensa-

tion 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.

PPOINTMENT

UTHORITY FOR

XCEPTED AND

ENIOR

XECU

TIVE

ERVICE

MPLOYEES

.—

(1) I

N 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) D

ECLINE 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-deter-

mining, 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) R

EORGANIZATION

.—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 reorganiza-

tion 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) E

MPLOYEE

ENEFIT

ROGRAMS

.—

(1) I

N 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) C

OST DIFFERENTIAL

.—

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122 STAT. 2730 PUBLIC LAW 110–289—JULY 30, 2008

(A) I

N GENERAL

.—The difference in the costs between

the benefits which would have been provided by the Depart-

ment of Housing and Urban Development and those pro-

vided by this section shall be paid by the Director.

(B) H

EALTH INSURANCE

.—If any employee elects to give

up membership in a health insurance program or the health

insurance program is not continued by the Director, the

employee shall be permitted to select an alternate Federal

health insurance program not later than 30 days after

the date of such election or notice, without regard to any

other regularly scheduled open season.

Subtitle C—Prompt Corrective Action

SEC. 1141. CRITICAL CAPITAL LEVELS.

(a) I

ENERAL

.—Section 1363 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4613)

is amended—

(1) by striking ‘‘For’’ and inserting ‘‘(a) E

NTERPRISES

.—

’’; and

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

‘‘(b) F

EDERAL

OME

OAN

ANKS

.—

‘‘(1) I

N GENERAL

.—For purposes of this subtitle, the critical

capital level for each Federal Home Loan Bank shall be such

amount of capital as the Director shall, by regulation, require.

‘‘(2) C

ONSIDERATION OF OTHER CRITICAL CAPITAL LEVELS

.—

In establishing the critical capital level under paragraph (1)

for the Federal Home Loan Banks, the Director shall take

due consideration of the critical capital level established under

subsection (a) for the enterprises, with such modifications as

the Director determines to be appropriate to reflect the dif-

ference in operations between the banks and the enterprises.’’.

(b) R

EGULATIONS

.—Not later than the expiration of the 180-

day period beginning on the date of enactment of this Act, the

Director of the Federal Housing Finance Agency shall issue regula-

tions pursuant to section 1363(b) of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (as added by this

section) establishing the critical capital level under such section.

SEC. 1142. CAPITAL CLASSIFICATIONS.

(a) I

ENERAL

.—Section 1364 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4614)

is amended—

(1) in the heading for subsection (a) by striking ‘‘In General’’

and inserting ‘‘Enterprises’’;

(2) in subsection (c)—

(A) by striking ‘‘subsection (b)’’ and inserting ‘‘sub-

section (c)’’;

(B) by striking ‘‘enterprises’’ and inserting ‘‘regulated

entities’’; and

(3) by redesignating subsections (c) (as so amended by

paragraph (2) of this subsection) and (d) as subsections (d)

and (f), respectively;

(4) by striking subsection (b) and inserting the following:

‘‘(b) F

EDERAL

OME

OAN

ANKS

.—

Deadline.

12 USC 4613

note.

Regulations.

Deadline.

Payments.

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122 STAT. 2731 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) E

STABLISHMENT AND CRITERIA

.—For purposes of this

subtitle, the Director shall, by regulation—

‘‘(A) establish the capital classifications specified under

paragraph (2) for the Federal Home Loan Banks;

‘‘(B) establish criteria for each such capital classifica-

tion based on the amount and types of capital held by

a bank and the risk-based, minimum, and critical capital

levels for the banks and taking due consideration of the

capital classifications established under subsection (a) for

the enterprises, with such modifications as the Director

determines to be appropriate to reflect the difference in

operations between the banks and the enterprises; and

‘‘(C) shall classify the Federal Home Loan Banks

according to such capital classifications.

‘‘(2) C

LASSIFICATIONS

.—The capital classifications specified

under this paragraph are—

‘‘(A) adequately capitalized;

‘‘(B) undercapitalized;

‘‘(C) significantly undercapitalized; and

‘‘(D) critically undercapitalized.

‘‘(c) D

ISCRETIONARY

LASSIFICATION

.—

‘‘(1) G

ROUNDS FOR RECLASSIFICATION

.—The Director may

reclassify a regulated entity under paragraph (2) if—

‘‘(A) at any time, the Director determines in writing

that the regulated entity is engaging in conduct that could

result in a rapid depletion of core or total capital or the

value of collateral pledged as security has decreased signifi-

cantly or that the value of the property subject to mortgages

held by the regulated entity (or securitized in the case

of an enterprise) has decreased significantly;

‘‘(B) after notice and an opportunity for hearing, the

Director determines that the regulated entity is in an

unsafe or unsound condition; or

‘‘(C) pursuant to section 1371(b), the Director deems

the regulated entity to be engaging in an unsafe or unsound

practice.

‘‘(2) R

ECLASSIFICATION

.—In addition to any other action

authorized under this title, including the reclassification of

a regulated entity for any reason not specified in this sub-

section, if the Director takes any action described in paragraph

(1), the Director may classify a regulated entity—

‘‘(A) as undercapitalized, if the regulated entity is

otherwise classified as adequately capitalized;

‘‘(B) as significantly undercapitalized, if the regulated

entity is otherwise classified as undercapitalized; and

‘‘(C) as critically undercapitalized, if the regulated

entity is otherwise classified as significantly undercapital-

ized.’’; and

(5) by inserting after subsection (d) (as so redesignated

by paragraph (3) of this subsection), the following new sub-

section:

‘‘(e) R

ESTRICTION ON

APITAL

ISTRIBUTIONS

.—

‘‘(1) I

N GENERAL

.—A regulated entity shall make no capital

distribution if, after making the distribution, the regulated

entity would be undercapitalized.

Regulations.

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122 STAT. 2732 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) E

XCEPTION

.—Notwithstanding paragraph (1), the

Director may permit a regulated entity, to the extent appro-

priate or applicable, to repurchase, redeem, retire, or otherwise

acquire shares or ownership interests if the repurchase,

redemption, retirement, or other acquisition—

‘‘(A) is made in connection with the issuance of addi-

tional shares or obligations of the regulated entity in at

least an equivalent amount; and

‘‘(B) will reduce the financial obligations of the regu-

lated entity or otherwise improve the financial condition

of the entity.’’.

(b) R

EGULATIONS

.—Not later than the expiration of the 180-

day period beginning on the date of enactment of this Act, the

Director of the Federal Housing Finance Agency shall issue regula-

tions to carry out section 1364(b) of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (as added by this

section), relating to capital classifications for the Federal Home

Loan Banks.

SEC. 1143. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITAL-

IZED REGULATED ENTITIES.

Section 1365 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4615) is amended—

(1) by striking ‘‘the enterprise’’ each place that term

appears and inserting ‘‘the regulated entity’’;

(2) by striking ‘‘An enterprise’’ each place that term appears

and inserting ‘‘A regulated entity’’;

(3) by striking ‘‘an enterprise’’ each place that term appears

and inserting ‘‘a regulated entity’’;

(4) in subsection (a)—

(A) by redesignating paragraphs (1) and (2) as para-

graphs (2) and (3), respectively;

(B) by inserting before paragraph (2), as redesignated,

the following:

‘‘(1) R

EQUIRED MONITORING

.—The Director shall—

‘‘(A) closely monitor the condition of any undercapital-

ized regulated entity;

‘‘(B) closely monitor compliance with the capital res-

toration plan, restrictions, and requirements imposed on

an undercapitalized regulated entity under this section;

and ‘‘(C) periodically review the plan, restrictions, and

requirements applicable to an undercapitalized regulated

entity to determine whether the plan, restrictions, and

requirements are achieving the purpose of this section.’’;

and (C) by adding at the end the following:

‘‘(4) R

ESTRICTION OF ASSET GROWTH

.—An undercapitalized

regulated entity shall not permit its average total assets during

any calendar quarter to exceed its average total assets during

the preceding calendar quarter, unless—

‘‘(A) the Director has accepted the capital restoration

plan of the regulated entity;

‘‘(B) any increase in total assets is consistent with

the capital restoration plan; and

‘‘(C) the ratio of tangible equity to assets of the regu-

lated entity increases during the calendar quarter at a

Review.

Deadline.

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122 STAT. 2733 PUBLIC LAW 110–289—JULY 30, 2008

rate sufficient to enable the regulated entity to become

adequately capitalized within a reasonable time.

‘‘(5) P

RIOR APPROVAL OF ACQUISITIONS AND NEW ACTIVI

TIES

.—An undercapitalized regulated entity shall not, directly

or indirectly, acquire any interest in any entity or engage

in any new activity, unless—

‘‘(A) the Director has accepted the capital restoration

plan of the regulated entity, the regulated entity is imple-

menting the plan, and the Director determines that the

proposed action is consistent with and will further the

achievement of the plan; or

‘‘(B) the Director determines that the proposed action

will further the purpose of this subtitle.’’;

(5) in subsection (b)—

(A) in the subsection heading, by striking ‘‘D

ISCRE

TIONARY

’’;

(B) in the matter preceding paragraph (1), by striking

‘‘may’’ and inserting ‘‘shall’’; and

(i) by striking ‘‘make, in good faith, reasonable

efforts necessary to’’; and

(ii) by striking the period at the end and inserting

‘‘in any material respect.’’; and

(6) by striking subsection (c) and inserting the following:

‘‘(c) O

THER

ISCRETIONARY

AFEGUARDS

.—The Director may

take, with respect to an undercapitalized regulated entity, any

of the actions authorized to be taken under section 1366 with

respect to a significantly undercapitalized regulated entity, if the

Director determines that such actions are necessary to carry out

the purpose of this subtitle.’’.

SEC. 1144. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY

UNDERCAPITALIZED REGULATED ENTITIES.

Section 1366 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4616) is amended—

(1) in subsection (a)(2), by striking ‘‘undercapitalized enter-

prise’’ and inserting ‘‘undercapitalized’’;

(2) by striking ‘‘the enterprise’’ each place that term

appears and inserting ‘‘the regulated entity’’;

(3) by striking ‘‘An enterprise’’ each place that term appears

and inserting ‘‘A regulated entity’’;

(4) by striking ‘‘an enterprise’’ each place that term appears

and inserting ‘‘a regulated entity’’;

(5) in subsection (b)—

(A) in the subsection heading, by striking ‘‘D

ISCRE

TIONARY

UPERVISORY

’’ and inserting ‘‘S

PECIFIC

’’;

(B) in the matter preceding paragraph (1), by striking

‘‘may, at any time, take any’’ and inserting ‘‘shall carry

out this section by taking, at any time, 1 or more’’;

(D) by redesignating paragraph (5) as paragraph (6);

(E) by inserting after paragraph (4) the following:

‘‘(5) I

MPROVEMENT OF MANAGEMENT

.—Take 1 or more of

the following actions:

‘‘(A) N

EW ELECTION OF BOARD

.—Order a new election

for the board of directors of the regulated entity.

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122 STAT. 2734 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) D

ISMISSAL OF DIRECTORS OR EXECUTIVE OFFI

CERS

.—Require the regulated entity to dismiss from office

any director or executive officer who had held office for

more than 180 days immediately before the date on which

the regulated entity became undercapitalized. Dismissal

under this subparagraph shall not be construed to be a

removal pursuant to the enforcement powers of the Director

under section 1377.

‘‘(C) E

MPLOY QUALIFIED EXECUTIVE OFFICERS

.—Require

the regulated entity to employ qualified executive officers

(who, if the Director so specifies, shall be subject to

approval by the Director).’’; and

(F) by adding at the end the following:

‘‘(7) O

THER ACTION

.—Require the regulated entity to take

any other action that the Director determines will better carry

out the purpose of this section than any of the other actions

specified in this subsection.’’; and

(6) by striking subsection (c) and inserting the following:

‘‘(c) R

ESTRICTION ON

OMPENSATION OF

XECUTIVE

FFICERS

.—

A regulated entity that is classified as significantly undercapitalized

in accordance with section 1364 may not, without prior written

approval by the Director—

‘‘(1) pay any bonus to any executive officer; or

‘‘(2) provide compensation to any executive officer at a

rate exceeding the average rate of compensation of that officer

(excluding bonuses, stock options, and profit sharing) during

the 12 calendar months preceding the calendar month in which

the regulated entity became significantly undercapitalized.’’.

SEC. 1145. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED REGU-

LATED ENTITIES.

(a) I

ENERAL

.—Section 1367 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617)

is amended to read as follows:

‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED REGU-

LATED ENTITIES.

‘‘(a) A

PPOINTMENT OF THE

GENCY AS

ONSERVATOR OR

ECEIVER

.—

‘‘(1) I

N GENERAL

.—Notwithstanding any other provision of

Federal or State law, the Director may appoint the Agency

as conservator or receiver for a regulated entity in the manner

provided under paragraph (2) or (4). All references to the conser-

vator or receiver under this section are references to the Agency

acting as conservator or receiver.

‘‘(2) D

ISCRETIONARY APPOINTMENT

.—The Agency may, at

the discretion of the Director, be appointed conservator or

receiver for the purpose of reorganizing, rehabilitating, or

winding up the affairs of a regulated entity.

‘‘(3) G

ROUNDS FOR DISCRETIONARY APPOINTMENT OF CONSER

VATOR OR RECEIVER

.—The grounds for appointing conservator

or receiver for any regulated entity under paragraph (2) are

as follows:

‘‘(A) A

SSETS INSUFFICIENT FOR OBLIGATIONS

.—The

assets of the regulated entity are less than the obligations

of the regulated entity to its creditors and others.

‘‘(B) S

UBSTANTIAL DISSIPATION

.—Substantial dissipa-

tion of assets or earnings due to—

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122 STAT. 2735 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) any violation of any provision of Federal or

State law; or

‘‘(ii) any unsafe or unsound practice.

‘‘(C) U

NSAFE OR UNSOUND CONDITION

.—An unsafe or

unsound condition to transact business.

‘‘(D) C

EASE AND DESIST ORDERS

.—Any willful violation

of a cease and desist order that has become final.

‘‘(E) C

ONCEALMENT

.—Any concealment of the books,

papers, records, or assets of the regulated entity, or any

refusal to submit the books, papers, records, or affairs

of the regulated entity, for inspection to any examiner

or to any lawful agent of the Director.

‘‘(F) I

NABILITY TO MEET OBLIGATIONS

.—The regulated

entity is likely to be unable to pay its obligations or meet

the demands of its creditors in the normal course of busi-

ness.

‘‘(G) L

OSSES

.—The regulated entity has incurred or

is likely to incur losses that will deplete all or substantially

all of its capital, and there is no reasonable prospect for

the regulated entity to become adequately capitalized (as

defined in section 1364(a)(1)).

‘‘(H) V

IOLATIONS OF LAW

.—Any violation of any law

or regulation, or any unsafe or unsound practice or condi-

tion that is likely to—

‘‘(i) cause insolvency or substantial dissipation of

assets or earnings; or

‘‘(ii) weaken the condition of the regulated entity.

‘‘(I) C

ONSENT

.—The regulated entity, by resolution of

its board of directors or its shareholders or members, con-

sents to the appointment.

‘‘(J) U

NDERCAPITALIZATION

.—The regulated entity is

undercapitalized or significantly undercapitalized (as

defined in section 1364(a)(3)), and—

‘‘(i) has no reasonable prospect of becoming ade-

quately capitalized;

‘‘(ii) fails to become adequately capitalized, as

required by—

‘‘(I) section 1365(a)(1) with respect to a regu-

lated entity; or

‘‘(II) section 1366(a)(1) with respect to a signifi-

cantly undercapitalized regulated entity;

‘‘(iii) fails to submit a capital restoration plan

acceptable to the Agency within the time prescribed

under section 1369C; or

‘‘(iv) materially fails to implement a capital res-

toration plan submitted and accepted under section

1369C.

‘‘(K) C

RITICAL UNDERCAPITALIZATION

.—The regulated

entity is critically undercapitalized, as defined in section

1364(a)(4).

‘‘(L) M

ONEY LAUNDERING

.—The Attorney General noti-

fies the Director in writing that the regulated entity has

been found guilty of a criminal offense under section 1956

or 1957 of title 18, United States Code, or section 5322

or 5324 of title 31, United States Code.

‘‘(4) M

ANDATORY RECEIVERSHIP

.—

Notification.

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122 STAT. 2736 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) I

N GENERAL

.—The Director shall appoint the

Agency as receiver for a regulated entity if the Director

determines, in writing, that—

‘‘(i) the assets of the regulated entity are, and

during the preceding 60 calendar days have been, less

than the obligations of the regulated entity to its credi-

tors and others; or

‘‘(ii) the regulated entity is not, and during the

preceding 60 calendar days has not been, generally

paying the debts of the regulated entity (other than

debts that are the subject of a bona fide dispute) as

such debts become due.

‘‘(B) P

ERIODIC DETERMINATION REQUIRED FOR CRITI

CALLY UNDERCAPITALIZED REGULATED ENTITY

.—If a regu-

lated entity is critically undercapitalized, the Director shall

make a determination, in writing, as to whether the regu-

lated entity meets the criteria specified in clause (i) or

(ii) of subparagraph (A)—

‘‘(i) not later than 30 calendar days after the regu-

lated entity initially becomes critically undercapital-

ized; and

‘‘(ii) at least once during each succeeding 30-cal-

endar day period.

‘‘(C) D

ETERMINATION NOT REQUIRED IF RECEIVERSHIP

ALREADY IN PLACE

.—Subparagraph (B) does not apply with

respect to a regulated entity in any period during which

the Agency serves as receiver for the regulated entity.

‘‘(D) R

ECEIVERSHIP TERMINATES CONSERVATORSHIP

.—

The appointment of the Agency as receiver of a regulated

entity under this section shall immediately terminate any

conservatorship established for the regulated entity under

this title.

‘‘(5) J

UDICIAL REVIEW

.—

‘‘(A) I

N GENERAL

.—If the Agency is appointed conser-

vator or receiver under this section, the regulated entity

may, within 30 days of such appointment, bring an action

in the United States district court for the judicial district

in which the home office of such regulated entity is located,

or in the United States District Court for the District

of Columbia, for an order requiring the Agency to remove

itself as conservator or receiver.

‘‘(B) R

EVIEW

.—Upon the filing of an action under

subparagraph (A), the court shall, upon the merits, dismiss

such action or direct the Agency to remove itself as such

conservator or receiver.

‘‘(6) D

IRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINT

MENT OF CONSERVATOR OR RECEIVER

.—The members of the

board of directors of a regulated entity shall not be liable

to the shareholders or creditors of the regulated entity for

acquiescing in or consenting in good faith to the appointment

of the Agency as conservator or receiver for that regulated

entity.

‘‘(7) A

GENCY NOT SUBJECT TO ANY OTHER FEDERAL

AGENCY

.—When acting as conservator or receiver, the Agency

shall not be subject to the direction or supervision of any

other agency of the United States or any State in the exercise

of the rights, powers, and privileges of the Agency.

Deadline.

Deadlines.

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122 STAT. 2737 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(b) P

OWERS AND

UTIES OF THE

GENCY AS

ONSERVATOR

ECEIVER

.—

‘‘(1) R

ULEMAKING AUTHORITY OF THE AGENCY

.—The Agency

may prescribe such regulations as the Agency determines to

be appropriate regarding the conduct of conservatorships or

receiverships.

‘‘(2) G

ENERAL POWERS

.—

‘‘(A) S

UCCESSOR TO REGULATED ENTITY

.—The Agency

shall, as conservator or receiver, and by operation of law,

immediately succeed to—

‘‘(i) all rights, titles, powers, and privileges of the

regulated entity, and of any stockholder, officer, or

director of such regulated entity with respect to the

regulated entity and the assets of the regulated entity;

and

‘‘(ii) title to the books, records, and assets of any

other legal custodian of such regulated entity.

‘‘(B) O

PERATE THE REGULATED ENTITY

.—The Agency

may, as conservator or receiver—

‘‘(i) take over the assets of and operate the regu-

lated entity with all the powers of the shareholders,

the directors, and the officers of the regulated entity

and conduct all business of the regulated entity;

‘‘(ii) collect all obligations and money due the regu-

lated entity;

‘‘(iii) perform all functions of the regulated entity

in the name of the regulated entity which are con-

sistent with the appointment as conservator or

receiver;

‘‘(iv) preserve and conserve the assets and property

of the regulated entity; and

‘‘(v) provide by contract for assistance in fulfilling

any function, activity, action, or duty of the Agency

as conservator or receiver.

‘‘(C) F

UNCTIONS OF OFFICERS

DIRECTORS

AND SHARE

HOLDERS OF A REGULATED ENTITY

.—The Agency may, by

regulation or order, provide for the exercise of any function

by any stockholder, director, or officer of any regulated

entity for which the Agency has been named conservator

or receiver.

‘‘(D) P

OWERS AS CONSERVATOR

.—The Agency may, as

conservator, take such action as may be—

‘‘(i) necessary to put the regulated entity in a sound

and solvent condition; and

‘‘(ii) appropriate to carry on the business of the

regulated entity and preserve and conserve the assets

and property of the regulated entity.

‘‘(E) A

DDITIONAL POWERS AS RECEIVER

.—In any case

in which the Agency is acting as receiver, the Agency

shall place the regulated entity in liquidation and proceed

to realize upon the assets of the regulated entity in such

manner as the Agency deems appropriate, including

through the sale of assets, the transfer of assets to a

limited-life regulated entity established under subsection

(i), or the exercise of any other rights or privileges granted

to the Agency under this paragraph.

Regulations.

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122 STAT. 2738 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(F) O

RGANIZATION OF NEW ENTERPRISE

.—The Agency

may, as receiver for an enterprise, organize a successor

enterprise that will operate pursuant to subsection (i).

‘‘(G) T

RANSFER OR SALE OF ASSETS AND LIABILITIES

.—

The Agency may, as conservator or receiver, transfer or

sell any asset or liability of the regulated entity in default,

and may do so without any approval, assignment, or con-

sent with respect to such transfer or sale.

‘‘(H) P

AYMENT OF VALID OBLIGATIONS

.—The Agency,

as conservator or receiver, shall, to the extent of proceeds

realized from the performance of contracts or sale of the

assets of a regulated entity, pay all valid obligations of

the regulated entity that are due and payable at the time

of the appointment of the Agency as conservator or receiver,

in accordance with the prescriptions and limitations of

this section.

‘‘(I) S

UBPOENA AUTHORITY

.—

‘‘(i) I

N GENERAL

.—

‘‘(I) A

GENCY AUTHORITY

.—The Agency may, as

conservator or receiver, and for purposes of car-

rying out any power, authority, or duty with

respect to a regulated entity (including deter-

mining any claim against the regulated entity and

determining and realizing upon any asset of any

person in the course of collecting money due the

regulated entity), exercise any power established

under section 1348.

‘‘(II) A

PPLICABILITY OF LAW

.—The provisions

of section 1348 shall apply with respect to the

exercise of any power under this subparagraph,

in the same manner as such provisions apply under

that section.

‘‘(ii) S

UBPOENA

.—A subpoena or subpoena duces

tecum may be issued under clause (i) only by, or with

the written approval of, the Director, or the designee

of the Director.

‘‘(iii) R

ULE OF CONSTRUCTION

.—This subsection

shall not be construed to limit any rights that the

Agency, in any capacity, might otherwise have under

section 1317 or 1379B.

‘‘(J) I

NCIDENTAL POWERS

.—The Agency may, as conser-

vator or receiver—

‘‘(i) exercise all powers and authorities specifically

granted to conservators or receivers, respectively,

under this section, and such incidental powers as shall

be necessary to carry out such powers; and

‘‘(ii) take any action authorized by this section,

which the Agency determines is in the best interests

of the regulated entity or the Agency.

‘‘(K) O

THER PROVISIONS

.—

‘‘(i) S

HAREHOLDERS AND CREDITORS OF FAILED

REGULATED ENTITY

.—Notwithstanding any other provi-

sion of law, the appointment of the Agency as receiver

for a regulated entity pursuant to paragraph (2) or

(4) of subsection (a) and its succession, by operation

of law, to the rights, titles, powers, and privileges

described in subsection (b)(2)(A) shall terminate all

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122 STAT. 2739 PUBLIC LAW 110–289—JULY 30, 2008

rights and claims that the stockholders and creditors

of the regulated entity may have against the assets

or charter of the regulated entity or the Agency arising

as a result of their status as stockholders or creditors,

except for their right to payment, resolution, or other

satisfaction of their claims, as permitted under sub-

sections (b)(9), (c), and (e).

‘‘(ii) A

SSETS OF REGULATED ENTITY

.—Notwith-

standing any other provision of law, for purposes of

this section, the charter of a regulated entity shall

not be considered an asset of the regulated entity.

‘‘(3) A

UTHORITY OF RECEIVER TO DETERMINE CLAIMS

.—

‘‘(A) I

N GENERAL

.—The Agency may, as receiver, deter-

mine claims in accordance with the requirements of this

subsection and any regulations prescribed under paragraph

(4).

‘‘(B) N

OTICE REQUIREMENTS

.—The receiver, in any case

involving the liquidation or winding up of the affairs of

a closed regulated entity, shall—

‘‘(i) promptly publish a notice to the creditors of

the regulated entity to present their claims, together

with proof, to the receiver by a date specified in the

notice which shall be not less than 90 days after the

date of publication of such notice; and

‘‘(ii) republish such notice approximately 1 month

and 2 months, respectively, after the date of publication

under clause (i).

‘‘(C) M

AILING REQUIRED

.—The receiver shall mail a

notice similar to the notice published under subparagraph

(B)(i) at the time of such publication to any creditor shown

on the books of the regulated entity—

‘‘(i) at the last address of the creditor appearing

in such books; or

‘‘(ii) upon discovery of the name and address of

a claimant not appearing on the books of the regulated

entity, within 30 days after the discovery of such name

and address.

‘‘(4) R

ULEMAKING AUTHORITY RELATING TO DETERMINATION

OF CLAIMS

.—Subject to subsection (c), the Director may pre-

scribe regulations regarding the allowance or disallowance of

claims by the receiver and providing for administrative deter-

mination of claims and review of such determination.

‘‘(5) P

ROCEDURES FOR DETERMINATION OF CLAIMS

.—

‘‘(A) D

ETERMINATION PERIOD

.—

‘‘(i) I

N GENERAL

.—Before the end of the 180-day

period beginning on the date on which any claim

against a regulated entity is filed with the Agency

as receiver, the Agency shall determine whether to

allow or disallow the claim and shall notify the claim-

ant of any determination with respect to such claim.

‘‘(ii) E

XTENSION OF TIME

.—The period described

in clause (i) may be extended by a written agreement

between the claimant and the Agency.

‘‘(iii) M

AILING OF NOTICE SUFFICIENT

.—The require-

ments of clause (i) shall be deemed to be satisfied

if the notice of any determination with respect to any

Deadline.

Notification.

Deadline.

Notice.

Publication.

Deadline.

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122 STAT. 2740 PUBLIC LAW 110–289—JULY 30, 2008

claim is mailed to the last address of the claimant

which appears—

‘‘(I) on the books of the regulated entity;

‘‘(II) in the claim filed by the claimant; or

‘‘(III) in documents submitted in proof of the

claim.

‘‘(iv) C

ONTENTS OF NOTICE OF DISALLOWANCE

.—If

any claim filed under clause (i) is disallowed, the notice

to the claimant shall contain—

‘‘(I) a statement of each reason for the dis-

allowance; and

‘‘(II) the procedures available for obtaining

agency review of the determination to disallow

the claim or judicial determination of the claim.

‘‘(B) A

LLOWANCE OF PROVEN CLAIM

.—The receiver shall

allow any claim received on or before the date specified

in the notice published under paragraph (3)(B)(i) by the

receiver from any claimant which is proved to the satisfac-

tion of the receiver.

‘‘(C) D

ISALLOWANCE OF CLAIMS FILED AFTER FILING

PERIOD

.—Claims filed after the date specified in the notice

published under paragraph (3)(B)(i), or the date specified

under paragraph (3)(C), shall be disallowed and such dis-

allowance shall be final.

‘‘(D) A

UTHORITY TO DISALLOW CLAIMS

.—

‘‘(i) I

N GENERAL

.—The receiver may disallow any

portion of any claim by a creditor or claim of security,

preference, or priority which is not proved to the satis-

faction of the receiver.

‘‘(ii) P

AYMENTS TO LESS THAN FULLY SECURED

CREDITORS

.—In the case of a claim of a creditor against

a regulated entity which is secured by any property

or other asset of such regulated entity, the receiver—

‘‘(I) may treat the portion of such claim which

exceeds an amount equal to the fair market value

of such property or other asset as an unsecured

claim against the regulated entity; and

‘‘(II) may not make any payment with respect

to such unsecured portion of the claim, other than

in connection with the disposition of all claims

of unsecured creditors of the regulated entity.

‘‘(iii) E

XCEPTIONS

.—No provision of this paragraph

shall apply with respect to—

‘‘(I) any extension of credit from any Federal

Reserve Bank, Federal Home Loan Bank, or the

United States Treasury; or

‘‘(II) any security interest in the assets of the

regulated entity securing any such extension of

credit.

‘‘(E) N

O JUDICIAL REVIEW OF DETERMINATION PURSUANT

TO SUBPARAGRAPH (D)

.—No court may review the deter-

mination of the Agency under subparagraph (D) to disallow

a claim.

‘‘(F) L

EGAL EFFECT OF FILING

.—

‘‘(i) S

TATUTE OF LIMITATION TOLLED

.—For purposes

of any applicable statute of limitations, the filing of

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122 STAT. 2741 PUBLIC LAW 110–289—JULY 30, 2008

a claim with the receiver shall constitute a commence-

ment of an action.

‘‘(ii) N

O PREJUDICE TO OTHER ACTIONS

.—Subject

to paragraph (10), the filing of a claim with the receiver

shall not prejudice any right of the claimant to continue

any action which was filed before the date of the

appointment of the receiver, subject to the determina-

tion of claims by the receiver.

‘‘(6) P

ROVISION FOR JUDICIAL DETERMINATION OF CLAIMS

.—

‘‘(A) I

N GENERAL

.—The claimant may file suit on a

claim (or continue an action commenced before the appoint-

ment of the receiver) in the district or territorial court

of the United States for the district within which the prin-

cipal place of business of the regulated entity is located

or the United States District Court for the District of

Columbia (and such court shall have jurisdiction to hear

such claim), before the end of the 60-day period beginning

on the earlier of—

‘‘(i) the end of the period described in paragraph

(5)(A)(i) with respect to any claim against a regulated

entity for which the Agency is receiver; or

‘‘(ii) the date of any notice of disallowance of such

claim pursuant to paragraph (5)(A)(i).

‘‘(B) S

TATUTE OF LIMITATIONS

.—A claim shall be

deemed to be disallowed (other than any portion of such

claim which was allowed by the receiver), and such dis-

allowance shall be final, and the claimant shall have no

further rights or remedies with respect to such claim, if

the claimant fails, before the end of the 60-day period

described under subparagraph (A), to file suit on such

claim (or continue an action commenced before the appoint-

ment of the receiver).

‘‘(7) R

EVIEW OF CLAIMS

.—

‘‘(A) O

THER REVIEW PROCEDURES

.—

‘‘(i) I

N GENERAL

.—The Agency shall establish such

alternative dispute resolution processes as may be

appropriate for the resolution of claims filed under

paragraph (5)(A)(i).

‘‘(ii) C

RITERIA

.—In establishing alternative dispute

resolution processes, the Agency shall strive for proce-

dures which are expeditious, fair, independent, and

low cost.

‘‘(iii) V

OLUNTARY BINDING OR NONBINDING PROCE

DURES

.—The Agency may establish both binding and

nonbinding processes under this subparagraph, which

may be conducted by any government or private party.

All parties, including the claimant and the Agency,

must agree to the use of the process in a particular

case.

‘‘(B) C

ONSIDERATION OF INCENTIVES

.—The Agency shall

seek to develop incentives for claimants to participate in

the alternative dispute resolution process.

‘‘(8) E

XPEDITED DETERMINATION OF CLAIMS

.—

‘‘(A) E

STABLISHMENT REQUIRED

.—The Agency shall

establish a procedure for expedited relief outside of the

routine claims process established under paragraph (5) for

claimants who—

Procedures.

Deadline.

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122 STAT. 2742 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) allege the existence of legally valid and enforce-

able or perfected security interests in assets of any

regulated entity for which the Agency has been

appointed receiver; and

‘‘(ii) allege that irreparable injury will occur if

the routine claims procedure is followed.

‘‘(B) D

ETERMINATION PERIOD

.—Before the end of the

90-day period beginning on the date on which any claim

is filed in accordance with the procedures established under

subparagraph (A), the Director shall—

‘‘(i) determine—

‘‘(I) whether to allow or disallow such claim;

or ‘‘(II) whether such claim should be determined

pursuant to the procedures established under para-

graph (5); and

‘‘(ii) notify the claimant of the determination, and

if the claim is disallowed, provide a statement of each

reason for the disallowance and the procedure for

obtaining agency review or judicial determination.

‘‘(C) P

ERIOD FOR FILING OR RENEWING SUIT

.—Any

claimant who files a request for expedited relief shall be

permitted to file a suit, or to continue a suit filed before

the date of appointment of the receiver, seeking a deter-

mination of the rights of the claimant with respect to

such security interest after the earlier of—

‘‘(i) the end of the 90-day period beginning on

the date of the filing of a request for expedited relief;

or ‘‘(ii) the date on which the Agency denies the claim.

‘‘(D) S

TATUTE OF LIMITATIONS

.—If an action described

under subparagraph (C) is not filed, or the motion to renew

a previously filed suit is not made, before the end of the

30-day period beginning on the date on which such action

or motion may be filed under subparagraph (B), the claim

shall be deemed to be disallowed as of the end of such

period (other than any portion of such claim which was

allowed by the receiver), such disallowance shall be final,

and the claimant shall have no further rights or remedies

with respect to such claim.

‘‘(E) L

EGAL EFFECT OF FILING

.—

‘‘(i) S

TATUTE OF LIMITATION TOLLED

.—For purposes

of any applicable statute of limitations, the filing of

a claim with the receiver shall constitute a commence-

ment of an action.

‘‘(ii) N

O PREJUDICE TO OTHER ACTIONS

.—Subject

to paragraph (10), the filing of a claim with the receiver

shall not prejudice any right of the claimant to continue

any action that was filed before the appointment of

the receiver, subject to the determination of claims

by the receiver.

‘‘(9) P

AYMENT OF CLAIMS

.—

‘‘(A) I

N GENERAL

.—The receiver may, in the discretion

of the receiver, and to the extent that funds are available

from the assets of the regulated entity, pay creditor claims,

in such manner and amounts as are authorized under

this section, which are—

Deadline.

Notification.

Deadline.

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122 STAT. 2743 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) allowed by the receiver;

‘‘(ii) approved by the Agency pursuant to a final

determination pursuant to paragraph (7) or (8); or

‘‘(iii) determined by the final judgment of any court

of competent jurisdiction.

‘‘(B) A

GREEMENTS AGAINST THE INTEREST OF THE

AGENCY

.—No agreement that tends to diminish or defeat

the interest of the Agency in any asset acquired by the

Agency as receiver under this section shall be valid against

the Agency unless such agreement is in writing and

executed by an authorized officer or representative of the

regulated entity.

‘‘(C) P

AYMENT OF DIVIDENDS ON CLAIMS

.—The receiver

may, in the sole discretion of the receiver, pay from the

assets of the regulated entity dividends on proved claims

at any time, and no liability shall attach to the Agency

by reason of any such payment, for failure to pay dividends

to a claimant whose claim is not proved at the time of

any such payment.

‘‘(D) R

ULEMAKING AUTHORITY OF THE DIRECTOR

.—The

Director may prescribe such rules, including definitions

of terms, as the Director deems appropriate to establish

a single uniform interest rate for, or to make payments

of post-insolvency interest to creditors holding proven

claims against the receivership estates of the regulated

entity, following satisfaction by the receiver of the principal

amount of all creditor claims.

‘‘(10) S

USPENSION OF LEGAL ACTIONS

.—

‘‘(A) I

N GENERAL

.—After the appointment of a conser-

vator or receiver for a regulated entity, the conservator

or receiver may, in any judicial action or proceeding to

which such regulated entity is or becomes a party, request

a stay for a period not to exceed—

‘‘(i) 45 days, in the case of any conservator; and

‘‘(ii) 90 days, in the case of any receiver.

‘‘(B) G

RANT OF STAY BY ALL COURTS REQUIRED

.—Upon

receipt of a request by the conservator or receiver under

subparagraph (A) for a stay of any judicial action or pro-

ceeding in any court with jurisdiction of such action or

proceeding, the court shall grant such stay as to all parties.

‘‘(11) A

DDITIONAL RIGHTS AND DUTIES

.—

‘‘(A) P

RIOR FINAL ADJUDICATION

.—The Agency shall

abide by any final unappealable judgment of any court

of competent jurisdiction which was rendered before the

appointment of the Agency as conservator or receiver.

‘‘(B) R

IGHTS AND REMEDIES OF CONSERVATOR OR

RECEIVER

.—In the event of any appealable judgment, the

Agency as conservator or receiver—

‘‘(i) shall have all of the rights and remedies avail-

able to the regulated entity (before the appointment

of such conservator or receiver) and the Agency,

including removal to Federal court and all appellate

rights; and

‘‘(ii) shall not be required to post any bond in

order to pursue such remedies.

‘‘(C) N

O ATTACHMENT OR EXECUTION

.—No attachment

or execution may issue by any court upon assets in the

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122 STAT. 2744 PUBLIC LAW 110–289—JULY 30, 2008

possession of the receiver, or upon the charter, of a regu-

lated entity for which the Agency has been appointed

receiver.

‘‘(D) L

IMITATION ON JUDICIAL REVIEW

.—Except as

otherwise provided in this subsection, no court shall have

jurisdiction over—

‘‘(i) any claim or action for payment from, or any

action seeking a determination of rights with respect

to, the assets or charter of any regulated entity for

which the Agency has been appointed receiver; or

‘‘(ii) any claim relating to any act or omission

of such regulated entity or the Agency as receiver.

‘‘(E) D

ISPOSITION OF ASSETS

.—In exercising any right,

power, privilege, or authority as conservator or receiver

in connection with any sale or disposition of assets of

a regulated entity for which the Agency has been appointed

conservator or receiver, the Agency shall conduct its oper-

ations in a manner which—

‘‘(i) maximizes the net present value return from

the sale or disposition of such assets;

‘‘(ii) minimizes the amount of any loss realized

in the resolution of cases; and

‘‘(iii) ensures adequate competition and fair and

consistent treatment of offerors.

‘‘(12) S

TATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY

CONSERVATOR OR RECEIVER

.—

‘‘(A) I

N GENERAL

.—Notwithstanding any provision of

any contract, the applicable statute of limitations with

regard to any action brought by the Agency as conservator

or receiver shall be—

‘‘(i) in the case of any contract claim, the longer

of—

‘‘(I) the 6-year period beginning on the date

on which the claim accrues; or

‘‘(II) the period applicable under State law;

and

‘‘(ii) in the case of any tort claim, the longer of—

‘‘(I) the 3-year period beginning on the date

on which the claim accrues; or

‘‘(II) the period applicable under State law.

‘‘(B) D

ETERMINATION OF THE DATE ON WHICH A CLAIM

ACCRUES

.—For purposes of subparagraph (A), the date on

which the statute of limitations begins to run on any claim

described in such subparagraph shall be the later of—

‘‘(i) the date of the appointment of the Agency

as conservator or receiver; or

‘‘(ii) the date on which the cause of action accrues.

‘‘(13) R

EVIVAL OF EXPIRED STATE CAUSES OF ACTION

.—

‘‘(A) I

N GENERAL

.—In the case of any tort claim

described under clause (ii) for which the statute of limita-

tions applicable under State law with respect to such claim

has expired not more than 5 years before the appointment

of the Agency as conservator or receiver, the Agency may

bring an action as conservator or receiver on such claim

without regard to the expiration of the statute of limitations

applicable under State law.

Effective date.

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122 STAT. 2745 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) C

LAIMS DESCRIBED

.—A tort claim referred to under

clause (i) is a claim arising from fraud, intentional mis-

conduct resulting in unjust enrichment, or intentional mis-

conduct resulting in substantial loss to the regulated entity.

‘‘(14) A

CCOUNTING AND RECORDKEEPING REQUIREMENTS

.—

‘‘(A) I

N GENERAL

.—The Agency as conservator or

receiver shall, consistent with the accounting and reporting

practices and procedures established by the Agency, main-

tain a full accounting of each conservatorship and receiver-

ship or other disposition of a regulated entity in default.

‘‘(B) A

NNUAL ACCOUNTING OR REPORT

.—With respect

to each conservatorship or receivership, the Agency shall

make an annual accounting or report available to the

Board, the Comptroller General of the United States, the

Committee on Banking, Housing, and Urban Affairs of

the Senate, and the Committee on Financial Services of

the House of Representatives.

‘‘(C) A

VAILABILITY OF REPORTS

.—Any report prepared

under subparagraph (B) shall be made available by the

Agency upon request to any shareholder of a regulated

entity or any member of the public.

‘‘(D) R

ECORDKEEPING REQUIREMENT

.—After the end of

the 6-year period beginning on the date on which the

conservatorship or receivership is terminated by the

Director, the Agency may destroy any records of such regu-

lated entity which the Agency, in the discretion of the

Agency, determines to be unnecessary, unless directed not

to do so by a court of competent jurisdiction or govern-

mental agency, or prohibited by law.

‘‘(15) F

RAUDULENT TRANSFERS

.—

‘‘(A) I

N GENERAL

.—The Agency, as conservator or

receiver, may avoid a transfer of any interest of an entity-

affiliated party, or any person determined by the conser-

vator or receiver to be a debtor of the regulated entity,

in property, or any obligation incurred by such party or

person, that was made within 5 years of the date on which

the Agency was appointed conservator or receiver, if such

party or person voluntarily or involuntarily made such

transfer or incurred such liability with the intent to hinder,

delay, or defraud the regulated entity, the Agency, the

conservator, or receiver.

‘‘(B) R

IGHT OF RECOVERY

.—To the extent a transfer

is avoided under subparagraph (A), the conservator or

receiver may recover, for the benefit of the regulated entity,

the property transferred, or, if a court so orders, the value

of such property (at the time of such transfer) from—

‘‘(i) the initial transferee of such transfer or the

entity-affiliated party or person for whose benefit such

transfer was made; or

‘‘(ii) any immediate or mediate transferee of any

such initial transferee.

‘‘(C) R

IGHTS OF TRANSFEREE OR OBLIGEE

.—The conser-

vator or receiver may not recover under subparagraph (B)

from— ‘‘(i) any transferee that takes for value, including

satisfaction or securing of a present or antecedent debt,

in good faith; or

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122 STAT. 2746 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) any immediate or mediate good faith trans-

feree of such transferee.

‘‘(D) R

IGHTS UNDER THIS PARAGRAPH

.—The rights under

this paragraph of the conservator or receiver described

under subparagraph (A) shall be superior to any rights

of a trustee or any other party (other than any party

which is a Federal agency) under title 11, United States

Code.

‘‘(16) A

TTACHMENT OF ASSETS AND OTHER INJUNCTIVE

RELIEF

.—Subject to paragraph (17), any court of competent

jurisdiction may, at the request of the conservator or receiver,

issue an order in accordance with rule 65 of the Federal Rules

of Civil Procedure, including an order placing the assets of

any person designated by the conservator or receiver under

the control of the court, and appointing a trustee to hold such

assets.

‘‘(17) S

TANDARDS OF PROOF

.—Rule 65 of the Federal Rules

of Civil Procedure shall apply with respect to any proceeding

under paragraph (16) without regard to the requirement of

such rule that the applicant show that the injury, loss, or

damage is irreparable and immediate.

‘‘(18) T

REATMENT OF CLAIMS ARISING FROM BREACH OF CON

TRACTS EXECUTED BY THE CONSERVATOR OR RECEIVER

.—

‘‘(A) I

N GENERAL

.—Notwithstanding any other provi-

sion of this subsection, any final and unappealable judg-

ment for monetary damages entered against the conser-

vator or receiver for the breach of an agreement executed

or approved in writing by the conservator or receiver after

the date of its appointment, shall be paid as an administra-

tive expense of the conservator or receiver.

‘‘(B) N

O LIMITATION OF POWER

.—Nothing in this para-

graph shall be construed to limit the power of the conser-

vator or receiver to exercise any rights under contract

or law, including to terminate, breach, cancel, or otherwise

discontinue such agreement.

‘‘(19) G

ENERAL EXCEPTIONS

.—

‘‘(A) L

IMITATIONS

.—The rights of the conservator or

receiver appointed under this section shall be subject to

the limitations on the powers of a receiver under sections

402 through 407 of the Federal Deposit Insurance Corpora-

tion Improvement Act of 1991 (12 U.S.C. 4402 through

4407).

‘‘(B) M

ORTGAGES HELD IN TRUST

.—

‘‘(i) I

N GENERAL

.—Any mortgage, pool of mortgages,

or interest in a pool of mortgages held in trust, custo-

dial, or agency capacity by a regulated entity for the

benefit of any person other than the regulated entity

shall not be available to satisfy the claims of creditors

generally, except that nothing in this clause shall be

construed to expand or otherwise affect the authority

of any regulated entity.

‘‘(ii) H

OLDING OF MORTGAGES

.—Any mortgage, pool

of mortgages, or interest in a pool of mortgages

described in clause (i) shall be held by the conservator

or receiver appointed under this section for the bene-

ficial owners of such mortgage, pool of mortgages, or

interest in accordance with the terms of the agreement

Applicability.

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122 STAT. 2747 PUBLIC LAW 110–289—JULY 30, 2008

creating such trust, custodial, or other agency arrange-

ment.

‘‘(iii) L

IABILITY OF CONSERVATOR OR RECEIVER

.—

The liability of the conservator or receiver appointed

under this section for damages shall, in the case of

any contingent or unliquidated claim relating to the

mortgages held in trust, be estimated in accordance

with the regulations of the Director.

‘‘(c) P

RIORITY OF

XPENSES AND

NSECURED

LAIMS

.—

‘‘(1) I

N GENERAL

.—Unsecured claims against a regulated

entity, or the receiver therefor, that are proven to the satisfac-

tion of the receiver shall have priority in the following order:

‘‘(A) Administrative expenses of the receiver.

‘‘(B) Any other general or senior liability of the regu-

lated entity (which is not a liability described under

subparagraph (C) or (D).

‘‘(C) Any obligation subordinated to general creditors

(which is not an obligation described under subparagraph

(D)).

‘‘(D) Any obligation to shareholders or members arising

as a result of their status as shareholder or members.

‘‘(2) C

REDITORS SIMILARLY SITUATED

.—All creditors that are

similarly situated under paragraph (1) shall be treated in a

similar manner, except that the receiver may take any action

(including making payments) that does not comply with this

subsection, if—

‘‘(A) the Director determines that such action is nec-

essary to maximize the value of the assets of the regulated

entity, to maximize the present value return from the

sale or other disposition of the assets of the regulated

entity, or to minimize the amount of any loss realized

upon the sale or other disposition of the assets of the

regulated entity; and

‘‘(B) all creditors that are similarly situated under

paragraph (1) receive not less than the amount provided

in subsection (e)(2).

‘‘(3) D

EFINITION

.—As used in this subsection, the term

‘administrative expenses of the receiver’ includes—

‘‘(A) the actual, necessary costs and expenses incurred

by the receiver in preserving the assets of a failed regulated

entity or liquidating or otherwise resolving the affairs of

a failed regulated entity; and

‘‘(B) any obligations that the receiver determines are

necessary and appropriate to facilitate the smooth and

orderly liquidation or other resolution of the regulated

entity.

‘‘(d) P

ROVISIONS

ELATING TO

ONTRACTS

NTERED

NTO

EFORE

PPOINTMENT OF

ONSERVATOR OR

ECEIVER

.—

‘‘(1) A

UTHORITY TO REPUDIATE CONTRACTS

.—In addition to

any other rights a conservator or receiver may have, the conser-

vator or receiver for any regulated entity may disaffirm or

repudiate any contract or lease—

‘‘(A) to which such regulated entity is a party;

‘‘(B) the performance of which the conservator or

receiver, in its sole discretion, determines to be burden-

some; and

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122 STAT. 2748 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) the disaffirmance or repudiation of which the con-

servator or receiver determines, in its sole discretion, will

promote the orderly administration of the affairs of the

regulated entity.

‘‘(2) T

IMING OF REPUDIATION

.—The conservator or receiver

shall determine whether or not to exercise the rights of repudi-

ation under this subsection within a reasonable period following

such appointment.

‘‘(3) C

LAIMS FOR DAMAGES FOR REPUDIATION

.—

‘‘(A) I

N GENERAL

.—Except as otherwise provided under

subparagraph (C) and paragraphs (4), (5), and (6), the

liability of the conservator or receiver for the disaffirmance

or repudiation of any contract pursuant to paragraph (1)

shall be—

‘‘(i) limited to actual direct compensatory damages;

and

‘‘(ii) determined as of—

‘‘(I) the date of the appointment of the conser-

vator or receiver; or

‘‘(II) in the case of any contract or agreement

referred to in paragraph (8), the date of the

disaffirmance or repudiation of such contract or

agreement.

‘‘(B) N

O LIABILITY FOR OTHER DAMAGES

.—For purposes

of subparagraph (A), the term ‘actual direct compensatory

damages’ shall not include—

‘‘(i) punitive or exemplary damages;

‘‘(ii) damages for lost profits or opportunity; or

‘‘(iii) damages for pain and suffering.

‘‘(C) M

EASURE OF DAMAGES FOR REPUDIATION OF FINAN

CIAL CONTRACTS

.—In the case of any qualified financial

contract or agreement to which paragraph (8) applies,

compensatory damages shall be—

‘‘(i) deemed to include normal and reasonable costs

of cover or other reasonable measures of damages uti-

lized in the industries for such contract and agreement

claims; and

‘‘(ii) paid in accordance with this subsection and

subsection (e), except as otherwise specifically provided

in this section.

‘‘(4) L

EASES UNDER WHICH THE REGULATED ENTITY IS THE

LESSEE

.—

‘‘(A) I

N GENERAL

.—If the conservator or receiver dis-

affirms or repudiates a lease under which the regulated

entity was the lessee, the conservator or receiver shall

not be liable for any damages (other than damages deter-

mined under subparagraph (B)) for the disaffirmance or

repudiation of such lease.

‘‘(B) P

AYMENTS OF RENT

.—Notwithstanding subpara-

graph (A), the lessor under a lease to which that subpara-

graph applies shall—

‘‘(i) be entitled to the contractual rent accruing

before the later of the date on which—

‘‘(I) the notice of disaffirmance or repudiation

is mailed; or

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122 STAT. 2749 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(II) the disaffirmance or repudiation becomes

effective, unless the lessor is in default or breach

of the terms of the lease;

‘‘(ii) have no claim for damages under any accelera-

tion clause or other penalty provision in the lease;

and

‘‘(iii) have a claim for any unpaid rent, subject

to all appropriate offsets and defenses, due as of the

date of the appointment, which shall be paid in accord-

ance with this subsection and subsection (e).

‘‘(5) L

EASES UNDER WHICH THE REGULATED ENTITY IS THE

LESSOR

.—

‘‘(A) I

N GENERAL

.—If the conservator or receiver repudi-

ates an unexpired written lease of real property of the

regulated entity under which the regulated entity is the

lessor and the lessee is not, as of the date of such repudi-

ation, in default, the lessee under such lease may either—

‘‘(i) treat the lease as terminated by such repudi-

ation; or

‘‘(ii) remain in possession of the leasehold interest

for the balance of the term of the lease, unless the

lessee defaults under the terms of the lease after the

date of such repudiation.

‘‘(B) P

ROVISIONS APPLICABLE TO LESSEE REMAINING IN

POSSESSION

.—If any lessee under a lease described under

subparagraph (A) remains in possession of a leasehold

interest under clause (ii) of subparagraph (A)—

‘‘(i) the lessee—

‘‘(I) shall continue to pay the contractual rent

pursuant to the terms of the lease after the date

of the repudiation of such lease; and

‘‘(II) may offset against any rent payment

which accrues after the date of the repudiation

of the lease, and any damages which accrue after

such date due to the nonperformance of any obliga-

tion of the regulated entity under the lease after

such date; and

‘‘(ii) the conservator or receiver shall not be liable

to the lessee for any damages arising after such date

as a result of the repudiation, other than the amount

of any offset allowed under clause (i)(II).

‘‘(6) C

ONTRACTS FOR THE SALE OF REAL PROPERTY

.—

‘‘(A) I

N GENERAL

.—If the conservator or receiver repudi-

ates any contract for the sale of real property and the

purchaser of such real property under such contract is

in possession, and is not, as of the date of such repudiation,

in default, such purchaser may either—

‘‘(i) treat the contract as terminated by such

repudiation; or

‘‘(ii) remain in possession of such real property.

‘‘(B) P

ROVISIONS APPLICABLE TO PURCHASER REMAINING

IN POSSESSION

.—If any purchaser of real property under

any contract described under subparagraph (A) remains

in possession of such property under clause (ii) of subpara-

graph (A)—

‘‘(i) the purchaser—

Payments.

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122 STAT. 2750 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(I) shall continue to make all payments due

under the contract after the date of the repudiation

of the contract; and

‘‘(II) may offset against any such payments

any damages which accrue after such date due

to the nonperformance (after such date) of any

obligation of the regulated entity under the con-

tract; and

‘‘(ii) the conservator or receiver shall—

‘‘(I) not be liable to the purchaser for any

damages arising after such date as a result of

the repudiation, other than the amount of any

offset allowed under clause (i)(II);

‘‘(II) deliver title to the purchaser in accord-

ance with the provisions of the contract; and

‘‘(III) have no obligation under the contract

other than the performance required under sub-

clause (II).

‘‘(C) A

SSIGNMENT AND SALE ALLOWED

.—

‘‘(i) I

N GENERAL

.—No provision of this paragraph

shall be construed as limiting the right of the conser-

vator or receiver to assign the contract described under

subparagraph (A), and sell the property subject to the

contract and the provisions of this paragraph.

‘‘(ii) N

O LIABILITY AFTER ASSIGNMENT AND SALE

.—

If an assignment and sale described under clause (i)

is consummated, the conservator or receiver shall have

no further liability under the contract described under

subparagraph (A), or with respect to the real property

which was the subject of such contract.

‘‘(7) S

ERVICE CONTRACTS

.—

‘‘(A) S

ERVICES PERFORMED BEFORE APPOINTMENT

.—In

the case of any contract for services between any person

and any regulated entity for which the Agency has been

appointed conservator or receiver, any claim of such person

for services performed before the appointment of the conser-

vator or receiver shall be—

‘‘(i) a claim to be paid in accordance with sub-

sections (b) and (e); and

‘‘(ii) deemed to have arisen as of the date on which

the conservator or receiver was appointed.

‘‘(B) S

ERVICES PERFORMED AFTER APPOINTMENT AND

PRIOR TO REPUDIATION

.—If, in the case of any contract

for services described under subparagraph (A), the conser-

vator or receiver accepts performance by the other person

before the conservator or receiver makes any determination

to exercise the right of repudiation of such contract under

this section—

‘‘(i) the other party shall be paid under the terms

of the contract for the services performed; and

‘‘(ii) the amount of such payment shall be treated

as an administrative expense of the conservatorship

or receivership.

‘‘(C) A

CCEPTANCE OF PERFORMANCE NO BAR TO SUBSE

QUENT REPUDIATION

.—The acceptance by the conservator

or receiver of services referred to under subparagraph (B)

Payments.

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122 STAT. 2751 PUBLIC LAW 110–289—JULY 30, 2008

in connection with a contract described in such subpara-

graph shall not affect the right of the conservator or

receiver to repudiate such contract under this section at

any time after such performance.

‘‘(8) C

ERTAIN QUALIFIED FINANCIAL CONTRACTS

.—

‘‘(A) R

IGHTS OF PARTIES TO CONTRACTS

.—Subject to

paragraphs (9) and (10), and notwithstanding any other

provision of this title (other than subsection (b)(9)(B) of

this section), any other Federal law, or the law of any

State, no person shall be stayed or prohibited from exer-

cising— ‘‘(i) any right of that person to cause the termi-

nation, liquidation, or acceleration of any qualified

financial contract with a regulated entity that arises

upon the appointment of the Agency as receiver for

such regulated entity at any time after such appoint-

ment;

‘‘(ii) any right under any security agreement or

arrangement or other credit enhancement relating to

one or more qualified financial contracts; or

‘‘(iii) any right to offset or net out any termination

value, payment amount, or other transfer obligation

arising under or in connection with 1 or more contracts

and agreements described in clause (i), including any

master agreement for such contracts or agreements.

‘‘(B) A

PPLICABILITY OF OTHER PROVISIONS

.—Subsection

(b)(10) shall apply in the case of any judicial action or

proceeding brought against any receiver referred to under

subparagraph (A), or the regulated entity for which such

receiver was appointed, by any party to a contract or agree-

ment described under subparagraph (A)(i) with such regu-

lated entity.

‘‘(C) C

ERTAIN TRANSFERS NOT AVOIDABLE

.—

‘‘(i) I

N GENERAL

.—Notwithstanding paragraph (11),

or any other provision of Federal or State law relating

to the avoidance of preferential or fraudulent transfers,

the Agency, whether acting as such or as conservator

or receiver of a regulated entity, may not avoid any

transfer of money or other property in connection with

any qualified financial contract with a regulated entity.

‘‘(ii) E

XCEPTION FOR CERTAIN TRANSFERS

.—Clause

(i) shall not apply to any transfer of money or other

property in connection with any qualified financial con-

tract with a regulated entity if the Agency determines

that the transferee had actual intent to hinder, delay,

or defraud such regulated entity, the creditors of such

regulated entity, or any conservator or receiver

appointed for such regulated entity.

‘‘(D) C

ERTAIN CONTRACTS AND AGREEMENTS DEFINED

.—

In this subsection the following definitions shall apply:

‘‘(i) Q

UALIFIED FINANCIAL CONTRACT

.—The term

‘qualified financial contract’ means any securities con-

tract, commodity contract, forward contract, repurchase

agreement, swap agreement, and any similar agree-

ment that the Agency determines by regulation, resolu-

tion, or order to be a qualified financial contract for

purposes of this paragraph.

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122 STAT. 2752 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) S

ECURITIES CONTRACT

.—The term ‘securities

contract’—

‘‘(I) means a contract for the purchase, sale,

or loan of a security, a certificate of deposit, a

mortgage loan, or any interest in a mortgage loan,

a group or index of securities, certificates of

deposit, or mortgage loans or interests therein

(including any interest therein or based on the

value thereof) or any option on any of the fore-

going, including any option to purchase or sell

any such security, certificate of deposit, mortgage

loan, interest, group or index, or option, and

including any repurchase or reverse repurchase

transaction on any such security, certificate of

deposit, mortgage loan, interest, group or index,

or option;

‘‘(II) does not include any purchase, sale, or

repurchase obligation under a participation in a

commercial mortgage loan, unless the Agency

determines by regulation, resolution, or order to

include any such agreement within the meaning

of such term;

‘‘(III) means any option entered into on a

national securities exchange relating to foreign

currencies;

‘‘(IV) means the guarantee by or to any securi-

ties clearing agency of any settlement of cash,

securities, certificates of deposit, mortgage loans

or interests therein, group or index of securities,

certificates of deposit, or mortgage loans or

interests therein (including any interest therein

or based on the value thereof) or option on any

of the foregoing, including any option to purchase

or sell any such security, certificate of deposit,

mortgage loan, interest, group or index, or option;

‘‘(V) means any margin loan;

‘‘(VI) means any other agreement or trans-

action that is similar to any agreement or trans-

action referred to in this clause;

‘‘(VII) means any combination of the agree-

ments or transactions referred to in this clause;

‘‘(VIII) means any option to enter into any

agreement or transaction referred to in this clause;

‘‘(IX) means a master agreement that provides

for an agreement or transaction referred to in sub-

clause (I), (III), (IV), (V), (VI), (VII), or (VIII),

together with all supplements to any such master

agreement, without regard to whether the master

agreement provides for an agreement or trans-

action that is not a securities contract under this

clause, except that the master agreement shall

be considered to be a securities contract under

this clause only with respect to each agreement

or transaction under the master agreement that

is referred to in subclause (I), (III), (IV), (V), (VI),

(VII), or (VIII); and

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122 STAT. 2753 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(X) means any security agreement or arrange-

ment or other credit enhancement related to any

agreement or transaction referred to in this clause,

including any guarantee or reimbursement obliga-

tion in connection with any agreement or trans-

action referred to in this clause.

‘‘(iii) C

OMMODITY CONTRACT

.—The term ‘com-

modity contract’ means—

‘‘(I) with respect to a futures commission mer-

chant, a contract for the purchase or sale of a

commodity for future delivery on, or subject to

the rules of, a contract market or board of trade;

‘‘(II) with respect to a foreign futures commis-

sion merchant, a foreign future;

‘‘(III) with respect to a leverage transaction

merchant, a leverage transaction;

‘‘(IV) with respect to a clearing organization,

a contract for the purchase or sale of a commodity

for future delivery on, or subject to the rules of,

a contract market or board of trade that is cleared

by such clearing organization, or commodity option

traded on, or subject to the rules of, a contract

market or board of trade that is cleared by such

clearing organization;

‘‘(V) with respect to a commodity options

dealer, a commodity option;

‘‘(VI) any other agreement or transaction that

is similar to any agreement or transaction referred

to in this clause;

‘‘(VII) any combination of the agreements or

transactions referred to in this clause;

‘‘(VIII) any option to enter into any agreement

or transaction referred to in this clause;

‘‘(IX) a master agreement that provides for

an agreement or transaction referred to in sub-

clause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII),

together with all supplements to any such master

agreement, without regard to whether the master

agreement provides for an agreement or trans-

action that is not a commodity contract under this

clause, except that the master agreement shall

be considered to be a commodity contract under

this clause only with respect to each agreement

or transaction under the master agreement that

is referred to in subclause (I), (II), (III), (IV), (V),

(VI), (VII), or (VIII); or

‘‘(X) any security agreement or arrangement

or other credit enhancement related to any agree-

ment or transaction referred to in this clause,

including any guarantee or reimbursement obliga-

tion in connection with any agreement or trans-

action referred to in this clause.

‘‘(iv) F

ORWARD CONTRACT

.—The term ‘forward con-

tract’ means—

‘‘(I) a contract (other than a commodity con-

tract) for the purchase, sale, or transfer of a com-

modity or any similar good, article, service, right,

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122 STAT. 2754 PUBLIC LAW 110–289—JULY 30, 2008

or interest which is presently or in the future

becomes the subject of dealing in the forward con-

tract trade, or product or byproduct thereof, with

a maturity date more than 2 days after the date

on which the contract is entered into, including

a repurchase transaction, reverse repurchase

transaction, consignment, lease, swap, hedge

transaction, deposit, loan, option, allocated trans-

action, unallocated transaction, or any other

similar agreement;

‘‘(II) any combination of agreements or trans-

actions referred to in subclauses (I) and (III);

‘‘(III) any option to enter into any agreement

or transaction referred to in subclause (I) or (II);

‘‘(IV) a master agreement that provides for

an agreement or transaction referred to in sub-

clauses (I), (II), or (III), together with all supple-

ments to any such master agreement, without

regard to whether the master agreement provides

for an agreement or transaction that is not a for-

ward contract under this clause, except that the

master agreement shall be considered to be a for-

ward contract under this clause only with respect

to each agreement or transaction under the master

agreement that is referred to in subclause (I), (II),

or (III); or

‘‘(V) any security agreement or arrangement

or other credit enhancement related to any agree-

ment or transaction referred to in subclause (I),

(II), (III), or (IV), including any guarantee or

reimbursement obligation in connection with any

agreement or transaction referred to in any such

subclause.

‘‘(v) R

EPURCHASE AGREEMENT

.—The term

‘repurchase agreement’ (including a reverse repurchase

agreement)—

‘‘(I) means an agreement, including related

terms, which provides for the transfer of one or

more certificates of deposit, mortgage-related secu-

rities (as such term is defined in section 3 of the

Securities Exchange Act of 1934), mortgage loans,

interests in mortgage-related securities or mort-

gage loans, eligible bankers’ acceptances, qualified

foreign government securities (defined for purposes

of this clause as a security that is a direct obliga-

tion of, or that is fully guaranteed by, the central

government of a member of the Organization for

Economic Cooperation and Development, as deter-

mined by regulation or order adopted by the appro-

priate Federal banking authority), or securities

that are direct obligations of, or that are fully

guaranteed by, the United States or any agency

of the United States against the transfer of funds

by the transferee of such certificates of deposit,

eligible bankers’ acceptances, securities, mortgage

loans, or interests with a simultaneous agreement

by such transferee to transfer to the transferor

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122 STAT. 2755 PUBLIC LAW 110–289—JULY 30, 2008

thereof certificates of deposit, eligible bankers’

acceptances, securities, mortgage loans, or

interests as described above, at a date certain not

later than 1 year after such transfers or on

demand, against the transfer of funds, or any other

similar agreement;

‘‘(II) does not include any repurchase obliga-

tion under a participation in a commercial mort-

gage loan, unless the Agency determines by regula-

tion, resolution, or order to include any such

participation within the meaning of such term;

‘‘(III) means any combination of agreements

or transactions referred to in subclauses (I) and

(IV);

‘‘(IV) means any option to enter into any agree-

ment or transaction referred to in subclause (I)

or (III);

‘‘(V) means a master agreement that provides

for an agreement or transaction referred to in sub-

clause (I), (III), or (IV), together with all supple-

ments to any such master agreement, without

regard to whether the master agreement provides

for an agreement or transaction that is not a

repurchase agreement under this clause, except

that the master agreement shall be considered

to be a repurchase agreement under this subclause

only with respect to each agreement or transaction

under the master agreement that is referred to

in subclause (I), (III), or (IV); and

‘‘(VI) means any security agreement or

arrangement or other credit enhancement related

to any agreement or transaction referred to in

subclause (I), (III), (IV), or (V), including any guar-

antee or reimbursement obligation in connection

with any agreement or transaction referred to in

any such subclause.

‘‘(vi) S

WAP AGREEMENT

.—The term ‘swap agree-

ment’ means—

‘‘(I) any agreement, including the terms and

conditions incorporated by reference in any such

agreement, which is an interest rate swap, option,

future, or forward agreement, including a rate

floor, rate cap, rate collar, cross-currency rate

swap, and basis swap; a spot, same day-tomorrow,

tomorrow-next, forward, or other foreign exchange

or precious metals agreement; a currency swap,

option, future, or forward agreement; an equity

index or equity swap, option, future, or forward

agreement; a debt index or debt swap, option,

future, or forward agreement; a total return, credit

spread or credit swap, option, future, or forward

agreement; a commodity index or commodity swap,

option, future, or forward agreement; or a weather

swap, weather derivative, or weather option;

‘‘(II) any agreement or transaction that is

similar to any other agreement or transaction

referred to in this clause and that is of a type

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122 STAT. 2756 PUBLIC LAW 110–289—JULY 30, 2008

that has been, is presently, or in the future

becomes, the subject of recurrent dealings in the

swap markets (including terms and conditions

incorporated by reference in such agreement) and

that is a forward, swap, future, or option on one

or more rates, currencies, commodities, equity

securities or other equity instruments, debt securi-

ties or other debt instruments, quantitative meas-

ures associated with an occurrence, extent of an

occurrence, or contingency associated with a finan-

cial, commercial, or economic consequence, or eco-

nomic or financial indices or measures of economic

or financial risk or value;

‘‘(III) any combination of agreements or trans-

actions referred to in this clause;

‘‘(IV) any option to enter into any agreement

or transaction referred to in this clause;

‘‘(V) a master agreement that provides for an

agreement or transaction referred to in subclause

(I), (II), (III), or (IV), together with all supplements

to any such master agreement, without regard to

whether the master agreement contains an agree-

ment or transaction that is not a swap agreement

under this clause, except that the master agree-

ment shall be considered to be a swap agreement

under this clause only with respect to each agree-

ment or transaction under the master agreement

that is referred to in subclause (I), (II), (III), or

(IV); and

‘‘(VI) any security agreement or arrangement

or other credit enhancement related to any agree-

ments or transactions referred to in subclause (I),

(II), (III), (IV), or (V), including any guarantee

or reimbursement obligation in connection with

any agreement or transaction referred to in any

such subclause.

‘‘(vii) T

REATMENT OF MASTER AGREEMENT AS ONE

AGREEMENT

.—Any master agreement for any contract

or agreement described in any preceding clause of this

subparagraph (or any master agreement for such

master agreement or agreements), together with all

supplements to such master agreement, shall be

treated as a single agreement and a single qualified

financial contract. If a master agreement contains

provisions relating to agreements or transactions that

are not themselves qualified financial contracts, the

master agreement shall be deemed to be a qualified

financial contract only with respect to those trans-

actions that are themselves qualified financial con-

tracts.

‘‘(viii) T

RANSFER

.—The term ‘transfer’ means every

mode, direct or indirect, absolute or conditional, vol-

untary or involuntary, of disposing of or parting with

property or with an interest in property, including

retention of title as a security interest and foreclosure

of the equity of redemption of the regulated entity.

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122 STAT. 2757 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(E) C

ERTAIN PROTECTIONS IN EVENT OF APPOINTMENT

OF CONSERVATOR

.—Notwithstanding any other provision of

this section, any other Federal law, or the law of any

State (other than paragraph (10) of this subsection and

subsection (b)(9)(B)), no person shall be stayed or prohibited

from exercising—

‘‘(i) any right such person has to cause the termi-

nation, liquidation, or acceleration of any qualified

financial contract with a regulated entity in a con-

servatorship based upon a default under such financial

contract which is enforceable under applicable non-

insolvency law;

‘‘(ii) any right under any security agreement or

arrangement or other credit enhancement relating to

1 or more such qualified financial contracts; or

‘‘(iii) any right to offset or net out any termination

values, payment amounts, or other transfer obligations

arising under or in connection with such qualified

financial contracts.

‘‘(F) C

LARIFICATION

.—No provision of law shall be con-

strued as limiting the right or power of the Agency, or

authorizing any court or agency to limit or delay in any

manner, the right or power of the Agency to transfer any

qualified financial contract in accordance with paragraphs

(9) and (10), or to disaffirm or repudiate any such contract

in accordance with subsection (d)(1).

‘‘(G) W

ALKAWAY CLAUSES NOT EFFECTIVE

.—

‘‘(i) I

N GENERAL

.—Notwithstanding the provisions

of subparagraphs (A) and (E), and sections 403 and

404 of the Federal Deposit Insurance Corporation

Improvement Act of 1991, no walkaway clause shall

be enforceable in a qualified financial contract of a

regulated entity in default.

‘‘(ii) W

ALKAWAY CLAUSE DEFINED

.—For purposes

of this subparagraph, the term ‘walkaway clause’

means a provision in a qualified financial contract

that, after calculation of a value of a party’s position

or an amount due to or from 1 of the parties in accord-

ance with its terms upon termination, liquidation, or

acceleration of the qualified financial contract, either

does not create a payment obligation of a party or

extinguishes a payment obligation of a party in whole

or in part solely because of the status of such party

as a nondefaulting party.

‘‘(9) T

RANSFER OF QUALIFIED FINANCIAL CONTRACTS

.—In

making any transfer of assets or liabilities of a regulated entity

in default which includes any qualified financial contract, the

conservator or receiver for such regulated entity shall either—

‘‘(A) transfer to 1 person—

‘‘(i) all qualified financial contracts between any

person (or any affiliate of such person) and the regu-

lated entity in default;

‘‘(ii) all claims of such person (or any affiliate of

such person) against such regulated entity under any

such contract (other than any claim which, under the

terms of any such contract, is subordinated to the

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122 STAT. 2758 PUBLIC LAW 110–289—JULY 30, 2008

claims of general unsecured creditors of such regulated

entity);

‘‘(iii) all claims of such regulated entity against

such person (or any affiliate of such person) under

any such contract; and

‘‘(iv) all property securing, or any other credit

enhancement for any contract described in clause (i),

or any claim described in clause (ii) or (iii) under

any such contract; or

‘‘(B) transfer none of the financial contracts, claims,

or property referred to under subparagraph (A) (with

respect to such person and any affiliate of such person).

‘‘(10) N

OTIFICATION OF TRANSFER

.—

‘‘(A) I

N GENERAL

.—The conservator or receiver shall

notify any person that is a party to a contract or transfer

by 5:00 p.m. (Eastern Standard Time) on the business

day following the date of the appointment of the receiver

in the case of a receivership, or the business day following

such transfer in the case of a conservatorship, if—

‘‘(i) the conservator or receiver for a regulated

entity in default makes any transfer of the assets

and liabilities of such regulated entity; and

‘‘(ii) such transfer includes any qualified financial

contract.

‘‘(B) C

ERTAIN RIGHTS NOT ENFORCEABLE

.—

‘‘(i) R

ECEIVERSHIP

.—A person who is a party to

a qualified financial contract with a regulated entity

may not exercise any right that such person has to

terminate, liquidate, or net such contract under para-

graph (8)(A) of this subsection or under section 403

or 404 of the Federal Deposit Insurance Corporation

Improvement Act of 1991, solely by reason of or inci-

dental to the appointment of a receiver for the regu-

lated entity (or the insolvency or financial condition

of the regulated entity for which the receiver has been

appointed)—

‘‘(I) until 5:00 p.m. (Eastern Standard Time)

on the business day following the date of the

appointment of the receiver; or

‘‘(II) after the person has received notice that

the contract has been transferred pursuant to

paragraph (9)(A).

‘‘(ii) C

ONSERVATORSHIP

.—A person who is a party

to a qualified financial contract with a regulated entity

may not exercise any right that such person has to

terminate, liquidate, or net such contract under para-

graph (8)(E) of this subsection or under section 403

or 404 of the Federal Deposit Insurance Corporation

Improvement Act of 1991, solely by reason of or inci-

dental to the appointment of a conservator for the

regulated entity (or the insolvency or financial condi-

tion of the regulated entity for which the conservator

has been appointed).

‘‘(iii) N

OTICE

.—For purposes of this paragraph, the

conservator or receiver of a regulated entity shall be

deemed to have notified a person who is a party to

a qualified financial contract with such regulated

Effective dates.

Deadline.

Contracts.

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122 STAT. 2759 PUBLIC LAW 110–289—JULY 30, 2008

entity, if the conservator or receiver has taken steps

reasonably calculated to provide notice to such person

by the time specified in subparagraph (A).

‘‘(C) B

USINESS DAY DEFINED

.—For purposes of this

paragraph, the term ‘business day’ means any day other

than any Saturday, Sunday, or any day on which either

the New York Stock Exchange or the Federal Reserve

Bank of New York is closed.

‘‘(11) D

ISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINAN

CIAL CONTRACTS

.—In exercising the rights of disaffirmance or

repudiation of a conservator or receiver with respect to any

qualified financial contract to which a regulated entity is a

party, the conservator or receiver for such institution shall

either— ‘‘(A) disaffirm or repudiate all qualified financial con-

tracts between—

‘‘(i) any person or any affiliate of such person;

and ‘‘(ii) the regulated entity in default; or

‘‘(B) disaffirm or repudiate none of the qualified finan-

cial contracts referred to in subparagraph (A) (with respect

to such person or any affiliate of such person).

‘‘(12) C

ERTAIN SECURITY INTERESTS NOT AVOIDABLE

.—No

provision of this subsection shall be construed as permitting

the avoidance of any legally enforceable or perfected security

interest in any of the assets of any regulated entity, except

where such an interest is taken in contemplation of the insol-

vency of the regulated entity, or with the intent to hinder,

delay, or defraud the regulated entity or the creditors of such

regulated entity.

‘‘(13) A

UTHORITY TO ENFORCE CONTRACTS

.—

‘‘(A) I

N GENERAL

.—Notwithstanding any provision of

a contract providing for termination, default, acceleration,

or exercise of rights upon, or solely by reason of, insolvency

or the appointment of, or the exercise of rights or powers

by, a conservator or receiver, the conservator or receiver

may enforce any contract, other than a contract for liability

insurance for a director or officer, or a contract or a regu-

lated entity bond, entered into by the regulated entity.

‘‘(B) C

ERTAIN RIGHTS NOT AFFECTED

.—No provision of

this paragraph may be construed as impairing or affecting

any right of the conservator or receiver to enforce or recover

under a liability insurance contract for an officer or

director, or regulated entity bond under other applicable

law.

‘‘(C) C

ONSENT REQUIREMENT

.—

‘‘(i) I

N GENERAL

.—Except as otherwise provided

under this section, no person may exercise any right

or power to terminate, accelerate, or declare a default

under any contract to which a regulated entity is a

party, or to obtain possession of or exercise control

over any property of the regulated entity, or affect

any contractual rights of the regulated entity, without

the consent of the conservator or receiver, as appro-

priate, for a period of—

‘‘(I) 45 days after the date of appointment

of a conservator; or

Effective dates.

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122 STAT. 2760 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(II) 90 days after the date of appointment

of a receiver.

‘‘(ii) E

XCEPTIONS

.—This subparagraph shall not—

‘‘(I) apply to a contract for liability insurance

for an officer or director;

‘‘(II) apply to the rights of parties to certain

qualified financial contracts under subsection

(d)(8); and

‘‘(III) be construed as permitting the conser-

vator or receiver to fail to comply with otherwise

enforceable provisions of such contracts.

‘‘(14) S

AVINGS CLAUSE

.—The meanings of terms used in

this subsection are applicable for purposes of this subsection

only, and shall not be construed or applied so as to challenge

or affect the characterization, definition, or treatment of any

similar terms under any other statute, regulation, or rule,

including the Gramm-Leach-Bliley Act, the Legal Certainty

for Bank Products Act of 2000, the securities laws (as that

term is defined in section 3(a)(47) of the Securities Exchange

Act of 1934), and the Commodity Exchange Act.

‘‘(15) E

XCEPTION FOR FEDERAL RESERVE AND FEDERAL HOME

LOAN BANKS

.—No provision of this subsection shall apply with

respect to—

‘‘(A) any extension of credit from any Federal Home

Loan Bank or Federal Reserve Bank to any regulated

entity; or

‘‘(B) any security interest in the assets of the regulated

entity securing any such extension of credit.

‘‘(e) V

ALUATION OF

LAIMS IN

EFAULT

.—

‘‘(1) I

N GENERAL

.—Notwithstanding any other provision of

Federal law or the law of any State, and regardless of the

method which the Agency determines to utilize with respect

to a regulated entity in default or in danger of default, including

transactions authorized under subsection (i), this subsection

shall govern the rights of the creditors of such regulated entity.

‘‘(2) M

AXIMUM LIABILITY

.—The maximum liability of the

Agency, acting as receiver or in any other capacity, to any

person having a claim against the receiver or the regulated

entity for which such receiver is appointed shall be not more

than the amount that such claimant would have received if

the Agency had liquidated the assets and liabilities of the

regulated entity without exercising the authority of the Agency

under subsection (i).

‘‘(f) L

IMITATION ON

OURT

CTION

.—Except as provided in this

section or at the request of the Director, no court may take any

action to restrain or affect the exercise of powers or functions

of the Agency as a conservator or a receiver.

‘‘(g) L

IABILITY OF

IRECTORS AND

FFICERS

.—

‘‘(1) I

N GENERAL

.—A director or officer of a regulated entity

may be held personally liable for monetary damages in any

civil action described in paragraph (2) brought by, on behalf

of, or at the request or direction of the Agency, and prosecuted

wholly or partially for the benefit of the Agency—

‘‘(A) acting as conservator or receiver of such regulated

entity; or

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122 STAT. 2761 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) acting based upon a suit, claim, or cause of action

purchased from, assigned by, or otherwise conveyed by

such receiver or conservator.

‘‘(2) A

CTIONS ADDRESSED

.—Paragraph (1) applies in any

civil action for gross negligence, including any similar conduct

or conduct that demonstrates a greater disregard of a duty

of care than gross negligence, including intentional tortious

conduct, as such terms are defined and determined under

applicable State law.

‘‘(3) N

O LIMITATION

.—Nothing in this subsection shall

impair or affect any right of the Agency under other applicable

law.

‘‘(h) D

AMAGES

.—In any proceeding related to any claim against

a director, officer, employee, agent, attorney, accountant, appraiser,

or any other party employed by or providing services to a regulated

entity, recoverable damages determined to result from the improvi-

dent or otherwise improper use or investment of any assets of

the regulated entity shall include principal losses and appropriate

interest.

‘‘(i) L

IMITED

-L

IFE

EGULATED

NTITIES

.—

‘‘(1) O

RGANIZATION

.—

‘‘(A) P

URPOSE

.—The Agency, as receiver appointed

pursuant to subsection (a)—

‘‘(i) may, in the case of a Federal Home Loan

Bank, organize a limited-life regulated entity with

those powers and attributes of the Federal Home Loan

Bank in default or in danger of default as the Director

determines necessary, subject to the provisions of this

subsection, and the Director shall grant a temporary

charter to that limited-life regulated entity, and that

limited-life regulated entity may operate subject to

that charter; and

‘‘(ii) shall, in the case of an enterprise, organize

a limited-life regulated entity with respect to that

enterprise in accordance with this subsection.

‘‘(B) A

UTHORITIES

.—Upon the creation of a limited-

life regulated entity under subparagraph (A), the limited-

life regulated entity may—

‘‘(i) assume such liabilities of the regulated entity

that is in default or in danger of default as the Agency

may, in its discretion, determine to be appropriate,

except that the liabilities assumed shall not exceed

the amount of assets purchased or transferred from

the regulated entity to the limited-life regulated entity;

‘‘(ii) purchase such assets of the regulated entity

that is in default, or in danger of default as the Agency

may, in its discretion, determine to be appropriate;

and ‘‘(iii) perform any other temporary function which

the Agency may, in its discretion, prescribe in accord-

ance with this section.

‘‘(2) C

HARTER AND ESTABLISHMENT

.—

‘‘(A) T

RANSFER OF CHARTER

.—

‘‘(i) F

ANNIE MAE

.—If the Agency is appointed as

receiver for the Federal National Mortgage Association,

the limited-life regulated entity established under this

subsection with respect to such enterprise shall, by

Applicability.

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122 STAT. 2762 PUBLIC LAW 110–289—JULY 30, 2008

operation of law and immediately upon its organiza-

tion— ‘‘(I) succeed to the charter of the Federal

National Mortgage Association, as set forth in the

Federal National Mortgage Association Charter

Act; and

‘‘(II) thereafter operate in accordance with, and

subject to, such charter, this Act, and any other

provision of law to which the Federal National

Mortgage Association is subject, except as other-

wise provided in this subsection.

‘‘(ii) F

REDDIE MAC

.—If the Agency is appointed as

receiver for the Federal Home Loan Mortgage Corpora-

tion, the limited-life regulated entity established under

this subsection with respect to such enterprise shall,

by operation of law and immediately upon its organiza-

tion— ‘‘(I) succeed to the charter of the Federal Home

Loan Mortgage Corporation, as set forth in the

Federal Home Loan Mortgage Corporation Charter

Act; and

‘‘(II) thereafter operate in accordance with, and

subject to, such charter, this Act, and any other

provision of law to which the Federal Home Loan

Mortgage Corporation is subject, except as other-

wise provided in this subsection.

‘‘(B) I

NTERESTS IN AND ASSETS AND OBLIGATIONS OF

REGULATED ENTITY IN DEFAULT

.—Notwithstanding subpara-

graph (A) or any other provision of law—

‘‘(i) a limited-life regulated entity shall assume,

acquire, or succeed to the assets or liabilities of a

regulated entity only to the extent that such assets

or liabilities are transferred by the Agency to the lim-

ited-life regulated entity in accordance with, and sub-

ject to the restrictions set forth in, paragraph (1)(B);

‘‘(ii) a limited-life regulated entity shall not

assume, acquire, or succeed to any obligation that a

regulated entity for which a receiver has been

appointed may have to any shareholder of the regu-

lated entity that arises as a result of the status of

that person as a shareholder of the regulated entity;

and ‘‘(iii) no shareholder or creditor of a regulated

entity shall have any right or claim against the charter

of the regulated entity once the Agency has been

appointed receiver for the regulated entity and a lim-

ited-life regulated entity succeeds to the charter pursu-

ant to subparagraph (A).

‘‘(C) L

IMITED

LIFE REGULATED ENTITY TREATED AS

BEING IN DEFAULT FOR CERTAIN PURPOSES

.—A limited-life

regulated entity shall be treated as a regulated entity

in default at such times and for such purposes as the

Agency may, in its discretion, determine.

‘‘(D) M

ANAGEMENT

.—Upon its establishment, a limited-

life regulated entity shall be under the management of

a board of directors consisting of not fewer than 5 nor

more than 10 members appointed by the Agency.

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122 STAT. 2763 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(E) B

YLAWS

.—The board of directors of a limited-life

regulated entity shall adopt such bylaws as may be

approved by the Agency.

‘‘(3) C

APITAL STOCK

.—

‘‘(A) N

O AGENCY REQUIREMENT

.—The Agency is not

required to pay capital stock into a limited-life regu-

lated entity or to issue any capital stock on behalf

of a limited-life regulated entity established under this

subsection.

‘‘(B) A

UTHORITY

.—If the Director determines that

such action is advisable, the Agency may cause capital

stock or other securities of a limited-life regulated

entity established with respect to an enterprise to be

issued and offered for sale, in such amounts and on

such terms and conditions as the Director may deter-

mine, in the discretion of the Director.

‘‘(4) I

NVESTMENTS

.—Funds of a limited-life regulated entity

shall be kept on hand in cash, invested in obligations of the

United States or obligations guaranteed as to principal and

interest by the United States, or deposited with the Agency,

or any Federal reserve bank.

‘‘(5) E

XEMPT TAX STATUS

.—Notwithstanding any other

provision of Federal or State law, a limited-life regulated entity,

its franchise, property, and income shall be exempt from all

taxation now or hereafter imposed by the United States, by

any territory, dependency, or possession thereof, or by any

State, county, municipality, or local taxing authority.

‘‘(6) W

INDING UP

.—

‘‘(A) I

N GENERAL

.—Subject to subparagraphs (B) and

(C), not later than 2 years after the date of its organization,

the Agency shall wind up the affairs of a limited-life regu-

lated entity.

‘‘(B) E

XTENSION

.—The Director may, in the discretion

of the Director, extend the status of a limited-life regulated

entity for 3 additional 1-year periods.

‘‘(C) T

ERMINATION OF STATUS AS LIMITED

LIFE REGU

LATED ENTITY

.—

‘‘(i) I

N GENERAL

.—Upon the sale by the Agency

of 80 percent or more of the capital stock of a limited-

life regulated entity, as defined in clause (iv), to 1

or more persons (other than the Agency)—

‘‘(I) the status of the limited-life regulated

entity as such shall terminate; and

‘‘(II) the entity shall cease to be a limited-

life regulated entity for purposes of this subsection.

‘‘(ii) D

IVESTITURE OF REMAINING STOCK

IF ANY

.—

‘‘(I) I

N GENERAL

.—Not later than 1 year after

the date on which the status of a limited-life regu-

lated entity is terminated pursuant to clause (i),

the Agency shall sell to 1 or more persons (other

than the Agency) any remaining capital stock of

the former limited-life regulated entity.

‘‘(II) E

XTENSION AUTHORIZED

.—The Director

may extend the period referred to in subclause

(I) for not longer than an additional 2 years, if

the Director determines that such action would

be in the public interest.

Deadline.

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122 STAT. 2764 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(iii) S

AVINGS CLAUSE

.—Notwithstanding any

provision of law, other than clause (ii), the Agency

shall not be required to sell the capital stock of an

enterprise or a limited-life regulated entity established

with respect to an enterprise.

‘‘(iv) A

PPLICABILITY

.—This subparagraph applies

only with respect to a limited-life regulated entity that

is established with respect to an enterprise.

‘‘(7) T

RANSFER OF ASSETS AND LIABILITIES

.—

‘‘(A) I

N GENERAL

.—

‘‘(i) T

RANSFER OF ASSETS AND LIABILITIES

.—The

Agency, as receiver, may transfer any assets and liabil-

ities of a regulated entity in default, or in danger

of default, to the limited-life regulated entity in accord-

ance with and subject to the restrictions of paragraph

(1).

‘‘(ii) S

UBSEQUENT TRANSFERS

.—At any time after

the establishment of a limited-life regulated entity,

the Agency, as receiver, may transfer any assets and

liabilities of the regulated entity in default, or in

danger of default, as the Agency may, in its discretion,

determine to be appropriate in accordance with and

subject to the restrictions of paragraph (1).

‘‘(iii) E

FFECTIVE WITHOUT APPROVAL

.—The transfer

of any assets or liabilities of a regulated entity in

default or in danger of default to a limited-life regu-

lated entity shall be effective without any further

approval under Federal or State law, assignment, or

consent with respect thereto.

‘‘(iv) E

QUITABLE TREATMENT OF SIMILARLY SITU

ATED CREDITORS

.—The Agency shall treat all creditors

of a regulated entity in default or in danger of default

that are similarly situated under subsection (c)(1) in

a similar manner in exercising the authority of the

Agency under this subsection to transfer any assets

or liabilities of the regulated entity to the limited-

life regulated entity established with respect to such

regulated entity, except that the Agency may take

actions (including making payments) that do not

comply with this clause, if—

‘‘(I) the Director determines that such actions

are necessary to maximize the value of the assets

of the regulated entity, to maximize the present

value return from the sale or other disposition

of the assets of the regulated entity, or to minimize

the amount of any loss realized upon the sale

or other disposition of the assets of the regulated

entity; and

‘‘(II) all creditors that are similarly situated

under subsection (c)(1) receive not less than the

amount provided in subsection (e)(2).

‘‘(v) L

IMITATION ON TRANSFER OF LIABILITIES

.—Not-

withstanding any other provision of law, the aggregate

amount of liabilities of a regulated entity that are

transferred to, or assumed by, a limited-life regulated

entity may not exceed the aggregate amount of assets

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122 STAT. 2765 PUBLIC LAW 110–289—JULY 30, 2008

of the regulated entity that are transferred to, or pur-

chased by, the limited-life regulated entity.

‘‘(8) R

EGULATIONS

.—The Agency may promulgate such

regulations as the Agency determines to be necessary or appro-

priate to implement this subsection.

‘‘(9) P

OWERS OF LIMITED

LIFE REGULATED ENTITIES

.—

‘‘(A) I

N GENERAL

.—Each limited-life regulated entity

created under this subsection shall have all corporate

powers of, and be subject to the same provisions of law

as, the regulated entity in default or in danger of default

to which it relates, except that—

‘‘(i) the Agency may—

‘‘(I) remove the directors of a limited-life regu-

lated entity;

‘‘(II) fix the compensation of members of the

board of directors and senior management, as

determined by the Agency in its discretion, of a

limited-life regulated entity; and

‘‘(III) indemnify the representatives for pur-

poses of paragraph (1)(B), and the directors, offi-

cers, employees, and agents of a limited-life regu-

lated entity on such terms as the Agency deter-

mines to be appropriate; and

‘‘(ii) the board of directors of a limited-life regu-

lated entity—

‘‘(I) shall elect a chairperson who may also

serve in the position of chief executive officer,

except that such person shall not serve either as

chairperson or as chief executive officer without

the prior approval of the Agency; and

‘‘(II) may appoint a chief executive officer who

is not also the chairperson, except that such person

shall not serve as chief executive officer without

the prior approval of the Agency.

‘‘(B) S

TAY OF JUDICIAL ACTION

.—Any judicial action

to which a limited-life regulated entity becomes a party

by virtue of its acquisition of any assets or assumption

of any liabilities of a regulated entity in default shall

be stayed from further proceedings for a period of not

longer than 45 days, at the request of the limited-life

regulated entity. Such period may be modified upon the

consent of all parties.

‘‘(10) N

O FEDERAL STATUS

.—

‘‘(A) A

GENCY STATUS

.—A limited-life regulated entity

is not an agency, establishment, or instrumentality of the

United States.

‘‘(B) E

MPLOYEE STATUS

.—Representatives for purposes

of paragraph (1)(B), interim directors, directors, officers,

employees, or agents of a limited-life regulated entity are

not, solely by virtue of service in any such capacity, officers

or employees of the United States. Any employee of the

Agency or of any Federal instrumentality who serves at

the request of the Agency as a representative for purposes

of paragraph (1)(B), interim director, director, officer,

employee, or agent of a limited-life regulated entity shall

not—

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122 STAT. 2766 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) solely by virtue of service in any such capacity

lose any existing status as an officer or employee of

the United States for purposes of title 5, United States

Code, or any other provision of law; or

‘‘(ii) receive any salary or benefits for service in

any such capacity with respect to a limited-life regu-

lated entity in addition to such salary or benefits as

are obtained through employment with the Agency

or such Federal instrumentality.

‘‘(11) A

UTHORITY TO OBTAIN CREDIT

.—

‘‘(A) I

N GENERAL

.—A limited-life regulated entity may

obtain unsecured credit and issue unsecured debt.

‘‘(B) I

NABILITY TO OBTAIN CREDIT

.—If a limited-life

regulated entity is unable to obtain unsecured credit or

issue unsecured debt, the Director may authorize the

obtaining of credit or the issuance of debt by the limited-

life regulated entity—

‘‘(i) with priority over any or all of the obligations

of the limited-life regulated entity;

‘‘(ii) secured by a lien on property of the limited-

life regulated entity that is not otherwise subject to

a lien; or

‘‘(iii) secured by a junior lien on property of the

limited-life regulated entity that is subject to a lien.

‘‘(C) L

IMITATIONS

.—

‘‘(i) I

N GENERAL

.—The Director, after notice and

a hearing, may authorize the obtaining of credit or

the issuance of debt by a limited-life regulated entity

that is secured by a senior or equal lien on property

of the limited-life regulated entity that is subject to

a lien (other than mortgages that collateralize the

mortgage-backed securities issued or guaranteed by

an enterprise) only if—

‘‘(I) the limited-life regulated entity is unable

to otherwise obtain such credit or issue such debt;

and

‘‘(II) there is adequate protection of the

interest of the holder of the lien on the property

with respect to which such senior or equal lien

is proposed to be granted.

‘‘(D) B

URDEN OF PROOF

.—In any hearing under this

subsection, the Director has the burden of proof on the

issue of adequate protection.

‘‘(12) E

FFECT ON DEBTS AND LIENS

.—The reversal or modi-

fication on appeal of an authorization under this subsection

to obtain credit or issue debt, or of a grant under this section

of a priority or a lien, does not affect the validity of any

debt so issued, or any priority or lien so granted, to an entity

that extended such credit in good faith, whether or not such

entity knew of the pendency of the appeal, unless such

authorization and the issuance of such debt, or the granting

of such priority or lien, were stayed pending appeal.

‘‘(j) O

THER

GENCY

XEMPTIONS

.—

‘‘(1) A

PPLICABILITY

.—The provisions of this subsection shall

apply with respect to the Agency in any case in which the

Agency is acting as a conservator or a receiver.

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122 STAT. 2767 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) T

AXATION

.—The Agency, including its franchise, its

capital, reserves, and surplus, and its income, shall be exempt

from all taxation imposed by any State, county, municipality,

or local taxing authority, except that any real property of the

Agency shall be subject to State, territorial, county, municipal,

or local taxation to the same extent according to its value

as other real property is taxed, except that, notwithstanding

the failure of any person to challenge an assessment under

State law of the value of such property, and the tax thereon,

shall be determined as of the period for which such tax is

imposed.

‘‘(3) P

ROPERTY PROTECTION

.—No property of the Agency

shall be subject to levy, attachment, garnishment, foreclosure,

or sale without the consent of the Agency, nor shall any involun-

tary lien attach to the property of the Agency.

‘‘(4) P

ENALTIES AND FINES

.—The Agency shall not be liable

for any amounts in the nature of penalties or fines, including

those arising from the failure of any person to pay any real

property, personal property, probate, or recording tax or any

recording or filing fees when due.

‘‘(k) P

ROHIBITION OF

HARTER

EVOCATION

.—In no case may

the receiver appointed pursuant to this section revoke, annul, or

terminate the charter of an enterprise.’’.

(b) T

ECHNICAL AND

ONFORMING

MENDMENTS

.—The Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(12 U.S.C. 4501 et seq.) is amended—

(1) in section 1368 (12 U.S.C. 4618)—

(A) by striking ‘‘an enterprise’’ each place that term

appears and inserting ‘‘a regulated entity’’; and

(B) by striking ‘‘the enterprise’’ each place that term

appears and inserting ‘‘the regulated entity’’;

(2) in section 1369C (12 U.S.C. 4622), by striking ‘‘enter-

prise’’ each place that term appears and inserting ‘‘regulated

entity’’;

(3) in section 1369D (12 U.S.C. 4623)—

(A) by striking ‘‘an enterprise’’ each place that term

appears and inserting ‘‘a regulated entity’’; and

(B) in subsection (a)(1), by striking ‘‘An enterprise’’

and inserting ‘‘A regulated entity’’; and

(4) by striking sections 1369, 1369A, and 1369B (12 U.S.C.

4619, 4620, and 4621).

Subtitle D—Enforcement Actions

SEC. 1151. CEASE AND DESIST PROCEEDINGS.

Section 1371 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4631) is amended—

(1) by striking subsections (a) and (b) and inserting the

following:

‘‘(a) I

SSUANCE FOR

NSAFE OR

NSOUND

RACTICES AND

IOLA

TIONS

.—

‘‘(1) A

UTHORITY OF DIRECTOR

.—If, in the opinion of the

Director, a regulated entity or any entity-affiliated party is

engaging or has engaged, or the Director has reasonable cause

to believe that the regulated entity or any entity-affiliated

party is about to engage, in an unsafe or unsound practice

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122 STAT. 2768 PUBLIC LAW 110–289—JULY 30, 2008

in conducting the business of the regulated entity or the Office

of Finance, or is violating or has violated, or the Director

has reasonable cause to believe is about to violate, a law,

rule, regulation, or order, or any condition imposed in writing

by the Director in connection with the granting of any applica-

tion or other request by the regulated entity or the Office

of Finance or any written agreement entered into with the

Director, the Director may issue and serve upon the regulated

entity or entity-affiliated party a notice of charges in respect

thereof.

‘‘(2) L

IMITATION

.—The Director may not, pursuant to this

section, enforce compliance with any housing goal established

under subpart B of part 2 of subtitle A of this title, with

section 1336 or 1337 of this title, with subsection (m) or (n)

of section 309 of the Federal National Mortgage Association

Charter Act (12 U.S.C. 1723a(m), (n)), with subsection (e) or

(f) of section 307 of the Federal Home Loan Mortgage Corpora-

tion Act (12 U.S.C. 1456(e), (f)), or with paragraph (5) of section

10(j) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)).

‘‘(b) I

SSUANCE FOR

NSATISFACTORY

ATING

.—If a regulated

entity receives, in its most recent report of examination, a less-

than-satisfactory rating for asset quality, management, earnings,

or liquidity, the Director may (if the deficiency is not corrected)

deem the regulated entity to be engaging in an unsafe or unsound

practice for purposes of subsection (a).’’;

(2) in subsection (c)—

(A) in paragraph (1), by inserting before the period

at the end the following: ‘‘, unless the party served with

a notice of charges shall appear at the hearing personally

or by a duly authorized representative, the party shall

be deemed to have consented to the issuance of the cease

and desist order’’; and

(B) in paragraph (2)—

(i) by striking ‘‘or director’’ and inserting ‘‘director,

or entity-affiliated party’’; and

(ii) by inserting ‘‘or entity-affiliated party’’ before

‘‘consents’’;

(3) in each of subsections (c), (d), and (e)—

(A) by striking ‘‘the enterprise’’ each place that term

appears and inserting ‘‘the regulated entity’’;

(B) by striking ‘‘an enterprise’’ each place that term

appears and inserting ‘‘a regulated entity’’; and

and inserting ‘‘practice’’;

(4) in subsection (d)—

(A) in the matter preceding paragraph (1)—

(i) by striking ‘‘or director’’ and inserting ‘‘director,

or entity-affiliated party’’; and

(ii) by inserting ‘‘to require a regulated entity or

entity-affiliated party’’ after ‘‘includes the authority’’;

(B) in paragraph (1)—

(i) by striking ‘‘to require an executive officer or

a director to’’; and

(ii) by striking ‘‘loss’’ and all that follows through

‘‘person’’ and inserting ‘‘loss, if’’;

(iii) in subparagraph (A), by inserting ‘‘such entity

or party or finance facility’’ before ‘‘was’’; and

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122 STAT. 2769 PUBLIC LAW 110–289—JULY 30, 2008

(iv) by striking subparagraph (B) and inserting

the following:

‘‘(B) the violation or practice involved a reckless dis-

regard for the law or any applicable regulations or prior

order of the Director;’’; and

‘‘asset’’;

(5) in subsection (e), by inserting ‘‘or entity-affiliated

party’’—

(A) before ‘‘or any executive’’; and

(B) before the period at the end; and

(6) in subsection (f)—

(A) by striking ‘‘enterprise’’ and inserting ‘‘regulated

entity, finance facility,’’; and

(B) by striking ‘‘or director’’ and inserting ‘‘director,

or entity-affiliated party’’.

SEC. 1152. TEMPORARY CEASE AND DESIST PROCEEDINGS.

Section 1372 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4632) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) G

ROUNDS FOR

SSUANCE

.—

‘‘(1) I

N GENERAL

.—If the Director determines that the

actions specified in the notice of charges served upon a regu-

lated entity or any entity-affiliated party pursuant to section

1371(a), or the continuation thereof, is likely to cause insolvency

or significant dissipation of assets or earnings of that entity,

or is likely to weaken the condition of that entity prior to

the completion of the proceedings conducted pursuant to sec-

tions 1371 and 1373, the Director may—

‘‘(A) issue a temporary order requiring that regulated

entity or entity-affiliated party to cease and desist from

any such violation or practice; and

‘‘(B) require that regulated entity or entity-affiliated

party to take affirmative action to prevent or remedy such

insolvency, dissipation, condition, or prejudice pending

completion of such proceedings.

‘‘(2) A

DDITIONAL REQUIREMENTS

.—An order issued under

paragraph (1) may include any requirement authorized under

subsection 1371(d).’’;

(2) in subsection (b)—

(A) by striking ‘‘or director’’ and inserting ‘‘director,

or entity-affiliated party’’; and

(B) by striking ‘‘enterprise’’ each place that term

appears and inserting ‘‘regulated entity’’;

(3) in subsection (c), by striking ‘‘enterprise’’ each place

that term appears and inserting ‘‘regulated entity’’;

(4) in subsection (d)—

(A) by striking ‘‘or director’’ each place that term

appears and inserting ‘‘director, or entity-affiliated party’’;

and

(B) by striking ‘‘An enterprise’’ and inserting ‘‘A regu-

lated entity’’; and

(5) in subsection (e)—

(A) by striking ‘‘request the Attorney General of the

United States to’’; and

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122 STAT. 2770 PUBLIC LAW 110–289—JULY 30, 2008

(B) by striking ‘‘or may, under the direction and control

of the Attorney General, bring such action’’.

SEC. 1153. REMOVAL AND PROHIBITION AUTHORITY.

(a) I

ENERAL

.—Part 1 of subtitle C of the Federal Housing

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.

4631 et seq.) is amended—

(1) by redesignating sections 1377 through 1379B (12

U.S.C. 4637–4641) as sections 1379 through 1379D, respec-

tively; and

(2) by inserting after section 1376 (12 U.S.C. 4636) the

following:

‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.

‘‘(a) A

UTHORITY

SSUE

RDER

.—

‘‘(1) I

N GENERAL

.—The Director may serve upon a party

described in paragraph (2), or any officer, director, or manage-

ment of the Office of Finance a written notice of the intention

of the Director to suspend or remove such party from office,

or prohibit any further participation by such party, in any

manner, in the conduct of the affairs of the regulated entity.

‘‘(2) A

PPLICABILITY

.—A party described in this paragraph

is an entity-affiliated party or any officer, director, or manage-

ment of the Office of Finance, if the Director determines that—

‘‘(A) that party, officer, or director has, directly or

indirectly—

‘‘(i) violated—

‘‘(I) any law or regulation;

‘‘(II) any cease and desist order which has

become final;

‘‘(III) any condition imposed in writing by the

Director in connection with the grant of any

application or other request by such regulated

entity; or

‘‘(IV) any written agreement between such

regulated entity and the Director;

‘‘(ii) engaged or participated in any unsafe or

unsound practice in connection with any regulated

entity or business institution; or

‘‘(iii) committed or engaged in any act, omission,

or practice which constitutes a breach of such party’s

fiduciary duty;

‘‘(B) by reason of the violation, practice, or breach

described in subparagraph (A)—

‘‘(i) such regulated entity or business institution

has suffered or will probably suffer financial loss or

other damage; or

‘‘(ii) such party has received financial gain or other

benefit; and

‘‘(C) the violation, practice, or breach described in

subparagraph (A)—

‘‘(i) involves personal dishonesty on the part of

such party; or

‘‘(ii) demonstrates willful or continuing disregard

by such party for the safety or soundness of such

regulated entity or business institution.

‘‘(b) S

USPENSION

RDER

.—

12 USC 4636a.

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122 STAT. 2771 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) S

USPENSION OR PROHIBITION AUTHORITY

.—If the

Director serves written notice under subsection (a) upon a

party subject to that subsection (a), the Director may, by order,

suspend or remove such party from office, or prohibit such

party from further participation in any manner in the conduct

of the affairs of the regulated entity, if the Director—

‘‘(A) determines that such action is necessary for the

protection of the regulated entity; and

‘‘(B) serves such party with written notice of the order.

‘‘(2) E

FFECTIVE PERIOD

.—Any order issued under this sub-

section—

‘‘(A) shall become effective upon service; and

‘‘(B) unless a court issues a stay of such order under

subsection (g), shall remain in effect and enforceable until—

‘‘(i) the date on which the Director dismisses the

charges contained in the notice served under subsection

(a) with respect to such party; or

‘‘(ii) the effective date of an order issued under

subsection (b).

‘‘(3) C

OPY OF ORDER

.—If the Director issues an order under

subsection (b) to any party, the Director shall serve a copy

of such order on any regulated entity with which such party

is affiliated at the time such order is issued.

‘‘(c) N

OTICE

, H

EARING

AND

RDER

.—

‘‘(1) N

OTICE

.—A notice under subsection (a) of the intention

of the Director to issue an order under this section shall contain

a statement of the facts constituting grounds for such action,

and shall fix a time and place at which a hearing will be

held on such action.

‘‘(2) T

IMING OF HEARING

.—A hearing shall be fixed for

a date not earlier than 30 days, nor later than 60 days, after

the date of service of notice under subsection (a), unless an

earlier or a later date is set by the Director at the request

of— ‘‘(A) the party receiving such notice, and good cause

is shown; or

‘‘(B) the Attorney General of the United States.

‘‘(3) C

ONSENT

.—Unless the party that is the subject of

a notice delivered under subsection (a) appears at the hearing

in person or by a duly authorized representative, such party

shall be deemed to have consented to the issuance of an order

under this section.

‘‘(4) I

SSUANCE OF ORDER OF SUSPENSION

.—The Director may

issue an order under this section, as the Director may deem

appropriate, if—

‘‘(A) a party is deemed to have consented to the

issuance of an order under paragraph (3); or

‘‘(B) upon the record made at the hearing, the Director

finds that any of the grounds specified in the notice have

been established.

‘‘(5) E

FFECTIVENESS OF ORDER

.—Any order issued under

paragraph (4) shall become effective at the expiration of 30

days after the date of service upon the relevant regulated

entity and party (except in the case of an order issued upon

consent under paragraph (3), which shall become effective at

the time specified therein). Such order shall remain effective

and enforceable except to such extent as it is stayed, modified,

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122 STAT. 2772 PUBLIC LAW 110–289—JULY 30, 2008

terminated, or set aside by action of the Director or a reviewing

court.

‘‘(d) P

ROHIBITION OF

ERTAIN

PECIFIC

CTIVITIES

.—Any person

subject to an order issued under this section shall not—

‘‘(1) participate in any manner in the conduct of the affairs

of any regulated entity or the Office of Finance;

‘‘(2) solicit, procure, transfer, attempt to transfer, vote,

or attempt to vote any proxy, consent, or authorization with

respect to any voting rights in any regulated entity;

‘‘(3) violate any voting agreement previously approved by

the Director; or

‘‘(4) vote for a director, or serve or act as an entity-affiliated

party of a regulated entity or as an officer or director of the

Office of Finance.

‘‘(e) I

NDUSTRY

-W

IDE

ROHIBITION

.—

‘‘(1) I

N GENERAL

.—Except as provided in paragraph (2),

any person who, pursuant to an order issued under this section,

has been removed or suspended from office in a regulated

entity or the Office of Finance, or prohibited from participating

in the conduct of the affairs of a regulated entity or the Office

of Finance, may not, while such order is in effect, continue

or commence to hold any office in, or participate in any manner

in the conduct of the affairs of, any regulated entity or the

Office of Finance.

‘‘(2) E

XCEPTION IF DIRECTOR PROVIDES WRITTEN CONSENT

.—

If, on or after the date on which an order is issued under

this section which removes or suspends from office any party,

or prohibits such party from participating in the conduct of

the affairs of a regulated entity or the Office of Finance, such

party receives the written consent of the Director, the order

shall, to the extent of such consent, cease to apply to such

party with respect to the regulated entity or such Office of

Finance described in the written consent. Any such consent

shall be publicly disclosed.

‘‘(3) V

IOLATION OF PARAGRAPH (1) TREATED AS VIOLATION

OF ORDER

.—Any violation of paragraph (1) by any person who

is subject to an order issued under subsection (h) shall be

treated as a violation of the order.

‘‘(f) A

PPLICABILITY

.—This section shall only apply to a person

who is an individual, unless the Director specifically finds that

it should apply to a corporation, firm, or other business entity.

‘‘(g) S

TAY OF

USPENSION AND

ROHIBITION OF

NTITY

-A

FFILI

ATED

ARTY

.—Not later than 10 days after the date on which

any entity-affiliated party has been suspended from office or prohib-

ited from participation in the conduct of the affairs of a regulated

entity under this section, such party may apply to the United

States District Court for the District of Columbia, or the United

States district court for the judicial district in which the head-

quarters of the regulated entity is located, for a stay of such suspen-

sion or prohibition pending the completion of the administrative

proceedings pursuant to subsection (c). The court shall have jurisdic-

tion to stay such suspension or prohibition.

‘‘(h) S

USPENSION OR

EMOVAL OF

NTITY

-A

FFILIATED

ARTY

HARGED

ITH

ELONY

.—

‘‘(1) S

USPENSION OR PROHIBITION

.—

‘‘(A) I

N GENERAL

.—Whenever any entity-affiliated party

is charged in any information, indictment, or complaint,

Deadline.

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122 STAT. 2773 PUBLIC LAW 110–289—JULY 30, 2008

with the commission of or participation in a crime involving

dishonesty or breach of trust which is punishable by impris-

onment for a term exceeding 1 year under Federal or

State law, the Director may, if continued service or partici-

pation by such party may pose a threat to the regulated

entity or impair public confidence in the regulated entity,

by written notice served upon such party, suspend such

party from office or prohibit such party from further partici-

pation in any manner in the conduct of the affairs of

any regulated entity.

‘‘(B) P

ROVISIONS APPLICABLE TO NOTICE

.—

‘‘(i) C

OPY

.—A copy of any notice under subpara-

graph (A) shall be served upon the relevant regulated

entity.

‘‘(ii) E

FFECTIVE PERIOD

.—A suspension or prohibi-

tion under subparagraph (A) shall remain in effect

until the information, indictment, or complaint referred

to in subparagraph (A) is finally disposed of, or until

terminated by the Director.

‘‘(2) R

EMOVAL OR PROHIBITION

.—

‘‘(A) I

N GENERAL

.—If a judgment of conviction or an

agreement to enter a pretrial diversion or other similar

program is entered against an entity-affiliated party in

connection with a crime described in paragraph (1)(A),

at such time as such judgment is not subject to further

appellate review, the Director may, if continued service

or participation by such party may pose a threat to the

regulated entity or impair public confidence in the regu-

lated entity, issue and serve upon such party an order

removing such party from office or prohibiting such party

from further participation in any manner in the conduct

of the affairs of the regulated entity without the prior

written consent of the Director.

‘‘(B) P

ROVISIONS APPLICABLE TO ORDER

.—

‘‘(i) C

OPY

.—A copy of any order under subpara-

graph (A) shall be served upon the relevant regulated

entity, at which time the entity-affiliated party who

is subject to the order (if a director or an officer)

shall cease to be a director or officer of such regulated

entity.

‘‘(ii) E

FFECT OF ACQUITTAL

.—A finding of not guilty

or other disposition of the charge shall not preclude

the Director from instituting proceedings after such

finding or disposition to remove a party from office

or to prohibit further participation in the affairs of

a regulated entity pursuant to subsection (a) or (b).

‘‘(iii) E

FFECTIVE PERIOD

.—Unless terminated by

the Director, any notice of suspension or order of

removal issued under this subsection shall remain

effective and outstanding until the completion of any

hearing or appeal authorized under paragraph (4).

‘‘(3) A

UTHORITY OF REMAINING BOARD MEMBERS

.—

‘‘(A) I

N GENERAL

.—If at any time, because of the

suspension of 1 or more directors pursuant to this section,

there shall be on the board of directors of a regulated

entity less than a quorum of directors not so suspended,

all powers and functions vested in or exercisable by such

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122 STAT. 2774 PUBLIC LAW 110–289—JULY 30, 2008

board shall vest in and be exercisable by the director or

directors on the board not so suspended, until such time

as there shall be a quorum of the board of directors.

‘‘(B) A

PPOINTMENT OF TEMPORARY DIRECTORS

.—If all

of the directors of a regulated entity are suspended pursu-

ant to this section, the Director shall appoint persons to

serve temporarily as directors pending the termination of

such suspensions, or until such time as those who have

been suspended cease to be directors of the regulated entity

and their respective successors take office.

‘‘(4) H

EARING REGARDING CONTINUED PARTICIPATION

.—

‘‘(A) I

N GENERAL

.—Not later than 30 days after the

date of service of any notice of suspension or order of

removal issued pursuant to paragraph (1) or (2), the entity-

affiliated party may request in writing an opportunity to

appear before the Director to show that the continued

service or participation in the conduct of the affairs of

the regulated entity by such party does not, or is not

likely to, pose a threat to the interests of the regulated

entity, or threaten to impair public confidence in the regu-

lated entity.

‘‘(B) T

IMING AND FORM OF HEARING

.—Upon receipt of

a request for a hearing under subparagraph (A), the

Director shall fix a time (not later than 30 days after

the date of receipt of such request, unless extended at

the request of such party) and place at which the entity-

affiliated party may appear, personally or through counsel,

before the Director or 1 or more designated employees

of the Director to submit written materials (or, at the

discretion of the Director, oral testimony) and oral argu-

ment.

‘‘(C) D

ETERMINATION

.—Not later than 60 days after

the date of a hearing under subparagraph (B), the Director

shall notify the entity-affiliated party whether the suspen-

sion or prohibition from participation in any manner in

the conduct of the affairs of the regulated entity will be

continued, terminated, or otherwise modified, or whether

the order removing such party from office or prohibiting

such party from further participation in any manner in

the conduct of the affairs of the regulated entity will be

rescinded or otherwise modified. Such notification shall

contain a statement of the basis for any adverse decision

of the Director.

‘‘(5) R

ULES

.—The Director is authorized to prescribe such

rules as may be necessary to carry out this subsection.’’.

(b) C

ONFORMING

MENDMENTS

.—

(1) S

AFETY AND SOUNDNESS ACT

.—Subtitle C of the Federal

Housing Enterprises Financial Safety and Soundness Act of

1992 (12 U.S.C. 4501 et seq.) is amended—

(A) in section 1317(f), by striking ‘‘section 1379B’’ and

inserting ‘‘section 1379D’’;

(B) in section 1373(a)—

(i) in paragraph (1), by striking ‘‘or 1376(c)’’ and

inserting ‘‘, 1376(c), or 1377’’;

(ii) in paragraph (2), by inserting ‘‘or 1377’’ after’’

1371’’; and

12 USC 4633.

12 USC 4517.

Deadline.

Notification.

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122 STAT. 2775 PUBLIC LAW 110–289—JULY 30, 2008

(iii) in paragraph (4), by inserting ‘‘or removal

or prohibition’’ after ‘‘cease and desist’’; and

(i) by striking ‘‘or 1376’’ and inserting ‘‘1313B,

1376, or 1377’’; and

(ii) by striking ‘‘such section’’ and inserting ‘‘this

title’’.

(2) F

ANNIE MAE CHARTER ACT

.—Section 308(b) of the Fed-

eral National Mortgage Association Charter Act (12 U.S.C.

1723(b)) is amended in the second sentence, by striking ‘‘The’’

and inserting ‘‘Except to the extent that action under section

1377 of the Federal Housing Enterprises Financial Safety and

Soundness Act of 1992 temporarily results in a lesser number,

the’’.

(3) F

REDDIE MAC CHARTER ACT

.—Section 303(a)(2)(A) of

the Federal Home Loan Mortgage Corporation Act (12 U.S.C.

1452(a)(2)(A)) is amended, in the second sentence, by striking

‘‘The’’ and inserting ‘‘Except to the extent action under section

1377 of the Federal Housing Enterprises Financial Safety and

Soundness Act of 1992 temporarily results in a lesser number,

the’’.

SEC. 1154. ENFORCEMENT AND JURISDICTION.

Section 1375 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4635) is amended—

(1) by striking subsection (a) and inserting the following

new subsection:

‘‘(a) E

NFORCEMENT

.—The Director may, in the discretion of

the Director, apply to the United States District Court for the

District of Columbia, or the United States district court within

the jurisdiction of which the headquarters of the regulated entity

is located, for the enforcement of any effective and outstanding

notice or order issued under this subtitle or subtitle B, or request

that the Attorney General of the United States bring such an

action. Such court shall have jurisdiction and power to order and

require compliance with such notice or order.’’; and

(2) in subsection (b), by striking ‘‘or 1376’’ and inserting

‘‘1313B, 1376, or 1377’’.

SEC. 1155. CIVIL MONEY PENALTIES.

Section 1376 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4636) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) I

ENERAL

.—The Director may impose a civil money

penalty in accordance with this section on any regulated entity

or any entity-affiliated party. The Director shall not impose a civil

penalty in accordance with this section on any regulated entity

or any entity-affiliated party for any violation that is addressed

under section 1345(a).’’;

(2) by striking subsection (b) and inserting the following:

‘‘(b) A

MOUNT OF

ENALTY

.—

‘‘(1) F

IRST TIER

.—A regulated entity or entity-affiliated

party shall forfeit and pay a civil penalty of not more than

$10,000 for each day during which a violation continues, if

such regulated entity or party—

‘‘(A) violates any provision of this title, the authorizing

statutes, or any order, condition, rule, or regulation under

this title or any authorizing statute;

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122 STAT. 2776 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) violates any final or temporary order or notice

issued pursuant to this title;

‘‘(C) violates any condition imposed in writing by the

Director in connection with the grant of any application

or other request by such regulated entity; or

‘‘(D) violates any written agreement between the regu-

lated entity and the Director.

‘‘(2) S

ECOND TIER

.—Notwithstanding paragraph (1), a regu-

lated entity or entity-affiliated party shall forfeit and pay a

civil penalty of not more than $50,000 for each day during

which a violation, practice, or breach continues, if—

‘‘(A) the regulated entity or entity-affiliated party,

respectively—

‘‘(i) commits any violation described in any

subparagraph of paragraph (1);

‘‘(ii) recklessly engages in an unsafe or unsound

practice in conducting the affairs of the regulated

entity; or

‘‘(iii) breaches any fiduciary duty; and

‘‘(B) the violation, practice, or breach—

‘‘(i) is part of a pattern of misconduct;

‘‘(ii) causes or is likely to cause more than a

minimal loss to the regulated entity; or

‘‘(iii) results in pecuniary gain or other benefit

to such party.

‘‘(3) T

HIRD TIER

.—Notwithstanding paragraphs (1) and (2),

any regulated entity or entity-affiliated party shall forfeit and

pay a civil penalty in an amount not to exceed the applicable

maximum amount determined under paragraph (4) for each

day during which such violation, practice, or breach continues,

if such regulated entity or entity-affiliated party—

‘‘(A) knowingly—

‘‘(i) commits any violation described in any

subparagraph of paragraph (1);

‘‘(ii) engages in any unsafe or unsound practice

in conducting the affairs of the regulated entity; or

‘‘(iii) breaches any fiduciary duty; and

‘‘(B) knowingly or recklessly causes a substantial loss

to the regulated entity or a substantial pecuniary gain

or other benefit to such party by reason of such violation,

practice, or breach.

‘‘(4) M

AXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION

DESCRIBED IN PARAGRAPH (3)

.—The maximum daily amount of

any civil penalty which may be assessed pursuant to paragraph

(3) for any violation, practice, or breach described in paragraph

(3) is— ‘‘(A) in the case of any entity-affiliated party, an

amount not to exceed $2,000,000; and

‘‘(B) in the case of any regulated entity, $2,000,000.’’;

(3) in subsection (c)—

(A) by striking ‘‘enterprise’’ each place that term

appears and inserting ‘‘regulated entity’’;

(B) by inserting ‘‘or entity-affiliated party’’ before ‘‘in

writing’’; and

been given’’;

(4) in subsection (d)—

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122 STAT. 2777 PUBLIC LAW 110–289—JULY 30, 2008

(A) by striking ‘‘or director’’ each place such term

appears and inserting ‘‘director, or entity-affiliated party’’;

(B) by striking ‘‘an enterprise’’ and inserting ‘‘a regu-

lated entity’’;

(D) by striking ‘‘request the Attorney General of the

United States to’’;

(E) by inserting ‘‘, or the United States district court

within the jurisdiction of which the headquarters of the

regulated entity is located,’’ after ‘‘District of Columbia’’;

(F) by striking ‘‘, or may, under the direction and

control of the Attorney General of the United States, bring

such an action’’; and

(G) by striking ‘‘and section 1374’’; and

(5) in subsection (g), by striking ‘‘An enterprise’’ and

inserting ‘‘A regulated entity’’.

SEC. 1156. CRIMINAL PENALTY.

(a) I

ENERAL

.—Subtitle C of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et

seq.) is amended by inserting after section 1377, as added by

this Act, the following:

‘‘SEC. 1378. CRIMINAL PENALTY.

‘‘Whoever, being subject to an order in effect under section

1377, without the prior written approval of the Director, knowingly

participates, directly or indirectly, in any manner (including by

engaging in an activity specifically prohibited in such an order)

in the conduct of the affairs of any regulated entity shall, notwith-

standing section 3571 of title 18, be fined not more than $1,000,000,

imprisoned for not more than 5 years, or both.’’.

(b) T

ECHNICAL AND

ONFORMING

MENDMENTS

.—The Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(12 U.S.C. 4501 et seq.) is amended—

(1) in section 1379 (as so designated by this Act)—

(A) by striking ‘‘an enterprise’’ and inserting ‘‘a regu-

lated entity’’; and

(B) by striking ‘‘the enterprise’’ and inserting ‘‘the regu-

lated entity’’;

(2) in section 1379A (as so designated by this Act), by

striking ‘‘an enterprise’’ and inserting ‘‘a regulated entity’’;

(3) in section 1379B(c) (as so designated by this Act), by

striking ‘‘enterprise’’ and inserting ‘‘regulated entity’’; and

(4) in section 1379D (as so designated by this Act), by

striking ‘‘enterprise’’ and inserting ‘‘regulated entity’’.

SEC. 1157. NOTICE AFTER SEPARATION FROM SERVICE.

Section 1379 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4637), as so designated

by this Act, is amended—

(1) by striking ‘‘2-year’’ and inserting ‘‘6-year’’;

(2) by striking ‘‘a director or executive officer of an enter-

prise’’ and inserting ‘‘an entity-affiliated party’’;

(3) by striking ‘‘director or officer’’ each place that term

appears and inserting ‘‘entity-affiliated party’’; and

(4) by striking ‘‘enterprise.’’ and inserting ‘‘regulated

entity.’’.

12 USC 4641.

12 USC 4639.

12 USC 4638.

12 USC 4637.

12 USC 4636b.

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122 STAT. 2778 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1158. SUBPOENA AUTHORITY.

(a) I

ENERAL

.—Section 1379B of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4641)

is amended—

(1) in subsection (a)—

(A) in the matter preceding paragraph (1)—

(i) by striking ‘‘administrative’’;

(ii) by inserting ‘‘, examination, or investigation’’

after ‘‘proceeding’’;

(iii) by striking ‘‘subtitle’’ and inserting ‘‘title’’; and

(iv) by inserting ‘‘or any designated representative

thereof, including any person designated to conduct

any hearing under this subtitle’’ after ‘‘Director’’; and

(B) in paragraph (4), by striking ‘‘issued by the

Director’’;

(2) in subsection (b), by inserting ‘‘or in any territory or

other place subject to the jurisdiction of the United States’’

after ‘‘State’’;

(3) by striking subsection (c) and inserting the following:

‘‘(c) E

NFORCEMENT

.—

‘‘(1) I

N GENERAL

.—The Director, or any party to proceedings

under this subtitle, may apply to the United States District

Court for the District of Columbia, or the United States district

court for the judicial district of the United States in any terri-

tory in which such proceeding is being conducted, or where

the witness resides or carries on business, for enforcement

of any subpoena or subpoena duces tecum issued pursuant

to this section.

‘‘(2) P

OWER OF COURT

.—The courts described under para-

graph (1) shall have the jurisdiction and power to order and

require compliance with any subpoena issued under paragraph

(1).’’;

(4) in subsection (d), by inserting ‘‘enterprise-affiliated

party’’ before ‘‘may allow’’; and

(5) by adding at the end the following:

‘‘(e) P

ENALTIES

.—A person shall be guilty of a misdemeanor,

and upon conviction, shall be subject to a fine of not more than

$1,000 or to imprisonment for a term of not more than 1 year,

or both, if that person willfully fails or refuses, in disobedience

of a subpoena issued under subsection (c), to—

‘‘(1) attend court;

‘‘(2) testify in court;

‘‘(3) answer any lawful inquiry; or

‘‘(4) produce books, papers, correspondence, contracts,

agreements, or such other records as requested in the sub-

poena.’’.

Subtitle E—General Provisions

SEC. 1161. CONFORMING AND TECHNICAL AMENDMENTS.

(a) A

MENDMENTS TO

1992 A

.—The Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501

et seq.), as amended by this Act, is amended—

(1) in section 1315 (12 U.S.C. 4515)—

(A) in subsection (a)—

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122 STAT. 2779 PUBLIC LAW 110–289—JULY 30, 2008

(i) by striking ‘‘(a) O

FFICE

ERSONNEL

.—The’’ and

inserting ‘‘(a) I

ENERAL

.—Subject to title III of the

Federal Housing Finance Regulatory Reform Act of

2008, the’’; and

(ii) by striking ‘‘the Office’’ each place that term

appears and inserting ‘‘the Agency’’;

(B) in subsection (c), by striking ‘‘the Office’’ and

inserting ‘‘the Agency’’;

(D) by striking subsection (d) and redesignating sub-

section (e) as subsection (d); and

(E) by striking subsection (f);

(2) in section 1319A (12 U.S.C. 4520)—

(A) by striking ‘‘(a) I

ENERAL

.—’’; and

(B) by striking subsection (b);

(3) in section 1364(c) (12 U.S.C. 4614(c)), by striking the

last sentence;

(4) by striking section 1383 (12 U.S.C. 1451 note);

(5) in each of sections 1319D, 1319E, and 1319F (12 U.S.C.

4523, 4524, 4525) by striking ‘‘the Office’’ each place that term

appears and inserting ‘‘the Agency’’; and

(6) in each of sections 1319B and 1369(a)(3) (12 U.S.C.

4521, 4619(a)(3)), by striking ‘‘Committee on Banking, Finance

and Urban Affairs’’ each place such term appears and inserting

‘‘Committee on Financial Services’’.

(b) A

MENDMENTS TO

ANNIE

HARTER

.—The Federal

National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.)

is amended—

(1) in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)),

309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12 U.S.C.

1723a(k)(1)), by striking ‘‘Director of the Office of Federal

Housing Enterprise Oversight of the Department of Housing

and Urban Development’’ each place that term appears, and

inserting ‘‘Director of the Federal Housing Finance Agency’’;

and

(2) in section 309—

(A) in subsection (m) (12 U.S.C. 1723a(m))—

(i) in paragraph (1), by striking ‘‘to the Secretary,

in a form determined by the Secretary’’ and inserting

‘‘to the Director of the Federal Housing Finance

Agency, in a form determined by the Director’’; and

(ii) in paragraph (2), by striking ‘‘to the Secretary,

in a form determined by the Secretary’’ and inserting

‘‘to the Director of the Federal Housing Finance

Agency, in a form determined by the Director’’;

(B) in subsection (n) (12 U.S.C. 1723a(n))—

(i) in paragraph (1), by striking ‘‘and the Secretary’’

and inserting ‘‘and the Director of the Federal Housing

Finance Agency’’; and

(ii) in paragraph (2), by striking ‘‘Secretary’’ each

place that term appears and inserting ‘‘Director of

the Federal Housing Finance Agency’’; and

inserting ‘‘Director of the Federal Housing Finance

Agency’’.

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122 STAT. 2780 PUBLIC LAW 110–289—JULY 30, 2008

MENDMENTS TO

REDDIE

HARTER

.—The Federal

Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.)

is amended—

(1) in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)),

303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12 U.S.C.

1456(c)(1)), by striking ‘‘Director of the Office of Federal

Housing Enterprise Oversight of the Department of Housing

and Urban Development’’ each place that term appears, and

inserting ‘‘Director of the Federal Housing Finance Agency’’;

(2) in section 306 (12 U.S.C. 1455)—

(A) in subsection (c)(2), by inserting ‘‘the’’ after ‘‘Sec-

retary of’’;

(B) in subsection (i)—

(i) by striking ‘‘section 1316(c)’’ and inserting ‘‘sec-

tion 306(c)’’; and

(ii) by striking ‘‘section 106’’ and inserting ‘‘section

1316’’; and

and inserting ‘‘or substantially’’; and

(3) in section 307 (12 U.S.C. 1456)—

(A) in subsection (e)—

(i) in paragraph (1), by striking ‘‘to the Secretary,

in a form determined by the Secretary’’ and inserting

‘‘to the Director of the Federal Housing Finance

Agency, in a form determined by the Director’’; and

(ii) in paragraph (2), by striking ‘‘to the Secretary,

in a form determined by the Secretary’’ and inserting

‘‘to the Director of the Federal Housing Finance

Agency, in a form determined by the Director’’; and

(B) in subsection (f)—

(i) in paragraph (1), by striking ‘‘and the Secretary’’

and inserting ‘‘and the Director of the Federal Housing

Finance Agency’’;

(ii) in paragraph (2), by striking ‘‘the Secretary’’

each place that term appears and inserting ‘‘the

Director of the Federal Housing Finance Agency’’; and

(iii) in paragraph (3)(B), by striking ‘‘Secretary’’

and inserting ‘‘Director of the Federal Housing Finance

Agency’’.

(d) A

MENDMENT TO

ITLE

18, U

NITED

TATES

ODE

.—Section

1905 of title 18, United States Code, is amended by striking ‘‘Office

of Federal Housing Enterprise Oversight’’ and inserting ‘‘Federal

Housing Finance Agency’’.

(e) A

MENDMENTS TO

LOOD

ISASTER

ROTECTION

CT OF

1973.—Section 102(f)(3)(A) of the Flood Disaster Protection Act

of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking ‘‘Director

of the Office of Federal Housing Enterprise Oversight of the Depart-

ment of Housing and Urban Development’’ and inserting ‘‘Director

of the Federal Housing Finance Agency’’.

(f) A

MENDMENT TO

EPARTMENT OF

OUSING AND

RBAN

EVELOPMENT

.—Section 5 of the Department of Housing and

Urban Development Act (42 U.S.C. 3534) is amended by striking

subsection (d).

(g) A

MENDMENTS TO

ITLE

5, U

NITED

TATES

ODE

.—Title 5,

United States Code, is amended—

(1) in section 5313, by striking the item relating to the

Director of the Office of Federal Housing Enterprise Oversight,

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122 STAT. 2781 PUBLIC LAW 110–289—JULY 30, 2008

Department of Housing and Urban Development and inserting

the following new item:

‘‘Director of the Federal Housing Finance Agency.’’; and

(2) in section 3132(a)(1)—

(A) in subparagraph (B), by striking ‘‘,, and’’ and

inserting ‘‘, and’’;

(B) in subparagraph (D)—

(i) by striking ‘‘the Federal Housing Finance

Board’’;

(ii) by striking ‘‘the Office of Federal Housing

Enterprise Oversight of the Department of Housing

and Urban Development’’ and inserting ‘‘the Federal

Housing Finance Agency’’; and

(iii) by striking ‘‘or or’’ at the end;

8(d)(1)(B)(iii) of Public Law 107–123, by adding ‘‘or’’ at

the end; and

(D) by redesignating subparagraph (E), as added by

section 10702(c)(1)(C) of Public Law 107–171, as subpara-

graph (F).

(h) A

MENDMENT TO

ARBANES

-O

XLEY

.—Section

105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.

7215(b)(5)(B)(ii)(II)) is amended by inserting ‘‘and the Director of

the Federal Housing Finance Agency,’’ after ‘‘Commission,’’.

(i) A

MENDMENT TO

EDERAL

EPOSIT

NSURANCE

.—Section

11(t)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C.

1821(t)(2)(A)) is amended by adding at the end the following:

‘‘(vii) Federal Housing Finance Agency.’’.

SEC. 1162. PRESIDENTIALLY-APPOINTED DIRECTORS OF ENTER-

PRISES.

(a) F

ANNIE

.—

(1) I

N GENERAL

.—Section 308(b) of the Federal National

Mortgage Association Charter Act (12 U.S.C. 1723(b)) is

amended—

(A) in the first sentence, by striking ‘‘eighteen persons,

five of whom shall be appointed annually by the President

of the United States, and the remainder of whom’’ and

inserting ‘‘13 persons, or such other number that the

Director determines appropriate, who’’;

(B) in the second sentence, by striking ‘‘appointed by

the President’’;

(i) by striking ‘‘appointed or’’; and

(ii) by striking ‘‘, except that any such appointed

member may be removed from office by the President

for good cause’’;

(D) in the fourth sentence, by striking ‘‘elective’’; and

(E) by striking the fifth sentence.

(2) T

RANSITIONAL PROVISION

.—The amendments made by

paragraph (1) shall not apply to any appointed position of

the board of directors of the Federal National Mortgage Associa-

tion until the expiration of the annual term for such position

during which the effective date under section 1163 occurs.

(b) F

REDDIE

.—

12 USC 1723

note.

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122 STAT. 2782 PUBLIC LAW 110–289—JULY 30, 2008

(1) I

N GENERAL

.—Section 303(a)(2) of the Federal Home

Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is

amended—

(A) in subparagraph (A)—

(i) in the first sentence, by striking ‘‘18 persons,

5 of whom shall be appointed annually by the President

of the United States and the remainder of whom’’

and inserting ‘‘13 persons, or such other number as

the Director determines appropriate, who’’; and

(ii) in the second sentence, by striking ‘‘appointed

by the President of the United States’’;

(B) in subparagraph (B)—

(i) by striking ‘‘such or’’; and

(ii) by striking ‘‘, except that any appointed

member may be removed from office by the President

for good cause’’; and

(i) by striking the first sentence; and

(ii) by striking ‘‘elective’’.

(2) T

RANSITIONAL PROVISION

.—The amendments made by

paragraph (1) shall not apply to any appointed position of

the board of directors of the Federal Home Loan Mortgage

Corporation until the expiration of the annual term for such

position during which the effective date under section 1163

occurs.

SEC. 1163. EFFECTIVE DATE.

Except as otherwise specifically provided in this title, this title

and the amendments made by this title shall take effect on, and

shall apply beginning on, the date of enactment of this Act.

TITLE II—FEDERAL HOME LOAN BANKS

SEC. 1201. RECOGNITION OF DISTINCTIONS BETWEEN THE ENTER-

PRISES AND THE FEDERAL HOME LOAN BANKS.

Section 1313 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended

by adding at the end the following:

‘‘(f) R

ECOGNITION OF

ISTINCTIONS

ETWEEN THE

NTERPRISES

AND THE

EDERAL

OME

OAN

ANKS

.—Prior to promulgating any

regulation or taking any other formal or informal agency action

of general applicability and future effect relating to the Federal

Home Loan Banks (other than any regulation, advisory document,

or examination guidance of the Federal Housing Finance Board

that the Director reissues after the authority of the Director over

the Federal Home Loan Banks takes effect), including the issuance

of an advisory document or examination guidance, the Director

shall consider the differences between the Federal Home Loan

Banks and the enterprises with respect to—

‘‘(1) the Banks’—

‘‘(A) cooperative ownership structure;

‘‘(B) the mission of providing liquidity to members;

‘‘(C) affordable housing and community development

mission;

‘‘(D) capital structure; and

‘‘(E) joint and several liability; and

5 USC 13132

note.

12 USC 1452

note.

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122 STAT. 2783 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) any other differences that the Director considers appro-

priate.’’.

SEC. 1202. DIRECTORS.

Section 7 of the Federal Home Loan Bank Act (12 U.S.C.

1427) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) N

UMBER

; E

LECTION

; Q

UALIFICATIONS

; C

ONFLICTS OF

NTEREST

.—

‘‘(1) I

N GENERAL

.—Subject to paragraphs (2) through (4),

the management of each Federal Home Loan Bank shall be

vested in a board of 13 directors, or such other number as

the Director determines appropriate.

‘‘(2) B

OARD MAKEUP

.—The board of directors of each Bank

shall be comprised of—

‘‘(A) member directors, who shall comprise at least

the majority of the members of the board of directors;

and ‘‘(B) independent directors, who shall comprise not

fewer than

⁄

of the members of the board of directors.

‘‘(3) S

ELECTION CRITERIA

.—

‘‘(A) I

N GENERAL

.—Each member of the board of direc-

tors shall be—

‘‘(i) elected by plurality vote of the members, in

accordance with procedures established under this sec-

tion; and

‘‘(ii) a citizen of the United States.

‘‘(B) I

NDEPENDENT DIRECTOR CRITERIA

.—

‘‘(i) I

N GENERAL

.—Each independent director that

is not a public interest director under clause (ii) shall

have demonstrated knowledge of, or experience in,

financial management, auditing and accounting, risk

management practices, derivatives, project develop-

ment, or organizational management, or such other

knowledge or expertise as the Director may provide

by regulation.

‘‘(ii) P

UBLIC INTEREST

.—Not fewer than 2 of the

independent directors shall have more than 4 years

of experience in representing consumer or community

interests on banking services, credit needs, housing,

or financial consumer protections.

‘‘(iii) C

ONFLICTS OF INTEREST

.—No independent

director may, during the term of service on the board

of directors, serve as an officer of any Federal Home

Loan Bank or as a director, officer, or employee of

any member of a Bank, or of any person that receives

advances from a Bank.

‘‘(4) D

EFINITIONS

.—For purposes of this section, the fol-

lowing definitions shall apply:

‘‘(A) I

NDEPENDENT DIRECTOR

.—The terms ‘independent

director’ and ‘independent directorship’ mean a member

of the board of directors of a Federal Home Loan Bank

who is a bona fide resident of the district in which the

Federal Home Loan Bank is located, or the directorship

held by such a person, respectively.

‘‘(B) M

EMBER DIRECTOR

.—The terms ‘member director’

and ‘member directorship’ mean a member of the board

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122 STAT. 2784 PUBLIC LAW 110–289—JULY 30, 2008

of directors of a Federal Home Loan Bank who is an

officer or director of a member institution that is located

in the district in which the Federal Home Loan Bank

is located, or the directorship held by such a person, respec-

tively.’’;

(2) by striking ‘‘elective’’ each place that term appears,

other than in subsections (d), (e), and (f), and inserting

‘‘member’’;

(3) in subsection (b)—

(A) by striking the subsection heading and all that

follows through ‘‘Each elective directorship’’ and inserting

the following:

‘‘(b) D

IRECTORSHIPS

.—

‘‘(1) M

EMBER DIRECTORSHIPS

.—Each member directorship’’;

and

(B) by adding at the end the following:

‘‘(2) I

NDEPENDENT DIRECTORSHIPS

.—

‘‘(A) E

LECTIONS

.—Each independent director—

‘‘(i) shall be elected by the members entitled to

vote, from among eligible persons nominated, after con-

sultation with the Advisory Council of the Bank, by

the board of directors of the Bank; and

‘‘(ii) shall be elected by a plurality of the votes

of the members of the Bank at large, with each member

having the number of votes for each such directorship

as it has under paragraph (1) in an election to fill

member directorships.

‘‘(B) C

RITERIA

.—Nominees shall meet all applicable

requirements prescribed in this section.

‘‘(C) N

OMINATION AND ELECTION PROCEDURES

.—Proce-

dures for nomination and election of independent directors

shall be prescribed by the bylaws of each Federal Home

Loan Bank, in a manner consistent with the rules and

regulations of the Agency.’’;

(4) in subsection (c)—

(A) by striking ‘‘elective’’ each place that term appears

and inserting ‘‘member’’, except—

(i) in the second sentence, the second place that

term appears; and

(ii) each place that term appears in the fifth sen-

tence; and

(B) in the second sentence—

(i) by inserting ‘‘(A) except as provided in clause

(B) of this sentence,’’ before ‘‘if at any time’’; and

(ii) by inserting before the period at the end the

following: ‘‘, and (B) clause (A) of this sentence shall

not apply to the directorships of any Federal Home

Loan Bank resulting from the merger of any 2 or

more such Banks’’;

(5) in subsection (d)—

(A) in the first sentence—

(i) by striking ‘‘, whether elected or appointed,’’;

and

(ii) by striking ‘‘3 years’’ and inserting ‘‘4 years’’;

(B) in the second sentence—

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122 STAT. 2785 PUBLIC LAW 110–289—JULY 30, 2008

(i) by striking ‘‘Federal Home Loan Bank System

Modernization Act of 1999’’ and inserting ‘‘Federal

Housing Finance Regulatory Reform Act of 2008’’;

(ii) by striking ‘‘

⁄

’’ and inserting ‘‘

⁄

’’; and

(iii) by striking ‘‘or appointed’’; and

(i) by striking ‘‘an elective’’ each place that term

appears and inserting ‘‘a’’; and

(ii) by striking ‘‘in any elective directorship or elec-

tive directorships’’;

(6) in subsection (f)—

(A) by striking paragraph (2);

(B) by striking ‘‘appointed or’’ each place that term

appears; and

(i) by striking ‘‘(3) E

LECTED BANK DIRECTORS

.—

’’ and inserting ‘‘(2) E

LECTION PROCESS

.—’’; and

(ii) by striking ‘‘elective’’ each place that term

appears;

(7) in subsection (i)—

(A) in paragraph (1), by striking ‘‘Subject to paragraph

(2), each’’ and inserting ‘‘Each’’; and

(B) by striking paragraph (2) and inserting the fol-

lowing:

‘‘(2) A

NNUAL REPORT

.—The Director shall include, in the

annual report submitted to the Congress pursuant to section

1319B of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992, information regarding the com-

pensation and expenses paid by the Federal Home Loan Banks

to the directors on the boards of directors of the Banks.’’;

and (8) by adding at the end the following:

‘‘(l) T

RANSITION

ULE

.—Any member of the board of directors

of a Bank elected or appointed in accordance with this section

prior to the date of enactment of this subsection may continue

to serve as a member of that board of directors for the remainder

of the existing term of service.’’.

SEC. 1203. DEFINITIONS.

Section 2 of the Federal Home Loan Bank Act (12 U.S.C.

1422) is amended—

(1) by striking paragraphs (1), (10), and (11);

(2) by redesignating paragraphs (2) through (9) as para-

graphs (1) through (8), respectively;

(3) by redesignating paragraphs (12) and (13) as paragraphs

(9) and (10), respectively; and

(4) by adding at the end the following:

‘‘(11) D

IRECTOR

.—The term ‘Director’ means the Director

of the Federal Housing Finance Agency.

‘‘(12) A

GENCY

.—The term ‘Agency’ means the Federal

Housing Finance Agency, established under section 1311 of

the Federal Housing Enterprises Financial Safety and Sound-

ness Act of 1992.’’.

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

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.),

other than in provisions of that Act added or amended otherwise

by this Act, is amended—

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122 STAT. 2786 PUBLIC LAW 110–289—JULY 30, 2008

(1) by striking sections 2A and 2B (12 U.S.C. 1422a, 1422b);

(2) in section 18 (12 U.S.C. 1438), by striking subsection

(b); (3) in section 11 (12 U.S.C. 1431)—

(A) in subsection (b)—

(i) in the first sentence—

(I) by striking ‘‘The Board’’ and inserting ‘‘The

Office of Finance, as agent for the Banks,’’; and

(II) by striking ‘‘the Board’’ and inserting ‘‘such

Office’’; and

(ii) in the second and fourth sentences, by striking

‘‘the Board’’ each place such term appears and inserting

‘‘the Office of Finance’’;

(B) in subsection (c)—

(i) by striking ‘‘the Board’’ the first place such

term appears and inserting ‘‘the Office of Finance,

as agent for the Banks,’’; and

(ii) by striking ‘‘the Board’’ the second place such

term appears and inserting ‘‘such Office’’; and

(i) by striking the 2 commas after ‘‘permit’’ and

inserting ‘‘or’’; and

(ii) by striking the comma after ‘‘require’’;

(4) in section 6 (12 U.S.C. 1426)—

(A) in subsection (b)(1), in the matter preceding

subparagraph (A), by striking ‘‘Finance Board approval’’

and inserting ‘‘approval by the Director’’; and

(B) in each of subsections (c)(4)(B) and (d)(2), by

striking ‘‘Finance Board regulations’’ each place that term

appears and inserting ‘‘regulations of the Director’’;

(5) in section 10(b) (12 U.S.C. 1430(b))—

(A) in the subsection heading, by striking ‘‘F

ORMAL

OARD

ESOLUTION

’’ and inserting ‘‘A

PPROVAL OF

IRECTOR

’’; and

(B) by striking ‘‘by formal resolution’’;

(6) in section 21(b)(5) (12 U.S.C. 1441(b)(5)), by striking

‘‘Chairperson of the Federal Housing Finance Board’’ and

inserting ‘‘Director’’;

(7) in section 15 (12 U.S.C. 1435), by inserting ‘‘or the

Director’’ after ‘‘the Board’’;

(8) by striking ‘‘the Board’’ each place that term appears

and inserting ‘‘the Director’’;

(9) by striking ‘‘The Board’’ each place that term appears

and inserting ‘‘The Director’’;

(10) by striking ‘‘the Finance Board’’ each place that term

appears and inserting ‘‘the Director’’;

(11) by striking ‘‘The Finance Board’’ each place that term

appears and inserting ‘‘The Director’’; and

(12) by striking ‘‘Federal Housing Finance Board’’ each

place that term appears and inserting ‘‘Director’’.

SEC. 1205. HOUSING GOALS.

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.)

is amended by inserting after section 10b the following new section:

‘‘SEC. 10C. HOUSING GOALS.

‘‘(a) I

ENERAL

.—The Director shall establish housing goals

with respect to the purchase of mortgages, if any, by the Federal

12 USC 1430c.

12 USC

1430 et al.

12 USC

1422 et al.

12 USC

1427 et al.

12 USC

1422 et al.

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122 STAT. 2787 PUBLIC LAW 110–289—JULY 30, 2008

Home Loan Banks. Such goals shall be consistent with the goals

established under sections 1331 through 1334 of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992.

‘‘(b) C

ONSIDERATIONS

.—In establishing the goals required by

subsection (a), the Director shall consider the unique mission and

ownership structure of the Federal Home Loan Banks.

‘‘(c) T

RANSITION

ERIOD

.—To facilitate an orderly transition,

the Director shall establish interim target goals for purposes of

this section for each of the 2 calendar years following the date

of enactment of this section.

‘‘(d) M

ONITORING AND

NFORCEMENT OF

OALS

.—The require-

ments of section 1336 of the Federal Housing Enterprises Safety

and Soundness Act of 1992, shall apply to this section, in the

same manner and to the same extent as that section applies to

the Federal housing enterprises.

‘‘(e) A

NNUAL

EPORT

.—The Director shall annually report to

Congress on the performance of the Banks in meeting the goals

established under this section.’’.

SEC. 1206. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.

Section 4(a)(1) of the Federal Home Loan Bank Act (12 U.S.C.

1424(a)(1)) is amended—

(1) by inserting after ‘‘savings bank,’’ the following:

‘‘community development financial institution,’’; and

(2) in subparagraph (B), by inserting after ‘‘United States,’’

the following: ‘‘or, in the case of a community development

financial institution, is certified as a community development

financial institution under the Community Development

Banking and Financial Institutions Act of 1994.’’.

SEC. 1207. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN

BANKS.

The Federal Home Loan Bank Act is amended by inserting

after section 20 (12 U.S.C. 1440) the following new section:

‘‘SEC. 20A. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN

BANKS.

‘‘(a) I

NFORMATION ON

INANCIAL

ONDITION

.—In order to enable

each Federal Home Loan Bank to evaluate the financial condition

of one or more of the other Federal Home Loan Banks individually

and the Federal Home Loan Bank System (including any risks

associated with the issuance or repayment of consolidated Federal

Home Loan Bank bonds and debentures or other borrowings and

the joint and several liabilities of the Banks incurred due to such

borrowings), as well as to comply with any of its obligations under

the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the

Director shall make available to the Banks such reports, records,

or other information as may be available, relating to the condition

of any Federal Home Loan Bank.

‘‘(b) S

HARING OF

NFORMATION

.—

‘‘(1) I

N GENERAL

.—The Director shall promulgate regula-

tions to facilitate the sharing of information made available

under subsection (a) directly among the Federal Home Loan

Banks.

‘‘(2) L

IMITATION

.—Notwithstanding paragraph (1), a Fed-

eral Home Loan Bank responding to a request from another

Bank or from the Director for information pursuant to this

section may request that the Director determine that such

Regulations.

Reports.

Records.

12 USC 1440a.

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122 STAT. 2788 PUBLIC LAW 110–289—JULY 30, 2008

information is proprietary and that the public interest requires

that such information not be shared.

‘‘(c) L

IMITATION

.—Nothing in this section shall affect the obliga-

tions of any Federal Home Loan Bank under the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.) or the regulations

issued by the Securities and Exchange Commission thereunder.

‘‘(d) N

AIVER OF

RIVILEGE

.—The Director shall not be

deemed to have waived any privilege applicable to any information

concerning a Federal Home Loan Bank by transferring, or permit-

ting the transfer of, that information to any other Federal Home

Loan Bank for the purposes set out in subsection (a).’’.

SEC. 1208. EXCLUSION FROM CERTAIN REQUIREMENTS.

(a) I

ENERAL

.—The Federal Home Loan Banks shall be

exempt from compliance with—

(1) sections 13(e), 14(a), and 14(c) of the Securities

Exchange Act of 1934, and related Commission regulations;

(2) section 15 of the Securities Exchange Act of 1934,

and related Commission regulations, with respect to trans-

actions in the capital stock of a Federal Home Loan Bank;

(3) section 17A of the Securities Exchange Act of 1934,

and related Commission regulations, with respect to the

transfer of the securities of a Federal Home Loan Bank; and

(4) the Trust Indenture Act of 1939.

(b) M

EMBER

XEMPTION

.—The members of the Federal Home

Loan Bank System shall be exempt from compliance with sections

13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange Act

of 1934, and related Commission regulations, with respect to owner-

ship of or transactions in the capital stock of the Federal Home

Loan Banks by such members.

XEMPTED AND

OVERNMENT

ECURITIES

.—

(1) C

APITAL STOCK

.—The capital stock issued by each of

the Federal Home Loan Banks under section 6 of the Federal

Home Loan Bank Act are—

(A) exempted securities, within the meaning of section

3(a)(2) of the Securities Act of 1933; and

(B) exempted securities, within the meaning of section

3(a)(12)(A) of the Securities Exchange Act of 1934, except

to the extent provided in section 38 of that Act.

(2) O

THER OBLIGATIONS

.—The debentures, bonds, and other

obligations issued under section 11 of the Federal Home Loan

Bank Act (12 U.S.C. 1431) are—

(A) exempted securities, within the meaning of section

3(a)(2) of the Securities Act of 1933;

(B) government securities, within the meaning of sec-

tion 3(a)(42) of the Securities Exchange Act of 1934; and

tion 2(a)(16) of the Investment Company Act of 1940.

(3) B

ROKERS AND DEALERS

.—A person (other than a Federal

Home Loan Bank effecting transactions for members of the

Federal Home Loan Bank System) that effects transactions

in the capital stock or other obligations of a Federal Home

Loan Bank, for the account of others or for that person’s own

account, as applicable, is a broker or dealer, as those terms

are defined in paragraphs (4) and (5), respectively, of section

3(a) of the Securities Exchange Act of 1934, but is excluded

from the definition of—

12 USC 1426a.

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122 STAT. 2789 PUBLIC LAW 110–289—JULY 30, 2008

(A) the term ‘‘government securities broker’’ under sec-

tion 3(a)(43) of the Securities Exchange Act of 1934; and

(B) the term ‘‘government securities dealer’’ under sec-

tion 3(a)(44) of the Securities Exchange Act of 1934.

(d) E

XEMPTION

ROM

EPORTING

EQUIREMENTS

.—The Federal

Home Loan Banks shall be exempt from periodic reporting require-

ments under the securities laws pertaining to the disclosure of—

(1) related party transactions that occur in the ordinary

course of the business of the Banks with members; and

(2) the unregistered sales of equity securities.

(e) T

ENDER

FFERS

.—Commission rules relating to tender offers

shall not apply in connection with transactions in the capital stock

of the Federal Home Loan Banks.

(f) R

EGULATIONS

.—

(1) I

N GENERAL

.—The Commission shall promulgate such

rules and regulations as may be necessary or appropriate in

the public interest or in furtherance of this section and the

exemptions provided in this section.

(2) C

ONSIDERATIONS

.—In issuing regulations under this sec-

tion, the Commission shall consider the distinctive characteris-

tics of the Federal Home Loan Banks when evaluating—

(A) the accounting treatment with respect to the pay-

ment to the Resolution Funding Corporation;

(B) the role of the combined financial statements of

the Federal Home Loan Banks;

stock; and

(D) the accounting treatment related to the joint and

several nature of the obligations of the Banks.

(g) D

EFINITIONS

.—As used in this section—

(1) the terms ‘‘Bank’’, ‘‘Federal Home Loan Bank’’,

‘‘member’’, and ‘‘Federal Home Loan Bank System’’ have the

same meanings as in section 2 of the Federal Home Loan

Bank Act (12 U.S.C. 1422);

(2) the term ‘‘Commission’’ means the Securities and

Exchange Commission; and

(3) the term ‘‘securities laws’’ has the same meaning as

in section 3(a)(47) of the Securities Exchange Act of 1934 (15

U.S.C. 78c(a)(47)).

SEC. 1209. VOLUNTARY MERGERS.

Section 26 of the Federal Home Loan Bank Act (12 U.S.C.

1446) is amended—

(1) by striking ‘‘Whenever’’ and inserting ‘‘(a) I

ERAL

.—Whenever’’; and

(2) by adding at the end the following:

‘‘(b) V

OLUNTARY

ERGERS

UTHORIZED

.—

‘‘(1) I

N GENERAL

.—Any Federal Home Loan Bank may,

with the approval of the Director and of the boards of directors

of the Banks involved, merge with another Bank.

‘‘(2) R

EGULATIONS REQUIRED

.—The Director shall promul-

gate regulations establishing the conditions and procedures

for the consideration and approval of any voluntary merger

described in paragraph (1), including the procedures for Bank

member approval.’’.

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122 STAT. 2790 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1210. AUTHORITY TO REDUCE DISTRICTS.

Section 3 of the Federal Home Loan Bank Act (12 U.S.C.

1423) is amended—

(1) by striking ‘‘As soon’’ and inserting ‘‘(a) I

ENERAL

.—

As soon’’; and

(2) by adding at the end the following:

‘‘(b) A

UTHORITY

EDUCE

ISTRICTS

.—Notwithstanding sub-

section (a), the number of districts may be reduced to a number

less than 8—

‘‘(1) pursuant to a voluntary merger between Banks, as

approved pursuant to section 26(b); or

‘‘(2) pursuant to a decision by the Director to liquidate

a Bank pursuant to section 1367 of the Federal Housing Enter-

prises Financial Safety and Soundness Act of 1992.’’.

SEC. 1211. COMMUNITY FINANCIAL INSTITUTION MEMBERS.

(a) T

OTAL

SSET

EQUIREMENT

.—Paragraph (10) of section 2

of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so

redesignated by section 201(3) of this Act, is amended by striking

‘‘$500,000,000’’ each place such term appears and inserting

‘‘$1,000,000,000’’.

(b) U

SE OF

DVANCES FOR

OMMUNITY

EVELOPMENT

CTIVI

TIES

.—Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C.

1430(a)) is amended—

(1) in paragraph (2)(B)—

(A) by striking ‘‘and’’; and

(B) by inserting ‘‘, and community development activi-

ties’’ before the period at the end;

(2) in paragraph (3)(E), by inserting ‘‘or community develop-

ment activities’’ after ‘‘agriculture,’’; and

(3) in paragraph (6)—

(A) by striking ‘‘and’’; and

(B) by inserting ‘‘, and ‘community development activi-

ties’ ’’ before ‘‘shall’’.

SEC. 1212. PUBLIC USE DATABASE; REPORTS TO CONGRESS.

Section 10 of the Federal Home Loan Bank Act (12 U.S.C.

1430) is amended—

(1) in subsection (j)(12)—

(A) by striking subparagraph (C) and inserting the

following:

‘‘(C) R

EPORTS

.—The Director shall annually report to

the Committee on Banking, Housing, and Urban Affairs

of the Senate and the Committee on Financial Services

of the House of Representatives on the collateral pledged

to the Banks, including an analysis of collateral by type

and by Bank district.’’; and

(B) by adding at the end the following:

‘‘(D) S

UBMISSION TO CONGRESS

.—The Director shall

submit the reports under subparagraphs (A) and (C) to

the Committee on Banking, Housing, and Urban Affairs

of the Senate and the Committee on Financial Services

of the House of Representatives, not later than 180 days

after the date of enactment of the Federal Housing Finance

Regulatory Reform Act of 2008.’’; and

(2) by adding at the end the following:

‘‘(k) P

UBLIC

ATABASE

.—

Deadline.

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122 STAT. 2791 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) D

ATA

.—Each Federal Home Loan Bank shall provide

to the Director, in a form determined by the Director, census

tract level data relating to mortgages purchased, if any,

including—

‘‘(A) data consistent with that reported under section

1323 of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992;

‘‘(B) data elements required to be reported under the

Home Mortgage Disclosure Act of 1975; and

‘‘(C) any other data elements that the Director con-

siders appropriate.

‘‘(2) P

UBLIC USE DATABASE

.—

‘‘(A) I

N GENERAL

.—The Director shall make available

to the public, in a form that is useful to the public

(including forms accessible electronically), and to the extent

practicable, the data provided to the Director under para-

graph (1).

‘‘(B) P

ROPRIETARY INFORMATION

.—Not withstanding

subparagraph (A), the Director may not provide public

access to, or disclose to the public, any information required

to be submitted under this subsection that the Director

determines is proprietary or that would provide personally

identifiable information and that is not otherwise publicly

accessible through other forms, unless the Director deter-

mines that it is in the public interest to provide such

information.’’.

SEC. 1213. SEMIANNUAL REPORTS.

Section 21B of the Federal Home Loan Bank Act is amended

in subsection (f)(2)(C), by adding at the end the following:

‘‘(v) S

EMIANNUAL REPORTS

.—The Director shall

report semiannually to the Committee on Banking,

Housing, and Urban Affairs of the Senate and the

Committee on Financial Services of the House of Rep-

resentatives on the projected date for the completion

of contributions required by this section.’’.

SEC. 1214. LIQUIDATION OR REORGANIZATION OF A FEDERAL HOME

LOAN BANK.

Section 26 of the Federal Home Loan Bank Act (12 U.S.C.

1446) is amended by adding at the end the following: ‘‘At least

30 days prior to liquidating or reorganizing any Bank under this

section, the Director shall notify the Bank of its determination

and the facts and circumstances upon which such determination

is based. The Bank may contest that determination in a hearing

before the Director, in which all issues shall be determined on

the record pursuant to section 554 of title 5, United States Code.’’.

SEC. 1215. STUDY AND REPORT TO CONGRESS ON SECURITIZATION

OF ACQUIRED MEMBER ASSETS.

(a) S

TUDY

.—The Director shall conduct a study on securitization

of home mortgage loans purchased or to be purchased from member

financial institutions under the Acquired Member Assets programs.

In conducting the study, the Director shall establish a process

for the formal submission of comments.

(b) E

LEMENTS

.—The study shall encompass—

(1) the benefits and risks associated with securitization

of Acquired Member Assets;

Records.

Deadline.

Notification.

12 USC 1441b.

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122 STAT. 2792 PUBLIC LAW 110–289—JULY 30, 2008

(2) the potential impact of securitization upon liquidity

in the mortgage and broader credit markets;

(3) the ability of the Federal Home Loan Bank or Banks

in question to manage the risks associated with such a program;

(4) the impact of such a program on the existing activities

of the Banks, including their mortgage portfolios and advances;

and

(5) the joint and several liability of the Banks and the

cooperative structure of the Federal Home Loan Bank System.

ONSULTATIONS

.—In conducting the study under this sec-

tion, the Director shall consult with the Federal Home Loan Banks,

the Banks’ fiscal agent, representatives of the mortgage lending

industry, practitioners in the structured finance field, and other

experts as needed.

(d) R

EPORT

.—Not later than 1 year after the date of enactment

of this Act, the Director shall submit a report to Congress on

the results of the study conducted under subsection (a), including

policy recommendations based on the analysis of the Director of

the feasibility of mortgage-backed securities issuance by a Federal

Home Loan Bank or Banks and the risks and benefits associated

with such program or programs.

(e) D

EFINITIONS

.—As used in this section, the terms ‘‘member’’,

‘‘Bank’’, and ‘‘Federal Home Loan Bank’’ have the same meanings

as in section 2 of the Federal Home Loan Bank Act (12 U.S.C.

1422).

SEC. 1216. TECHNICAL AND CONFORMING AMENDMENTS.

(a) R

IGHT TO

INANCIAL

RIVACY

CT OF

1978.—Section 1113(o)

of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3413(o))

is amended—

(1) by striking ‘‘Federal Housing Finance Board’’ and

inserting ‘‘Federal Housing Finance Agency’’; and

(2) by striking ‘‘Federal Housing Finance Board’s’’ and

inserting ‘‘Federal Housing Finance Agency’s’’.

(b) R

IEGLE

OMMUNITY

EVELOPMENT AND

EGULATORY

MPROVEMENT

CT OF

1994.—Section 117(e) of the Riegle Commu-

nity Development and Regulatory Improvement Act of 1994 (12

U.S.C. 4716(e)) is amended by striking ‘‘Federal Housing Finance

Board’’ and inserting ‘‘Federal Housing Finance Agency’’.

ITLE

18, U

NITED

TATES

ODE

.—Title 18, United States

Code, is amended by striking ‘‘Federal Housing Finance Board’’

each place such term appears in each of sections 212, 657, 1006,

and 1014, and inserting ‘‘Federal Housing Finance Agency’’.

(d) MAHRA A

CT OF

1997.—Section 517(b)(4) of the Multifamily

Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C.

1437f note) is amended by striking ‘‘Federal Housing Finance

Board’’ and inserting ‘‘Federal Housing Finance Agency’’.

(e) T

ITLE

44, U

NITED

TATES

ODE

.—Section 3502(5) of title

44, United States Code, is amended by striking ‘‘Federal Housing

Finance Board’’ and inserting ‘‘Federal Housing Finance Agency’’.

(f) A

CCESS TO

OCAL

TV A

CT OF

2000.—Section 1004(d)(2)(D)(iii)

of the Launching Our Communities’ Access to Local Television

Act of 2000 (47 U.S.C. 1103(d)(2)(D)(iii)) is amended by striking

‘‘Office of Federal Housing Enterprise Oversight, the Federal

Housing Finance Board’’ and inserting ‘‘Federal Housing Finance

Agency’’.

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122 STAT. 2793 PUBLIC LAW 110–289—JULY 30, 2008

(g) FIRREA.—Section 1216 of the Financial Institutions

Reform, Recovery, and Enhancement Act of 1989 (12 U.S.C. 1833e)

is amended—

(1) in subsection (a), by striking paragraph (3) and inserting

the following:

‘‘(3) the Federal Housing Finance Agency;’’;

(2) in subsection (b), by striking ‘‘Federal National Mort-

gage Association’’ and inserting ‘‘Federal Home Loan Banks,

the Federal National Mortgage Association,’’; and

(3) in subsection (c), by striking ‘‘Finance Board’’ and

inserting ‘‘Finance Agency’’.

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

(a) I

ENERAL

.—Not later than 1 year after the date of enact-

ment of this Act, the Director shall conduct a study and submit

a report to the Committee on Banking, Housing, and Urban Affairs

of the Senate and the Committee on Financial Services of the

House or Representatives on the extent to which loans and securi-

ties used as collateral to support Federal Home Loan Bank advances

are consistent with the interagency guidance on nontraditional

mortgage products.

(b) R

EQUIRED

ONTENT

.—The study required under subsection

(a) shall—

(1) consider and recommend any additional regulations,

guidance, advisory bulletins, or other administrative actions

necessary to ensure that the Federal Home Loan Banks are

not supporting loans with predatory characteristics; and

(2) include an opportunity for the public to comment on

any recommendations made under paragraph (1).

SEC. 1218. FEDERAL HOME LOAN BANK REFINANCING AUTHORITY FOR

CERTAIN RESIDENTIAL MORTGAGE LOANS.

Section 10(j)(2) of the Federal Home Loan Bank Act (12 U.S.C.

1430(j)(2)) is amended—

(1) in subparagraph (A), by striking ‘‘or’’ at the end;

(2) in subparagraph (B), by striking the period at the

end and inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(C) during the 2-year period beginning on the date

of enactment of this subparagraph, use such percentage

as the Director may by regulation establish of any sub-

sidized advances set aside to finance homeownership under

subparagraph (A) to refinance loans that are secured by

a first mortgage on a primary residence of any family

having an income at or below 80 percent of the median

income for the area.’’.

Effective date.

Public comment.

Recommen-

dations.

Deadline.

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122 STAT. 2794 PUBLIC LAW 110–289—JULY 30, 2008

TITLE III—TRANSFER OF FUNCTIONS,

PERSONNEL, AND PROPERTY OF

OFHEO AND THE FEDERAL HOUSING

FINANCE BOARD

Subtitle A—OFHEO

SEC. 1301. ABOLISHMENT OF OFHEO.

(a) I

ENERAL

.—Effective at the end of the 1-year period

beginning on the date of enactment of this Act, the Office of Federal

Housing Enterprise Oversight of the Department of Housing and

Urban Development and the positions of the Director and Deputy

Director of such Office are abolished.

(b) D

ISPOSITION OF

FFAIRS

.—During the 1-year period begin-

ning on the date of enactment of this Act, the Director of the

Office of Federal Housing Enterprise Oversight, solely for the pur-

pose of winding up the affairs of the Office of Federal Housing

Enterprise Oversight—

(1) shall manage the employees of such Office and provide

for the payment of the compensation and benefits of any such

employee which accrue before the effective date of the transfer

of such employee under section 1303; and

(2) may take any other action necessary for the purpose

of winding up the affairs of the Office.

TATUS OF

MPLOYEES

EFORE

RANSFER

.—The amend-

ments made by title I and the abolishment of the Office of Federal

Housing Enterprise Oversight under subsection (a) of this section

may not be construed to affect the status of any employee of

such Office as an employee of an agency of the United States

for purposes of any other provision of law before the effective

date of the transfer of any such employee under section 1303.

(d) U

SE OF

ROPERTY AND

ERVICES

.—

(1) P

ROPERTY

.—The Director may use the property of the

Office of Federal Housing Enterprise Oversight to perform func-

tions which have been transferred to the Director for such

time as is reasonable to facilitate the orderly transfer of func-

tions transferred under any other provision of this Act or any

amendment made by this Act to any other provision of law.

(2) A

GENCY SERVICES

.—Any agency, department, or other

instrumentality of the United States, and any successor to

any such agency, department, or instrumentality, which was

providing supporting services to the Office of Federal Housing

Enterprise Oversight before the expiration of the period under

subsection (a) in connection with functions that are transferred

to the Director shall—

(A) continue to provide such services, on a reimbursable

basis, until the transfer of such functions is complete; and

(B) consult with any such agency to coordinate and

facilitate a prompt and reasonable transition.

(e) C

ONTINUATION OF

ERVICES

.—The Director may use the

services of employees and other personnel of the Office of Federal

Housing Enterprise Oversight, on a reimbursable basis, to perform

functions which have been transferred to the Director for such

time as is reasonable to facilitate the orderly transfer of functions

Effective date.

12 USC 4511

note.

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122 STAT. 2795 PUBLIC LAW 110–289—JULY 30, 2008

pursuant to any other provision of this Act or any amendment

made by this Act to any other provision of law.

(f) S

AVINGS

ROVISIONS

.—

(1) E

XISTING RIGHTS

DUTIES

AND OBLIGATIONS NOT

AFFECTED

.—Subsection (a) shall not affect the validity of any

right, duty, or obligation of the United States, the Director

of the Office of Federal Housing Enterprise Oversight, or any

other person, which—

(A) arises under—

(i) the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992;

(ii) the Federal National Mortgage Association

Charter Act;

(iii) the Federal Home Loan Mortgage Corporation

Act; or

(iv) any other provision of law applicable with

respect to such Office; and

(B) existed on the day before the date of abolishment

under subsection (a).

(2) C

ONTINUATION OF SUITS

.—No action or other proceeding

commenced by or against the Director of the Office of Federal

Housing Enterprise Oversight in connection with functions that

are transferred to the Director of the Federal Housing Finance

Agency shall abate by reason of the enactment of this Act,

except that the Director of the Federal Housing Finance Agency

shall be substituted for the Director of the Office of Federal

Housing Enterprise Oversight as a party to any such action

or proceeding.

SEC. 1302. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

(a) I

ENERAL

.—All regulations, orders, and determinations

described in subsection (b) shall remain in effect according to the

terms of such regulations, orders, and determinations, and shall

be enforceable by or against the Director or the Secretary of Housing

and Urban Development, as the case may be, until modified, termi-

nated, set aside, or superseded in accordance with applicable law

by the Director or the Secretary, as the case may be, any court

of competent jurisdiction, or operation of law.

(b) A

PPLICABILITY

.—A regulation, order, or determination is

described in this subsection if it—

(1) was issued, made, prescribed, or allowed to become

effective by—

(A) the Office of Federal Housing Enterprise Oversight;

(B) the Secretary of Housing and Urban Development,

and relates to the authority of the Secretary under—

(i) the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992;

(ii) the Federal National Mortgage Association

Charter Act, with respect to the Federal National Mort-

gage Association; or

(iii) the Federal Home Loan Mortgage Corporation

Act, with respect to the Federal Home Loan Mortgage

Corporation; or

functions transferred by this Act; and

(2) is in effect on the effective date of the abolishment

under section 1301(a).

12 USC 4511

note.

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122 STAT. 2796 PUBLIC LAW 110–289—JULY 30, 2008

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

(a) T

RANSFER

.—Each employee of the Office of Federal Housing

Enterprise Oversight shall be transferred to the Agency for employ-

ment, not later than the effective date of the abolishment under

section 1301(a), and such transfer shall be deemed a transfer of

function for purposes of section 3503 of title 5, United States

Code.

(b) G

UARANTEED

OSITIONS

.—

(1) I

N GENERAL

.—Each employee transferred under sub-

section (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) N

O 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 compensa-

tion 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.

PPOINTMENT

UTHORITY FOR

XCEPTED AND

ENIOR

XECU

TIVE

ERVICE

MPLOYEES

.—

(1) I

N 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) D

ECLINE 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-deter-

mining, 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) R

EORGANIZATION

.—If the Director determines, after the end

of the 1-year period beginning on the effective date of the abolish-

ment under section 1301(a), that a reorganization of the combined

workforce is required, that reorganization shall be deemed a major

reorganization for purposes of affording affected employee retire-

ment under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United

States Code.

(e) E

MPLOYEE

ENEFIT

ROGRAMS

.—

(1) I

N GENERAL

.—Any employee of the Office of Federal

Housing Enterprise Oversight accepting employment with the

Agency as a result of a transfer under subsection (a) may

retain, for 12 months after the date on which such transfer

occurs, membership in any employee benefit program of the

Agency or the Office of Federal Housing Enterprise Oversight

of the Department of Housing and Urban Development, as

applicable, including insurance, to which such employee belongs

on the date of the abolishment under section 1301(a), if—

(A) the employee does not elect to give up the benefit

or membership in the program; and

(B) the benefit or program is continued by the Director

of the Federal Housing Finance Agency.

Effective date.

Deadline.

12 USC 4511

note.

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122 STAT. 2797 PUBLIC LAW 110–289—JULY 30, 2008

(2) C

OST DIFFERENTIAL

.—

(A) I

N GENERAL

.—The difference in the costs between

the benefits which would have been provided by the Office

of Federal Housing Enterprise Oversight and those pro-

vided by this section shall be paid by the Director.

(B) H

EALTH INSURANCE

.—If any employee elects to give

up membership in a health insurance program or the health

insurance program is not continued by the Director, the

employee shall be permitted to select an alternate Federal

health insurance program not later than 30 days after

the date of such election or notice, without regard to any

other regularly scheduled open season.

SEC. 1304. TRANSFER OF PROPERTY AND FACILITIES.

Upon the effective date of its abolishment under section 1301(a),

all property of the Office of Federal Housing Enterprise Oversight

shall transfer to the Agency.

Subtitle B—Federal Housing Finance

Board

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

(a) I

ENERAL

.—Effective at the end of the 1-year period

beginning on the date of enactment of this Act, the Federal Housing

Finance Board (in this subtitle referred to as the ‘‘Board’’) is abol-

ished.

(b) D

ISPOSITION OF

FFAIRS

.—During the 1-year period begin-

ning on the date of enactment of this Act, the Board, solely for

the purpose of winding up the affairs of the Board—

(1) shall manage the employees of the Board and provide

for the payment of the compensation and benefits of any such

employee which accrue before the effective date of the transfer

of such employee under section 1313; and

(2) may take any other action necessary for the purpose

of winding up the affairs of the Board.

TATUS OF

MPLOYEES

EFORE

RANSFER

.—The amend-

ments made by titles I and II and the abolishment of the Board

under subsection (a) may not be construed to affect the status

of any employee of the Board as an employee of an agency of

the United States for purposes of any other provision of law before

the effective date of the transfer of any such employee under section

1313.

(d) U

SE OF

ROPERTY AND

ERVICES

.—

(1) P

ROPERTY

.—The Director may use the property of the

Board to perform functions which have been transferred to

the Director, for such time as is reasonable to facilitate the

orderly transfer of functions transferred under any other provi-

sion of this Act or any amendment made by this Act to any

other provision of law.

(2) A

GENCY SERVICES

.—Any agency, department, or other

instrumentality of the United States, and any successor to

any such agency, department, or instrumentality, which was

providing supporting services to the Board before the expiration

of the 1-year period under subsection (a) in connection with

functions that are transferred to the Director shall—

Deadline.

Effective date.

Termination

date.

12 USC 4511

note.

12 USC 4511

note.

Deadline.

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122 STAT. 2798 PUBLIC LAW 110–289—JULY 30, 2008

(A) continue to provide such services, on a reimbursable

basis, until the transfer of such functions is complete; and

(B) consult with any such agency to coordinate and

facilitate a prompt and reasonable transition.

(e) C

ONTINUATION OF

ERVICES

.—The Director may use the

services of employees and other personnel of the Board, on a

reimbursable basis, to perform functions which have been trans-

ferred to the Director for such time as is reasonable to facilitate

the orderly transfer of functions pursuant to any other provision

of this Act or any amendment made by this Act to any other

provision of law.

(f) S

AVINGS

ROVISIONS

.—

(1) E

XISTING RIGHTS

DUTIES

AND OBLIGATIONS NOT

AFFECTED

.—Subsection (a) shall not affect the validity of any

right, duty, or obligation of the United States, a member of

the Board, or any other person, which—

(A) arises under the Federal Home Loan Bank Act,

or any other provision of law applicable with respect to

the Board; and

(B) existed on the day before the effective date of

the abolishment under subsection (a).

(2) C

ONTINUATION OF SUITS

.—No action or other proceeding

commenced by or against the Board in connection with functions

that are transferred under this Act to the Director shall abate

by reason of the enactment of this Act, except that the Director

shall be substituted for the Board or any member thereof as

a party to any such action or proceeding.

SEC. 1312. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

(a) I

ENERAL

.—All regulations, orders, determinations, and

resolutions described under subsection (b) shall remain in effect

according to the terms of such regulations, orders, determinations,

and resolutions, and shall be enforceable by or against the Director

until modified, terminated, set aside, or superseded in accordance

with applicable law by the Director, any court of competent jurisdic-

tion, or operation of law.

(b) A

PPLICABILITY

.—A regulation, order, determination, or reso-

lution is described under this subsection if it—

(1) was issued, made, prescribed, or allowed to become

effective by—

(A) the Board; or

(B) a court of competent jurisdiction, and relates to

functions transferred by this Act; and

(2) is in effect on the effective date of the abolishment

under section 1311(a).

SEC. 1313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL

HOUSING FINANCE BOARD.

(a) T

RANSFER

.—Each employee of the Board shall be transferred

to the Agency for employment, not later than the effective date

of the abolishment under section 1311(a), and such transfer shall

be deemed a transfer of function for purposes of section 3503

of title 5, United States Code.

(b) G

UARANTEED

OSITIONS

.—

(1) I

N GENERAL

.—Each employee transferred under sub-

section (a) shall be guaranteed a position with the same status,

tenure, grade, and pay as that held on the day immediately

preceding the transfer.

Deadline.

12 USC 4511

note.

Regulations.

Orders.

12 USC 4511

note.

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122 STAT. 2799 PUBLIC LAW 110–289—JULY 30, 2008

(2) N

O INVOLUNTARY SEPARATION OR REDUCTION

.—An

employee holding a permanent position on the day immediately

preceding the transfer may not be involuntarily separated or

reduced in grade or compensation during the 12-month period

beginning on the date of transfer, except for cause, or, if the

employee is a temporary employee, separated in accordance

with the terms of the appointment of the employee.

PPOINTMENT

UTHORITY FOR

XCEPTED

MPLOYEES

.—

(1) I

N GENERAL

.—In the case of an employee occupying

a position in the excepted service, any appointment authority

established under law or by regulations of the Office of Per-

sonnel Management for filling such position shall be trans-

ferred, subject to paragraph (2).

(2) D

ECLINE OF TRANSFER

.—The Director may decline a

transfer of authority under paragraph (1), to the extent that

such authority relates to a position excepted from the competi-

tive service because of its confidential, policymaking, policy-

determining, or policy-advocating character.

(d) R

EORGANIZATION

.—If the Director determines, after the end

of the 1-year period beginning on the effective date of the abolish-

ment under section 1311(a), that a reorganization of the combined

workforce is required, that reorganization shall be deemed a major

reorganization for purposes of affording affected employee retire-

ment under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United

States Code.

(e) E

MPLOYEE

ENEFIT

ROGRAMS

.—

(1) I

N GENERAL

.—Any employee of the Board accepting

employment with the Agency as a result of a transfer under

subsection (a) may retain, for 12 months after the date on

which such transfer occurs, membership in any employee ben-

efit program of the Agency or the Board, as applicable, including

insurance, to which such employee belongs on the effective

date of the abolishment under section 1311(a) if—

(A) the employee does not elect to give up the benefit

or membership in the program; and

(B) the benefit or program is continued by the Director.

(2) C

OST DIFFERENTIAL

.—

(A) I

N GENERAL

.—The difference in the costs between

the benefits which would have been provided by the Board

and those provided by this section shall be paid by the

Director.

(B) H

EALTH INSURANCE

.—If any employee elects to give

up membership in a health insurance program or the health

insurance program is not continued by the Director, the

employee shall be permitted to select an alternate Federal

health insurance program not later than 30 days after

the date of such election or notice, without regard to any

other regularly scheduled open season.

SEC. 1314. TRANSFER OF PROPERTY AND FACILITIES.

Upon the effective date of the abolishment under section

1311(a), all property of the Board shall transfer to the Agency.

Effective date.

12 USC 4511

note.

Deadline.

Effective date.

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122 STAT. 2800 PUBLIC LAW 110–289—JULY 30, 2008

TITLE IV—HOPE FOR HOMEOWNERS

SEC. 1401. SHORT TITLE.

This title may be cited as the ‘‘HOPE for Homeowners Act

of 2008’’.

SEC. 1402. ESTABLISHMENT OF HOPE FOR HOMEOWNERS PROGRAM.

(a) E

STABLISHMENT

.—Title II of the National Housing Act (12

U.S.C. 1707 et seq.) is amended by adding at the end the following:

‘‘SEC. 257. HOPE FOR HOMEOWNERS PROGRAM.

‘‘(a) E

STABLISHMENT

.—There is established in the Federal

Housing Administration a HOPE for Homeowners Program.

‘‘(b) P

URPOSE

.—The purpose of the HOPE for Homeowners Pro-

gram is—

‘‘(1) to create an FHA program, participation in which

is voluntary on the part of homeowners and existing loan

holders to insure refinanced loans for distressed borrowers to

support long-term, sustainable homeownership;

‘‘(2) to allow homeowners to avoid foreclosure by reducing

the principle balance outstanding, and interest rate charged,

on their mortgages;

‘‘(3) to help stabilize and provide confidence in mortgage

markets by bringing transparency to the value of assets based

on mortgage assets;

‘‘(4) to target mortgage assistance under this section to

homeowners for their principal residence;

‘‘(5) to enhance the administrative capacity of the FHA

to carry out its expanded role under the HOPE for Homeowners

Program;

‘‘(6) to ensure the HOPE for Homeowners Program remains

in effect only for as long as is necessary to provide stability

to the housing market; and

‘‘(7) to provide servicers of delinquent mortgages with addi-

tional methods and approaches to avoid foreclosure.

‘‘(c) E

STABLISHMENT AND

MPLEMENTATION OF

ROGRAM

EQUIREMENTS

.—

‘‘(1) D

UTIES OF THE BOARD

.—In order to carry out the

purposes of the HOPE for Homeowners Program, the Board

shall— ‘‘(A) establish requirements and standards for the pro-

gram; and

‘‘(B) prescribe such regulations and provide such guid-

ance as may be necessary or appropriate to implement

such requirements and standards.

‘‘(2) D

UTIES OF THE SECRETARY

.—In carrying out any of

the program requirements or standards established under para-

graph (1), the Secretary may issue such interim guidance and

mortgagee letters as the Secretary determines necessary or

appropriate.

‘‘(d) I

NSURANCE OF

ORTGAGES

.—The Secretary is authorized

upon application of a mortgagee to make commitments to insure

or to insure any eligible mortgage that has been refinanced in

a manner meeting the requirements under subsection (e).

‘‘(e) R

EQUIREMENTS OF

NSURED

ORTGAGES

.—To be eligible

for insurance under this section, a refinanced eligible mortgage

shall comply with all of the following requirements:

Regulations.

Standards.

12 USC

1715z–23.

12 USC 1701

note.

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122 STAT. 2801 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) L

ACK OF CAPACITY TO PAY EXISTING MORTGAGE

.—

‘‘(A) B

ORROWER CERTIFICATION

.—

‘‘(i) I

N GENERAL

.—The mortgagor shall provide cer-

tification to the Secretary that the mortgagor has not

intentionally defaulted on the mortgage or any other

debt, and has not knowingly, or willfully and with

actual knowledge, furnished material information

known to be false for the purpose of obtaining any

eligible mortgage.

‘‘(ii) P

ENALTIES

.—

‘‘(I) F

ALSE STATEMENT

.—Any certification filed

pursuant to clause (i) shall contain an acknowledg-

ment that any willful false statement made in

such certification is punishable under section 1001,

of title 18, United States Code, by fine or imprison-

ment of not more than 5 years, or both.

‘‘(II) L

IABILITY FOR REPAYMENT

.—The mort-

gagor shall agree in writing that the mortgagor

shall be liable to repay to the Federal Housing

Administration any direct financial benefit

achieved from the reduction of indebtedness on

the existing mortgage or mortgages on the resi-

dence refinanced under this section derived from

misrepresentations made in the certifications and

documentation required under this subparagraph,

subject to the discretion of the Secretary.

‘‘(B) C

URRENT BORROWER DEBT

INCOME RATIO

.—As

of March 1, 2008, the mortgagor shall have had a ratio

of mortgage debt to income, taking into consideration all

existing mortgages of that mortgagor at such time, greater

than 31 percent (or such higher amount as the Board

determines appropriate).

‘‘(2) D

ETERMINATION OF PRINCIPAL OBLIGATION AMOUNT

.—

The principal obligation amount of the refinanced eligible mort-

gage to be insured shall—

‘‘(A) be determined by the reasonable ability of the

mortgagor to make his or her mortgage payments, as such

ability is determined by the Secretary pursuant to section

203(b)(4) or by any other underwriting standards estab-

lished by the Board; and

‘‘(B) not exceed 90 percent of the appraised value of

the property to which such mortgage relates.

‘‘(3) R

EQUIRED WAIVER OF PREPAYMENT PENALTIES AND

FEES

.—All penalties for prepayment or refinancing of the

eligible mortgage, and all fees and penalties related to default

or delinquency on the eligible mortgage, shall be waived or

forgiven.

‘‘(4) E

XTINGUISHMENT OF SUBORDINATE LIENS

.—

‘‘(A) R

EQUIRED AGREEMENT

.—All holders of outstanding

mortgage liens on the property to which the eligible mort-

gage relates shall agree to accept the proceeds of the

insured loan as payment in full of all indebtedness under

the eligible mortgage, and all encumbrances related to

such eligible mortgage shall be removed. The Secretary

may take such actions, subject to standards established

by the Board under subparagraph (B), as may be necessary

and appropriate to facilitate coordination and agreement

Records.

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122 STAT. 2802 PUBLIC LAW 110–289—JULY 30, 2008

between the holders of the existing senior mortgage and

any existing subordinate mortgages, taking into consider-

ation the subordinate lien status of such subordinate mort-

gages.

‘‘(B) S

HARED APPRECIATION

.—

‘‘(i) I

N GENERAL

.—The Board shall establish stand-

ards and policies that will allow for the payment to

the holder of any existing subordinate mortgage of

a portion of any future appreciation in the property

secured by such eligible mortgage that is owed to the

Secretary pursuant to subsection (k).

‘‘(ii) F

ACTORS

.—In establishing the standards and

policies required under clause (i), the Board shall take

into consideration—

‘‘(I) the status of any subordinate mortgage;

‘‘(II) the outstanding principal balance of and

accrued interest on the existing senior mortgage

and any outstanding subordinate mortgages;

‘‘(III) the extent to which the current appraised

value of the property securing a subordinate mort-

gage is less than the outstanding principal balance

and accrued interest on any other liens that are

senior to such subordinate mortgage; and

‘‘(IV) such other factors as the Board deter-

mines to be appropriate.

‘‘(C) V

OLUNTARY PROGRAM

.—This paragraph may not

be construed to require any holder of any existing mortgage

to participate in the program under this section generally,

or with respect to any particular loan.

‘‘(5) T

ERM OF MORTGAGE

.—The refinanced eligible mortgage

to be insured shall—

‘‘(A) bear interest at a single rate that is fixed for

the entire term of the mortgage; and

‘‘(B) have a maturity of not less than 30 years from

the date of the beginning of amortization of such refinanced

eligible mortgage.

‘‘(6) M

AXIMUM LOAN AMOUNT

.—The principal obligation

amount of the eligible mortgage to be insured shall not exceed

132 percent of the dollar amount limitation in effect for 2007

under section 305(a)(2) of the Federal Home Loan Mortgage

Corporation Act (12 U.S.C. 1454(a)(2)) for a property of the

applicable size.

‘‘(7) P

ROHIBITION ON SECOND LIENS

.—A mortgagor may not

grant a new second lien on the mortgaged property during

the first 5 years of the term of the mortgage insured under

this section, except as the Board determines to be necessary

to ensure the maintenance of property standards; and provided

that such new outstanding liens (A) do not reduce the value

of the Government’s equity in the borrower’s home; and (B)

when combined with the mortgagor’s existing mortgage indebt-

edness, do not exceed 95 percent of the home’s appraised value

at the time of the new second lien.

‘‘(8) A

PPRAISALS

.—Any appraisal conducted in connection

with a mortgage insured under this section shall—

‘‘(A) be based on the current value of the property;

Standards.

Policies.

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122 STAT. 2803 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) be conducted in accordance with title XI of the

Financial Institutions Reform, Recovery, and Enforcement

Act of 1989 (12 U.S.C. 3331 et seq.);

‘‘(C) be completed by an appraiser who meets the com-

petency requirements of the Uniform Standards of Profes-

sional Appraisal Practice;

‘‘(D) be wholly consistent with the appraisal standards,

practices, and procedures under section 202(e) of this Act

that apply to all loans insured under this Act; and

‘‘(E) comply with the requirements of subsection (g)

of this section (relating to appraisal independence).

‘‘(9) D

OCUMENTATION AND VERIFICATION OF INCOME

.—In

complying with the FHA underwriting requirements under the

HOPE for Homeowners Program under this section, the mort-

gagee shall document and verify the income of the mortgagor

or non-filing status by procuring (A) an income tax return

transcript of the income tax returns of the mortgagor, or(B)

a copy of the income tax returns from the Internal Revenue

Service, for the two most recent years for which the filing

deadline for such years has passed and by any other method,

in accordance with procedures and standards that the Board

shall establish.

‘‘(10) M

ORTGAGE FRAUD

.—The mortgagor shall not have

been convicted under Federal or State law for fraud during

the 10-year period ending upon the insurance of the mortgage

under this section.

‘‘(11) P

RIMARY RESIDENCE

.—The mortgagor shall provide

documentation satisfactory in the determination of the Sec-

retary to prove that the residence covered by the mortgage

to be insured under this section is occupied by the mortgagor

as the primary residence of the mortgagor, and that such resi-

dence is the only residence in which the mortgagor has any

present ownership interest.

‘‘(f) S

TUDY OF

UCTION OR

ULK

EFINANCE

ROGRAM

.—

‘‘(1) S

TUDY

.—The Board shall conduct a study of the need

for and efficacy of an auction or bulk refinancing mechanism

to facilitate refinancing of existing residential mortgages that

are at risk for foreclosure into mortgages insured under this

section. The study shall identify and examine various options

for mechanisms under which lenders and servicers of such

mortgages may make bids for forward commitments for such

insurance in an expedited manner.

‘‘(2) C

ONTENT

.—

‘‘(A) A

NALYSIS

.—The study required under paragraph

(1) shall analyze—

‘‘(i) the feasibility of establishing a mechanism that

would facilitate the more rapid refinancing of bor-

rowers at risk of foreclosure into performing mortgages

insured under this section;

‘‘(ii) whether such a mechanism would provide an

effective and efficient mechanism to reduce foreclosures

on qualified existing mortgages;

‘‘(iii) whether the use of an auction or bulk

refinance program is necessary to stabilize the housing

market and reduce the impact of turmoil in that

market on the economy of the United States;

Procedures.

Standards.

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122 STAT. 2804 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(iv) whether there are other mechanisms or

authority that would be useful to reduce foreclosure;

and ‘‘(v) and any other factors that the Board considers

relevant.

‘‘(B) D

ETERMINATIONS

.—To the extent that the Board

finds that a facility of the type described in subparagraph

(A) is feasible and useful, the study shall—

‘‘(i) determine and identify any additional

authority or resources needed to establish and operate

such a mechanism;

‘‘(ii) determine whether there is a need for addi-

tional authority with respect to the loan underwriting

criteria established in this section or with respect to

eligibility of participating borrowers, lenders, or

holders of liens;

‘‘(iii) determine whether such underwriting criteria

should be established on the basis of individual loans,

in the aggregate, or otherwise to facilitate the goal

of refinancing borrowers at risk of foreclosure into

viable loans insured under this section.

‘‘(3) R

EPORT

.—Not later than the expiration of the 60-

day period beginning on the date of the enactment of this

section, the Board shall submit a report regarding the results

of the study conducted under this subsection to the Committee

on Financial Services of the House of Representatives and

the Committee on Banking, Housing, and Urban Affairs of

the Senate. The report shall include a detailed description

of the analysis required under paragraph (2)(A) and of the

determinations made pursuant to paragraph (2)(B), and shall

include any other findings and recommendations of the Board

pursuant to the study, including identifying various options

for mechanisms described in paragraph (1).

‘‘(g) A

PPRAISAL

NDEPENDENCE

.—

‘‘(1) P

ROHIBITIONS ON INTERESTED PARTIES IN A REAL ESTATE

TRANSACTION

.—No mortgage lender, mortgage broker, mortgage

banker, real estate broker, appraisal management company,

employee of an appraisal management company, nor any other

person with an interest in a real estate transaction involving

an appraisal in connection with a mortgage insured under

this section shall improperly influence, or attempt to improperly

influence, through coercion, extortion, collusion, compensation,

instruction, inducement, intimidation, nonpayment for services

rendered, or bribery, the development, reporting, result, or

review of a real estate appraisal sought in connection with

the mortgage.

‘‘(2) C

IVIL MONETARY PENALTIES

.—The Secretary may

impose a civil money penalty for any knowing and material

violation of paragraph (1) under the same terms and conditions

as are authorized in section 536(a) of this Act.

‘‘(h) S

TANDARDS

ROTECT

GAINST

DVERSE

ELECTION

.—

‘‘(1) I

N GENERAL

.—The Board shall, by rule or order, estab-

lish standards and policies to require the underwriter of the

insured loan to provide such representations and warranties

as the Board considers necessary or appropriate to enforce

compliance with all underwriting and appraisal standards of

the HOPE for Homeowners Program.

Regulations.

Orders.

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122 STAT. 2805 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) E

XCLUSION FOR VIOLATIONS

.—The Board shall prohibit

the Secretary from paying insurance benefits to a mortgagee

who violates the representations and warranties, as established

under paragraph (1), or in any case in which a mortgagor

fails to make the first payment on a refinanced eligible mort-

gage.

‘‘(3) O

THER AUTHORITY

.—The Board may establish such

other standards or policies as necessary to protect against

adverse selection, including requiring loans identified by the

Secretary as higher risk loans to demonstrate payment perform-

ance for a reasonable period of time prior to being insured

under the program.

‘‘(i) P

REMIUMS

.—For each refinanced eligible mortgage insured

under this section, the Secretary shall establish and collect—

‘‘(1) at the time of insurance, a single premium payment

in an amount equal to 3 percent of the amount of the original

insured principal obligation of the refinanced eligible mortgage,

which shall be paid from the proceeds of the mortgage being

insured under this section, through the reduction of the amount

of indebtedness that existed on the eligible mortgage prior

to refinancing; and

‘‘(2) in addition to the premium required under paragraph

(1), an annual premium in an amount equal to 1.5 percent

of the amount of the remaining insured principal balance of

the mortgage.

‘‘(j) O

RIGINATION

EES AND

NTEREST

ATE

.—The Board shall

establish—

‘‘(1) a reasonable limitation on origination fees for

refinanced eligible mortgages insured under this section; and

‘‘(2) procedures to ensure that interest rates on such mort-

gages shall be commensurate with market rate interest rates

on such types of loans.

‘‘(k) E

QUITY AND

PPRECIATION

.—

‘‘(1) F

IVE

YEAR PHASE

IN FOR EQUITY AS A RESULT OF SALE

OR REFINANCING

.—For each eligible mortgage insured under

this section, the Secretary and the mortgagor of such mortgage

shall, upon any sale or disposition of the property to which

such mortgage relates, or upon the subsequent refinancing

of such mortgage, be entitled to the following with respect

to any equity created as a direct result of such sale or refi-

nancing:

‘‘(A) If such sale or refinancing occurs during the period

that begins on the date that such mortgage is insured

and ends 1 year after such date of insurance, the Secretary

shall be entitled to 100 percent of such equity.

‘‘(B) If such sale or refinancing occurs during the period

that begins 1 year after such date of insurance and ends

2 years after such date of insurance, the Secretary shall

be entitled to 90 percent of such equity and the mortgagor

shall be entitled to 10 percent of such equity.

‘‘(C) If such sale or refinancing occurs during the period

that begins 2 years after such date of insurance and ends

3 years after such date of insurance, the Secretary shall

be entitled to 80 percent of such equity and the mortgagor

shall be entitled to 20 percent of such equity.

‘‘(D) If such sale or refinancing occurs during the period

that begins 3 years after such date of insurance and ends

Effective dates.

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122 STAT. 2806 PUBLIC LAW 110–289—JULY 30, 2008

4 years after such date of insurance, the Secretary shall

be entitled to 70 percent of such equity and the mortgagor

shall be entitled to 30 percent of such equity.

‘‘(E) If such sale or refinancing occurs during the period

that begins 4 years after such date of insurance and ends

5 years after such date of insurance, the Secretary shall

be entitled to 60 percent of such equity and the mortgagor

shall be entitled to 40 percent of such equity.

‘‘(F) If such sale or refinancing occurs during any period

that begins 5 years after such date of insurance, the Sec-

retary shall be entitled to 50 percent of such equity and

the mortgagor shall be entitled to 50 percent of such equity.

‘‘(2) A

PPRECIATION IN VALUE

.—For each eligible mortgage

insured under this section, the Secretary and the mortgagor

of such mortgage shall, upon any sale or disposition of the

property to which such mortgage relates, each be entitled to

50 percent of any appreciation in value of the appraised value

of such property that has occurred since the date that such

mortgage was insured under this section.

‘‘(l) E

STABLISHMENT OF

HOPE F

UND

.—

‘‘(1) I

N GENERAL

.—There is established in the Federal

Housing Administration a revolving fund to be known as the

Home Ownership Preservation Entity Fund, which shall be

used by the Board for carrying out the mortgage insurance

obligations under this section.

‘‘(2) M

ANAGEMENT OF FUND

.—The HOPE Fund shall be

administered and managed by the Secretary, who shall estab-

lish reasonable and prudent criteria for the management and

operation of any amounts in the HOPE Fund.

‘‘(m) L

IMITATION ON

GGREGATE

NSURANCE

UTHORITY

.—The

aggregate original principal obligation of all mortgages insured

under this section may not exceed $300,000,000,000.

‘‘(n) R

EPORTS BY THE

OARD

.—The Board shall submit monthly

reports to the Congress identifying the progress of the HOPE for

Homeowners Program, which shall contain the following informa-

tion for each month:

‘‘(1) The number of new mortgages insured under this

section, including the location of the properties subject to such

mortgages by census tract.

‘‘(2) The aggregate principal obligation of new mortgages

insured under this section.

‘‘(3) The average amount by which the principle balance

outstanding on mortgages insured this section was reduced.

‘‘(4) The amount of premiums collected for insurance of

mortgages under this section.

‘‘(5) The claim and loss rates for mortgages insured under

this section.

‘‘(6) Any other information that the Board considers appro-

priate.

‘‘(o) R

EQUIRED

UTREACH

FFORTS

.—The Secretary shall carry

out outreach efforts to ensure that homeowners, lenders, and the

general public are aware of the opportunities for assistance avail-

able under this section.

‘‘(p) E

NHANCEMENT OF

FHA C

APACITY

.—Under the direction

of the Board, the Secretary shall take such actions as may be

necessary to—

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122 STAT. 2807 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(1) contract for the establishment of underwriting criteria,

automated underwriting systems, pricing standards, and other

factors relating to eligibility for mortgages insured under this

section;

‘‘(2) contract for independent quality reviews of under-

writing, including appraisal reviews and fraud detection, of

mortgages insured under this section or pools of such mort-

gages; and

‘‘(3) increase personnel of the Department as necessary

to process or monitor the processing of mortgages insured under

this section.

‘‘(q) GNMA C

OMMITMENT

UTHORITY

.—

‘‘(1) G

UARANTEES

.—The Secretary shall take such actions

as may be necessary to ensure that securities based on and

backed by a trust or pool composed of mortgages insured under

this section are available to be guaranteed by the Government

National Mortgage Association as to the timely payment of

principal and interest.

‘‘(2) G

UARANTEE AUTHORITY

.—To carry out the purposes

of section 306 of the National Housing Act (12 U.S.C. 1721),

the Government National Mortgage Association may enter into

new commitments to issue guarantees of securities based on

or backed by mortgages insured under this section, not

exceeding $300,000,000,000. The amount of authority provided

under the preceding sentence to enter into new commitments

to issue guarantees is in addition to any amount of authority

to make new commitments to issue guarantees that is provided

to the Association under any other provision of law.

‘‘(r) S

UNSET

.—The Secretary may not enter into any new

commitment to insure any refinanced eligible mortgage, or newly

insure any refinanced eligible mortgage pursuant to this section

before October 1, 2008 or after September 30, 2011.

‘‘(s) D

EFINITIONS

.—For purposes of this section, the following

definitions shall apply:

‘‘(1) A

PPROVED FINANCIAL INSTITUTION OR MORTGAGEE

.—

The term ‘approved financial institution or mortgagee’ means

a financial institution or mortgagee approved by the Secretary

under section 203 as responsible and able to service mortgages

responsibly.

‘‘(2) B

OARD

.—The term ‘Board’ means the Board of Direc-

tors of the HOPE for Homeowners Program. The Board shall

be composed of the Secretary, the Secretary of the Treasury,

the Chairperson of the Board of Governors of the Federal

Reserve System, and the Chairperson of the Board of Directors

of the Federal Deposit Insurance Corporation, or their des-

ignees.

‘‘(3) E

LIGIBLE MORTGAGE

.—The term ‘eligible mortgage’

means a mortgage—

‘‘(A) the mortgagor of which—

‘‘(i) occupies such property as his or her principal

residence; and

‘‘(ii) cannot, subject to subsection (e)(1)(B) and such

other standards established by the Board, afford his

or her mortgage payments; and

‘‘(B) originated on or before January 1, 2008.

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122 STAT. 2808 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(4) E

XISTING SENIOR MORTGAGE

.—The term ‘existing senior

mortgage’ means, with respect to a mortgage insured under

this section, the existing mortgage that has superior priority.

‘‘(5) E

XISTING SUBORDINATE MORTGAGE

.—The term ‘existing

subordinate mortgage’ means, with respect to a mortgage

insured under this section, an existing mortgage that has

subordinate priority to the existing senior mortgage.

‘‘(6) HOPE

FOR HOMEOWNERS PROGRAM

.—The term ‘HOPE

for Homeowners Program’ means the program established

under this section.

‘‘(7) S

ECRETARY

.—The term ‘Secretary’ means the Secretary

of Housing and Urban Development, except where specifically

provided otherwise.

‘‘(t) R

EQUIREMENTS

ELATED TO THE

OARD

.—

‘‘(1) C

OMPENSATION

ACTUAL

NECESSARY

AND TRANSPOR

TATION EXPENSES

.—

‘‘(A) F

EDERAL EMPLOYEES

.—A member of the Board

who is an officer or employee of the Federal Government

shall serve without additional pay (or benefits in the nature

of compensation) for service as a member of the Board.

‘‘(B) T

RAVEL EXPENSES

.—Members of the Board shall

be entitled to receive travel expenses, including per diem

in lieu of subsistence, equivalent to those set forth in

subchapter I of chapter 57 of title 5, United States Code.

‘‘(2) B

YLAWS

.—The Board may prescribe, amend, and repeal

such bylaws as may be necessary for carrying out the functions

of the Board.

‘‘(3) Q

UORUM

.—A majority of the Board shall constitute

a quorum.

‘‘(4) S

TAFF

;

EXPERTS AND CONSULTANTS

.—

‘‘(A) D

ETAIL OF GOVERNMENT EMPLOYEES

.—Upon

request of the Board, any Federal Government employee

may be detailed to the Board without reimbursement, and

such detail shall be without interruption or loss of civil

service status or privilege.

‘‘(B) E

XPERTS AND CONSULTANTS

.—The Board shall pro-

cure the services of experts and consultants as the Board

considers appropriate.

‘‘(u) R

ULE OF

ONSTRUCTION

ELATED TO

OLUNTARY

ATURE

OF THE

ROGRAM

.—This section shall not be construed to require

that any approved financial institution or mortgagee participate

in any activity authorized under this section, including any activity

related to the refinancing of an eligible mortgage.

‘‘(v) R

ULE OF

ONSTRUCTION

ELATED TO

NSURANCE OF

ORT

GAGES

.—Except as otherwise provided for in this section or by

action of the Board, the provisions and requirements of section

203(b) shall apply with respect to the insurance of any eligible

mortgage under this section.

‘‘(w) HOPE B

ONDS

.—

‘‘(1) I

SSUANCE AND REPAYMENT OF BONDS

.—Notwith-

standing section 504(b) of the Federal Credit Reform Act of

1990 (2 U.S.C. 661d(b)), the Secretary of the Treasury shall—

‘‘(A) subject to such terms and conditions as the Sec-

retary of the Treasury deems necessary, issue Federal

credit instruments, to be known as ‘HOPE Bonds’, that

are callable at the discretion of the Secretary of the

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122 STAT. 2809 PUBLIC LAW 110–289—JULY 30, 2008

Treasury and do not, in the aggregate, exceed the amount

specified in subsection (m);

‘‘(B) provide the subsidy amounts necessary for loan

guarantees under the HOPE for Homeowners Program,

not to exceed the amount specified in subsection (m), in

accordance with the provisions of the Federal Credit Reform

Act of 1990 (2 U.S.C. 661 et seq.), except as provided

in this paragraph; and

‘‘(C) use the proceeds from HOPE Bonds only to pay

for the net costs to the Federal Government of the HOPE

for Homeowners Program, including administrative costs.

‘‘(2) R

EIMBURSEMENTS TO TREASURY

.—Funds received

pursuant to section 1338(b) of the Federal Housing Enterprises

Regulatory Reform Act of 1992 shall be used to reimburse

the Secretary of the Treasury for amounts borrowed under

paragraph (1).

‘‘(3) U

SE OF RESERVE FUND

.—If the net cost to the Federal

Government for the HOPE for Homeowners Program exceeds

the amount of funds received under paragraph (2), remaining

debts of the HOPE for Homeowners Program shall be paid

from amounts deposited into the fund established by the Sec-

retary under section 1337(e) of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992, remaining

amounts in such fund to be used to reduce the National debt.

‘‘(4) R

EDUCTION OF NATIONAL DEBT

.—Amounts collected

under the HOPE for Homeowners Program in accordance with

subsections (i) and (k) in excess of the net cost to the Federal

Government for such Program shall be used to reduce the

National debt.’’.

SEC. 1403. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL

MORTGAGE LOANS.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended

by inserting after section 129 the following new section:

‘‘SEC. 129A. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL

MORTGAGES.

‘‘(a) I

ENERAL

.—Except as may be established in any invest-

ment contract between a servicer of pooled residential mortgages

and an investor, a servicer of pooled residential mortgages—

‘‘(1) owes any duty to maximize the net present value

of the pooled mortgages in an investment to all investors and

parties having a direct or indirect interest in such investment,

not to any individual party or group of parties; and

‘‘(2) shall be deemed to act in the best interests of all

such investors and parties if the servicer agrees to or imple-

ments a modification or workout plan, including any modifica-

tion or refinancing undertaken pursuant to the HOPE for

Homeowners Act of 2008, for a residential mortgage or a class

of residential mortgages that constitute a part or all of the

pooled mortgages in such investment, provided that any mort-

gage so modified meets the following criteria:

‘‘(A) Default on the payment of such mortgage has

occurred or is reasonably foreseeable.

‘‘(B) The property securing such mortgage is occupied

by the mortgagor of such mortgage.

‘‘(C) The anticipated recovery on the principal out-

standing obligation of the mortgage under the modification

15 USC 1639a.

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122 STAT. 2810 PUBLIC LAW 110–289—JULY 30, 2008

or workout plan exceeds, on a net present value basis,

the anticipated recovery on the principal outstanding

obligation of the mortgage through foreclosure.

‘‘(b) D

EFINITION

.—As used in this section, the term ‘servicer’

means the person responsible for servicing of a loan (including

the person who makes or holds a loan if such person also services

the loan).’’.

SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS.

Section 202(e) of the National Housing Act (12 U.S.C. 1708(e))

is amended by adding at the end the following:

‘‘(5) A

DDITIONAL APPRAISER STANDARDS

.—Beginning on the

date of enactment of the Federal Housing Finance Regulatory

Reform Act of 2008, any appraiser chosen or approved to con-

duct appraisals for mortgages under this title shall—

‘‘(A) be certified—

‘‘(i) by the State in which the property to be

appraised is located; or

‘‘(ii) by a nationally recognized professional

appraisal organization; and

‘‘(B) have demonstrated verifiable education in the

appraisal requirements established by the Federal Housing

Administration under this subsection.’’.

TITLE V—S.A.F.E. MORTGAGE

LICENSING ACT

SEC. 1501. SHORT TITLE.

This title may be cited as the ‘‘Secure and Fair Enforcement

for Mortgage Licensing Act of 2008’’ or ‘‘S.A.F.E. Mortgage Licensing

Act of 2008’’.

SEC. 1502. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE

LICENSING SYSTEM AND REGISTRY.

In order to increase uniformity, reduce regulatory burden,

enhance consumer protection, and reduce fraud, the States, through

the Conference of State Bank Supervisors and the American

Association of Residential Mortgage Regulators, are hereby encour-

aged to establish a Nationwide Mortgage Licensing System and

Registry for the residential mortgage industry that accomplishes

all of the following objectives:

(1) Provides uniform license applications and reporting

requirements for State-licensed loan originators.

(2) Provides a comprehensive licensing and supervisory

database.

(3) Aggregates and improves the flow of information to

and between regulators.

(4) Provides increased accountability and tracking of loan

originators.

(5) Streamlines the licensing process and reduces the regu-

latory burden.

(6) Enhances consumer protections and supports anti-fraud

measures.

(7) Provides consumers with easily accessible information,

offered at no charge, utilizing electronic media, including the

Internet, regarding the employment history of, and publicly

States.

12 USC 5101

note.

12 USC 5101

note.

Certification.

Effective date.

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122 STAT. 2811 PUBLIC LAW 110–289—JULY 30, 2008

adjudicated disciplinary and enforcement actions against, loan

originators.

(8) Establishes a means by which residential mortgage

loan originators would, to the greatest extent possible, be

required to act in the best interests of the consumer.

(9) Facilitates responsible behavior in the subprime mort-

gage market place and provides comprehensive training and

examination requirements related to subprime mortgage

lending.

(10) Facilitates the collection and disbursement of consumer

complaints on behalf of State and Federal mortgage regulators.

SEC. 1503. DEFINITIONS.

For purposes of this title, the following definitions shall apply:

(1) F

EDERAL BANKING AGENCIES

.—The term ‘‘Federal

banking agencies’’ means the Board of Governors of the Federal

Reserve System, the Comptroller of the Currency, the Director

of the Office of Thrift Supervision, the National Credit Union

Administration, and the Federal Deposit Insurance Corpora-

tion.

(2) D

EPOSITORY INSTITUTION

.—The term ‘‘depository institu-

tion’’ has the same meaning as in section 3 of the Federal

Deposit Insurance Act, and includes any credit union.

(3) L

OAN ORIGINATOR

.—

(A) I

N GENERAL

.—The term ‘‘loan originator’’—

(i) means an individual who—

(I) takes a residential mortgage loan applica-

tion; and

(II) offers or negotiates terms of a residential

mortgage loan for compensation or gain;

(ii) does not include any individual who is not

otherwise described in clause (i) and who performs

purely administrative or clerical tasks on behalf of

a person who is described in any such clause;

(iii) does not include a person or entity that only

performs real estate brokerage activities and is licensed

or registered in accordance with applicable State law,

unless the person or entity is compensated by a lender,

a mortgage broker, or other loan originator or by any

agent of such lender, mortgage broker, or other loan

originator; and

(iv) does not include a person or entity solely

involved in extensions of credit relating to timeshare

plans, as that term is defined in section 101(53D)

of title 11, United States Code.

(B) O

THER DEFINITIONS RELATING TO LOAN ORIGI

NATOR

.—For purposes of this subsection, an individual

‘‘assists a consumer in obtaining or applying to obtain

a residential mortgage loan’’ by, among other things,

advising on loan terms (including rates, fees, other costs),

preparing loan packages, or collecting information on behalf

of the consumer with regard to a residential mortgage

loan.

DMINISTRATIVE OR CLERICAL TASKS

.—The term

‘‘administrative or clerical tasks’’ means the receipt, collec-

tion, and distribution of information common for the proc-

essing or underwriting of a loan in the mortgage industry

12 USC 5102.

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122 STAT. 2812 PUBLIC LAW 110–289—JULY 30, 2008

and communication with a consumer to obtain information

necessary for the processing or underwriting of a residential

mortgage loan.

(D) R

EAL ESTATE BROKERAGE ACTIVITY DEFINED

.—The

term ‘‘real estate brokerage activity’’ means any activity

that involves offering or providing real estate brokerage

services to the public, including—

(i) acting as a real estate agent or real estate

broker for a buyer, seller, lessor, or lessee of real

property;

(ii) bringing together parties interested in the sale,

purchase, lease, rental, or exchange of real property;

(iii) negotiating, on behalf of any party, any portion

of a contract relating to the sale, purchase, lease,

rental, or exchange of real property (other than in

connection with providing financing with respect to

any such transaction);

(iv) engaging in any activity for which a person

engaged in the activity is required to be registered

or licensed as a real estate agent or real estate broker

under any applicable law; and

(v) offering to engage in any activity, or act in

any capacity, described in clause (i), (ii), (iii), or (iv).

(4) L

OAN PROCESSOR OR UNDERWRITER

.—

(A) I

N GENERAL

.—The term ‘‘loan processor or under-

writer’’ means an individual who performs clerical or sup-

port duties at the direction of and subject to the supervision

and instruction of—

(i) a State-licensed loan originator; or

(ii) a registered loan originator.

(B) C

LERICAL OR SUPPORT DUTIES

.—For purposes of

subparagraph (A), the term ‘‘clerical or support duties’’

may include—

(i) the receipt, collection, distribution, and analysis

of information common for the processing or under-

writing of a residential mortgage loan; and

(ii) communicating with a consumer to obtain the

information necessary for the processing or under-

writing of a loan, to the extent that such communica-

tion does not include offering or negotiating loan rates

or terms, or counseling consumers about residential

mortgage loan rates or terms.

(5) N

ATIONWIDE MORTGAGE LICENSING SYSTEM AND REG

ISTRY

.—The term ‘‘Nationwide Mortgage Licensing System and

Registry’’ means a mortgage licensing system developed and

maintained by the Conference of State Bank Supervisors and

the American Association of Residential Mortgage Regulators

for the State licensing and registration of State-licensed loan

originators and the registration of registered loan originators

or any system established by the Secretary under section 1509.

(6) N

ONTRADITIONAL MORTGAGE PRODUCT

.—The term ‘‘non-

traditional mortgage product’’ means any mortgage product

other than a 30-year fixed rate mortgage.

(7) R

EGISTERED LOAN ORIGINATOR

.—The term ‘‘registered

loan originator’’ means any individual who—

(A) meets the definition of loan originator and is an

employee of—

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122 STAT. 2813 PUBLIC LAW 110–289—JULY 30, 2008

(i) a depository institution;

(ii) a subsidiary that is—

(I) owned and controlled by a depository

institution; and

(II) regulated by a Federal banking agency;

(iii) an institution regulated by the Farm Credit

Administration; and

(B) is registered with, and maintains a unique identi-

fier through, the Nationwide Mortgage Licensing System

and Registry.

(8) R

ESIDENTIAL MORTGAGE LOAN

.—The term ‘‘residential

mortgage loan’’ means any loan primarily for personal, family,

or household use that is secured by a mortgage, deed of trust,

or other equivalent consensual security interest on a dwelling

(as defined in section 103(v) of the Truth in Lending Act)

or residential real estate upon which is constructed or intended

to be constructed a dwelling (as so defined).

(9) S

ECRETARY

.—The term ‘‘Secretary’’ means the Secretary

of Housing and Urban Development.

(10) S

TATE

.—The term ‘‘State’’ means any State of the

United States, the District of Columbia, any territory of the

United States, Puerto Rico, Guam, American Samoa, the Trust

Territory of the Pacific Islands, the Virgin Islands, and the

Northern Mariana Islands.

(11) S

TATE

LICENSED LOAN ORIGINATOR

.—The term ‘‘State-

licensed loan originator’’ means any individual who—

(A) is a loan originator;

(B) is not an employee of—

(i) a depository institution;

(ii) a subsidiary that is—

(I) owned and controlled by a depository

institution; and

(II) regulated by a Federal banking agency;

(iii) an institution regulated by the Farm Credit

Administration; and

section 1508 and registered as a loan originator with, and

maintains a unique identifier through, the Nationwide

Mortgage Licensing System and Registry.

(12) U

NIQUE IDENTIFIER

.—

(A) I

N GENERAL

.—The term ‘‘unique identifier’’ means

a number or other identifier that—

(i) permanently identifies a loan originator;

(ii) is assigned by protocols established by the

Nationwide Mortgage Licensing System and Registry

and the Federal banking agencies to facilitate elec-

tronic tracking of loan originators and uniform identi-

fication of, and public access to, the employment his-

tory of and the publicly adjudicated disciplinary and

enforcement actions against loan originators; and

(iii) shall not be used for purposes other than

those set forth under this title.

(B) R

ESPONSIBILITY OF STATES

.—To the greatest extent

possible and to accomplish the purpose of this title, States

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122 STAT. 2814 PUBLIC LAW 110–289—JULY 30, 2008

shall use unique identifiers in lieu of social security num-

bers.

SEC. 1504. LICENSE OR REGISTRATION REQUIRED.

(a) I

ENERAL

.—Subject to the existence of a licensing or

registration regime, as the case may be, an individual may not

engage in the business of a loan originator without first—

(1) obtaining, and maintaining annually—

(A) a registration as a registered loan originator; or

(B) a license and registration as a State-licensed loan

originator; and

(2) obtaining a unique identifier.

(b) L

OAN

ROCESSORS AND

NDERWRITERS

.—

(1) S

UPERVISED LOAN PROCESSORS AND UNDERWRITERS

.—

A loan processor or underwriter who does not represent to

the public, through advertising or other means of commu-

nicating or providing information (including the use of business

cards, stationery, brochures, signs, rate lists, or other pro-

motional items), that such individual can or will perform any

of the activities of a loan originator shall not be required

to be a State-licensed loan originator.

(2) I

NDEPENDENT CONTRACTORS

.—An independent con-

tractor may not engage in residential mortgage loan origination

activities as a loan processor or underwriter unless such inde-

pendent contractor is a State-licensed loan originator.

SEC. 1505. STATE LICENSE AND REGISTRATION APPLICATION AND

ISSUANCE.

(a) B

ACKGROUND

HECKS

.—In connection with an application

to any State for licensing and registration as a State-licensed loan

originator, the applicant shall, at a minimum, furnish to the Nation-

wide Mortgage Licensing System and Registry information con-

cerning the applicant’s identity, including—

(1) fingerprints for submission to the Federal Bureau of

Investigation, and any governmental agency or entity author-

ized to receive such information for a State and national

criminal history background check; and

(2) personal history and experience, including authorization

for the System to obtain—

(A) an independent credit report obtained from a con-

sumer reporting agency described in section 603(p) of the

Fair Credit Reporting Act; and

(B) information related to any administrative, civil or

criminal findings by any governmental jurisdiction.

(b) I

SSUANCE OF

ICENSE

.—The minimum standards for

licensing and registration as a State-licensed loan originator shall

include the following:

(1) The applicant has never had a loan originator license

revoked in any governmental jurisdiction.

(2) The applicant has not been convicted of, or pled guilty

or nolo contendere to, a felony in a domestic, foreign, or military

court— (A) during the 7-year period preceding the date of

the application for licensing and registration; or

(B) at any time preceding such date of application,

if such felony involved an act of fraud, dishonesty, or a

breach of trust, or money laundering.

12 USC 5104.

12 USC 5103.

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122 STAT. 2815 PUBLIC LAW 110–289—JULY 30, 2008

(3) The applicant has demonstrated financial responsibility,

character, and general fitness such as to command the con-

fidence of the community and to warrant a determination that

the loan originator will operate honestly, fairly, and efficiently

within the purposes of this title.

(4) The applicant has completed the pre-licensing education

requirement described in subsection (c).

(5) The applicant has passed a written test that meets

the test requirement described in subsection (d).

(6) The applicant has met either a net worth or surety

bond requirement, or paid into a State fund, as required by

the State pursuant to section 1508(d)(6).

-L

ICENSING

DUCATION OF

OAN

RIGINATORS

.—

(1) M

INIMUM EDUCATIONAL REQUIREMENTS

.—In order to

meet the pre-licensing education requirement referred to in

subsection (b)(4), a person shall complete at least 20 hours

of education approved in accordance with paragraph (2), which

shall include at least—

(A) 3 hours of Federal law and regulations;

(B) 3 hours of ethics, which shall include instruction

on fraud, consumer protection, and fair lending issues;

and (C) 2 hours of training related to lending standards

for the nontraditional mortgage product marketplace.

(2) A

PPROVED EDUCATIONAL COURSES

.—For purposes of

paragraph (1), pre-licensing education courses shall be

reviewed, and approved by the Nationwide Mortgage Licensing

System and Registry.

(3) L

IMITATION AND STANDARDS

.—

(A) L

IMITATION

.—To maintain the independence of the

approval process, the Nationwide Mortgage Licensing

System and Registry shall not directly or indirectly offer

pre-licensure educational courses for loan originators.

(B) S

TANDARDS

.—In approving courses under this sec-

tion, the Nationwide Mortgage Licensing System and Reg-

istry shall apply reasonable standards in the review and

approval of courses.

(d) T

ESTING OF

OAN

RIGINATORS

.—

(1) I

N GENERAL

.—In order to meet the written test require-

ment referred to in subsection (b)(5), an individual shall pass,

in accordance with the standards established under this sub-

section, a qualified written test developed by the Nationwide

Mortgage Licensing System and Registry and administered by

an approved test provider.

(2) Q

UALIFIED TEST

.—A written test shall not be treated

as a qualified written test for purposes of paragraph (1) unless

the test adequately measures the applicant’s knowledge and

comprehension in appropriate subject areas, including—

(A) ethics;

(B) Federal law and regulation pertaining to mortgage

origination;

(D) Federal and State law and regulation, including

instruction on fraud, consumer protection, the nontradi-

tional mortgage marketplace, and fair lending issues.

(3) M

INIMUM COMPETENCE

.—

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122 STAT. 2816 PUBLIC LAW 110–289—JULY 30, 2008

(A) P

ASSING SCORE

.—An individual shall not be consid-

ered to have passed a qualified written test unless the

individual achieves a test score of not less than 75 percent

correct answers to questions.

(B) I

NITIAL RETESTS

.—An individual may retake a test

3 consecutive times with each consecutive taking occurring

at least 30 days after the preceding test.

UBSEQUENT RETESTS

.—After failing 3 consecutive

tests, an individual shall wait at least 6 months before

taking the test again.

(D) R

ETEST AFTER LAPSE OF LICENSE

.—A State-licensed

loan originator who fails to maintain a valid license for

a period of 5 years or longer shall retake the test, not

taking into account any time during which such individual

is a registered loan originator.

(e) M

ORTGAGE

ALL

EPORTS

.—Each mortgage licensee shall

submit to the Nationwide Mortgage Licensing System and Registry

reports of condition, which shall be in such form and shall contain

such information as the Nationwide Mortgage Licensing System

and Registry may require.

SEC. 1506. STANDARDS FOR STATE LICENSE RENEWAL.

(a) I

ENERAL

.—The minimum standards for license renewal

for State-licensed loan originators shall include the following:

(1) The loan originator continues to meet the minimum

standards for license issuance.

(2) The loan originator has satisfied the annual continuing

education requirements described in subsection (b).

(b) C

ONTINUING

DUCATION FOR

TATE

-L

ICENSED

OAN

RIGI

NATORS

.—

(1) I

N GENERAL

.—In order to meet the annual continuing

education requirements referred to in subsection (a)(2), a State-

licensed loan originator shall complete at least 8 hours of

education approved in accordance with paragraph (2), which

shall include at least—

(A) 3 hours of Federal law and regulations;

(B) 2 hours of ethics, which shall include instruction

on fraud, consumer protection, and fair lending issues;

and (C) 2 hours of training related to lending standards

for the nontraditional mortgage product marketplace.

(2) A

PPROVED EDUCATIONAL COURSES

.—For purposes of

paragraph (1), continuing education courses shall be reviewed,

and approved by the Nationwide Mortgage Licensing System

and Registry.

(3) C

ALCULATION OF CONTINUING EDUCATION CREDITS

.—A

State-licensed loan originator—

(A) may only receive credit for a continuing education

course in the year in which the course is taken; and

(B) may not take the same approved course in the

same or successive years to meet the annual requirements

for continuing education.

(4) I

NSTRUCTOR CREDIT

.—A State-licensed loan originator

who is approved as an instructor of an approved continuing

education course may receive credit for the originator’s own

annual continuing education requirement at the rate of 2 hours

credit for every 1 hour taught.

12 USC 5105.

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122 STAT. 2817 PUBLIC LAW 110–289—JULY 30, 2008

(5) L

IMITATION AND STANDARDS

.—

(A) L

IMITATION

.—To maintain the independence of the

approval process, the Nationwide Mortgage Licensing

System and Registry shall not directly or indirectly offer

any continuing education courses for loan originators.

(B) S

TANDARDS

.—In approving courses under this sec-

tion, the Nationwide Mortgage Licensing System and Reg-

istry shall apply reasonable standards in the review and

approval of courses.

SEC. 1507. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL

AGENCIES.

(a) D

EVELOPMENT

.—

(1) I

N GENERAL

.—The Federal banking agencies shall

jointly, through the Federal Financial Institutions Examination

Council, and together with the Farm Credit Administration,

develop and maintain a system for registering employees of

a depository institution, employees of a subsidiary that is owned

and controlled by a depository institution and regulated by

a Federal banking agency, or employees of an institution regu-

lated by the Farm Credit Administration, as registered loan

originators with the Nationwide Mortgage Licensing System

and Registry. The system shall be implemented before the

end of the 1-year period beginning on the date of enactment

of this title.

(2) R

EGISTRATION REQUIREMENTS

.—In connection with the

registration of any loan originator under this subsection, the

appropriate Federal banking agency and the Farm Credit

Administration shall, at a minimum, furnish or cause to be

furnished to the Nationwide Mortgage Licensing System and

Registry information concerning the employees’s identity,

including—

(A) fingerprints for submission to the Federal Bureau

of Investigation, and any governmental agency or entity

authorized to receive such information for a State and

national criminal history background check; and

(B) personal history and experience, including

authorization for the Nationwide Mortgage Licensing

System and Registry to obtain information related to any

administrative, civil or criminal findings by any govern-

mental jurisdiction.

(b) C

OORDINATION

.—

(1) U

NIQUE IDENTIFIER

.—The Federal banking agencies,

through the Financial Institutions Examination Council, and

the Farm Credit Administration shall coordinate with the

Nationwide Mortgage Licensing System and Registry to estab-

lish protocols for assigning a unique identifier to each registered

loan originator that will facilitate electronic tracking and uni-

form identification of, and public access to, the employment

history of and publicly adjudicated disciplinary and enforcement

actions against loan originators.

(2) N

ATIONWIDE MORTGAGE LICENSING SYSTEM AND REG

ISTRY DEVELOPMENT

.—To facilitate the transfer of information

required by subsection (a)(2), the Nationwide Mortgage

Licensing System and Registry shall coordinate with the Fed-

eral banking agencies, through the Financial Institutions

Public

information.

Deadline.

12 USC 5106.

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122 STAT. 2818 PUBLIC LAW 110–289—JULY 30, 2008

Examination Council, and the Farm Credit Administration con-

cerning the development and operation, by such System and

Registry, of the registration functionality and data require-

ments for loan originators.

ONSIDERATION OF

ACTORS AND

ROCEDURES

.—In estab-

lishing the registration procedures under subsection (a) and the

protocols for assigning a unique identifier to a registered loan

originator, the Federal banking agencies shall make such de

minimis exceptions as may be appropriate to paragraphs (1)(A)

and (2) of section 1504(a), shall make reasonable efforts to utilize

existing information to minimize the burden of registering loan

originators, and shall consider methods for automating the process

to the greatest extent practicable consistent with the purposes

of this title.

SEC. 1508. SECRETARY OF HOUSING AND URBAN DEVELOPMENT

BACKUP AUTHORITY TO ESTABLISH A LOAN ORIGINATOR

LICENSING SYSTEM.

(a) B

ACKUP

ICENSING

YSTEM

.—If, by the end of the 1-year

period, or the 2-year period in the case of a State whose legislature

meets only biennially, beginning on the date of the enactment

of this title or at any time thereafter, the Secretary determines

that a State does not have in place by law or regulation a system

for licensing and registering loan originators that meets the require-

ments of sections 1505 and 1506 and subsection (d) of this section,

or does not participate in the Nationwide Mortgage Licensing

System and Registry, the Secretary shall provide for the establish-

ment and maintenance of a system for the licensing and registration

by the Secretary of loan originators operating in such State as

State-licensed loan originators.

(b) L

ICENSING AND

EGISTRATION

EQUIREMENTS

.—The system

established by the Secretary under subsection (a) for any State

shall meet the requirements of sections 1505 and 1506 for State-

licensed loan originators.

NIQUE

DENTIFIER

.—The Secretary shall coordinate with

the Nationwide Mortgage Licensing System and Registry to estab-

lish protocols for assigning a unique identifier to each loan origi-

nator licensed by the Secretary as a State-licensed loan originator

that will facilitate electronic tracking and uniform identification

of, and public access to, the employment history of and the publicly

adjudicated disciplinary and enforcement actions against loan origi-

nators.

(d) S

TATE

ICENSING

EQUIREMENTS

.—For purposes of

this section, the law in effect in a State meets the requirements

of this subsection if the Secretary determines the law satisfies

the following minimum requirements:

(1) A State loan originator supervisory authority is main-

tained to provide effective supervision and enforcement of such

law, including the suspension, termination, or nonrenewal of

a license for a violation of State or Federal law.

(2) The State loan originator supervisory authority ensures

that all State-licensed loan originators operating in the State

are registered with Nationwide Mortgage Licensing System

and Registry.

(3) The State loan originator supervisory authority is

required to regularly report violations of such law, as well

Reports.

Public

infomation.

States.

Deadlines.

12 USC 5107.

Information

technology.

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122 STAT. 2819 PUBLIC LAW 110–289—JULY 30, 2008

as enforcement actions and other relevant information, to the

Nationwide Mortgage Licensing System and Registry.

(4) The State loan originator supervisory authority has

a process in place for challenging information contained in

the Nationwide Mortgage Licensing System and Registry.

(5) The State loan originator supervisory authority has

established a mechanism to assess civil money penalties for

individuals acting as mortgage originators in their State with-

out a valid license or registration.

(6) The State loan originator supervisory authority has

established minimum net worth or surety bonding requirements

that reflect the dollar amount of loans originated by a residen-

tial mortgage loan originator, or has established a recovery

fund paid into by the loan originators.

(e) T

EMPORARY

XTENSION OF

ERIOD

.—The Secretary may

extend, by not more than 24 months, the 1-year or 2-year period,

as the case may be, referred to in subsection (a) for the licensing

of loan originators in any State under a State licensing law that

meets the requirements of sections 1505 and 1506 and subsection

(d) if the Secretary determines that such State is making a good

faith effort to establish a State licensing law that meets such

requirements, license mortgage originators under such law, and

System and Registry.

SEC. 1509. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE MORT-

GAGE LICENSING AND REGISTRY SYSTEM.

If at any time the Secretary determines that the Nationwide

Mortgage Licensing System and Registry is failing to meet the

requirements and purposes of this title for a comprehensive

licensing, supervisory, and tracking system for loan originators,

the Secretary shall establish and maintain such a system to carry

out the purposes of this title and the effective registration and

regulation of loan originators.

SEC. 1510. FEES.

The Federal banking agencies, the Farm Credit Administration,

the Secretary, and the Nationwide Mortgage Licensing System and

Registry may charge reasonable fees to cover the costs of

maintaining and providing access to information from the Nation-

wide Mortgage Licensing System and Registry, to the extent that

such fees are not charged to consumers for access to such system

and registry.

SEC. 1511. BACKGROUND CHECKS OF LOAN ORIGINATORS.

(a) A

CCESS TO

ECORDS

.—Notwithstanding any other provision

of law, in providing identification and processing functions, the

Attorney General shall provide access to all criminal history

information to the appropriate State officials responsible for regu-

lating State-licensed loan originators to the extent criminal history

background checks are required under the laws of the State for

the licensing of such loan originators.

(b) A

GENT

.—For the purposes of this section and in order to

reduce the points of contact which the Federal Bureau of Investiga-

tion may have to maintain for purposes of subsection (a), the

Conference of State Bank Supervisors or a wholly owned subsidiary

may be used as a channeling agent of the States for requesting

12 USC 5110.

12 USC 5109.

12 USC 5108.

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122 STAT. 2820 PUBLIC LAW 110–289—JULY 30, 2008

and distributing information between the Department of Justice

and the appropriate State agencies.

SEC. 1512. CONFIDENTIALITY OF INFORMATION.

(a) S

YSTEM

ONFIDENTIALITY

.—Except as otherwise provided

in this section, any requirement under Federal or State law

regarding the privacy or confidentiality of any information or mate-

rial provided to the Nationwide Mortgage Licensing System and

Registry or a system established by the Secretary under section

1509, and any privilege arising under Federal or State law

(including the rules of any Federal or State court) with respect

to such information or material, shall continue to apply to such

information or material after the information or material has been

disclosed to the system. Such information and material may be

shared with all State and Federal regulatory officials with mortgage

industry oversight authority without the loss of privilege or the

loss of confidentiality protections provided by Federal and State

laws.

(b) N

ONAPPLICABILITY OF

ERTAIN

EQUIREMENTS

.—Informa-

tion or material that is subject to a privilege or confidentiality

under subsection (a) shall not be subject to—

(1) disclosure under any Federal or State law governing

the disclosure to the public of information held by an officer

or an agency of the Federal Government or the respective

State; or

(2) subpoena or discovery, or admission into evidence, in

any private civil action or administrative process, unless with

respect to any privilege held by the Nationwide Mortgage

Licensing System and Registry or the Secretary with respect

to such information or material, the person to whom such

information or material pertains waives, in whole or in part,

in the discretion of such person, that privilege.

OORDINATION

ITH

THER

.—Any State law, including

any State open record law, relating to the disclosure of confidential

supervisory information or any information or material described

in subsection (a) that is inconsistent with subsection (a) shall be

superseded by the requirements of such provision to the extent

State law provides less confidentiality or a weaker privilege.

(d) P

UBLIC

CCESS TO

NFORMATION

.—This section shall not

apply with respect to the information or material relating to the

employment history of, and publicly adjudicated disciplinary and

enforcement actions against, loan originators that is included in

Nationwide Mortgage Licensing System and Registry for access

by the public.

SEC. 1513. LIABILITY PROVISIONS.

The Secretary, any State official or agency, any Federal banking

agency, or any organization serving as the administrator of the

Nationwide Mortgage Licensing System and Registry or a system

established by the Secretary under section 1509, or any officer

or employee of any such entity, shall not be subject to any civil

action or proceeding for monetary damages by reason of the good

faith action or omission of any officer or employee of any such

entity, while acting within the scope of office or employment,

relating to the collection, furnishing, or dissemination of information

concerning persons who are loan originators or are applying for

licensing or registration as loan originators.

12 USC 5112.

Applicability.

12 USC 5111.

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122 STAT. 2821 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1514. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.

(a) S

UMMONS

UTHORITY

.—The Secretary may—

(1) examine any books, papers, records, or other data of

any loan originator operating in any State which is subject

to a licensing system established by the Secretary under section

1508; and

(2) summon any loan originator referred to in paragraph

(1) or any person having possession, custody, or care of the

reports and records relating to such loan originator, to appear

before the Secretary or any delegate of the Secretary at a

time and place named in the summons and to produce such

books, papers, records, or other data, and to give testimony,

under oath, as may be relevant or material to an investigation

of such loan originator for compliance with the requirements

of this title.

(b) E

XAMINATION

UTHORITY

.—

(1) I

N GENERAL

.—If the Secretary establishes a licensing

system under section 1508 for any State, the Secretary shall

appoint examiners for the purposes of administering such sec-

tion.

(2) P

OWER TO EXAMINE

.—Any examiner appointed under

paragraph (1) shall have power, on behalf of the Secretary,

to make any examination of any loan originator operating in

any State which is subject to a licensing system established

by the Secretary under section 1508 whenever the Secretary

determines an examination of any loan originator is necessary

to determine the compliance by the originator with this title.

(3) R

EPORT OF EXAMINATION

.—Each examiner appointed

under paragraph (1) shall make a full and detailed report

of examination of any loan originator examined to the Secretary.

(4) A

DMINISTRATION OF OATHS AND AFFIRMATIONS

;

EVI

DENCE

.—In connection with examinations of loan originators

operating in any State which is subject to a licensing system

established by the Secretary under section 1508, or with other

types of investigations to determine compliance with applicable

law and regulations, the Secretary and examiners appointed

by the Secretary may administer oaths and affirmations and

examine and take and preserve testimony under oath as to

any matter in respect to the affairs of any such loan originator.

(5) A

SSESSMENTS

.—The cost of conducting any examination

of any loan originator operating in any State which is subject

to a licensing system established by the Secretary under section

1508 shall be assessed by the Secretary against the loan origi-

nator to meet the Secretary’s expenses in carrying out such

examination.

EASE AND

ESIST

ROCEEDING

.—

(1) A

UTHORITY OF SECRETARY

.—If the Secretary finds, after

notice and opportunity for hearing, that any person is violating,

has violated, or is about to violate any provision of this title,

or any regulation thereunder, with respect to a State which

is subject to a licensing system established by the Secretary

under section 1508, the Secretary may publish such findings

and enter an order requiring such person, and any other person

that is, was, or would be a cause of the violation, due to

an act or omission the person knew or should have known

would contribute to such violation, to cease and desist from

committing or causing such violation and any future violation

12 USC 5113.

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122 STAT. 2822 PUBLIC LAW 110–289—JULY 30, 2008

of the same provision, rule, or regulation. Such order may,

in addition to requiring a person to cease and desist from

committing or causing a violation, require such person to

comply, or to take steps to effect compliance, with such provi-

sion or regulation, upon such terms and conditions and within

such time as the Secretary may specify in such order. Any

such order may, as the Secretary deems appropriate, require

future compliance or steps to effect future compliance, either

permanently or for such period of time as the Secretary may

specify, with such provision or regulation with respect to any

loan originator.

(2) H

EARING

.—The notice instituting proceedings pursuant

to paragraph (1) shall fix a hearing date not earlier than

30 days nor later than 60 days after service of the notice

unless an earlier or a later date is set by the Secretary with

the consent of any respondent so served.

(3) T

EMPORARY ORDER

.—Whenever the Secretary deter-

mines that the alleged violation or threatened violation speci-

fied in the notice instituting proceedings pursuant to paragraph

(1), or the continuation thereof, is likely to result in significant

dissipation or conversion of assets, significant harm to con-

sumers, or substantial harm to the public interest prior to

the completion of the proceedings, the Secretary may enter

a temporary order requiring the respondent to cease and desist

from the violation or threatened violation and to take such

action to prevent the violation or threatened violation and

to prevent dissipation or conversion of assets, significant harm

to consumers, or substantial harm to the public interest as

the Secretary deems appropriate pending completion of such

proceedings. Such an order shall be entered only after notice

and opportunity for a hearing, unless the Secretary determines

that notice and hearing prior to entry would be impracticable

or contrary to the public interest. A temporary order shall

become effective upon service upon the respondent and, unless

set aside, limited, or suspended by the Secretary or a court

of competent jurisdiction, shall remain effective and enforceable

pending the completion of the proceedings.

(4) R

EVIEW OF TEMPORARY ORDERS

.—

(A) R

EVIEW BY SECRETARY

.—At any time after the

respondent has been served with a temporary cease and

desist order pursuant to paragraph (3), the respondent

may apply to the Secretary to have the order set aside,

limited, or suspended. If the respondent has been served

with a temporary cease and desist order entered without

a prior hearing before the Secretary, the respondent may,

within 10 days after the date on which the order was

served, request a hearing on such application and the Sec-

retary shall hold a hearing and render a decision on such

application at the earliest possible time.

(B) J

UDICIAL REVIEW

.—Within—

(i) 10 days after the date the respondent was

served with a temporary cease and desist order entered

with a prior hearing before the Secretary; or

(ii) 10 days after the Secretary renders a decision

on an application and hearing under paragraph (1),

with respect to any temporary cease and desist order

entered without a prior hearing before the Secretary,

Effective date.

Notification.

Deadline.

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122 STAT. 2823 PUBLIC LAW 110–289—JULY 30, 2008

the respondent may apply to the United States district

court for the district in which the respondent resides or

has its principal place of business, or for the District of

Columbia, for an order setting aside, limiting, or sus-

pending the effectiveness or enforcement of the order, and

the court shall have jurisdiction to enter such an order.

A respondent served with a temporary cease and desist

order entered without a prior hearing before the Secretary

may not apply to the court except after hearing and decision

by the Secretary on the respondent’s application under

subparagraph (A).

O AUTOMATIC STAY OF TEMPORARY ORDER

.—The

commencement of proceedings under subparagraph (B)

shall not, unless specifically ordered by the court, operate

as a stay of the Secretary’s order.

(5) A

UTHORITY OF THE SECRETARY TO PROHIBIT PERSONS

FROM SERVING AS LOAN ORIGINATORS

.—In any cease and desist

proceeding under paragraph (1), the Secretary may issue an

order to prohibit, conditionally or unconditionally, and perma-

nently or for such period of time as the Secretary shall deter-

mine, any person who has violated this title or regulations

thereunder, from acting as a loan originator if the conduct

of that person demonstrates unfitness to serve as a loan origi-

nator.

(d) A

UTHORITY OF THE

ECRETARY

SSESS

ONEY

ALTIES

.—

(1) I

N GENERAL

.—The Secretary may impose a civil penalty

on a loan originator operating in any State which is subject

to a licensing system established by the Secretary under section

1508, if the Secretary finds, on the record after notice and

opportunity for hearing, that such loan originator has violated

or failed to comply with any requirement of this title or any

regulation prescribed by the Secretary under this title or order

issued under subsection (c).

(2) M

AXIMUM AMOUNT OF PENALTY

.—The maximum amount

of penalty for each act or omission described in paragraph

(1) shall be $25,000.

SEC. 1515. STATE EXAMINATION AUTHORITY.

In addition to any authority allowed under State law a State

licensing agency shall have the authority to conduct investigations

and examinations as follows:

(1) For the purposes of investigating violations or com-

plaints arising under this title, or for the purposes of examina-

tion, the State licensing agency may review, investigate, or

examine any loan originator licensed or required to be licensed

under this title, as often as necessary in order to carry out

the purposes of this title.

(2) Each such loan originator shall make available upon

request to the State licensing agency the books and records

relating to the operations of such originator. The State licensing

agency may have access to such books and records and inter-

view the officers, principals, loan originators, employees, inde-

pendent contractors, agents, and customers of the licensee con-

cerning their business.

(3) The authority of this section shall remain in effect,

whether such a loan originator acts or claims to act under

Records.

12 USC 5114.

Notification.

Hearings.

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122 STAT. 2824 PUBLIC LAW 110–289—JULY 30, 2008

any licensing or registration law of such State, or claims to

act without such authority.

(4) No person subject to investigation or examination under

this section may knowingly withhold, abstract, remove, muti-

late, destroy, or secrete any books, records, computer records,

or other information.

SEC. 1516. REPORTS AND RECOMMENDATIONS TO CONGRESS.

(a) A

NNUAL

EPORTS

.—Not later than 1 year after the date

of enactment of this title, and annually thereafter, the Secretary

shall submit a report to Congress on the effectiveness of the provi-

sions of this title, including legislative recommendations, if any,

for strengthening consumer protections, enhancing examination

standards, streamlining communication between all stakeholders

involved in residential mortgage loan origination and processing,

and establishing performance based bonding requirements for mort-

gage originators or institutions that employ such brokers.

(b) L

EGISLATIVE

ECOMMENDATIONS

.—Not later than 6 months

after the date of enactment of this title, the Secretary shall make

recommendations to Congress on legislative reforms to the Real

Estate Settlement Procedures Act of 1974, that the Secretary deems

appropriate to promote more transparent disclosures, allowing con-

sumers to better shop and compare mortgage loan terms and settle-

ment costs.

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

(a) S

TUDY

EQUIRED

.—The Secretary shall conduct an extensive

study of the root causes of default and foreclosure of home loans,

using as much empirical data as is available.

(b) P

RELIMINARY

EPORT TO

ONGRESS

.—Not later than 6

months after the date of enactment of this title, the Secretary

shall submit to Congress a preliminary report regarding the study

required by this section.

INAL

EPORT TO

ONGRESS

.—Not later than 12 months

after the date of enactment of this title, the Secretary shall submit

to Congress a final report regarding the results of the study required

by this section, which shall include any recommended legislation

relating to the study, and recommendations for best practices and

for a process to provide targeted assistance to populations with

the highest risk of potential default or foreclosure.

TITLE VI—MISCELLANEOUS

SEC. 1601. STUDY AND REPORTS ON GUARANTEE FEES.

(a) O

NGOING

TUDY OF

EES

.—The Director shall conduct an

ongoing study of fees charged by enterprises for guaranteeing a

mortgage.

(b) C

OLLECTION OF

ATA

.—The Director shall, by regulation

or order, establish procedures for the collection of data from enter-

prises for purposes of this subsection, including the format and

the process for collection of such data.

EPORTS TO

ONGRESS

.—The Director shall annually submit

a report to Congress on the results of the study conducted under

subsection (a), based on the aggregated data collected under sub-

section (a) for the subject year, regarding the amount of such

fees and the criteria used by the enterprises to determine such

fees.

Regulations.

Orders.

Procedures.

Deadline.

12 USC 4514a.

Deadline.

12 USC 5116.

Deadline.

12 USC 5115.

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122 STAT. 2825 PUBLIC LAW 110–289—JULY 30, 2008

(d) C

ONTENTS OF

EPORTS

.—The reports required under sub-

section (c) shall identify and analyze—

(1) the factors considered in determining the amount of

the guarantee fees charged;

(2) the total revenue earned by the enterprises from guar-

antee fees;

(3) the total costs incurred by the enterprises for providing

guarantees;

(4) the average guarantee fee charged by the enterprises;

(5) an analysis of any increase or decrease in guarantee

fees from the preceding year;

(6) a breakdown of the revenue and costs associated with

providing guarantees, based on product type and risk classifica-

tions; and

(7) a breakdown of guarantee fees charged based on asset

size of the originator and the number of loans sold or trans-

ferred to an enterprise.

(e) P

ROTECTION OF

NFORMATION

.—Nothing in this section may

be construed to require or authorize the Director to publicly disclose

information that is confidential or proprietary.

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

(a) S

TUDY

.—The Director shall conduct a study of ways to

improve the overall default risk evaluation used with respect to

residential mortgage loans. Particular attention shall be paid to

the development and utilization of processes and technologies that

provide a means to standardize the measurement of risk.

(b) R

EPORT

.—The Director shall submit a report on the study

conducted under this section to the Committee on Banking,

Housing, and Urban Affairs of the Senate and the Committee

on Financial Services of the House of Representatives, not later

than 1 year after the date of enactment of this Act.

SEC. 1603. CONVERSION OF HUD CONTRACTS.

(a) I

ENERAL

.—Notwithstanding any other provision of law,

the Secretary may, at the request of an owner of a multifamily

housing project that exceeds 5,000 units to which a contract for

project-based rental assistance under section 8 of the United States

Housing Act of 1937 (‘‘Act’’) (42 U.S.C. 1437f) and a Rental Assist-

ance Payment contract is subject, convert such contracts to a con-

tract for project-based rental assistance under section 8 of the

Act. (b) I

NITIAL

ENEWAL

.—

(1) At the request of an owner under subsection (a) made

no later than 90 days prior to a conversion, the Secretary

may, to the extent sufficient amounts are made available in

appropriation Acts and notwithstanding any other law, treat

the contemplated resulting contract as if such contract were

eligible for initial renewal under section 524(a) of the Multi-

Family Assisted Housing Reform and Affordability Act of 1997

(42 U.S.C. 1437f note) (‘‘MAHRA’’) (42 U.S.C. 1437f note).

(2) A request by an owner pursuant to paragraph (1) shall

be upon such terms and conditions as the Secretary may

require.

ESULTING

ONTRACT

.—The resulting contract shall—

(1) be subject to section 524(a) of MAHRA (42 U.S.C. 1437f

note);

42 USC 1437f

note.

Deadline.

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122 STAT. 2826 PUBLIC LAW 110–289—JULY 30, 2008

(2) be considered for all purposes a contract that has been

renewed under section 524(a) of MAHRA (42 U.S.C. 1437f

note) for a term not to exceed 20 years;

(3) be subsequently renewable at the request of an owner,

under any renewal option for which the project is eligible under

MAHRA (42 U.S.C. 1437f note);

(4) contain provisions limiting distributions, as the Sec-

retary determines appropriate, not to exceed 10 percent of

the initial investment of the owner;

(5) be subject to the availability of sufficient amounts in

appropriation Acts; and

(6) be subject to such other terms and conditions as the

Secretary considers appropriate.

(d) I

NCOME

ARGETING

.—To the extent that assisted dwelling

units, subject to the resulting contract under subsection (a), serve

low-income families, as defined in section 3(b)(2) of the Act (42

U.S.C. 1437a(b)(2)) the units shall be considered to be in compliance

with all income targeting requirements under the Act (42 U.S.C.

1437 et seq).

(e) T

ENANT

LIGIBILITY

.—Notwithstanding any other provision

of law, each family residing in an assisted dwelling unit on the

date of conversion of a contract under this section, subject to the

resulting contract under subsection (a), shall be considered to meet

the applicable requirements for income eligibility and occupancy.

(f) D

EFINITIONS

.—As used in this section—

(1) the term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development;

(2) the term ‘‘conversion’’ means the action under which

a contract for project-based rental assistance under section

8 of the Act and a Rental Assistance Payment contract become

a contract for project-based rental assistance under section

8 of the Act (42 U.S.C. 1437f) pursuant to subsection (a);

(3) the term ‘‘resulting contract’’ means the new contract

after a conversion pursuant to subsection (a); and

(4) the term ‘‘assisted dwelling unit’’ means a dwelling

unit in a multifamily housing project that exceeds 5,000 units

that, on the date of conversion of a contract under this section,

is subject to a contract for project-based rental assistance under

section 8 of the Act (42 U.S.C. 1437f) or a Rental Assistance

Payment contract.

SEC. 1604. BRIDGE DEPOSITORY INSTITUTIONS.

(a) I

ENERAL

.—Section 11 of the Federal Deposit Insurance

Act (12 U.S.C. 1821) is amended—

(1) in subsection (d)(2)—

(A) in subparagraph (F), by striking ‘‘as receiver’’ and

all that follows through clause (ii) and inserting the fol-

lowing: ‘‘as receiver, with respect to any insured depository

institution, organize a new depository institution under

subsection (m) or a bridge depository institution under

subsection (n).’’;

(B) in subparagraph (G), by striking ‘‘new bank or

a bridge bank’’ and inserting ‘‘new depository institution

or a bridge depository institution’’;

(2) in the heading for subsection (e)(10)(C), by striking

‘‘B

RIDGE

ANKS

’’ and inserting ‘‘B

RIDGE

EPOSITORY

NSTITU

TIONS

’’;

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122 STAT. 2827 PUBLIC LAW 110–289—JULY 30, 2008

(3) in subsection (e)(10)(C)(i), by striking ‘‘bridge bank’’

and inserting ‘‘bridge depository institution’’;

(4) in subsection (m)—

(A) in the subsection heading, by striking ‘‘B

ANKS

’’

and inserting ‘‘D

EPOSITORY

NSTITUTIONS

’’;

(B) by striking ‘‘insured bank’’ each place such term

appears and inserting ‘‘insured depository institution’’;

appears and inserting ‘‘new depository institution’’;

(D) by striking ‘‘such bank’’ each place such term

appears and inserting ‘‘such depository institution’’;

(E) by striking ‘‘the bank’’ each place such term appears

and inserting ‘‘the insured depository institution’’;

(F) in paragraph (1), by inserting ‘‘or Federal savings

association’’ after ‘‘national bank’’;

(G) in paragraph (6), by striking ‘‘only bank’’ and

inserting ‘‘only depository institution’’;

(H) in paragraph (9), by inserting ‘‘or the Director

of the Office of Thrift Supervision, as appropriate’’ after

‘‘Comptroller of the Currency’’;

(I) in paragraph (15), by striking ‘‘, but in no event’’

and all that follows through ‘‘located’’;

(J) in paragraph (16)—

(i) by inserting ‘‘or the Director of the Office of

Thrift Supervision, as appropriate,’’ after ‘‘Comptroller

of the Currency’’ each place such term appears;

(ii) by striking ‘‘the bank’’ each place such term

appears and inserting ‘‘the depository institution’’;

(iii) by inserting ‘‘or Federal savings association’’

after ‘‘national bank’’ each place such term appears;

(iv) by inserting ‘‘or Federal savings associations’’

after ‘‘national banks’’; and

(v) by striking ‘‘Such bank’’ and inserting ‘‘Such

depository institution’’; and

(K) in paragraph (18), by inserting ‘‘or the Director

of the Office of Thrift Supervision, as appropriate,’’ after

‘‘Comptroller of the Currency’’ each place such term

appears;

(5) in subsection (n)—

(A) in the subsection heading, by striking ‘‘B

ANKS

’’

and inserting ‘‘D

EPOSITORY

NSTITUTIONS

’’;

(B) by striking ‘‘bridge bank’’ each place such term

appears and inserting ‘‘bridge depository institution’’;

appears (other than in paragraph (1)(A))and inserting

‘‘bridge depository institutions’’;

(D) by striking ‘‘bridge bank’s’’ each place such term

appears and inserting ‘‘bridge depository institution’s’’;

(E) by striking ‘‘insured bank’’ each place such term

appears and inserting ‘‘insured depository institution’’;

(F) by striking ‘‘insured banks’’ each place such term

appears and inserting ‘‘insured depository institutions’’;

(G) by striking ‘‘such bank’’ each place such term

appears (other than in paragraph (4)(J)) and inserting

‘‘such depository institution’’;

(H) by striking ‘‘the bank’’ each place such term

appears and inserting ‘‘the depository institution’’;

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122 STAT. 2828 PUBLIC LAW 110–289—JULY 30, 2008

(I) by striking ‘‘bank or banks’’ each place such term

appears and inserting ‘‘depository institution or institu-

tions’’;

(J) in paragraph (1)(A)—

(i) by inserting ‘‘, with respect to 1 or more insured

banks, or the Director of the Office of Thrift Super-

vision, with respect to 1 or more insured savings

associations,’’ after ‘‘Comptroller of the Currency’’;

(ii) by inserting ‘‘or Federal savings associations,

as appropriate,’’ after ‘‘national banks’’;

(iii) by inserting ‘‘or Federal savings associations,

as applicable,’’ after ‘‘banking associations’’; and

(iv) by striking ‘‘as bridge banks’’ and inserting

‘‘as ‘bridge depository institutions’ ’’;

(K) in paragraph (1)(B)—

(i) by striking ‘‘of a bank’’; and

(ii) by striking ‘‘of that bank’’;

(L) in the heading for paragraph (1)(E), by inserting

‘‘

OR FEDERAL SAVINGS ASSOCIATION

’’ before the period;

(M) in paragraph (1)(E), by inserting before the period

‘‘, in the case of 1 or more insured banks, and as a Federal

savings association, in the case of 1 or more insured savings

associations’’;

(N) in paragraph (2)—

(i) by inserting ‘‘or Federal savings association’’

after ‘‘national bank’’ each place such term appears;

(ii) in subparagraph (A), by inserting ‘‘or the

Director of the Office of Thrift Supervision’’ after

‘‘Comptroller of the Currency’’; and

(iii) in the heading for subparagraph (B), by

inserting ‘‘

OR FEDERAL SAVINGS ASSOCIATION

’’ before

the period;

(O) in paragraph (4)—

(i) in the matter preceding subparagraph (A), by

inserting ‘‘or Federal savings association, as appro-

priate’’ after ‘‘national bank’’;

(ii) in subparagraph (C), by striking ‘‘under section

5138 of the Revised Statutes or any other’’ and

inserting ‘‘under any’’;

(iii) by inserting ‘‘and the Director of the Office

of Thrift Supervision, as appropriate,’’ after ‘‘Comp-

troller of the Currency’’ each place such term appears;

(iv) in subparagraph (D), by striking ‘‘bank’s’’ and

inserting ‘‘depository institution’s’’; and

(v) in subparagraph (H), by striking ‘‘a bank in

default’’ and inserting ‘‘a depository institution in

default’’;

(P) in paragraph (8)—

(i) in subparagraph (A), by striking ‘‘the banks’’

and inserting ‘‘the depository institutions’’;

(ii) in subparagraph (B), by striking ‘‘bank’s’’ and

inserting ‘‘depository institution’s’’;

(Q) by striking ‘‘

BRIDGE BANK

’’ or ‘‘

BRIDGE BANKS

’’ as

the case may be in the headings for paragraphs (9), (10),

(12), and (13) and inserting ‘‘

BRIDGE DEPOSITORY INSTITU

TION

’’ or ‘‘

BRIDGE DEPOSITORY INSTITUTIONS

’’ as appropriate;

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122 STAT. 2829 PUBLIC LAW 110–289—JULY 30, 2008

(R) in paragraph (11), by inserting ‘‘or a Federal

savings association, as the case may be,’’ after ‘‘national

bank’’ each place such term appears;

(S) in paragraph (12)—

(i) by inserting ‘‘or the Director of the Office of

Thrift Supervision, as appropriate,’’ after ‘‘Comptroller

of the Currency’’ each place such term appears; and

(ii) by inserting ‘‘or Federal savings associations,

as appropriate’’ after ‘‘national banks’’; and

(T) in paragraph (13), by striking ‘‘single bank’’ and

inserting ‘‘single depository institution’’.

(b) O

THER

ONFORMING

MENDMENTS

.—

(1) F

EDERAL DEPOSIT INSURANCE ACT

.—The Federal Deposit

Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(A) in section 3 (12 U.S.C. 1813), by striking subsection

(i) and inserting the following:

‘‘(i) N

EPOSITORY

NSTITUTION AND

RIDGE

EPOSITORY

NSTITUTION

EFINED

.—

‘‘(1) N

EW DEPOSITORY INSTITUTION

.—The term ‘new deposi-

tory institution’ means a new national bank or Federal savings

association, other than a bridge depository institution, orga-

nized by the Corporation in accordance with section 11(m).

‘‘(2) B

RIDGE DEPOSITORY INSTITUTION

.—The term ‘bridge

depository institution’ means a new national bank or Federal

savings association organized by the Corporation in accordance

with section 11(n).’’;

(B) in section 10(d)(5)(B) (12 U.S.C. 1820(d)(5)(B)), by

striking ‘‘bridge bank’’ and inserting ‘‘bridge depository

institution’’;

bank’’ each place such term appears and inserting ‘‘new

depository institution’’;and

(D) in section 38(j)(2) (12 U.S.C. 1831o(j)(2)), by striking

‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’.

(2) F

EDERAL CREDIT UNION ACT

.—Section 207(c)(10)(C)(i)

of the Federal Credit Union Act (12 U.S.C. 1787(c)(10)(C)(i))

is amended by striking ‘‘bridge bank’’ and inserting ‘‘bridge

depository institution’’.

(3) T

ITLE 11

UNITED STATES CODE

.—Section 783 of title

11, United States Code, is amended by striking ‘‘bridge bank’’

and inserting ‘‘bridge depository institution’’.

(4) T

ITLE 26

UNITED STATES CODE

.—Section 414(l)(2)(G)

of the Internal Revenue Code of 1986, is amended by striking

‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’.

EPEAL OF

EPOSIT

IMITATION

.—Section 11(n)(1)(B)(i) of

the Federal Deposit Insurance Act (12 U.S.C. 1821(n)(1)(B)(i)) is

amended by striking ‘‘, except that’’ and all that follows through

‘‘another insured depository institution’’.

(d) F

EDERAL

ESERVE

ANK

ENDING TO

RIDGE

EPOSITORY

NSTITUTIONS

.—Section 11(n)(5) of the Federal Deposit Insurance

Act (12 U.S.C. 1821(n)(5)) is amended by adding at the end the

following new subparagraph:

‘‘(D) C

APITAL LEVELS

.—A bridge depository institution

shall not be considered an undercapitalized depository

institution or a critically undercapitalized depository

institution for purposes of section 10B(b) of the Federal

Reserve Act.’’.

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122 STAT. 2830 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 1605. SENSE OF THE SENATE.

It is the sense of the Senate that in implementing or carrying

out any provision of this Act, or any amendment made by this

Act, the Senate supports a policy of noninterference regarding local

government requirements that the holder of a foreclosed property

maintain that property.

DIVISION B—FORECLOSURE

PREVENTION

SEC. 2001. SHORT TITLE.

This division may be cited as the ‘‘Foreclosure Prevention Act

of 2008’’.

SEC. 2002. EMERGENCY DESIGNATION.

For purposes of Senate enforcement, all provisions of this divi-

sion are designated as emergency requirements and necessary to

meet emergency needs pursuant to section 204 of S. Con. Res.

21 (110th Congress), the concurrent resolution on the budget for

fiscal year 2008.

TITLE I—FHA MODERNIZATION ACT OF

2008

SEC. 2101. SHORT TITLE.

This title may be cited as the ‘‘FHA Modernization Act of

2008’’.

Subtitle A—Building American

Homeownership

SEC. 2111. SHORT TITLE.

This subtitle may be cited as the ‘‘Building American

Homeownership Act of 2008’’.

SEC. 2112. MAXIMUM PRINCIPAL LOAN OBLIGATION.

(a) I

ENERAL

.—Paragraph (2) of section 203(b) of the National

Housing Act (12 U.S.C. 1709(b)(2)) is amended—

(1) by striking subparagraphs (A) and (B) and inserting

the following:

‘‘(A) not to exceed the lesser of—

‘‘(i) in the case of a 1-family residence, 115 percent

of the median 1-family house price in the area, as

determined by the Secretary; and in the case of a

2-, 3-, or 4-family residence, the percentage of such

median price that bears the same ratio to such median

price as the dollar amount limitation determined under

the sixth sentence of section 305(a)(2) of the Federal

Home Loan Mortgage Corporation Act (12 U.S.C.

1454(a)(2)) for a 2-, 3-, or 4-family residence, respec-

tively, bears to the dollar amount limitation deter-

mined under such section for a 1-family residence;

12 USC 1701

note.

Building

American

Homeownership

Act of 2008.

12 USC 1701

note.

12 USC 1701

note.

Foreclosure

Prevention Act

of 2008.

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122 STAT. 2831 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) 150 percent of the dollar amount limitation

determined under the sixth sentence of such section

305(a)(2) for a residence of applicable size;

except that the dollar amount limitation in effect under

this subparagraph for any size residence for any area may

not be less than the greater of: (I) the dollar amount

limitation in effect under this section for the area on

October 21, 1998; or (II) 65 percent of the dollar amount

limitation determined under the sixth sentence of such

section 305(a)(2) for a residence of the applicable size;

and

‘‘(B) not to exceed 100 percent of the appraised value

of the property.’’; and

(2) in the matter following subparagraph (B), by striking

the second sentence (relating to a definition of ‘‘average closing

cost’’) and all that follows through ‘‘section 3103A(d) of title

38, United States Code.’’.

(b) T

REATMENT OF

-F

RONT

REMIUMS

.—Section 203(d) of the

National Housing Act (12 U.S.C. 1709(d)) is amended—

(1) by striking ‘‘Notwithstanding any’’ and inserting the

following: ‘‘Except as provided in paragraph (2) of this sub-

section, notwithstanding’’;

(2) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

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

‘‘(2) The maximum amount of a mortgage determined under

subsection (b)(2)(B) of this section may not be increased as provided

in paragraph (1).’’.

FFECTIVE

ATE

.— The amendments made by subsection

(a) shall take effect upon the expiration of the date described

in section 202(a) of the Economic Stimulus Act of 2008 (Public

Law 110–185; 122 Stat. 620).

SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF

SELLER-FUNDED DOWN PAYMENT ASSISTANCE.

Paragraph (9) of section 203(b) of the National Housing Act

(12 U.S.C. 1709(b)(9)) is amended to read as follows:

‘‘(9) C

ASH INVESTMENT REQUIREMENT

.—

‘‘(A) I

N GENERAL

.—A mortgage insured under this sec-

tion shall be executed by a mortgagor who shall have

paid, in cash or its equivalent, on account of the property

an amount equal to not less than 3.5 percent of the

appraised value of the property or such larger amount

as the Secretary may determine.

‘‘(B) F

AMILY MEMBERS

.—For purposes of this para-

graph, the Secretary shall consider as cash or its equivalent

any amounts borrowed from a family member (as such

term is defined in section 201), subject only to the require-

ments that, in any case in which the repayment of such

borrowed amounts is secured by a lien against the property,

that—

‘‘(i) such lien shall be subordinate to the mortgage;

and

‘‘(ii) the sum of the principal obligation of the

mortgage and the obligation secured by such lien may

not exceed 100 percent of the appraised value of the

property plus any initial service charges, appraisal,

12 USC 1709

note.

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122 STAT. 2832 PUBLIC LAW 110–289—JULY 30, 2008

inspection, and other fees in connection with the mort-

gage.

‘‘(C) P

ROHIBITED SOURCES

.—In no case shall the funds

required by subparagraph (A) consist, in whole or in part,

of funds provided by any of the following parties before,

during, or after closing of the property sale:

‘‘(i) The seller or any other person or entity that

financially benefits from the transaction.

‘‘(ii) Any third party or entity that is reimbursed,

directly or indirectly, by any of the parties described

in clause (i).

This subparagraph shall apply only to mortgages for which

the mortgagee has issued credit approval for the borrower

on or after October 1, 2008.’’.

SEC. 2114. MORTGAGE INSURANCE PREMIUMS.

Section 203(c)(2) of the National Housing Act (12 U.S.C.

1709(c)(2)) is amended—

(1) in the matter preceding subparagraph (A), by striking

‘‘or of the General Insurance Fund’’ and all that follows through

‘‘section 234(c),,’’; and

(2) in subparagraph (A)—

(A) by striking ‘‘2.25 percent’’ and inserting ‘‘3 percent’’;

and (B) by striking ‘‘2.0 percent’’ and inserting ‘‘2.75 per-

cent’’.

SEC. 2115. REHABILITATION LOANS.

Subsection (k) of section 203 of the National Housing Act (12

U.S.C. 1709(k)) is amended—

(1) in paragraph (1), by striking ‘‘on’’ and all that follows

through ‘‘1978’’; and

(2) in paragraph (5)—

(A) by striking ‘‘General Insurance Fund’’ the first

place it appears and inserting ‘‘Mutual Mortgage Insurance

Fund’’; and

(B) in the second sentence, by striking the comma

and all that follows through ‘‘General Insurance Fund’’.

SEC. 2116. DISCRETIONARY ACTION.

The National Housing Act is amended—

(1) in subsection (e) of section 202 (12 U.S.C. 1708(e))—

(A) in paragraph (3)(B), by striking ‘‘section 202(e)

of the National Housing Act’’ and inserting ‘‘this sub-

section’’; and

(B) by redesignating such subsection as subsection (f);

(2) by striking paragraph (4) of section 203(s) (12 U.S.C.

1709(s)(4)) and inserting the following new paragraph:

‘‘(4) the Secretary of Agriculture;’’; and

(3) by transferring subsection (s) of section 203 (as amended

by paragraph (2) of this section) to section 202, inserting such

subsection after subsection (d) of section 202, and redesignating

such subsection as subsection (e).

SEC. 2117. INSURANCE OF CONDOMINIUMS.

(a) I

ENERAL

.—Section 234 of the National Housing Act

(12 U.S.C. 1715y) is amended—

(1) in subsection (c), in the first sentence—

Applicability.

Effective date.

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122 STAT. 2833 PUBLIC LAW 110–289—JULY 30, 2008

(A) by striking ‘‘and’’ before ‘‘(2)’’; and

(B) by inserting before the period at the end the fol-

lowing: ‘‘, and (3) the project has a blanket mortgage

insured by the Secretary under subsection (d)’’; and

(2) in subsection (g), by striking ‘‘, except that’’ and all

that follows and inserting a period.

(b) D

EFINITION OF

ORTGAGE

.—Section 201(a) of the National

Housing Act (12 U.S.C. 1707(a)) is amended—

(1) before ‘‘a first mortgage’’ insert ‘‘(A)’’;

(2) by striking ‘‘or on a leasehold (1)’’ and inserting ‘‘(B)

a first mortgage on a leasehold on real estate (i)’’;

(3) by striking ‘‘or (2)’’ and inserting ‘‘, or (ii)’’; and

(4) by inserting before the semicolon the following: ‘‘, or

of a fee interest in, or long-term leasehold interest in, real

estate consisting of a one-family unit in a multifamily project,

including a project in which the dwelling units are attached,

or are manufactured housing units, semi-detached, or detached,

and an undivided interest in the common areas and facilities

which serve the project’’.

EFINITION OF

EAL

STATE

.—Section 201 of the National

Housing Act (12 U.S.C. 1707) is amended by adding at the end

the following new subsection:

‘‘(g) The term ‘real estate’ means land and all natural resources

and structures permanently affixed to the land, including residential

buildings and stationary manufactured housing. The Secretary may

not require, for treatment of any land or other property as real

estate for purposes of this title, that such land or property be

treated as real estate for purposes of State taxation.’’.

SEC. 2118. MUTUAL MORTGAGE INSURANCE FUND.

(a) I

ENERAL

.—Subsection (a) of section 202 of the National

Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:

‘‘(a) M

UTUAL

ORTGAGE

NSURANCE

UND

.—

‘‘(1) E

STABLISHMENT

.—Subject to the provisions of the Fed-

eral Credit Reform Act of 1990, there is hereby created a

Mutual Mortgage Insurance Fund (in this title referred to as

the ‘Fund’), which shall be used by the Secretary to carry

out the provisions of this title with respect to mortgages insured

under section 203. The Secretary may enter into commitments

to guarantee, and may guarantee, such insured mortgages.

‘‘(2) L

IMIT ON LOAN GUARANTEES

.—The authority of the

Secretary to enter into commitments to guarantee such insured

mortgages shall be effective for any fiscal year only to the

extent that the aggregate original principal loan amount under

such mortgages, any part of which is guaranteed, does not

exceed the amount specified in appropriations Acts for such

fiscal year.

‘‘(3) F

IDUCIARY RESPONSIBILITY

.—The Secretary has a

responsibility to ensure that the Mutual Mortgage Insurance

Fund remains financially sound.

‘‘(4) A

NNUAL INDEPENDENT ACTUARIAL STUDY

.—The Sec-

retary shall provide for an independent actuarial study of the

Fund to be conducted annually, which shall analyze the finan-

cial position of the Fund. The Secretary shall submit a report

annually to the Congress describing the results of such study

and assessing the financial status of the Fund. The report

Reports.

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122 STAT. 2834 PUBLIC LAW 110–289—JULY 30, 2008

shall recommend adjustments to underwriting standards, pro-

gram participation, or premiums, if necessary, to ensure that

the Fund remains financially sound. The report shall also

include an evaluation of the quality control procedures and

accuracy of information utilized in the process of underwriting

loans guaranteed by the Fund. Such evaluation shall include

a review of the risk characteristics of loans based not only

on borrower information and performance, but on risks associ-

ated with loans originated or funded by various entities or

financial institutions.

‘‘(5) Q

UARTERLY REPORTS

.—During each fiscal year, the

Secretary shall submit a report to the Congress for each cal-

endar quarter, which shall specify for mortgages that are obliga-

tions of the Fund—

‘‘(A) the cumulative volume of loan guarantee commit-

ments that have been made during such fiscal year through

the end of the quarter for which the report is submitted;

‘‘(B) the types of loans insured, categorized by risk;

‘‘(C) any significant changes between actual and pro-

jected claim and prepayment activity;

‘‘(D) projected versus actual loss rates; and

‘‘(E) updated projections of the annual subsidy rates

to ensure that increases in risk to the Fund are identified

and mitigated by adjustments to underwriting standards,

program participation, or premiums, and the financial

soundness of the Fund is maintained.

The first quarterly report under this paragraph shall be sub-

mitted on the last day of the first quarter of fiscal year 2008,

or on the last day of the first full calendar quarter following

the enactment of the Building American Homeownership Act

of 2008, whichever is later.

‘‘(6) A

DJUSTMENT OF PREMIUMS

.—If, pursuant to the inde-

pendent actuarial study of the Fund required under paragraph

(4), the Secretary determines that the Fund is not meeting

the operational goals established under paragraph (7) or there

is a substantial probability that the Fund will not maintain

its established target subsidy rate, the Secretary may either

make programmatic adjustments under this title as necessary

to reduce the risk to the Fund, or make appropriate premium

adjustments.

‘‘(7) O

PERATIONAL GOALS

.—The operational goals for the

Fund are—

‘‘(A) to minimize the default risk to the Fund and

to homeowners by among other actions instituting fraud

prevention quality control screening not later than 18

months after the date of enactment of the Building Amer-

ican Homeownership Act of 2008; and

‘‘(B) to meet the housing needs of the borrowers that

the single family mortgage insurance program under this

title is designed to serve.’’.

(b) O

BLIGATIONS OF

UND

.—The National Housing Act is

amended as follows:

(1) H

OMEOWNERSHIP VOUCHER PROGRAM MORTGAGES

.—In

section 203(v) (12 U.S.C. 1709(v))—

(A) by striking ‘‘Notwithstanding section 202 of this

title, the’’ and inserting ‘‘The’’; and

Deadline.

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122 STAT. 2835 PUBLIC LAW 110–289—JULY 30, 2008

(B) by striking ‘‘General Insurance Fund’’ the first

place such term appears and all that follows through the

end of the subsection and inserting ‘‘Mutual Mortgage

Insurance Fund.’’.

(2) H

OME EQUITY CONVERSION MORTGAGES

.—Section

255(i)(2)(A) of the National Housing Act (12 U.S.C. 1715z–

20(i)(2)(A)) is amended by striking ‘‘General Insurance Fund’’

and inserting ‘‘Mutual Mortgage Insurance Fund’’.

ONFORMING

MENDMENTS

.—The National Housing Act is

amended—

(1) in section 205 (12 U.S.C. 1711), by striking subsections

(g) and (h); and

(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking

‘‘203(b)’’ and all that follows through ‘‘203(i)’’ and inserting

‘‘203, except as determined by the Secretary’’.

SEC. 2119. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

(a) H

AWAIIAN

OME

ANDS

.—Section 247(c) of the National

Housing Act (12 U.S.C. 1715z–12(c)) is amended—

(1) by striking ‘‘General Insurance Fund established in

section 519’’ and inserting ‘‘Mutual Mortgage Insurance Fund’’;

and (2) in the second sentence, by striking ‘‘(1) all references’’

and all that follows through ‘‘and (2)’’.

(b) I

NDIAN

ESERVATIONS

.—Section 248(f) of the National

Housing Act (12 U.S.C. 1715z–13(f)) is amended—

(1) by striking ‘‘General Insurance Fund’’ the first place

it appears through ‘‘519’’ and inserting ‘‘Mutual Mortgage Insur-

ance Fund’’; and

(2) in the second sentence, by striking ‘‘(1) all references’’

and all that follows through ‘‘and (2)’’.

SEC. 2120. CONFORMING AND TECHNICAL AMENDMENTS.

(a) R

EPEALS

.—The following provisions of the National Housing

Act are repealed:

(1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).

(2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).

(3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).

(4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).

(5) Section 222 (12 U.S.C. 1715m).

(6) Section 237 (12 U.S.C. 1715z–2).

(7) Section 245 (12 U.S.C. 1715z–10).

(b) D

EFINITION OF

REA

.—Section 203(u)(2)(A) of the National

Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking ‘‘shall’’

and all that follows and inserting ‘‘means a metropolitan statistical

area as established by the Office of Management and Budget;’’.

EFINITION OF

TATE

.—Section 201(d) of the National

Housing Act (12 U.S.C. 1707(d)) is amended by striking ‘‘the Trust

Territory of the Pacific Islands’’ and inserting ‘‘the Commonwealth

of the Northern Mariana Islands’’.

SEC. 2121. INSURANCE OF MORTGAGES.

Subsection (n)(2) of section 203 of the National Housing Act

(12 U.S.C. 1709(n)(2)) is amended—

(1) in subparagraph (A), by inserting ‘‘or subordinate mort-

gage or’’ before ‘‘lien given’’; and

(2) in subparagraph (C), by inserting ‘‘or subordinate mort-

gage or’’ before ‘‘lien’’.

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122 STAT. 2836 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 2122. HOME EQUITY CONVERSION MORTGAGES.

(a) I

ENERAL

.—Section 255 of the National Housing Act

(12 U.S.C. 1715z–20) is amended—

(1) in subsection (b)(2), insert ‘‘ ‘real estate,’ ’’ after ‘‘ ‘mort-

gagor’,’’;

(2) by amending subsection (d)(1) to read as follows:

‘‘(1) have been originated by a mortgagee approved by

the Secretary;’’;

(3) by amending subsection (d)(2)(B) to read as follows:

‘‘(B) has received adequate counseling, as provided in

subsection (f), by an independent third party that is not,

either directly or indirectly, associated with or compensated

by a party involved in—

‘‘(i) originating or servicing the mortgage;

‘‘(ii) funding the loan underlying the mortgage;

or ‘‘(iii) the sale of annuities, investments, long-term

care insurance, or any other type of financial or insur-

ance product;’’;

(4) in subsection (f)—

(A) by striking ‘‘(f) I

NFORMATION

ERVICES FOR

ORT

GAGORS

.—’’ and inserting ‘‘(f) C

OUNSELING

ERVICES AND

NFORMATION FOR

ORTGAGORS

.—’’; and

(B) by amending the matter preceding paragraph (1)

to read as follows: ‘‘The Secretary shall provide or cause

to be provided adequate counseling for the mortgagor, as

described in subsection (d)(2)(B). Such counseling shall be

provided by counselors that meet qualification standards

and follow uniform counseling protocols. The qualification

standards and counseling protocols shall be established

by the Secretary within 12 months of the date of enactment

of the Building American Homeownership Act of 2008.

The protocols shall require a qualified counselor to discuss

with each mortgagor information which shall include—

’’

(5) in subsection (g), by striking ‘‘established under section

203(b)(2)’’ and all that follows through ‘‘located’’ and inserting

‘‘limitation established under section 305(a)(2) of the Federal

Home Loan Mortgage Corporation Act for a 1-family residence’’;

(6) by striking subsection (l);

(7) by redesignating subsection (m) as subsection (l);

(8) by amending subsection (l), as so redesignated, to read

as follows:

‘‘(l) F

UNDING FOR

OUNSELING

.—The Secretary may use a por-

tion of the mortgage insurance premiums collected under the pro-

gram under this section to adequately fund the counseling and

disclosure activities required under subsection (f), including coun-

seling for those homeowners who elect not to take out a home

equity conversion mortgage, provided that the use of such funds

is based upon accepted actuarial principles.’’; and

(9) by adding at the end the following new subsection:

‘‘(m) A

UTHORITY

NSURE

OME

URCHASE

ORTGAGE

.—

‘‘(1) I

N GENERAL

.—Notwithstanding any other provision of

this section, the Secretary may insure, upon application by

a mortgagee, a home equity conversion mortgage upon such

terms and conditions as the Secretary may prescribe, when

the home equity conversion mortgage will be used to purchase

Standards.

Deadline.

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122 STAT. 2837 PUBLIC LAW 110–289—JULY 30, 2008

a 1- to 4-family dwelling unit, one unit of which the mortgagor

will occupy as a primary residence, and to provide for any

future payments to the mortgagor, based on available equity,

as authorized under subsection (d)(9).

‘‘(2) L

IMITATION ON PRINCIPAL OBLIGATION

.—A home equity

conversion mortgage insured pursuant to paragraph (1) shall

involve a principal obligation that does not exceed the dollar

amount limitation determined under section 305(a)(2) of the

Federal Home Loan Mortgage Corporation Act for a 1-family

residence.

‘‘(n) R

EQUIREMENTS ON

ORTGAGE

RIGINATORS

.—

‘‘(1) I

N GENERAL

.—The mortgagee and any other party that

participates in the origination of a mortgage to be insured

under this section shall—

‘‘(A) not participate in, be associated with, or employ

any party that participates in or is associated with any

other financial or insurance activity; or

‘‘(B) demonstrate to the Secretary that the mortgagee

or other party maintains, or will maintain, firewalls and

other safeguards designed to ensure that—

‘‘(i) individuals participating in the origination of

the mortgage shall have no involvement with, or incen-

tive to provide the mortgagor with, any other financial

or insurance product; and

‘‘(ii) the mortgagor shall not be required, directly

or indirectly, as a condition of obtaining a mortgage

under this section, to purchase any other financial

or insurance product.

‘‘(2) A

PPROVAL OF OTHER PARTIES

.—All parties that partici-

pate in the origination of a mortgage to be insured under

this section shall be approved by the Secretary.

‘‘(o) P

ROHIBITION

GAINST

EQUIREMENTS

URCHASE

DDI

TIONAL

RODUCTS

.—The mortgagor or any other party shall not

be required by the mortgagee or any other party to purchase an

insurance, annuity, or other similar product as a requirement or

condition of eligibility for insurance under subsection (c), except

for title insurance, hazard, flood, or other peril insurance, or other

such products that are customary and normal under subsection

(c), as determined by the Secretary.

‘‘(p) S

TUDY TO

ETERMINE

ONSUMER

ROTECTIONS AND

NDER

WRITING

TANDARDS

.—The Secretary shall conduct a study to

examine and determine appropriate consumer protections and

underwriting standards to ensure that the purchase of products

referred to in subsection (o) is appropriate for the consumer. In

conducting such study, the Secretary shall consult with consumer

advocates (including recognized experts in consumer protection),

industry representatives, representatives of counseling organiza-

tions, and other interested parties.’’.

(b) M

ORTGAGES FOR

OOPERATIVES

.—Subsection (b) of section

255 of the National Housing Act (12 U.S.C. 1715z–20(b)) is

amended—

(1) in paragraph (4)—

(A) by inserting ‘‘a first or subordinate mortgage or

lien’’ before ‘‘on all stock’’;

(B) by inserting ‘‘unit’’ after ‘‘dwelling’’; and

‘‘on a leasehold’’; and

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122 STAT. 2838 PUBLIC LAW 110–289—JULY 30, 2008

(2) in paragraph (5), by inserting ‘‘a first or subordinate

lien on’’ before ‘‘all stock’’.

IMITATION ON

RIGINATION

EES

.—Section 255 of the

National Housing Act (12 U.S.C. 1715z–20), as amended by the

preceding provisions of this section, is further amended by adding

at the end the following new subsection:

‘‘(r) L

IMITATION ON

RIGINATION

EES

.—The Secretary shall

establish limits on the origination fee that may be charged to

a mortgagor under a mortgage insured under this section, which

limitations shall—

‘‘(1) be equal to 2.0 percent of the maximum claim amount

of the mortgage, up to a maximum claim amount of $200,000

plus 1 percent of any portion of the maximum claim amount

that is greater than $200,000, unless adjusted thereafter on

the basis of an analysis of—

‘‘(A) the costs to mortgagors; and

‘‘(B) the impact on the reverse mortgage market;

‘‘(2) be subject to a minimum allowable amount;

‘‘(3) provide that the origination fee may be fully financed

with the mortgage;

‘‘(4) include any fees paid to correspondent mortgagees

approved by the Secretary;

‘‘(5) have the same effective date as subsection (m)(2)

regarding the limitation on principal obligation; and

‘‘(6) be subject to a maximum origination fee of $6,000,

except that such maximum limit shall be adjusted in accordance

with the annual percentage increase in the Consumer Price

Index of the Bureau of Labor Statistics of the Department

of Labor in increments of $500 only when the percentage

increase in such index, when applied to the maximum origina-

tion fee, produces dollar increases that exceed $500.’’.

(d) S

TUDY

EGARDING

ROGRAM

OSTS AND

REDIT

VAIL

ABILITY

.—

(1) I

N GENERAL

.—The Comptroller General of the United

States shall conduct a study regarding the costs and availability

of credit under the home equity conversion mortgages for

elderly homeowners program under section 255 of the National

Housing Act (12 U.S.C. 1715z–20) (in this subsection referred

to as the ‘‘program’’).

(2) P

URPOSE

.—The purpose of the study required under

paragraph (1) is to help Congress analyze and determine the

effects of limiting the amounts of the costs or fees under the

program from the amounts charged under the program as of

the date of the enactment of this title.

(3) C

ONTENT OF REPORT

.—The study required under para-

graph (1) should focus on—

(A) the cost to mortgagors of participating in the pro-

gram;

(B) the financial soundness of the program;

(D) the costs to elderly homeowners participating in

the program, including—

(i) mortgage insurance premiums charged under

the program;

(ii) up-front fees charged under the program; and

(iii) margin rates charged under the program.

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122 STAT. 2839 PUBLIC LAW 110–289—JULY 30, 2008

(4) T

IMING OF REPORT

.—Not later than 12 months after

the date of the enactment of this title, the Comptroller General

shall submit a report to the Committee on Banking, Housing,

and Urban Affairs of the Senate and the Committee on Finan-

cial Services of the House of Representatives setting forth the

results and conclusions of the study required under paragraph

(1).

SEC. 2123. ENERGY EFFICIENT MORTGAGES PROGRAM.

Section 106(a)(2) of the Energy Policy Act of 1992 (42 U.S.C.

12712 note) is amended—

(1) by amending subparagraph (C) to read as follows:

‘‘(C) C

OSTS OF IMPROVEMENTS

.—The cost of cost-effec-

tive energy efficiency improvements shall not exceed the

greater of—

‘‘(i) 5 percent of the property value (not to exceed

5 percent of the limit established under section

203(b)(2)(A)) of the National Housing Act (12 U.S.C.

1709(b)(2)(A); or

‘‘(ii) 2 percent of the limit established under section

203(b)(2)(B) of such Act.’’; and

(2) by adding at the end the following:

‘‘(D) L

IMITATION

.—In any fiscal year, the aggregate

number of mortgages insured pursuant to this section may

not exceed 5 percent of the aggregate number of mortgages

for 1- to 4-family residences insured by the Secretary of

Housing and Urban Development under title II of the

National Housing Act (12 U.S.C. 1707 et seq.) during the

preceding fiscal year.’’.

SEC. 2124. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BOR-

ROWERS WITHOUT SUFFICIENT CREDIT HISTORY.

(a) E

STABLISHMENT

.—Title II of the National Housing Act (12

U.S.C. 1707 et seq.) is amended by adding at the end the following

new section:

‘‘SEC. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BOR-

ROWERS WITHOUT SUFFICIENT CREDIT HISTORY.

‘‘(a) E

STABLISHMENT

.—The Secretary shall carry out a pilot

program to establish, and make available to mortgagees, an auto-

mated process for providing alternative credit rating information

for mortgagors and prospective mortgagors under mortgages on

1- to 4-family residences to be insured under this title who have

insufficient credit histories for determining their creditworthiness.

Such alternative credit rating information may include rent, utili-

ties, and insurance payment histories, and such other information

as the Secretary considers appropriate.

‘‘(b) S

COPE

.—The Secretary may carry out the pilot program

under this section on a limited basis or scope, and may consider

limiting the program to first-time homebuyers.

‘‘(c) L

IMITATION

.—In any fiscal year, the aggregate number

of mortgages insured pursuant to the automated process established

under this section may not exceed 5 percent of the aggregate

number of mortgages for 1- to 4-family residences insured by the

Secretary under this title during the preceding fiscal year.

‘‘(d) S

UNSET

.—After the expiration of the 5-year period begin-

ning on the date of the enactment of the Building American

Homeownership Act of 2008, the Secretary may not enter into

12 USC

1715z–24.

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122 STAT. 2840 PUBLIC LAW 110–289—JULY 30, 2008

any new commitment to insure any mortgage, or newly insure

any mortgage, pursuant to the automated process established under

this section.’’.

(b) GAO R

EPORT

.—Not later than the expiration of the two-

year period beginning on the date of the enactment of this subtitle,

the Comptroller General of the United States shall submit to the

Congress a report identifying the number of additional mortgagors

served using the automated process established pursuant to section

257 of the National Housing Act (as added by the amendment

made by subsection (a) of this section) and the impact of such

process and the insurance of mortgages pursuant to such process

on the safety and soundness of the insurance funds under the

National Housing Act of which such mortgages are obligations.

SEC. 2125. HOMEOWNERSHIP PRESERVATION.

The Secretary of Housing and Urban Development and the

Commissioner of the Federal Housing Administration, in consulta-

tion with industry, the Neighborhood Reinvestment Corporation,

and other entities involved in foreclosure prevention activities,

shall— (1) develop and implement a plan to improve the Federal

Housing Administration’s loss mitigation process; and

(2) report such plan to the Committee on Banking, Housing,

and Urban Affairs of the Senate and the Committee on Finan-

cial Services of the House of Representatives.

SEC. 2126. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA TECH-

NOLOGIES, PROCEDURES, PROCESSES, PROGRAM

PERFORMANCE, STAFFING, AND SALARIES.

(a) A

UTHORIZATION OF

PPROPRIATIONS

.—There is authorized

to be appropriated for each of fiscal years 2009 through 2013,

$25,000,000, from negative credit subsidy for the mortgage insur-

ance programs under title II of the National Housing Act, to the

Secretary of Housing and Urban Development for increasing

funding for the purpose of improving technology, processes, program

performance, eliminating fraud, and for providing appropriate

staffing in connection with the mortgage insurance programs under

title II of the National Housing Act.

(b) C

ERTIFICATION

.—The authorization under subsection (a)

shall not be effective for a fiscal year unless the Secretary of

Housing and Urban Development has, by rulemaking in accordance

with section 553 of title 5, United States Code (notwithstanding

subsections (a)(2), (b)(B), and (d)(3) of such section), made a deter-

mination that—

(1) premiums being, or to be, charged during such fiscal

year for mortgage insurance under title II of the National

Housing Act are established at the minimum amount sufficient

to— (A) comply with the requirements of section 205(f)

of such Act (relating to required capital ratio for the Mutual

Mortgage Insurance Fund); and

(B) ensure the safety and soundness of the other mort-

gage insurance funds under such Act; and

(2) any negative credit subsidy for such fiscal year resulting

from such mortgage insurance programs adequately ensures

the efficient delivery and availability of such programs.

TUDY AND

EPORT

.—The Secretary of Housing and Urban

Development shall conduct a study to obtain recommendations from

Regulations.

Reports.

Plans.

12 USC 1710

note.

Deadline.

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122 STAT. 2841 PUBLIC LAW 110–289—JULY 30, 2008

participants in the private residential (both single family and multi-

family) mortgage lending business and the secondary market for

such mortgages on how best to update and upgrade processes and

technologies for the mortgage insurance programs under title II

of the National Housing Act so that the procedures for originating,

insuring, and servicing of such mortgages conform with those cus-

tomarily used by secondary market purchasers of residential mort-

gage loans. Not later than the expiration of the 12-month period

beginning on the date of the enactment of this title, the Secretary

shall submit a report to the Congress describing the progress made

and to be made toward updating and upgrading such processes

and technology, and providing appropriate staffing for such mort-

gage insurance programs.

SEC. 2127. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY

IMPROVEMENTS.

Section 106(c)(4) of the Housing and Urban Development Act

of 1968 (12 U.S.C. 1701x(c)(4)) is amended:

(1) in subparagraph (C)—

(A) in clause (i), by striking ‘‘; or’’ and inserting a

semicolon;

(B) in clause (ii), by striking the period at the end

and inserting a semicolon; and

‘‘(iii) a significant reduction in the income of the

household due to divorce or death; or

‘‘(iv) a significant increase in basic expenses of

the homeowner or an immediate family member of

the homeowner (including the spouse, child, or parent

for whom the homeowner provides substantial care

or financial assistance) due to—

‘‘(I) an unexpected or significant increase in

medical expenses;

‘‘(II) a divorce;

‘‘(III) unexpected and significant damage to

the property, the repair of which will not be cov-

ered by private or public insurance; or

‘‘(IV) a large property-tax increase; or’’;

(2) by striking the matter that follows subparagraph (C);

and (3) by adding at the end the following:

‘‘(D) the Secretary of Housing and Urban Development

determines that the annual income of the homeowner is

no greater than the annual income established by the Sec-

retary as being of low- or moderate-income.’’.

SEC. 2128. PRE-PURCHASE HOMEOWNERSHIP COUNSELING DEM-

ONSTRATION.

(a) E

STABLISHMENT OF

ROGRAM

.—For the period beginning

on the date of enactment of this title and ending on the date

that is 3 years after such date of enactment, the Secretary of

Housing and Urban Development shall establish and conduct a

demonstration program to test the effectiveness of alternative forms

of pre-purchase homeownership counseling for eligible homebuyers.

(b) F

ORMS OF

OUNSELING

.—The Secretary of Housing and

Urban Development shall provide to eligible homebuyers pre-pur-

chase homeownership counseling under this section in the form

of—

12 USC 1701x

note.

Deadline.

Reports.

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122 STAT. 2842 PUBLIC LAW 110–289—JULY 30, 2008

(1) telephone counseling;

(2) individualized in-person counseling;

(3) web-based counseling;

(4) counseling classes; or

(5) any other form or type of counseling that the Secretary

may, in his discretion, determine appropriate.

IZE OF

ROGRAM

.—The Secretary shall make available

the pre-purchase homeownership counseling described in subsection

(b) to not more than 3,000 eligible homebuyers in any given year.

(d) I

NCENTIVE

ARTICIPATE

.—The Secretary of Housing and

Urban Development may provide incentives to eligible homebuyers

to participate in the demonstration program established under sub-

section (a). Such incentives may include the reduction of any insur-

ance premium charges owed by the eligible homebuyer to the Sec-

retary.

(e) E

LIGIBLE

OMEBUYER

EFINED

.—For purposes of this sec-

tion an ‘‘eligible homebuyer’’ means a first-time homebuyer who

has been approved for a home loan with a loan-to-value ratio

between 97 percent and 98.5 percent.

(f) R

EPORT TO

ONGRESS

.—The Secretary of Housing and Urban

Development shall report to the Committee on Banking, Housing,

and Urban Affairs of the Senate and the Committee on Financial

Services of the House of Representative—

(1) on an annual basis, on the progress and results of

the demonstration program established under subsection (a);

and (2) for the period beginning on the date of enactment of

this title and ending on the date that is 5 years after such

date of enactment, on the payment history and delinquency

rates of eligible homebuyers who participated in the demonstra-

tion program.

SEC. 2129. FRAUD PREVENTION.

Section 1014 of title 18, United States Code, is amended in

the first sentence—

(1) by inserting ‘‘the Federal Housing Administration,’’

before ‘‘the Farm Credit Administration’’; and

(2) by striking ‘‘commitment, or loan’’ and inserting

‘‘commitment, loan, or insurance agreement or application for

insurance or a guarantee’’.

SEC. 2130. LIMITATION ON MORTGAGE INSURANCE PREMIUM

INCREASES.

(a) I

ENERAL

.—Notwithstanding any other provision of law,

including any provision of this title and any amendment made

by this title—

(1) for the period beginning on the date of the enactment

of this title and ending on October 1, 2009, the premiums

charged for mortgage insurance under multifamily housing pro-

grams under the National Housing Act may not be increased

above the premium amounts in effect under such program

on October 1, 2006, unless the Secretary of Housing and Urban

Development determines that, absent such increase, insurance

of additional mortgages under such program would, under the

Federal Credit Reform Act of 1990, require the appropriation

of new budget authority to cover the costs (as such term is

defined in section 502 of the Federal Credit Reform Act of

1990 (2 U.S.C. 661a) of such insurance; and

12 USC 1709

note.

Deadline.

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122 STAT. 2843 PUBLIC LAW 110–289—JULY 30, 2008

(2) a premium increase pursuant to paragraph (1) may

be made only if not less than 30 days prior to such increase

taking effect, the Secretary of Housing and Urban Develop-

ment—

(A) notifies the Committee on Banking, Housing, and

Urban Affairs of the Senate and the Committee on Finan-

cial Services of the House of Representatives of such

increase; and

(B) publishes notice of such increase in the Federal

(b) W

AIVER

.—The Secretary of Housing and Urban Development

may waive the 30-day notice requirement under subsection (a)(2),

if the Secretary determines that waiting 30-days before increasing

premiums would cause substantial damage to the solvency of multi-

family housing programs under the National Housing Act.

SEC. 2131. SAVINGS PROVISION.

Any mortgage insured under title II of the National Housing

Act before the date of enactment of this subtitle shall continue

to be governed by the laws, regulations, orders, and terms and

conditions to which it was subject on the day before the date

of the enactment of this subtitle.

SEC. 2132. IMPLEMENTATION.

The Secretary of Housing and Urban Development shall by

notice establish any additional requirements that may be necessary

to immediately carry out the provisions of this subtitle. The notice

shall take effect upon issuance.

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

MIUMS.

(a) I

ENERAL

.—During the 12-month period beginning on

October 1, 2008, the Secretary of Housing and Urban Development

shall not take any action to implement or carry out risk-based

premiums, which are designed for mortgage lenders to offer bor-

rowers an FHA-insured product that provides a range of mortgage

insurance premium pricing, based on the risk that the insurance

contract represents, as such planned implementation was set forth

in the Notice published in the Federal Register on May 13, 2008

(Vol. 73, No. 93, Pages 27703 through 27711) (effective July 14,

2008).

(b) I

NSURANCE OF

ORTGAGES

NDER THE

ATIONAL

OUSING

.—During the 12-month period beginning on October 1, 2008,

the Secretary of Housing and Urban Development shall not take

any action to implement or carry out any other risk-based premium

product related to the insurance of any mortgage on a single family

residence under title II of the National Housing Act, where the

premium price for such new product is based in whole or in part

on a borrower’s Decision Credit Score, as that term is defined

in the Notice described under subsection (a), or any successor

thereto.

Effective date.

Requirements.

Notification.

Effective date.

12 USC 1701

note.

12 USC 1701

note.

Federal Register,

publication.

Notification.

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122 STAT. 2844 PUBLIC LAW 110–289—JULY 30, 2008

Subtitle B—Manufactured Housing Loan

Modernization

SEC. 2141. SHORT TITLE.

This subtitle may be cited as the ‘‘FHA Manufactured Housing

Loan Modernization Act of 2008’’.

SEC. 2142. PURPOSES.

The purposes of this subtitle are—

(1) to provide adequate funding for FHA-insured manufac-

tured housing loans for low- and moderate-income homebuyers

during all economic cycles in the manufactured housing

industry;

(2) to modernize the FHA title I insurance program for

manufactured housing loans to enhance participation by Ginnie

Mae and the private lending markets; and

(3) to adjust the low loan limits for title I manufactured

home loan insurance to reflect the increase in costs since such

limits were last increased in 1992 and to index the limits

to inflation.

SEC. 2143. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION

PORTFOLIO.

The second sentence of section 2(a) of the National Housing

Act (12 U.S.C. 1703(a)) is amended—

(1) by striking ‘‘In no case’’ and inserting ‘‘Other than

in connection with a manufactured home or a lot on which

to place such a home (or both), in no case’’; and

(2) by striking ‘‘: Provided, That with’’ and inserting ‘‘.

With’’.

SEC. 2144. INSURANCE BENEFITS.

(a) I

ENERAL

.—Subsection (b) of section 2 of the National

Housing Act (12 U.S.C. 1703(b)), is amended by adding at the

end the following new paragraph:

‘‘(8) I

NSURANCE BENEFITS FOR MANUFACTURED HOUSING

LOANS

.—Any contract of insurance with respect to loans,

advances of credit, or purchases in connection with a manufac-

tured home or a lot on which to place a manufactured home

(or both) for a financial institution that is executed under

this title after the date of the enactment of the FHA Manufac-

tured Housing Loan Modernization Act of 2008 by the Secretary

shall be conclusive evidence of the eligibility of such financial

institution for insurance, and the validity of any contract of

insurance so executed shall be incontestable in the hands of

the bearer from the date of the execution of such contract,

except for fraud or misrepresentation on the part of such

institution.’’.

(b) A

PPLICABILITY

.—The amendment made by subsection (a)

shall only apply to loans that are registered or endorsed for insur-

ance after the date of the enactment of this title.

SEC. 2145. MAXIMUM LOAN LIMITS.

(a) D

OLLAR

MOUNTS

.—Paragraph (1) of section 2(b) of the

National Housing Act (12 U.S.C. 1703(b)(1)) is amended—

(1) in clause (ii) of subparagraph (A), by striking ‘‘$17,500’’

and inserting ‘‘$25,090’’;

12 USC 1703

note.

Contracts.

12 USC 1703

note.

12 USC 1701

note.

FHA

Manufactured

Housing Loan

Modernization

Act

of 2008.

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122 STAT. 2845 PUBLIC LAW 110–289—JULY 30, 2008

(2) in subparagraph (C) by striking ‘‘$48,600’’ and inserting

‘‘$69,678’’;

(3) in subparagraph (D) by striking ‘‘$64,800’’ and inserting

‘‘$92,904’’;

(4) in subparagraph (E) by striking ‘‘$16,200’’ and inserting

‘‘$23,226’’; and

(5) by realigning subparagraphs (C), (D), and (E) 2 ems

to the left so that the left margins of such subparagraphs

are aligned with the margins of subparagraphs (A) and (B).

(b) A

NNUAL

NDEXING

.—Subsection (b) of section 2 of the

National Housing Act (12 U.S.C. 1703(b)), as amended by the pre-

ceding provisions of this title, is further amended by adding at

the end the following new paragraph:

‘‘(9) A

NNUAL INDEXING OF MANUFACTURED HOUSING

LOANS

.—The Secretary shall develop a method of indexing in

order to annually adjust the loan limits established in subpara-

graphs (A)(ii), (C), (D), and (E) of this subsection. Such index

shall be based on the manufactured housing price data collected

by the United States Census Bureau. The Secretary shall estab-

lish such index no later than 1 year after the date of the

enactment of the FHA Manufactured Housing Loan Moderniza-

tion Act of 2008.’’

ECHNICAL AND

ONFORMING

HANGES

.—Paragraph (1) of

section 2(b) of the National Housing Act (12 U.S.C. 1703(b)(1))

is amended—

(1) by striking ‘‘No’’ and inserting ‘‘Except as provided

in the last sentence of this paragraph, no’’; and

(2) by adding after and below subparagraph (G) the fol-

lowing:

‘‘The Secretary shall, by regulation, annually increase the dollar

amount limitations in subparagraphs (A)(ii), (C), (D), and (E) (as

such limitations may have been previously adjusted under this

sentence) in accordance with the index established pursuant to

paragraph (9).’’.

SEC. 2146. INSURANCE PREMIUMS.

Subsection (f) of section 2 of the National Housing Act (12

U.S.C. 1703(f)) is amended—

(1) by inserting ‘‘(1) P

REMIUM CHARGES

.—’’ after ‘‘(f)’’; and

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

‘‘(2) M

ANUFACTURED

OME

OANS

.—Notwithstanding para-

graph (1), in the case of a loan, advance of credit, or purchase

in connection with a manufactured home or a lot on which to

place such a home (or both), the premium charge for the insurance

granted under this section shall be paid by the borrower under

the loan or advance of credit, as follows:

‘‘(A) At the time of the making of the loan, advance of

credit, or purchase, a single premium payment in an amount

not to exceed 2.25 percent of the amount of the original insured

principal obligation.

‘‘(B) In addition to the premium under subparagraph (A),

annual premium payments during the term of the loan,

advance, or obligation purchased in an amount not exceeding

1.0 percent of the remaining insured principal balance

(excluding the portion of the remaining balance attributable

to the premium collected under subparagraph (A) and without

taking into account delinquent payments or prepayments).

Regulations.

Deadline.

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122 STAT. 2846 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) Premium charges under this paragraph shall be estab-

lished in amounts that are sufficient, but do not exceed the

minimum amounts necessary, to maintain a negative credit

subsidy for the program under this section for insurance of

loans, advances of credit, or purchases in connection with a

manufactured home or a lot on which to place such a home

(or both), as determined based upon risk to the Federal Govern-

ment under existing underwriting requirements.

‘‘(D) The Secretary may increase the limitations on pre-

mium payments to percentages above those set forth in sub-

paragraphs (A) and (B), but only if necessary, and not in

excess of the minimum increase necessary, to maintain a nega-

tive credit subsidy as described in subparagraph (C).’’.

SEC. 2147. TECHNICAL CORRECTIONS.

(a) D

ATES

.—Subsection (a) of section 2 of the National Housing

Act (12 U.S.C. 1703(a)) is amended—

(1) by striking ‘‘on and after July 1, 1939,’’ each place

such term appears; and

(2) by striking ‘‘made after the effective date of the Housing

Act of 1954’’.

(b) A

UTHORITY OF

ECRETARY

.—Subsection (c) of section 2 of

the National Housing Act (12 U.S.C. 1703(c)) is amended to read

as follows:

‘‘(c) H

ANDLING AND

ISPOSAL OF

ROPERTY

.—

‘‘(1) A

UTHORITY OF SECRETARY

.—Notwithstanding any other

provision of law, the Secretary may—

‘‘(A) deal with, complete, rent, renovate, modernize,

insure, or assign or sell at public or private sale, or other-

wise dispose of, for cash or credit in the Secretary’s discre-

tion, and upon such terms and conditions and for such

consideration as the Secretary shall determine to be reason-

able, any real or personal property conveyed to or otherwise

acquired by the Secretary, in connection with the payment

of insurance heretofore or hereafter granted under this

title, including any evidence of debt, contract, claim, per-

sonal property, or security assigned to or held by him

in connection with the payment of insurance heretofore

or hereafter granted under this section; and

‘‘(B) pursue to final collection, by way of compromise

or otherwise, all claims assigned to or held by the Secretary

and all legal or equitable rights accruing to the Secretary

in connection with the payment of such insurance,

including unpaid insurance premiums owed in connection

with insurance made available by this title.

‘‘(2) A

DVERTISEMENTS FOR PROPOSALS

.—Section 3709 of the

Revised Statutes shall not be construed to apply to any contract

of hazard insurance or to any purchase or contract for services

or supplies on account of such property if the amount thereof

does not exceed $25,000.

‘‘(3) D

ELEGATION OF AUTHORITY

.—The power to convey and

to execute in the name of the Secretary, deeds of conveyance,

deeds of release, assignments and satisfactions of mortgages,

and any other written instrument relating to real or personal

property or any interest therein heretofore or hereafter acquired

by the Secretary pursuant to the provisions of this title may

be exercised by an officer appointed by the Secretary without

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122 STAT. 2847 PUBLIC LAW 110–289—JULY 30, 2008

the execution of any express delegation of power or power

of attorney. Nothing in this subsection shall be construed to

prevent the Secretary from delegating such power by order

or by power of attorney, in the Secretary’s discretion, to any

officer or agent the Secretary may appoint.’’.

SEC. 2148. REVISION OF UNDERWRITING CRITERIA.

(a) I

ENERAL

.—Subsection (b) of section 2 of the National

Housing Act (12 U.S.C. 1703(b)), as amended by the preceding

provisions of this title, is further amended by adding at the end

the following new paragraph:

‘‘(10) F

INANCIAL SOUNDNESS OF MANUFACTURED HOUSING

PROGRAM

.—The Secretary shall establish such underwriting cri-

teria for loans and advances of credit in connection with a

manufactured home or a lot on which to place a manufactured

home (or both), including such loans and advances represented

by obligations purchased by financial institutions, as may be

necessary to ensure that the program under this title for insur-

ance for financial institutions against losses from such loans,

advances of credit, and purchases is financially sound.’’.

(b) T

IMING

.—Not later than the expiration of the 6-month period

beginning on the date of the enactment of this title, the Secretary

of Housing and Urban Development shall revise the existing under-

writing criteria for the program referred to in paragraph (10) of

section 2(b) of the National Housing Act (as added by subsection

(a) of this section) in accordance with the requirements of such

paragraph.

SEC. 2149. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

Title I of the National Housing Act is amended by adding

at the end of section 9 the following new section:

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

‘‘(a) I

ENERAL

.—Except as provided in subsection (b), the

provisions of sections 3, 8, 16, 17, 18, and 19 of the Real Estate

Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall

apply to each sale of a manufactured home financed with an FHA-

insured loan or extension of credit, as well as to services rendered

in connection with such transactions.

‘‘(b) A

UTHORITY OF THE

ECRETARY

.—The Secretary is author-

ized to determine the manner and extent to which the provisions

of sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement

Procedures Act of 1974 (12 U.S.C. 2601 et seq.) may reasonably

be applied to the transactions described in subsection (a), and

to grant such exemptions as may be necessary to achieve the

purposes of this section.

‘‘(c) D

EFINITIONS

.—For purposes of this section—

‘‘(1) the term ‘federally related mortgage loan’ as used

in sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement

Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall include

an FHA-insured loan or extension of credit made to a borrower

for the purpose of purchasing a manufactured home that the

borrower intends to occupy as a personal residence; and

‘‘(2) the term ‘real estate settlement service’ as used in

sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement

Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall include

any service rendered in connection with a loan or extension

12 USC 1706f.

12 USC 1703

note.

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122 STAT. 2848 PUBLIC LAW 110–289—JULY 30, 2008

of credit insured by the Federal Housing Administration for

the purchase of a manufactured home.

‘‘(d) U

NFAIR AND

ECEPTIVE

RACTICES

.—In connection with

the purchase of a manufactured home financed with a loan or

extension of credit insured by the Federal Housing Administration

under this title, the Secretary shall prohibit acts or practices in

connection with loans or extensions of credit that the Secretary

finds to be unfair, deceptive, or otherwise not in the interests

of the borrower.’’.

SEC. 2150. LEASEHOLD REQUIREMENTS.

Subsection (b) of section 2 of the National Housing Act (12

U.S.C. 1703(b)), as amended by the preceding provisions of this

title, is further amended by adding at the end the following new

paragraph:

‘‘(11) L

EASEHOLD REQUIREMENTS

.—No insurance shall be

granted under this section to any such financial institution

with respect to any obligation representing any such loan,

advance of credit, or purchase by it, made for the purposes

of financing a manufactured home which is intended to be

situated in a manufactured home community pursuant to a

lease, unless such lease—

‘‘(A) expires not less than 3 years after the origination

date of the obligation;

‘‘(B) is renewable upon the expiration of the original

3 year term by successive 1 year terms; and

‘‘(C) requires the lessor to provide the lessee written

notice of termination of the lease not less than 180 days

prior to the expiration of the current lease term in the

event the lessee is required to move due to the closing

of the manufactured home community, and further provides

that failure to provide such notice to the mortgagor in

a timely manner will cause the lease term, at its expiration,

to automatically renew for an additional 1 year term.’’.

TITLE II—MORTGAGE FORECLOSURE

PROTECTIONS FOR SERVICEMEMBERS

SEC. 2201. TEMPORARY INCREASE IN MAXIMUM LOAN GUARANTY

AMOUNT FOR CERTAIN HOUSING LOANS GUARANTEED

BY THE SECRETARY OF VETERANS AFFAIRS.

Notwithstanding subparagraph (C) of section 3703(a)(1) of title

38, United States Code, for purposes of any loan described in

subparagraph (A)(i)(IV) of such section that is originated during

the period beginning on the date of the enactment of this Act

and ending on December 31, 2008, the term ‘‘maximum guaranty

amount’’ shall mean an amount equal to 25 percent of the higher

of—

(1) the limitation determined under section 305(a)(2) of

the Federal Home Loan Mortgage Corporation Act (12 U.S.C.

1454(a)(2)) for the calendar year in which the loan is originated

for a single-family residence; or

(2) 125 percent of the area median price for a single-

family residence, but in no case to exceed 175 percent of the

Definition.

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122 STAT. 2849 PUBLIC LAW 110–289—JULY 30, 2008

limitation determined under such section 305(a)(2) for the cal-

endar year in which the loan is originated for a single-family

residence.

SEC. 2202. COUNSELING ON MORTGAGE FORECLOSURES FOR MEM-

BERS OF THE ARMED FORCES RETURNING FROM

SERVICE ABROAD.

(a) I

ENERAL

.—The Secretary of Defense shall develop and

implement a program to advise members of the Armed Forces

(including members of the National Guard and Reserve) who are

returning from service on active duty abroad (including service

in Operation Iraqi Freedom and Operation Enduring Freedom)

on actions to be taken by such members to prevent or forestall

mortgage foreclosures.

(b) E

LEMENTS

.—The program required by subsection (a) shall

include the following:

(1) Credit counseling.

(2) Home mortgage counseling.

(3) Such other counseling and information as the Secretary

considers appropriate for purposes of the program.

IMING OF

ROVISION OF

OUNSELING

.—Counseling and

other information under the program required by subsection (a)

shall be provided to a member of the Armed Forces covered by

the program as soon as practicable after the return of the member

from service as described in subsection (a).

SEC. 2203. ENHANCEMENT OF PROTECTIONS FOR SERVICEMEMBERS

RELATING TO MORTGAGES AND MORTGAGE FORE-

CLOSURES.

(a) E

XTENSION OF

ERIOD OF

ROTECTIONS

GAINST

ORTGAGE

ORECLOSURES

.—

(1) E

XTENSION OF PROTECTION PERIOD

.—Subsection (c) of

section 303 of the Servicemembers Civil Relief Act (50 U.S.C.

App. 533) is amended by striking ‘‘90 days’’ and inserting

‘‘9 months’’.

(2) E

XTENSION OF STAY OF PROCEEDINGS PERIOD

.—Sub-

section (b) of such section is amended by striking ‘‘90 days’’

and inserting ‘‘9 months’’.

(b) T

REATMENT OF

ORTGAGES AS

BLIGATIONS

UBJECT TO

NTEREST

ATE

IMITATION

.—Section 207 of the Servicemembers

Civil Relief Act (50 U.S.C. App. 527) is amended—

(1) in subsection (a)(1), by striking ‘‘in excess of 6 percent’’

the second place it appears and all that follows and inserting

‘‘in excess of 6 percent—

‘‘(A) during the period of military service and one year

thereafter, in the case of an obligation or liability consisting

of a mortgage, trust deed, or other security in the nature

of a mortgage; or

‘‘(B) during the period of military service, in the case

of any other obligation or liability.’’; and

(2) by striking subsection (d) and inserting the following

new subsection:

‘‘(d) D

EFINITIONS

.—In this section:

‘‘(1) I

NTEREST

.—The term ‘interest’ includes service charges,

renewal charges, fees, or any other charges (except bona fide

insurance) with respect to an obligation or liability.

10 USC 992

note.

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122 STAT. 2850 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) O

BLIGATION OR LIABILITY

.—The term ‘obligation or

liability’ includes an obligation or liability consisting of a mort-

gage, trust deed, or other security in the nature of a mortgage.’’.

FFECTIVE

ATE

; S

UNSET

.—

(1) E

FFECTIVE DATE

.—The amendment made by subsection

(a) shall take effect on the date of enactment of this Act.

(2) S

UNSET

.—The amendments made by subsection (a) shall

expire on December 31, 2010. Effective January 1, 2011, the

provisions of subsections (b) and (c) of section 303 of the

Servicemembers Civil Relief Act, as in effect on the day before

the date of the enactment of this Act, are hereby revived.

TITLE III—EMERGENCY ASSISTANCE

FOR THE REDEVELOPMENT OF ABAN-

DONED AND FORECLOSED HOMES

SEC. 2301. EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF

ABANDONED AND FORECLOSED HOMES.

(a) D

IRECT

PPROPRIATIONS

.—There are appropriated out of

any money in the Treasury not otherwise appropriated for the

fiscal year 2008, $4,000,000,000, to remain available until expended,

for assistance to States and units of general local government

(as such terms are defined in section 102 of the Housing and

Community Development Act of 1974 (42 U.S.C. 5302)) for the

redevelopment of abandoned and foreclosed upon homes and resi-

dential properties.

(b) A

LLOCATION OF

PPROPRIATED

MOUNTS

.—

(1) I

N GENERAL

.—The amounts appropriated or otherwise

made available to States and units of general local government

under this section shall be allocated based on a funding formula

established by the Secretary of Housing and Urban Develop-

ment (in this title referred to as the ‘‘Secretary’’).

(2) F

ORMULA TO BE DEVISED SWIFTLY

.—The funding formula

required under paragraph (1) shall be established not later

than 60 days after the date of enactment of this section.

(3) C

RITERIA

.—The funding formula required under para-

graph (1) shall ensure that any amounts appropriated or other-

wise made available under this section are allocated to States

and units of general local government with the greatest need,

as such need is determined in the discretion of the Secretary

based on—

(A) the number and percentage of home foreclosures

in each State or unit of general local government;

(B) the number and percentage of homes financed by

a subprime mortgage related loan in each State or unit

of general local government; and

or delinquency in each State or unit of general local govern-

ment.

(4) D

ISTRIBUTION

.—Amounts appropriated or otherwise

made available under this section shall be distributed according

to the funding formula established by the Secretary under

paragraph (1) not later than 30 days after the establishment

of such formula.

SE OF

UNDS

.—

Deadline.

State and

local

governments.

42 USC 5301

note.

50 USC app. 533

note.

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122 STAT. 2851 PUBLIC LAW 110–289—JULY 30, 2008

(1) I

N GENERAL

.—Any State or unit of general local govern-

ment that receives amounts pursuant to this section shall,

not later than 18 months after the receipt of such amounts,

use such amounts to purchase and redevelop abandoned and

foreclosed homes and residential properties.

(2) P

RIORITY

.—Any State or unit of general local govern-

ment that receives amounts pursuant to this section shall in

distributing such amounts give priority emphasis and consider-

ation to those metropolitan areas, metropolitan cities, urban

areas, rural areas, low- and moderate-income areas, and other

areas with the greatest need, including those—

(A) with the greatest percentage of home foreclosures;

(B) with the highest percentage of homes financed

by a subprime mortgage related loan; and

government as likely to face a significant rise in the rate

of home foreclosures.

(3) E

LIGIBLE USES

.—Amounts made available under this

section may be used to—

(A) establish financing mechanisms for purchase and

redevelopment of foreclosed upon homes and residential

properties, including such mechanisms as soft-seconds, loan

loss reserves, and shared-equity loans for low- and mod-

erate-income homebuyers;

(B) purchase and rehabilitate homes and residential

properties that have been abandoned or foreclosed upon,

in order to sell, rent, or redevelop such homes and prop-

erties;

foreclosed upon;

(D) demolish blighted structures; and

(E) redevelop demolished or vacant properties.

(d) L

IMITATIONS

.—

(1) O

N PURCHASES

.—Any purchase of a foreclosed upon

home or residential property under this section shall be at

a discount from the current market appraised value of the

home or property, taking into account its current condition,

and such discount shall ensure that purchasers are paying

below-market value for the home or property.

(2) R

EHABILITATION

.—Any rehabilitation of a foreclosed-

upon home or residential property under this section shall

be to the extent necessary to comply with applicable laws,

codes, and other requirements relating to housing safety,

quality, and habitability, in order to sell, rent, or redevelop

such homes and properties. Rehabilitation may include

improvements to increase the energy efficiency or conservation

of such homes and properties or provide a renewable energy

source or sources for such homes and properties.

(3) S

ALE OF HOMES

.—If an abandoned or foreclosed upon

home or residential property is purchased, redeveloped, or

otherwise sold to an individual as a primary residence, then

such sale shall be in an amount equal to or less than the

cost to acquire and redevelop or rehabilitate such home or

property up to a decent, safe, and habitable condition.

(4) R

EINVESTMENT OF PROFITS

.—

(A) P

ROFITS FROM SALES

RENTALS

AND REDEVELOP

MENT

.—

Discounts.

Urban and

rural areas.

Deadline.

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122 STAT. 2852 PUBLIC LAW 110–289—JULY 30, 2008

(i) 5-

YEAR REINVESTMENT PERIOD

.—During the 5-

year period following the date of enactment of this

Act, any revenue generated from the sale, rental,

redevelopment, rehabilitation, or any other eligible use

that is in excess of the cost to acquire and redevelop

(including reasonable development fees) or rehabilitate

an abandoned or foreclosed upon home or residential

property shall be provided to and used by the State

or unit of general local government in accordance with,

and in furtherance of, the intent and provisions of

this section.

(ii) D

EPOSITS IN THE TREASURY

.—

(I) P

ROFITS

.—Upon the expiration of the 5-

year period set forth under clause (i), any revenue

generated from the sale, rental, redevelopment,

rehabilitation, or any other eligible use that is

in excess of the cost to acquire and redevelop

(including reasonable development fees) or

rehabilitate an abandoned or foreclosed upon home

or residential property shall be deposited in the

Treasury of the United States as miscellaneous

receipts, unless the Secretary approves a request

to use the funds for purposes under this Act.

(II) O

THER AMOUNTS

.—Upon the expiration of

the 5-year period set forth under clause (i), any

other revenue not described under subclause (I)

generated from the sale, rental, redevelopment,

rehabilitation, or any other eligible use of an aban-

doned or foreclosed upon home or residential prop-

erty shall be deposited in the Treasury of the

United States as miscellaneous receipts.

(B) O

THER REVENUES

.—Any revenue generated under

subparagraphs (A), (C) or (D) of subsection (c)(3) shall

be provided to and used by the State or unit of general

local government in accordance with, and in furtherance

of, the intent and provisions of this section.

(e) R

ULES OF

ONSTRUCTION

.—

(1) I

N GENERAL

.—Except as otherwise provided by this

section, amounts appropriated, revenues generated, or amounts

otherwise made available to States and units of general local

government under this section shall be treated as though such

funds were community development block grant funds under

title I of the Housing and Community Development Act of

1974 (42 U.S.C. 5301 et seq.).

(2) N

O MATCH

.—No matching funds shall be required in

order for a State or unit of general local government to receive

any amounts under this section.

(f) A

UTHORITY TO

PECIFY

LTERNATIVE

EQUIREMENTS

.—

(1) I

N GENERAL

.—In administering any amounts appro-

priated or otherwise made available under this section, the

Secretary may specify alternative requirements to any provision

under title I of the Housing and Community Development

Act of 1974 (except for those related to fair housing, non-

discrimination, labor standards, and the environment) in

accordance with the terms of this section and for the sole

purpose of expediting the use of such funds.

State and local

governments.

State and local

governments.

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122 STAT. 2853 PUBLIC LAW 110–289—JULY 30, 2008

(2) N

OTICE

.—The Secretary shall provide written notice

of its intent to exercise the authority to specify alternative

requirements under paragraph (1) to the Committee on

Banking, Housing and Urban Affairs of the Senate and the

Committee on Financial Services of the House of Representa-

tives not later than 10 business days before such exercise

of authority is to occur.

(3) L

OW AND MODERATE INCOME REQUIREMENT

.—

(A) I

N GENERAL

.—Notwithstanding the authority of the

Secretary under paragraph (1)—

(i) all of the funds appropriated or otherwise made

available under this section shall be used with respect

to individuals and families whose income does not

exceed 120 percent of area median income; and

(ii) not less than 25 percent of the funds appro-

priated or otherwise made available under this section

shall be used for the purchase and redevelopment of

abandoned or foreclosed upon homes or residential

properties that will be used to house individuals or

families whose incomes do not exceed 50 percent of

area median income.

(B) R

ECURRENT REQUIREMENT

.—The Secretary shall,

by rule or order, ensure, to the maximum extent practicable

and for the longest feasible term, that the sale, rental,

or redevelopment of abandoned and foreclosed upon homes

and residential properties under this section remain afford-

able to individuals or families described in subparagraph

(A).

(g) P

ERIODIC

UDITS

.—In consultation with the Secretary of

Housing and Urban Development, the Comptroller General of the

United States shall conduct periodic audits to ensure that funds

appropriated, made available, or otherwise distributed under this

section are being used in a manner consistent with the criteria

provided in this section.

SEC. 2302. NATIONWIDE DISTRIBUTION OF RESOURCES.

Notwithstanding any other provision of this Act or the amend-

ments made by this Act, each State shall receive not less than

0.5 percent of funds made available under section 2301 (relating

to emergency assistance for the redevelopment of abandoned and

foreclosed homes).

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

DOMAIN.

No State or unit of general local government may use any

amounts received pursuant to section 2301 to fund any project

that seeks to use the power of eminent domain, unless eminent

domain is employed only for a public use: Provided, That for pur-

poses of this section, public use shall not be construed to include

economic development that primarily benefits private entities.

SEC. 2304. LIMITATION ON DISTRIBUTION OF FUNDS.

(a) I

ENERAL

.—None of the funds made available under

this title or title IV shall be distributed to—

(1) an organization which has been indicted for a violation

under Federal law relating to an election for Federal office;

or (2) an organization which employs applicable individuals.

42 USC 5301

note.

42 USC 5301

note.

42 USC 5301

note.

Regulations.

Orders.

Deadline.

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122 STAT. 2854 PUBLIC LAW 110–289—JULY 30, 2008

(b) A

PPLICABLE

NDIVIDUALS

EFINED

.—In this section, the term

‘‘applicable individual’’ means an individual who—

(1) is—

(A) employed by the organization in a permanent or

temporary capacity;

(B) contracted or retained by the organization; or

authority of, the organization; and

(2) has been indicted for a violation under Federal law

relating to an election for Federal office.

SEC. 2305. COUNSELING INTERMEDIARIES.

Notwithstanding any other provision of this Act, the amount

appropriated under section 2301(a) of this Act shall be

$3,920,000,000 and the amount appropriated under section 2401

of this Act shall be $180,000,000: Provided, That of the amount

appropriated under section 2401 of this Act pursuant to this section,

not less than 15 percent shall be provided to counseling organiza-

tions that target counseling services regarding loss mitigation to

minority and low-income homeowners or provide such services in

neighborhoods with high concentrations of minority and low-income

homeowners: Provided further, That of amounts appropriated under

such section 2401 $30,000,000 shall be used by the Neighborhood

Reinvestment Corporation (referred to in this section as the ‘‘NRC’’)

to make grants to counseling intermediaries approved by the

Department of Housing and Urban Development or the NRC to

hire attorneys to assist homeowners who have legal issues directly

related to the homeowner’s foreclosure, delinquency or short sale.

Such attorneys shall be capable of assisting homeowners of owner-

occupied homes with mortgages in default, in danger of default,

or subject to or at risk of foreclosure and who have legal issues

that cannot be handled by counselors already employed by such

intermediaries: Provided further, That of the amounts provided

for in the prior provisos the NRC shall give priority consideration

to counseling intermediaries and legal organizations that (1) provide

legal assistance in the 100 metropolitan statistical areas (as defined

by the Director of the Office of Management and Budget) with

the highest home foreclosure rates, and (2) have the capacity to

begin using the financial assistance within 90 days after receipt

of the assistance: Provided further, That no funds provided under

this Act shall be used to provide, obtain, or arrange on behalf

of a homeowner, legal representation involving or for the purposes

of civil litigation: Provided further, That the NRC, in awarding

counseling grants under section 2401 of this Act, may consider,

where appropriate, whether the entity has implemented a written

plan for providing in-person counseling and for making contact,

including personal contact, with defaulted mortgagors, for the pur-

pose of providing counseling or providing information about avail-

able counseling.

TITLE IV—HOUSING COUNSELING

RESOURCES

SEC. 2401. HOUSING COUNSELING RESOURCES.

There are appropriated out of any money in the Treasury

not otherwise appropriated for the fiscal year 2008, for an additional

Appropriations

authorization.

Legal assistance.

Deadline.

Grants.

Disadvantaged

persons.

42 USC 5301

note.

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122 STAT. 2855 PUBLIC LAW 110–289—JULY 30, 2008

amount for the ‘‘Neighborhood Reinvestment Corporation—Payment

to the Neighborhood Reinvestment Corporation’’ $100,000,000, to

remain available until December 31, 2008, for foreclosure mitigation

activities under the terms and conditions contained in the second

undesignated paragraph (beginning with the phrase ‘‘For an addi-

tional amount’’) under the heading ‘‘Neighborhood Reinvestment

Corporation—Payment to the Neighborhood Reinvestment Corpora-

tion’’ of Public Law 110–161.

SEC. 2402. CREDIT COUNSELING.

(a) I

ENERAL

.—Entities approved by the Neighborhood

Reinvestment Corporation or the Secretary and State housing

finance entities receiving funds under this title shall work to iden-

tify and coordinate with non-profit organizations operating national

or statewide toll-free foreclosure prevention hotlines, including those

that— (1) serve as a consumer referral source and data repository

for borrowers experiencing some form of delinquency or fore-

closure;

(2) connect callers with local housing counseling agencies

approved by the Neighborhood Reinvestment Corporation or

the Secretary to assist with working out a positive resolution

to their mortgage delinquency or foreclosure; or

(3) facilitate or offer free assistance to help homeowners

to understand their options, negotiate solutions, and find the

best resolution for their particular circumstances.

TITLE V—MORTGAGE DISCLOSURE

IMPROVEMENT ACT

SEC. 2501. SHORT TITLE.

This title may be cited as the ‘‘Mortgage Disclosure Improve-

ment Act of 2008’’.

SEC. 2502. ENHANCED MORTGAGE LOAN DISCLOSURES.

(a) T

RUTH IN

ENDING

ISCLOSURES

.—Section 128(b)(2)

of the Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended—

(1) by inserting ‘‘(A)’’ before ‘‘In the’’;

(2) by striking ‘‘a residential mortgage transaction, as

defined in section 103(w)’’ and inserting ‘‘any extension of credit

that is secured by the dwelling of a consumer’’;

(3) by striking ‘‘before the credit is extended, or’’ and

inserting ‘‘and’’;

(4) by inserting ‘‘, which shall be at least 7 business days

before consummation of the transaction’’ after ‘‘written applica-

tion’’;

(5) by striking ‘‘, whichever is earlier’’; and

(6) by striking ‘‘If the’’ and all that follows through the

end of the paragraph and inserting the following:

‘‘(B) In the case of an extension of credit that is secured

by the dwelling of a consumer, the disclosures provided under

subparagraph (A), shall be in addition to the other disclosures

required by subsection (a), and shall—

‘‘(i) state in conspicuous type size and format, the

following: ‘You are not required to complete this agreement

Creditors.

15 USC 1601

note.

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122 STAT. 2856 PUBLIC LAW 110–289—JULY 30, 2008

merely because you have received these disclosures or

signed a loan application.’; and

‘‘(ii) be provided in the form of final disclosures at

the time of consummation of the transaction, in the form

and manner prescribed by this section.

‘‘(C) In the case of an extension of credit that is secured

by the dwelling of a consumer, under which the annual rate

of interest is variable, or with respect to which the regular

payments may otherwise be variable, in addition to the other

disclosures required by subsection (a), the disclosures provided

under this subsection shall do the following:

‘‘(i) Label the payment schedule as follows: ‘Payment

Schedule: Payments Will Vary Based on Interest Rate

Changes’.

‘‘(ii) State in conspicuous type size and format examples

of adjustments to the regular required payment on the

extension of credit based on the change in the interest

rates specified by the contract for such extension of credit.

Among the examples required to be provided under this

clause is an example that reflects the maximum payment

amount of the regular required payments on the extension

of credit, based on the maximum interest rate allowed

under the contract, in accordance with the rules of the

Board. Prior to issuing any rules pursuant to this clause,

the Board shall conduct consumer testing to determine

the appropriate format for providing the disclosures

required under this subparagraph to consumers so that

such disclosures can be easily understood, including the

fact that the initial regular payments are for a specific

time period that will end on a certain date, that payments

will adjust afterwards potentially to a higher amount, and

that there is no guarantee that the borrower will be able

to refinance to a lower amount.

‘‘(D) In any case in which the disclosure statement under

subparagraph (A) contains an annual percentage rate of interest

that is no longer accurate, as determined under section 107(c),

the creditor shall furnish an additional, corrected statement

to the borrower, not later than 3 business days before the

date of consummation of the transaction.

‘‘(E) The consumer shall receive the disclosures required

under this paragraph before paying any fee to the creditor

or other person in connection with the consumer’s application

for an extension of credit that is secured by the dwelling of

a consumer. If the disclosures are mailed to the consumer,

the consumer is considered to have received them 3 business

days after they are mailed. A creditor or other person may

impose a fee for obtaining the consumer’s credit report before

the consumer has received the disclosures under this para-

graph, provided the fee is bona fide and reasonable in amount.

‘‘(F) W

AIVER OF TIMELINESS OF DISCLOSURES

.—To expedite

consummation of a transaction, if the consumer determines

that the extension of credit is needed to meet a bona fide

personal financial emergency, the consumer may waive or

modify the timing requirements for disclosures under subpara-

graph (A), provided that—

‘‘(i) the term ‘bona fide personal emergency’ may be

further defined in regulations issued by the Board;

Definition.

Regulations.

Deadline.

Consumer

testing.

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122 STAT. 2857 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) the consumer provides to the creditor a dated,

written statement describing the emergency and specifi-

cally waiving or modifying those timing requirements,

which statement shall bear the signature of all consumers

entitled to receive the disclosures required by this para-

graph; and

‘‘(iii) the creditor provides to the consumers at or before

the time of such waiver or modification, the final disclo-

sures required by paragraph (1).

‘‘(G) The requirements of subparagraphs (B), (C), (D) and

(E) shall not apply to extensions of credit relating to plans

described in section 101(53D) of title 11, United States Code.’’.

(b) C

IVIL

IABILITY

.—Section 130(a) of the Truth in Lending

Act (15 U.S.C. 1640(a)) is amended—

(1) in paragraph (2)(A)(iii), by striking ‘‘not less than $200

or greater than $2,000’’ and inserting ‘‘not less than $400

or greater than $4,000’’; and

(2) in the penultimate sentence of the undesignated matter

following paragraph (4)—

(A) by inserting ‘‘or section 128(b)(2)(C)(ii),’’ after

‘‘128(a),’’; and

(B) by inserting ‘‘or section 128(b)(2)(C)(ii)’’ before the

period.

FFECTIVE

ATES

.—

(1) G

ENERAL DISCLOSURES

.—Except as provided in para-

graph (2), the amendments made by subsection (a) shall become

effective 12 months after the date of enactment of this Act.

(2) V

ARIABLE INTEREST RATES

.—Subparagraph (C) of section

128(b)(2) of the Truth in Lending Act (15 U.S.C. 1638(b)(2)(C)),

as added by subsection (a) of this section, shall become effective

on the earlier of—

(A) the compliance date established by the Board for

such purpose, by regulation; or

(B) 30 months after the date of enactment of this

Act.

SEC. 2503. COMMUNITY DEVELOPMENT INVESTMENT AUTHORITY FOR

DEPOSITORY INSTITUTIONS.

(a) N

ATIONAL

ANKS

.—The first sentence of the paragraph des-

ignated as the ‘‘Eleventh’’ of section 5136 of the Revised Statutes

of the United States (12 U.S.C. 24) is amended by striking ‘‘promotes

the public welfare by benefitting primarily’’ and inserting ‘‘is

designed primarily to promote the public welfare, including the

welfare of’’.

(b) S

TATE

EMBER

ANKS

.—The first sentence of the 23rd

paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 338a)

is amended by striking ‘‘promotes the public welfare by benefitting

primarily’’ and inserting ‘‘is designed primarily to promote the

public welfare, including the welfare of’’.

15 USC 1638

note.

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122 STAT. 2858 PUBLIC LAW 110–289—JULY 30, 2008

TITLE VI—VETERANS HOUSING

MATTERS

SEC. 2601. HOME IMPROVEMENTS AND STRUCTURAL ALTERATIONS

FOR TOTALLY DISABLED MEMBERS OF THE ARMED

FORCES BEFORE DISCHARGE OR RELEASE FROM THE

ARMED FORCES.

Section 1717 of title 38, United States Code, is amended by

adding at the end the following new subsection:

‘‘(d)(1) In the case of a member of the Armed Forces who,

as determined by the Secretary, has a disability permanent in

nature incurred or aggravated in the line of duty in the active

military, naval, or air service, the Secretary may furnish improve-

ments and structural alterations for such member for such disability

or as otherwise described in subsection (a)(2) while such member

is hospitalized or receiving outpatient medical care, services, or

treatment for such disability if the Secretary determines that such

member is likely to be discharged or released from the Armed

Forces for such disability.

‘‘(2) The furnishing of improvements and alterations under

paragraph (1) in connection with the furnishing of medical services

described in subparagraph (A) or (B) of subsection (a)(2) shall

be subject to the limitation specified in the applicable subpara-

graph.’’.

SEC. 2602. ELIGIBILITY FOR SPECIALLY ADAPTED HOUSING BENEFITS

AND ASSISTANCE FOR MEMBERS OF THE ARMED FORCES

WITH SERVICE-CONNECTED DISABILITIES AND INDIVID-

UALS RESIDING OUTSIDE THE UNITED STATES.

(a) E

LIGIBILITY

.—Chapter 21 of title 38, United States Code,

is amended by inserting after section 2101 the following new section:

‘‘§ 2101A. Eligibility for benefits and assistance: members of

the Armed Forces with service-connected disabil-

ities; individuals residing outside the United

States

‘‘(a) M

EMBERS

ITH

ERVICE

-C

ONNECTED

ISABILITIES

.—(1)

The Secretary may provide assistance under this chapter to a

member of the Armed Forces serving on active duty who is suffering

from a disability that meets applicable criteria for benefits under

this chapter if the disability is incurred or aggravated in line

of duty in the active military, naval, or air service. Such assistance

shall be provided to the same extent as assistance is provided

under this chapter to veterans eligible for assistance under this

chapter and subject to the same requirements as veterans under

this chapter.

‘‘(2) For purposes of this chapter, any reference to a veteran

or eligible individual shall be treated as a reference to a member

of the Armed Forces described in subsection (a) who is similarly

situated to the veteran or other eligible individual so referred

to. ‘‘(b) B

ENEFITS AND

SSISTANCE FOR

NDIVIDUALS

ESIDING

SIDE THE

NITED

TATES

.—(1) Subject to paragraph (2), the Sec-

retary may, at the Secretary’s discretion, provide benefits and

assistance under this chapter (other than benefits under section

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122 STAT. 2859 PUBLIC LAW 110–289—JULY 30, 2008

2106 of this title) to any individual otherwise eligible for such

benefits and assistance who resides outside the United States.

‘‘(2) The Secretary may provide benefits and assistance to an

individual under paragraph (1) only if—

‘‘(A) the country or political subdivision in which the

housing or residence involved is or will be located permits

the individual to have or acquire a beneficial property interest

(as determined by the Secretary) in such housing or residence;

and

‘‘(B) the individual has or will acquire a beneficial property

interest (as so determined) in such housing or residence.

‘‘(c) R

EGULATIONS

.—Benefits and assistance under this chapter

by reason of this section shall be provided in accordance with

such regulations as the Secretary may prescribe.’’.

(b) C

ONFORMING

MENDMENTS

.—

(1) R

EPEAL OF SUPERSEDED AUTHORITY

.—Section 2101 of

title 38, United States Code, is amended—

(A) by striking subsection (c); and

(B) by redesignating subsection (d) as subsection (c).

(2) L

IMITATIONS ON ASSISTANCE

.—Section 2102 of title 38,

United States Code, is amended—

(A) in subsection (a)—

(i) by striking ‘‘veteran’’ each place it appears and

inserting ‘‘individual’’; and

(ii) in paragraph (3), by striking ‘‘veteran’s’’ and

inserting ‘‘individual’s’’;

(B) in subsection (b)(1), by striking ‘‘a veteran’’ and

inserting ‘‘an individual’’;

(i) by striking ‘‘a veteran’’ and inserting ‘‘an indi-

vidual’’; and

(ii) by striking ‘‘the veteran’’ each place it appears

and inserting ‘‘the individual’’; and

(D) in subsection (d), by striking ‘‘a veteran’’ each place

it appears and inserting ‘‘an individual’’.

(3) A

SSISTANCE FOR INDIVIDUALS TEMPORARILY RESIDING

IN HOUSING OF FAMILY MEMBER

.—Section 2102A of title 38,

United States Code, is amended—

(A) by striking ‘‘veteran’’ each place it appears (other

than in subsection (b)) and inserting ‘‘individual’’;

(B) in subsection (a), by striking ‘‘veteran’s’’ each place

it appears and inserting ‘‘individual’s’’; and

it appears and inserting ‘‘an individual’’.

(4) F

URNISHING OF PLANS AND SPECIFICATIONS

.—Section

2103 of title 38, United States Code, is amended by striking

‘‘veterans’’ both places it appears and inserting ‘‘individuals’’.

(5) C

ONSTRUCTION OF BENEFITS

.—Section 2104 of title 38,

United States Code, is amended—

(A) in subsection (a), by striking ‘‘veteran’’ each place

it appears and inserting ‘‘individual’’; and

(B) in subsection (b)—

(i) in the first sentence, by striking ‘‘A veteran’’

and inserting ‘‘An individual’’;

(ii) in the second sentence, by striking ‘‘a veteran’’

and inserting ‘‘an individual’’; and

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122 STAT. 2860 PUBLIC LAW 110–289—JULY 30, 2008

(iii) by striking ‘‘such veteran’’ each place it

appears and inserting ‘‘such individual’’.

(6) V

ETERANS

’

MORTGAGE LIFE INSURANCE

.—Section 2106

of title 38, United States Code, is amended—

(A) in subsection (a)—

(i) by striking ‘‘any eligible veteran’’ and inserting

‘‘any eligible individual’’; and

(ii) by striking ‘‘the veterans’ ’’ and inserting ‘‘the

individual’s’’;

(B) in subsection (b), by striking ‘‘an eligible veteran’’

and inserting ‘‘an eligible individual’’;

and inserting ‘‘an individual’’;

(D) in subsection (h), by striking ‘‘each veteran’’ and

inserting ‘‘each individual’’;

(E) in subsection (i), by striking ‘‘the veteran’s’’ each

place it appears and inserting ‘‘the individual’s’’;

(F) by striking ‘‘the veteran’’ each place it appears

and inserting ‘‘the individual’’; and

(G) by striking ‘‘a veteran’’ each place it appears and

inserting ‘‘an individual’’.

(7) H

EADING AMENDMENTS

.—(A) The heading of section

2101 of title 38, United States Code, is amended to read as

follows:

‘‘§ 2101. Acquisition and adaptation of housing: eligible vet-

erans’’.

(B) The heading of section 2102A of such title is amended

to read as follows:

‘‘§ 2102A. Assistance for individuals residing temporarily in

housing owned by a family member’’.

(8) C

LERICAL AMENDMENTS

.—The table of sections at the

beginning of chapter 21 of title 38, United States Code, is

amended—

(A) by striking the item relating to section 2101 and

inserting the following new item:

‘‘2101. Acquisition and adaptation of housing: eligible veterans.’’;

(B) by inserting after the item relating to section 2101,

as so amended, the following new item:

‘‘2101A. Eligibility for benefits and assistance: members of the Armed Forces with

service-connected disabilities; individuals residing outside the United

States.’’;

and (C) by striking the item relating to section 2102A and

inserting the following new item:

‘‘2102A. Assistance for individuals residing temporarily in housing owned by a fam-

ily member.’’.

SEC. 2603. SPECIALLY ADAPTED HOUSING ASSISTANCE FOR INDIVID-

UALS WITH SEVERE BURN INJURIES.

Section 2101 of title 38, United States Code, is amended—

(1) in subsection (a)(2), by adding at the end the following

new subparagraph:

‘‘(E) The disability is due to a severe burn injury (as deter-

mined pursuant to regulations prescribed by the Secretary).’’;

and (2) in subsection (b)(2)—

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122 STAT. 2861 PUBLIC LAW 110–289—JULY 30, 2008

(A) by striking ‘‘either’’ and inserting ‘‘any’’; and

(B) by adding at the end the following new subpara-

graph:

‘‘(C) The disability is due to a severe burn injury (as so

determined).’’.

SEC. 2604. EXTENSION OF ASSISTANCE FOR INDIVIDUALS RESIDING

TEMPORARILY IN HOUSING OWNED BY A FAMILY

MEMBER.

Section 2102A(e) of title 38, United States Code, is amended

by striking ‘‘after the end of the five-year period that begins on

the date of the enactment of the Veterans’ Housing Opportunity

and Benefits Improvement Act of 2006’’ and inserting ‘‘after

December 31, 2011’’.

SEC. 2605. INCREASE IN SPECIALLY ADAPTED HOUSING BENEFITS FOR

DISABLED VETERANS.

(a) I

ENERAL

.—Section 2102 of title 38, United States Code,

is amended—

(1) in subsection (b)(2), by striking ‘‘$10,000’’ and inserting

‘‘$12,000’’;

(2) in subsection (d)—

(A) in paragraph (1), by striking ‘‘$50,000’’ and

inserting ‘‘$60,000’’; and

(B) in paragraph (2), by striking ‘‘$10,000’’ and

inserting ‘‘$12,000’’; and

(3) by adding at the end the following new subsection:

‘‘(e)(1) Effective on October 1 of each year (beginning in 2009),

the Secretary shall increase the amounts described in subsection

(b)(2) and paragraphs (1) and (2) of subsection (d) in accordance

with this subsection.

‘‘(2) The increase in amounts under paragraph (1) to take

effect on October 1 of a year shall be by an amount of such

amounts equal to the percentage by which—

‘‘(A) the residential home cost-of-construction index for the

preceding calendar year, exceeds

‘‘(B) the residential home cost-of-construction index for the

year preceding the year described in subparagraph (A).

‘‘(3) The Secretary shall establish a residential home cost-of-

construction index for the purposes of this subsection. The index

shall reflect a uniform, national average change in the cost of

residential home construction, determined on a calendar year basis.

The Secretary may use an index developed in the private sector

that the Secretary determines is appropriate for purposes of this

subsection.’’.

(b) E

FFECTIVE

ATE

.—The amendments made by this section

shall take effect on July 1, 2008, and shall apply with respect

to payments made in accordance with section 2102 of title 38,

United States Code, on or after that date.

SEC. 2606. REPORT ON SPECIALLY ADAPTED HOUSING FOR DISABLED

INDIVIDUALS.

(a) I

ENERAL

.—Not later than December 31, 2008, the Sec-

retary of Veterans Affairs shall submit to the Committee on Vet-

erans’ Affairs of the Senate and the Committee on Veterans’ Affairs

of the House of Representatives a report that contains an assess-

ment of the adequacy of the authorities available to the Secretary

under law to assist eligible disabled individuals in acquiring—

Deadline.

38 USC 2102

note.

Effective date.

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122 STAT. 2862 PUBLIC LAW 110–289—JULY 30, 2008

(1) suitable housing units with special fixtures or movable

facilities required for their disabilities, and necessary land

therefor;

(2) such adaptations to their residences as are reasonably

necessary because of their disabilities; and

(3) residences already adapted with special features deter-

mined by the Secretary to be reasonably necessary as a result

of their disabilities.

(b) F

OCUS ON

ARTICULAR

ISABILITIES

.—The report required

by subsection (a) shall set forth a specific assessment of the needs

of— (1) veterans who have disabilities that are not described

in subsections (a)(2) and (b)(2) of section 2101 of title 38,

United States Code; and

(2) other disabled individuals eligible for specially adapted

housing under chapter 21 of such title by reason of section

2101A of such title (as added by section 2602(a) of this Act)

who have disabilities that are not described in such subsections.

SEC. 2607. REPORT ON SPECIALLY ADAPTED HOUSING ASSISTANCE

FOR INDIVIDUALS WHO RESIDE IN HOUSING OWNED BY

A FAMILY MEMBER ON PERMANENT BASIS.

Not later than December 31, 2008, the Secretary of Veterans

Affairs shall submit to the Committee on Veterans’ Affairs of the

Senate and the Committee on Veterans’ Affairs of the House of

Representatives a report on the advisability of providing assistance

under section 2102A of title 38, United States Code, to veterans

described in subsection (a) of such section, and to members of

the Armed Forces covered by such section 2102A by reason of

section 2101A of title 38, United States Code (as added by section

2602(a) of this Act), who reside with family members on a perma-

nent basis.

SEC. 2608. DEFINITION OF ANNUAL INCOME FOR PURPOSES OF SEC-

TION 8 AND OTHER PUBLIC HOUSING PROGRAMS.

Section 3(b)(4) of the United States Housing Act of 1937 (42

U.S.C. 1437a(3)(b)(4)) is amended by inserting ‘‘or any deferred

Department of Veterans Affairs disability benefits that are received

in a lump sum amount or in prospective monthly amounts’’ before

‘‘may not be considered’’.

SEC. 2609. PAYMENT OF TRANSPORTATION OF BAGGAGE AND HOUSE-

HOLD EFFECTS FOR MEMBERS OF THE ARMED FORCES

WHO RELOCATE DUE TO FORECLOSURE OF LEASED

HOUSING.

Section 406 of title 37, United States Code, is amended—

(1) by redesignating subsections (k) and (l) as subsections

(l) and (m), respectively; and

(2) by inserting after subsection (j) the following new sub-

section (k):

‘‘(k) A member of the armed forces who relocates from leased

or rental housing by reason of the foreclosure of such housing

is entitled to transportation of baggage and household effects under

subsection (b)(1) in the same manner, and subject to the same

conditions and limitations, as similarly circumstanced members

entitled to transportation of baggage and household effects under

that subsection.’’.

Deadline.

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122 STAT. 2863 PUBLIC LAW 110–289—JULY 30, 2008

TITLE VII—SMALL PUBLIC HOUSING

AUTHORITIES PAPERWORK REDUC-

TION ACT

SEC. 2701. SHORT TITLE.

This title may be cited as the ‘‘Small Public Housing Authorities

Paperwork Reduction Act’’.

SEC. 2702. PUBLIC HOUSING AGENCY PLANS FOR CERTAIN QUALIFIED

PUBLIC HOUSING AGENCIES.

(a) I

ENERAL

.—Section 5A(b) of the United States Housing

Act of 1937 (42 U.S.C. 1437c–1(b)) is amended by adding at the

end the following:

‘‘(3) E

XEMPTION OF CERTAIN PHAS FROM FILING REQUIRE

MENT

.—

‘‘(A) I

N GENERAL

.—Notwithstanding paragraph (1) or

any other provision of this Act—

‘‘(i) the requirement under paragraph (1) shall not

apply to any qualified public housing agency; and

‘‘(ii) except as provided in subsection (e)(4)(B), any

reference in this section or any other provision of law

to a ‘public housing agency’ shall not be considered

to refer to any qualified public housing agency, to

the extent such reference applies to the requirement

to submit an annual public housing agency plan under

this subsection.

‘‘(B) C

IVIL RIGHTS CERTIFICATION

.—Notwithstanding

that qualified public housing agencies are exempt under

subparagraph (A) from the requirement under this section

to prepare and submit an annual public housing plan,

each qualified public housing agency shall, on an annual

basis, make the certification described in paragraph (16)

of subsection (d), except that for purposes of such qualified

public housing agencies, such paragraph shall be applied

by substituting ‘the public housing program of the agency’

for ‘the public housing agency plan’.

‘‘(C) D

EFINITION

.—For purposes of this section, the

term ‘qualified public housing agency’ means a public

housing agency that meets the following requirements:

‘‘(i) The sum of (I) the number of public housing

dwelling units administered by the agency, and (II)

the number of vouchers under section 8(o) of the United

States Housing Act of 1937 (42 U.S.C. 1437f(o))

administered by the agency, is 550 or fewer.

‘‘(ii) The agency is not designated under section

6(j)(2) as a troubled public housing agency, and does

not have a failing score under the section 8 Manage-

ment Assessment Program during the prior 12

months.’’.

(b) R

ESIDENT

ARTICIPATION

.—Section 5A of the United States

Housing Act of 1937 (42 U.S.C. 1437c–1) is amended—

(1) in subsection (e), by inserting after paragraph (3) the

following:

‘‘(4) Q

UALIFIED PUBLIC HOUSING AGENCIES

.—

Applicability.

42 USC 1437

note.

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122 STAT. 2864 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) I

N GENERAL

.—Except as provided in subparagraph

(B), nothing in this section may be construed to exempt

a qualified public housing agency from the requirement

under paragraph (1) to establish 1 or more resident

advisory boards. Notwithstanding that qualified public

housing agencies are exempt under subsection (b)(3)(A)

from the requirement under this section to prepare and

submit an annual public housing plan, each qualified public

housing agency shall consult with, and consider the rec-

ommendations of the resident advisory boards for the

agency, at the annual public hearing required under sub-

section (f)(5), regarding any changes to the goals, objectives,

and policies of that agency.

‘‘(B) A

PPLICABILITY OF WAIVER AUTHORITY

.—Paragraph

(3) shall apply to qualified public housing agencies, except

that for purposes of such qualified public housing agencies,

subparagraph (B) of such paragraph shall be applied by

substituting ‘the functions described in the second sentence

of paragraph (4)(A)’ for ‘the functions described in para-

graph (2)’.

‘‘(f) P

UBLIC

EARINGS

.—’’; and

(2) in subsection (f) (as so designated by the amendment

made by paragraph (1)), by adding at the end the following:

‘‘(5) Q

UALIFIED PUBLIC HOUSING AGENCIES

.—

‘‘(A) R

EQUIREMENT

.—Notwithstanding that qualified

public housing agencies are exempt under subsection

(b)(3)(A) from the requirement under this section to conduct

a public hearing regarding the annual public housing plan

of the agency, each qualified public housing agency shall

annually conduct a public hearing—

‘‘(i) to discuss any changes to the goals, objectives,

and policies of the agency; and

‘‘(ii) to invite public comment regarding such

changes.

‘‘(B) A

VAILABILITY OF INFORMATION AND NOTICE

.—Not

later than 45 days before the date of any hearing described

in subparagraph (A), a qualified public housing agency

shall—

‘‘(i) make all information relevant to the hearing

and any determinations of the agency regarding

changes to the goals, objectives, and policies of the

agency to be considered at the hearing available for

inspection by the public at the principal office of the

public housing agency during normal business hours;

and

‘‘(ii) publish a notice informing the public that—

‘‘(I) the information is available as required

under clause (i); and

‘‘(II) a public hearing under subparagraph (A)

will be conducted.’’.

Deadline.

Public comment.

Establishment.

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122 STAT. 2865 PUBLIC LAW 110–289—JULY 30, 2008

TITLE VIII—HOUSING PRESERVATION

Subtitle A—Preservation Under Federal

Housing Programs

SEC. 2801. CLARIFICATION OF DISPOSITION OF CERTAIN PROPERTIES.

Notwithstanding any other provision of law, subtitle A of title

II of the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note)

and the amendments made by such title shall not apply to any

transaction regarding a multifamily real property for which—

(1) the Secretary of Housing and Urban Development has

received, before the date of the enactment of such Act, written

expressions of interest in purchasing the property from both

a city government and the housing commission of such city;

(2) after such receipt, the Secretary acquires title to the

property at a foreclosure sale; and

(3) such city government and housing commission have

resolved a previous disagreement with respect to the disposition

of the property.

SEC. 2802. ELIGIBILITY OF CERTAIN PROJECTS FOR ENHANCED

VOUCHER ASSISTANCE.

Notwithstanding any other provision of law—

(1) the property known as The Heritage Apartments (FHA

No. 023-44804), in Malden, Massachusetts, shall be considered

eligible low-income housing for purposes of the eligibility of

residents of the property for enhanced voucher assistance under

section 8(t) of the United States Housing Act of 1937 (42

U.S.C. 1437f(t)), pursuant to paragraph (2)(A) of section 223(f)

of the Low-Income Housing Preservation and Resident

Homeownership Act of 1990 (12 U.S.C. 4113(f)(2)(A));

(2) such residents shall receive enhanced rental housing

vouchers upon the prepayment of the mortgage loan for the

property under section 236 of the National Housing Act (12

U.S.C. 1715z-1); and

(3) the Secretary shall approve such prepayment and subse-

quent transfer of the property without any further condition,

except that the property shall be restricted for occupancy, until

the original maturity date of the prepaid mortgage loan, only

by families with incomes not exceeding 80 percent of the

adjusted median income for the area in which the property

is located, as published by the Secretary.

Amounts for the enhanced vouchers pursuant to this section shall

be provided under amounts appropriated for tenant-based rental

assistance otherwise authorized under section 8(t) of the United

States Housing Act of 1937.

SEC. 2803. TRANSFER OF CERTAIN RENTAL ASSISTANCE CONTRACTS.

(a) T

RANSFER

.—Subject to subsection (c) and notwithstanding

any other provision of law, the Secretary of Housing and Urban

Development shall, at the request of the owner, transfer or

authorize the transfer, of the contracts, restrictions, and debt

described in subsection (b)—

(1) on the housing that is owned or managed by Community

Properties of Ohio Management Services LLC or an affiliate

of Ohio Capital Corporation for Housing and located in Franklin

Ohio.

Public

information.

Massachusetts.

Disadvantaged

persons.

Deadlines.

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122 STAT. 2866 PUBLIC LAW 110–289—JULY 30, 2008

County, Ohio, to other properties located in Franklin County,

Ohio; and

(2) on the housing that is owned or managed by The

Model Group, Inc., and located in Hamilton County, Ohio, to

other properties located in Hamilton County, Ohio.

(b) C

ONTRACTS

, R

ESTRICTIONS

AND

EBT

OVERED

.—The con-

tracts, restrictions, and debt described in this subsection are as

follows:

(1) All or a portion of a project-based rental assistance

housing assistance payments contract under section 8 of the

United States Housing Act of 1937 (42 U.S.C. 1437f).

(2) Existing Federal use restrictions, including without

limitation use agreements, regulatory agreements, and

accommodation agreements.

(3) Any subordinate debt held by the Secretary or assigned

and any mortgages securing such debt, all related loan and

security documentation and obligations, and reserve and escrow

balances.

ETENTION OF

AME

UMBER OF

NITS AND

MOUNT OF

SSISTANCE

.—Any transfer pursuant to subsection (a) shall result

in—

(1) a total number of dwelling units (including units

retained by the owners and units transferred) covered by assist-

ance described in subsection (b)(1) after the transfer remaining

the same as such number assisted before the transfer, with

such increases or decreases in unit sizes as may be contained

in a plan approved by a local planning or development commis-

sion or department; and

(2) no reduction in the total amount of the housing assist-

ance payments under contracts described in subsection (b)(1).

SEC. 2804. PUBLIC HOUSING DISASTER RELIEF.

Section 9 of the United States Housing Act of 1937 (42 U.S.C.

1437g) is amended—

(1) by striking subsection (k); and

(2) by redesignating subsections (l), (m), and (n) as sub-

sections (k), (l), and (m), respectively.

SEC. 2805. PRESERVATION OF CERTAIN AFFORDABLE HOUSING.

Notwithstanding any other provision of law—

(1) for the property known as Nihonmachi Terrace (FHA

No. 121-44284), in San Francisco, California, upon the refi-

nancing of the existing federally insured mortgage pursuant

to section 236(b) of the National Housing Act (12 U.S.C. 1715z–

1(b)), unassisted low and moderate-income residents of the

property shall be deemed eligible for and shall receive voucher

assistance under section 8(o) of the United States Housing

Act of 1937 (42 U.S.C. 1437f(o)); and

(2) to preserve the affordability of the property, the housing

authority shall utilize such additional voucher assistance pursu-

ant to subsection 8(o)(13) of the United States Housing Act

of 1937, without regard to the limitations of subparagraphs

(B) and (D) of that subsection.

Amounts for the vouchers pursuant to this section shall be provided

under amounts appropriated for tenant-based rental assistance

otherwise authorized.

California.

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122 STAT. 2867 PUBLIC LAW 110–289—JULY 30, 2008

Subtitle B—Coordination of Federal Hous-

ing Programs and Tax Incentives for

Housing

SEC. 2831. SHORT TITLE.

This subtitle may be cited as the ‘‘Housing Tax Credit Coordina-

tion Act of 2008’’.

SEC. 2832. APPROVALS BY DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT.

(a) A

DMINISTRATIVE AND

ROCEDURAL

HANGES

.—

(1) I

N GENERAL

.—The Secretary of Housing and Urban

Development (in this section referred to as the ‘‘Secretary’’)

shall, not later than the expiration of the 6-month period begin-

ning upon after the date of the enactment of this Act, implement

administrative and procedural changes to expedite approval

of multifamily housing projects under the jurisdiction of the

Department of Housing and Urban Development that meet

the requirements of the Secretary for such approvals.

(2) P

ROJECTS

.—The multifamily housing projects referred

to in paragraph (1) shall include—

(A) projects for which assistance is provided by such

Department in conjunction with any low-income housing

tax credits under section 42 of the Internal Revenue Code

of 1986 or tax-exempt housing bonds; and

(B) existing public housing projects and assisted

housing projects, for which approval of the Secretary is

necessary for transactions, in conjunction with any such

low-income housing tax credits or tax-exempt housing

bonds, involving the preservation or rehabilitation of the

project.

(3) C

HANGES

.—The administrative and procedural changes

referred to in paragraph (1) shall include all actions necessary

to carry out paragraph (1), which may include—

(A) improving the efficiency of approval procedures;

(B) simplifying approval requirements,

required approvals;

(D) modifying division of approval authority between

field and national offices;

(E) improving outreach to project sponsors regarding

information that is required to be submitted for such

approvals;

(F) requesting additional funding for increasing staff,

if necessary; and

(G) any other actions which would expedite approvals.

Any such changes shall be made in a manner that provides

for full compliance with any existing requirements under law

or regulation that are designed to protect families receiving

public and assisted housing assistance, including income tar-

geting, rent, and fair housing provisions, and shall also comply

with requirements regarding environmental review and protec-

tion and wages paid to laborers.

(b) C

ONSULTATION

.—The Secretary shall consult with the

Commissioner of the Internal Revenue Service and take such actions

Deadline.

12 USC 1715s.

12 USC 1701

note.

Housing Tax

Credit

Coordination

Act of 2008.

Disadvantaged

persons.

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122 STAT. 2868 PUBLIC LAW 110–289—JULY 30, 2008

as are appropriate in conjunction with such consultation to simplify

the coordination of rules, regulations, forms, and approval require-

ments for multifamily housing projects projects for which assistance

is provided by such Department in conjunction with any low-income

housing tax credits under section 42 of the Internal Revenue Code

of 1986 or tax-exempt housing bonds.

ECOMMENDATIONS

.—In implementing the changes required

under this section, the Secretary shall solicit recommendations

regarding such changes from project owners and sponsors, investors

and stakeholders in housing tax credits, State and local housing

finance agencies, public housing agencies, tenant advocates, and

other stakeholders in such projects.

(d) R

EPORT

.—Not later than the expiration of the 9-month

period beginning on the date of the enactment of this Act, the

Secretary shall submit a report to the Committee on Financial

Services of the House of Representatives and the Committee on

Banking, Housing, and Urban Affairs of the Senate that—

(1) identifies the actions taken by the Secretary to comply

with this section;

(2) includes information regarding any resulting improve-

ments in the expedited approval for multifamily housing

projects;

(3) identifies recommendations made pursuant to sub-

section (c);

(4) identifies actions taken by the Secretary to implement

the provisions in the amendments made by sections 2834 and

2835 of this Act; and

(5) makes recommendations for any legislative changes

that are needed to facilitate prompt approval of assistance

for such projects.

SEC. 2833. PROJECT APPROVALS BY RURAL HOUSING SERVICE.

Section 515(h) of the Housing Act of 1949 (42 U.S.C. 1485)

is amended—

(1) by inserting ‘‘(1) C

ONDITION

.—’’ after ‘‘(h)’’; and

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

‘‘(2) A

CTIONS TO EXPEDITE PROJECT APPROVALS

.—

‘‘(A) I

N GENERAL

.—The Secretary shall take actions

to facilitate timely approval of requests to transfer owner-

ship or control, for the purpose of rehabilitation or preserva-

tion, of multifamily housing projects for which assistance

is provided by the Secretary of Agriculture in conjunction

with any low-income housing tax credits under section

42 of the Internal Revenue Code of 1986 or tax-exempt

housing bonds.

‘‘(B) C

ONSULTATION

.—The Secretary of Agriculture

shall consult with the Commissioner of the Internal Rev-

enue Service and take such actions as are appropriate

in conjunction with such consultation to simplify the

coordination of rules, regulations, forms (including applica-

tions forms for project transfers), and approval require-

ments multifamily housing projects for which assistance

is provided by the Secretary of Agriculture in conjunction

with any low-income housing tax credits under section

42 of the Internal Revenue Code of 1986 or tax-exempt

housing bonds.

Deadline.

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122 STAT. 2869 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) E

XISTING REQUIREMENTS

.—Any actions taken

pursuant to this paragraph shall be taken in a manner

that provides for full compliance with any existing require-

ments under law or regulation that are designed to protect

families receiving Federal housing assistance, including

income targeting, rent, and fair housing provisions, and

shall also comply with requirements regarding environ-

mental review and protection and wages paid to laborers.

‘‘(D) R

ECOMMENDATIONS

.—In implementing the

changes required under this paragraph, the Secretary shall

solicit recommendations regarding such changes from

project owners and sponsors, investors and stakeholders

in housing tax credits, State and local housing finance

agencies, tenant advocates, and other stakeholders in such

projects.’’.

SEC. 2834. USE OF FHA LOANS WITH HOUSING TAX CREDITS.

(a) S

UBSIDY

AYERING

EQUIREMENTS

.—Subsection (d) of sec-

tion 102 of the Department of Housing and Urban Development

Reform Act of 1989 (42 U.S.C. 3545(d)) is amended—

(1) in the first sentence, by inserting after ‘‘assistance

within the jurisdiction of the Department’’ the following: ‘‘,

as such term is defined in subsection (m), except that for

purposes of this subsection such term shall not include any

mortgage insurance provided pursuant to title II of the National

Housing Act (12 U.S.C. 1707 et seq.)’’; and

(2) in the second sentence, by inserting ‘‘such’’ before

‘‘assistance’’.

(b) C

OST

ERTIFICATION

.—Section 227 of National Housing Act

(12 U.S.C. 1715r) is amended—

(1) in the matter preceding paragraph (a) (relating to a

definition of ‘‘new or rehabilitated multifamily housing’’)—

(A) in the first sentence—

(i) by striking ‘‘Notwithstanding’’ and inserting

‘‘Except as provided in subsection (b) and notwith-

standing’’; and

(ii) by redesignating clauses (a) and (b) as clauses

(A) and (B), respectively; and

(B) by striking ‘‘As used in this section—’’;

(2) in paragraph (c) (relating to a definition of ‘‘actual

cost’’)— (A) in clause (i), by redesignating clauses (1) and (2)

as clauses (I) and (II), respectively; and

(B) in clause (ii), by redesignating clauses (1) and

(2) as clauses (I) and (II), respectively;

(3) by redesignating paragraphs (a), (b), and (c) as para-

graphs (1), (2), and (3), respectively;

(4) by inserting before paragraph (1) (as so redesignated

by paragraph (3) of this subsection) the following:

‘‘(b) E

XEMPTION FOR

ERTAIN

ROJECTS

SSISTED

ITH

NCOME

OUSING

REDIT

.—In the case of any mortgage insured

under any provision of this title that is executed in connection

with the construction, rehabilitation, purchase, or refinancing of

a multifamily housing project for which equity provided through

any low-income housing tax credit pursuant to section 42 of the

Internal Revenue Code of 1986 (26 U.S.C. 42), if the Secretary

determines at the time of issuance of the firm commitment for

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122 STAT. 2870 PUBLIC LAW 110–289—JULY 30, 2008

insurance that the ratio of the loan proceeds to the actual cost

of the project is less than 80 percent, subsection (a) of this section

shall not apply.

‘‘(c) D

EFINITIONS

.—For purposes of this section, the following

definitions shall apply:’’; and

(5) by inserting ‘‘(a) R

EQUIREMENT

.—’’ after ‘‘227.’’.

THER

ROVISIONS

EGARDING

REATMENT OF

ORTGAGES

OVERING

REDIT

ROJECTS

.—Title II of the National Housing

Act is amended by inserting after section 227 (12 U.S.C. 1715r)

the following new section:

‘‘SEC. 228. TREATMENT OF MORTGAGES COVERING TAX CREDIT

PROJECTS.

‘‘(a) D

EFINITION

.—For purposes of this section, the term ‘insured

mortgage covering a tax credit project’ means a mortgage insured

under any provision of this title that is executed in connection

with the construction, rehabilitation, purchase, or refinancing of

a multifamily housing project for which equity provided through

any low-income housing tax credit pursuant to section 42 of the

Internal Revenue Code of 1986 (26 U.S.C. 42).

‘‘(b) A

CCEPTANCE OF

ETTERS OF

REDIT

.—In the case of an

insured mortgage covering a tax credit project, the Secretary may

not require the escrowing of equity provided by the sale of any

low-income housing tax credits for the project pursuant to section

42 of the Internal Revenue Code of 1986, or any other form of

security, such as a letter of credit.

‘‘(c) A

SSET

ANAGEMENT

EQUIREMENTS

.—In the case of an

insured mortgage covering a tax credit project for which project

the applicable tax credit allocating agency is causing to be per-

formed periodic inspections in compliance with the requirements

of section 42 of the Internal Revenue Code of 1986, such project

shall be exempt from requirements imposed by the Secretary

regarding periodic inspections of the property by the mortgagee.

To the extent that other compliance monitoring is being performed

with respect to such a project by such an allocating agency pursuant

to such section 42, the Secretary shall, to the extent that the

Secretary determines such monitoring is sufficient to ensure compli-

ance with any requirements established by the Secretary, accept

such agency’s evidence of compliance for purposes of determining

compliance with the Secretary’s requirements.

‘‘(d) S

TREAMLINED

ROCESSING

ILOT

ROGRAM

.—

‘‘(1) I

N GENERAL

.—The Secretary shall establish a pilot

program to demonstrate the effectiveness of streamlining the

review process, which shall include all applications for mortgage

insurance under any provision of this title for mortgages

executed in connection with the construction, rehabilitation,

purchase, or refinancing of a multifamily housing project for

which equity provided through any low-income housing tax

credit pursuant to section 42 of the Internal Revenue Code

of 1986. The Secretary shall issue instructions for implementing

the pilot program under this subsection not later than the

expiration of the 180-day period beginning upon the date of

the enactment of the Housing Tax Credit Coordination Act

of 2008.

‘‘(2) R

EQUIREMENTS

.—Such pilot program shall provide

for—

Intructions.

Deadline.

12 USC 1715s.

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122 STAT. 2871 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) the Secretary to appoint designated underwriters,

who shall be responsible for reviewing such mortgage insur-

ance applications and making determinations regarding

the eligibility of such applications for such mortgage insur-

ance in lieu of the processing functions regarding such

applications that are otherwise performed by other

employees of the Department of Housing and Urban

Development;

‘‘(B) submission of applications for such mortgage

insurance by mortgagees who have previously been

expressly approved by the Secretary; and

‘‘(C) determinations regarding the eligibility of such

applications for such mortgage insurance to be made by

the chief underwriter pursuant to requirements prescribed

by the Secretary, which shall include requiring submission

of reports regarding applications of proposed mortgagees

by third-party entities expressly approved by the chief

underwriter.’’.

SEC. 2835. OTHER HUD PROGRAMS.

(a) S

ECTION

8 A

SSISTANCE

.—

(1) PHA

PROJECT

BASED ASSISTANCE

.—Section 8(o)(13) of

the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(13))

is amended—

(A) in subparagraph (D)(i)—

(i) by striking ‘‘building’’ and inserting ‘‘project’’;

and (ii) by adding at the end the following: ‘‘For pur-

poses of this subparagraph, the term’’project‘‘ means

a single building, multiple contiguous buildings, or

multiple buildings on contiguous parcels of land.’’;

(B) in the first sentence of subparagraph (F), by

striking ‘‘10 years’’ and inserting ‘‘15 years’’;

(i) by inserting after the period at the end of the

first sentence the following: ‘‘Such contract may, at

the election of the public housing agency and the owner

of the structure, specify that such contract shall be

extended for renewal terms of up to 15 years each,

if the agency makes the determination required by

this subparagraph and the owner is in compliance

with the terms of the contract.’’; and

(ii) by adding at the end the following: ‘‘A public

housing agency may agree to enter into such a contract

at the time it enters into the initial agreement for

a housing assistance payment contract or at any time

thereafter that is before the expiration of the housing

assistance payment contract.’’;

(D) in subparagraph (H), by inserting before the period

at the end of the first sentence the following: ‘‘, except

that in the case of a contract unit that has been allocated

low-income housing tax credits and for which the rent

limitation pursuant to such section 42 is less than the

amount that would otherwise be permitted under this

subparagraph, the rent for such unit may, in the sole

discretion of a public housing agency, be established at

the higher section 8 rent, subject only to paragraph (10)(A)’’;

Definition.

Reports.

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122 STAT. 2872 PUBLIC LAW 110–289—JULY 30, 2008

(E) in subparagraph (I)(i), by inserting before the semi-

colon the following: ‘‘, except that the contract may provide

that the maximum rent permitted for a dwelling unit shall

not be less than the initial rent for the dwelling unit

under the initial housing assistance payments contract cov-

ering the unit’’; and

(F) by adding at the end the following new subpara-

graphs:

‘‘(L) U

SE IN COOPERATIVE HOUSING AND ELEVATOR

BUILDINGS

.—A public housing agency may enter into a

housing assistance payments contract under this paragraph

with respect to—

‘‘(i) dwelling units in cooperative housing; and

‘‘(ii) notwithstanding subsection (c), dwelling units

in a high-rise elevator project, including such a project

that is occupied by families with children, without

review and approval of the contract by the Secretary.

‘‘(M) R

EVIEWS

.—

‘‘(i) S

UBSIDY LAYERING

.—A subsidy layering review

in accordance with section 102(d) of the Department

of Housing and Urban Development Reform Act of

1989 (42 U.S.C. 3545(d)) shall not be required for

assistance under this paragraph in the case of a

housing assistance payments contract for an existing

structure, or if a subsidy layering review has been

conducted by the applicable State or local agency.

‘‘(ii) E

NVIRONMENTAL REVIEW

.—A public housing

agency shall not be required to undertake any environ-

mental review before entering into a housing assistance

payments contract under this paragraph for an existing

structure, except to the extent such a review is other-

wise required by law or regulation.’’.

(2) V

OUCHER PROGRAM RENT REASONABLENESS

.—Section

8(o)(10) of the United States Housing Act of 1937 (42 U.S.C.

1437f(o)(10)) is amended by adding at the end the following

new subparagraph;

‘‘(F) T

AX CREDIT PROJECTS

.—In the case of a dwelling

unit receiving tax credits pursuant to section 42 of the

Internal Revenue Code of 1986 or for which assistance

is provided under subtitle A of title II of the Cranston

Gonzalez National Affordable Housing Act of 1990, for

which a housing assistance contract not subject to para-

graph (13) of this subsection is established, rent reasonable-

ness shall be determined as otherwise provided by this

paragraph, except that—

‘‘(i) comparison with rent for units in the private,

unassisted local market shall not be required if the

rent is equal to or less than the rent for other com-

parable units receiving such tax credits or assistance

in the project that are not occupied by families assisted

with tenant-based assistance under this subsection;

and ‘‘(ii) the rent shall not be considered reasonable

for purposes of this paragraph if it exceeds the greater

of— ‘‘(I) the rents charged for other comparable

units receiving such tax credits or assistance in

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122 STAT. 2873 PUBLIC LAW 110–289—JULY 30, 2008

the project that are not occupied by families

assisted with tenant-based assistance under this

subsection; and

‘‘(II) the payment standard established by the

public housing agency for a unit of the size

involved.’’.

(b) S

ECTION

202 H

OUSING FOR

LDERLY

ERSONS

.—Subsection

(f) of section 202 of the Housing Act of 1959 (12 U.S.C. 1701q(f))

is amended—

(1) by striking ‘‘S

ELECTION

RITERIA

.—’’ and inserting ‘‘I

TIAL

ELECTION

RITERIA AND

ROCESSING

.— (1) S

ELECTION

CRITERIA

.—’’;

(2) by redesignating paragraphs (1) through (7) as subpara-

graphs (A) through (G), respectively; and

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

‘‘(2) D

ELEGATED PROCESSING

.—

‘‘(A) In issuing a capital advance under this subsection

for any project for which financing for the purposes

described in the last two sentences of subsection (b) is

provided by a combination of a capital advance under sub-

section (c)(1) and sources other than this section, within

30 days of award of the capital advance, the Secretary

shall delegate review and processing of such projects to

a State or local housing agency that—

‘‘(i) is in geographic proximity to the property;

‘‘(ii) has demonstrated experience in and capacity

for underwriting multifamily housing loans that pro-

vide housing and supportive services;

‘‘(iii) may or may not be providing low-income

housing tax credits in combination with the capital

advance under this section, and

‘‘(iv) agrees to issue a firm commitment within

12 months of delegation.

‘‘(B) The Secretary shall retain the authority to process

capital advances in cases in which no State or local housing

agency has applied to provide delegated processing pursu-

ant to this paragraph or no such agency has entered into

an agreement with the Secretary to serve as a delegated

processing agency.

‘‘(C) An agency to which review and processing is dele-

gated pursuant to subparagraph (A) may assess a reason-

able fee which shall be included in the capital advance

amounts and may recommend project rental assistance

amounts in excess of those initially awarded by the Sec-

retary. The Secretary shall develop a schedule for reason-

able fees under this subparagraph to be paid to delegated

processing agencies, which shall take into consideration

any other fees to be paid to the agency for other funding

provided to the project by the agency, including bonds,

tax credits, and other gap funding.

‘‘(D) Under such delegated system, the Secretary shall

retain the authority to approve rents and development

costs and to execute a capital advance within 60 days

of receipt of the commitment from the State or local agency.

The Secretary shall provide to such agency and the project

sponsor, in writing, the reasons for any reduction in capital

Deadline.

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122 STAT. 2874 PUBLIC LAW 110–289—JULY 30, 2008

advance amounts or project rental assistance and such

reductions shall be subject to appeal.’’.

INNEY

-V

ENTO

OMELESS

SSISTANCE

NDER

HELTER

LUS

ARE

ROGRAM

.—

(1) T

ERM OF CONTRACTS WITH OWNER OR LESSOR

.—Part

I of subtitle F of the McKinney-Vento Homeless Assistance

Act is amended—

(A) by redesignating sections 462 and 463 (42 U.S.C.

11403g, 11403h) as sections 463 and 464, respectively;

(B) by striking ‘‘section 463’’ each place such term

appears in sections 471, 476, 481, 486, and 488 (42 U.S.C.

11404, 11405, 11406, 11407, and 11407b) and inserting

‘‘section 464’’; and

the following new section:

‘‘SEC. 462. TERM OF CONTRACT WITH OWNER OR LESSOR.

‘‘An applicant under this subtitle may enter into a contract

with the owner or lessor of a property that receives rental assistance

under this subtitle having a term of not more than 15 years,

subject to the availability of sufficient funds provided in appropria-

tion Acts for the purpose of renewing expiring contracts for assist-

ance payments. Such contract may, at the election of the applicant

and owner or lessor, specify that such contract shall be extended

for renewal terms of not more than 15 years each, subject to

the availability of sufficient such appropriated funds.’’.

(2) P

ROJECT

BASED RENTAL ASSISTANCE CONTRACTS

.—Sec-

tion 478(a) of the McKinney-Vento Homeless Assistance Act

(42 U.S.C. 11405a(a)) is amended by inserting before the period

at the end the following: ‘‘; except that, in the case of any

project for which equity is provided through any low-income

housing tax credit pursuant to section 42 of the Internal Rev-

enue Code of 1986 (26 U.S.C. 42), if an expenditure of such

amount for each unit (including the prorated share of such

work) is required to make the structure decent, safe, and sani-

tary, and the owner agrees to reach initial closing on permanent

financing from such other sources within two years and agrees

to carry out the rehabilitation with resources other than assist-

ance under this subtitle within 60 months of notification of

grant approval, the contract shall be for a term of 10 years

(except that such period may be extended by up to 1 year

by the Secretary, which extension shall be granted unless the

Secretary determines that the sponsor is primarily responsible

for the failure to meet such deadline)’’.

(d) D

ATA

OLLECTION ON

ENANTS OF

OUSING

REDIT

ROJECTS

.—Title I of the United States Housing Act of 1937 (42

U.S.C. 1437 et seq.) is amended by adding at the end the following

new section:

‘‘SEC. 36. COLLECTION OF INFORMATION ON TENANTS IN TAX CREDIT

PROJECTS.

‘‘(a) I

ENERAL

.—Each State agency administering tax credits

under section 42 of the Internal Revenue Code of 1986 (26 U.S.C.

42) shall furnish to the Secretary of Housing and Urban Develop-

ment, not less than annually, information concerning the race,

ethnicity, family composition, age, income, use of rental assistance

under section 8(o) of the United States Housing Act of 1937 or

Deadline.

42 USC

1437z–8.

Termination

date.

Extension.

42 USC 11405b.

42 USC

11403f–1.

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122 STAT. 2875 PUBLIC LAW 110–289—JULY 30, 2008

other similar assistance, disability status, and monthly rental pay-

ments of households residing in each property receiving such credits

through such agency. Such State agencies shall, to the extent fea-

sible, collect such information through existing reporting processes

and in a manner that minimizes burdens on property owners.

In the case of any household that continues to reside in the same

dwelling unit, information provided by the household in a previous

year may be used if the information is of a category that is not

subject to change or if information for the current year is not

readily available to the owner of the property.

‘‘(b) S

TANDARDS

.—The Secretary shall establish standards and

definitions for the information collected under subsection (a), pro-

vide States with technical assistance in establishing systems to

compile and submit such information, and, in coordination with

other Federal agencies administering housing programs, establish

procedures to minimize duplicative reporting requirements for prop-

erties assisted under multiple housing programs.

‘‘(c) P

UBLIC

VAILABILITY

.—The Secretary shall, not less than

annually, compile and make publicly available the information sub-

mitted to the Secretary pursuant to subsection (a).

‘‘(d) A

UTHORIZATION OF

PPROPRIATIONS

.—There is authorized

to be appropriated for the cost of activities required under sub-

sections (b) and (c) $2,500,000 for fiscal year 2009 and $900,000

for each of fiscal years 2010 through 2013.’’.

TITLE IX—MISCELLANEOUS

SEC. 2901. HOMELESS ASSISTANCE.

(a) A

PPROPRIATIONS

.—Section 726 of the McKinney-Vento

Homeless Assistance Act (42 U.S.C. 11435) is amended by striking

‘‘$70,000,000’’ and all that follows and inserting ‘‘$100,000,000 for

fiscal year 2009 and such sums as may be necessary for each

subsequent fiscal year.’’.

(b) E

MERGENCY

SSISTANCE

.—Section 722 of the McKinney-

Vento Homeless Assistance Act (42 U.S.C. 11432) is amended by

adding at the end the following:

‘‘(h) S

PECIAL

ULE FOR

MERGENCY

SSISTANCE

.—

‘‘(1) E

MERGENCY ASSISTANCE

.—

‘‘(A) R

ESERVATION OF AMOUNTS

.—Subject to paragraph

(4) and notwithstanding any other provision of this title,

the Secretary shall use funds appropriated under section

726 for fiscal year 2009, but not to exceed $30,000,000,

for the purposes of providing emergency assistance through

grants.

‘‘(B) G

ENERAL AUTHORITY

.—The Secretary shall use the

funds to make grants to State educational agencies under

paragraph (2), to enable the agencies to make subgrants

to local educational agencies under paragraph (3), to pro-

vide activities described in section 723(d) for individuals

referred to in subparagraph (C).

‘‘(C) E

LIGIBLE INDIVIDUALS

.—Funds made available

under this subsection shall be used to provide such activi-

ties for eligible individuals, consisting of homeless children

and youths, and their families, who have become homeless

due to home foreclosure, including children and youths,

State and local

governments.

Grants.

Deadline.

Reports.

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122 STAT. 2876 PUBLIC LAW 110–289—JULY 30, 2008

and their families, who became homeless when lenders

foreclosed on properties rented by the families.

‘‘(2) G

RANTS TO STATE EDUCATIONAL AGENCIES

.—

‘‘(A) D

ISBURSEMENT

.—The Secretary shall make grants

with funds provided under paragraph (1)(A) to State edu-

cational agencies based on need, consistent with the

number of eligible individuals described in paragraph (1)(C)

in the States involved, as determined by the Secretary.

‘‘(B) A

SSURANCE

.—To be eligible to receive a grant

under this paragraph, a State educational agency shall

provide an assurance to the Secretary that the State edu-

cational agency, and each local educational agency

receiving a subgrant from the State educational agency

under this subsection shall ensure that the activities car-

ried out under this subsection are consistent with the

activities described in section 723(d).

‘‘(3) S

UBGRANTS TO LOCAL EDUCATIONAL AGENCIES

.—A State

educational agency that receives a grant under paragraph (2)

shall use the funds made available through the grant to make

subgrants to local educational agencies. The State educational

agency shall make the subgrants to local educational agencies

based on need, consistent with the number of eligible individ-

uals described in paragraph (1)(C) in the areas served by the

local educational agencies, as determined by the State edu-

cational agency.

‘‘(4) R

ESTRICTION

.—The Secretary—

‘‘(A) shall determine the amount (if any) by which

the funds appropriated under section 726 for fiscal year

2009 exceed $70,000,000; and

‘‘(B) may only use funds from that amount to carry

out this subsection.’’.

SEC. 2902. INCREASING ACCESS AND UNDERSTANDING OF ENERGY

EFFICIENT MORTGAGES.

(a) D

EFINITION

.—As used in this section, the term ‘‘energy

efficient mortgage’’ has the same meaning as given that term in

paragraph (24) of section 104 of the Cranston-Gonzalez National

Affordable Housing Act (42 U.S.C. 12704(24)).

(b) R

ECOMMENDATIONS TO

LIMINATE

ARRIERS TO

SE OF

NERGY

FFICIENT

ORTGAGES

.—

(1) I

N GENERAL

.—Not later than 180 days after the date

of enactment of this section, the Secretary of Housing and

Urban Development, in conjunction with the Secretary of

Energy and the Administrator of the Environmental Protection

Agency, shall consult with the residential mortgage industry

and States to develop recommendations to eliminate the bar-

riers that exist to increasing the availability, use, and purchase

of energy efficient mortgages, including such barriers as—

(A) the lack of reliable and accessible information on

such mortgages, including estimated energy savings and

other benefits of energy efficient housing;

(B) the confusion regarding underwriting requirements

and differences among various energy efficient mortgage

programs;

such mortgages;

Deadline.

12 USC

1701z–17.

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122 STAT. 2877 PUBLIC LAW 110–289—JULY 30, 2008

(D) the lack of publicly available research on the

default risk of such mortgages; and

(E) the availability of certified or accredited home

energy rating services.

(2) R

EPORT TO CONGRESS

.—The Secretary of Housing and

Urban Development shall submit a report to Congress that—

(A) summarizes the recommendations developed under

paragraph (1); and

(B) includes any recommendations for statutory, regu-

latory, or administrative changes that the Secretary deems

necessary to institute such recommendations.

NERGY

FFICIENT

ORTGAGES

UTREACH

AMPAIGN

.—

(1) I

N GENERAL

.—The Secretary of Housing and Urban

Development, in consultation and coordination with the Sec-

retary of Energy, the Administrator of the Environmental

Protection Agency, and State Energy and Housing Finance

Directors, shall carry out an education and outreach campaign

to inform and educate consumers, home builders, residential

lenders, and other real estate professionals on the availability,

benefits, and advantages of—

(A) improved energy efficiency in housing; and

(B) energy efficient mortgages.

(2) A

UTHORIZATION OF APPROPRIATIONS

.—There are author-

ized to be appropriated such sums as are necessary to carry

out the education and outreach campaign described under para-

graph (1).

DIVISION C—TAX-RELATED PROVISIONS

SEC. 3000. SHORT TITLE; ETC.

(a) S

HORT

ITLE

.—This division may be cited as the ‘‘Housing

Assistance Tax Act of 2008’’.

(b) A

MENDMENT OF

1986 C

ODE

.—Except as otherwise expressly

provided, whenever in this division an amendment or repeal is

expressed in terms of an amendment to, or repeal of, a section

or other provision, the reference shall be considered to be made

to a section or other provision of the Internal Revenue Code of

1986.

ABLE OF

ONTENTS

.—The table of contents for this division

is as follows:

Sec. 3000. Short title; etc.

TITLE I—HOUSING TAX INCENTIVES

Subtitle A—Multi-Family Housing

ART

I—L

-I

NCOME

OUSING

REDIT

Sec. 3001. Temporary increase in volume cap for low-income housing tax credit.

Sec. 3002. Determination of credit rate.

Sec. 3003. Modifications to definition of eligible basis.

Sec. 3004. Other simplification and reform of low-income housing tax incentives.

Sec. 3005. Treatment of military basic pay.

ART

II—M

ODIFICATIONS TO

-E

XEMPT

OUSING

OND

ULES

Sec. 3007. Recycling of tax-exempt debt for financing residential rental projects.

Sec. 3008. Coordination of certain rules applicable to low-income housing credit and

qualified residential rental project exempt facility bonds.

ART

III—R

EFORMS

ELATED TO THE

-I

NCOME

OUSING

REDIT AND

XEMPT

OUSING

ONDS

Sec. 3009. Hold harmless for reductions in area median gross income.

26 USC 1

note.

Housing

Assistance

Tax Act of 2008.

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122 STAT. 2878 PUBLIC LAW 110–289—JULY 30, 2008

Sec. 3010. Exception to annual current income determination requirement where

determination not relevant.

Subtitle B—Single Family Housing

Sec. 3011. First-time homebuyer credit.

Sec. 3012. Additional standard deduction for real property taxes for nonitemizers.

Subtitle C—General Provisions

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules.

Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt housing

bonds, low-income housing tax credit, and rehabilitation credit.

Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for treatment as

tax-exempt bonds.

Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign affidavits.

Sec. 3025. Modification of definition of tax-exempt use property for purposes of the

rehabilitation credit.

Sec. 3026. Extension of special rule for mortgage revenue bonds for residences lo-

cated in disaster areas.

Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery rebates for in-

dividuals.

TITLE II—REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

Subtitle A—Foreign Currency and Other Qualified Activities

Sec. 3031. Revisions to REIT income tests.

Sec. 3032. Revisions to REIT asset tests.

Sec. 3033. Conforming foreign currency revisions.

Subtitle B—Taxable REIT Subsidiaries

Sec. 3041. Conforming taxable REIT subsidiary asset test.

Subtitle C—Dealer Sales

Sec. 3051. Holding period under safe harbor.

Sec. 3052. Determining value of sales under safe harbor.

Subtitle D—Health Care REITs

Sec. 3061. Conformity for health care facilities.

Subtitle E—Effective Dates

Sec. 3071. Effective dates.

TITLE III—REVENUE PROVISIONS

Subtitle A—General Provisions

Sec. 3081. Election to accelerate the AMT and research credits in lieu of bonus de-

preciation.

Sec. 3082. Certain GO Zone incentives.

Sec. 3083. Increase in statutory limit on the public debt.

Subtitle B—Revenue Offsets

Sec. 3091. Returns relating to payments made in settlement of payment card and

third party network transactions.

Sec. 3092. Gain from sale of principal residence allocated to nonqualified use not

excluded from income.

Sec. 3093. Delay in application of worldwide allocation of interest.

Sec. 3094. Time for payment of corporate estimated taxes.

TITLE I—HOUSING TAX INCENTIVES

Subtitle A—Multi-Family Housing

PART I—LOW-INCOME HOUSING TAX CREDIT

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

HOUSING TAX CREDIT.

Paragraph (3) of section 42(h) is amended by adding at the

end the following new subparagraph:

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122 STAT. 2879 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(I) I

NCREASE IN STATE HOUSING CREDIT CEILING FOR

2008 AND 2009

.—In the case of calendar years 2008 and

2009—

‘‘(i) the dollar amount in effect under subparagraph

(C)(ii)(I) for such calendar year (after any increase

under subparagraph (H)) shall be increased by $0.20,

and

‘‘(ii) the dollar amount in effect under subpara-

graph (C)(ii)(II) for such calendar year (after any

increase under subparagraph (H)) shall be increased

by an amount equal to 10 percent of such dollar amount

(rounded to the next lowest multiple of $5,000).’’.

SEC. 3002. DETERMINATION OF CREDIT RATE.

(a) T

EMPORARY

INIMUM

REDIT

ATE FOR

-F

EDERALLY

UBSIDIZED

UILDINGS

.—

(1) I

N GENERAL

.—Subsection (b) of section 42 is amended

by striking paragraph (1), by redesignating paragraph (2) as

paragraph (1), and by inserting after paragraph (1), as so

redesignated, the following new paragraph:

‘‘(2) T

EMPORARY MINIMUM CREDIT RATE FOR NON

FEDERALLY

SUBSIDIZED NEW BUILDINGS

.—In the case of any new building—

‘‘(A) which is placed in service by the taxpayer after

the date of the enactment of this paragraph and before

December 31, 2013, and

‘‘(B) which is not federally subsidized for the taxable

year,

the applicable percentage shall not be less than 9 percent.’’.

(2) C

ONFORMING AMENDMENTS

.—

(A) Subsection (b) of section 42, as amended by para-

graph (1), is amended by striking ‘‘For purposes of this

section—’’ and all that follows through ‘‘means the appro-

priate’’ and inserting the following:

‘‘(1) D

ETERMINATION OF APPLICABLE PERCENTAGE

.—For pur-

poses of this section, the term ‘applicable percentage’ means,

with respect to any building, the appropriate’’.

(B) Clause (i) of section 42(b)(1)(B), as redesignated

by paragraph (1), is amended by striking ‘‘a building

described in paragraph (1)(A)’’ and inserting ‘‘a new

building which is not federally subsidized for the taxable

year’’.

by paragraph (1), is amended by striking ‘‘a building

described in paragraph (1)(B)’’ and inserting ‘‘a building

not described in clause (i)’’.

(b) M

ODIFICATIONS TO

EFINITION OF

EDERALLY

UBSIDIZED

UILDING

.—

(1) I

N GENERAL

.—Subparagraph (A) of section 42(i)(2) is

amended by striking ‘‘, or any below market Federal loan,’’.

(2) C

ONFORMING AMENDMENTS

.—

(A) Subparagraph (B) of section 42(i)(2) is amended—

(i) by striking ‘‘

BALANCE OF LOAN OR

’’ in the

heading thereof,

(ii) by striking ‘‘loan or’’ in the matter preceding

clause (i), and

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122 STAT. 2880 PUBLIC LAW 110–289—JULY 30, 2008

(iii) by striking ‘‘subsection (d)—’’ and all that fol-

lows and inserting ‘‘subsection (d) the proceeds of such

obligation.’’.

(B) Subparagraph (C) of section 42(i)(2) is amended—

(i) by striking ‘‘or below market Federal loan’’ in

the matter preceding clause (i),

(ii) in clause (i)—

(I) by striking ‘‘or loan (when issued or made)’’

and inserting ‘‘(when issued)’’, and

(II) by striking ‘‘the proceeds of such obligation

or loan’’ and inserting ‘‘the proceeds of such obliga-

tion’’, and

(iii) by striking ‘‘, and such loan is repaid,’’ in

clause (ii).

striking subparagraphs (D) and (E).

FFECTIVE

ATE

.—The amendments made by this subsection

shall apply to buildings placed in service after the date of the

enactment of this Act.

SEC. 3003. MODIFICATIONS TO DEFINITION OF ELIGIBLE BASIS.

(a) I

NCREASE IN

REDIT FOR

ERTAIN

TATE

ESIGNATED

UILDINGS

.—Subparagraph (C) of section 42(d)(5) (relating to

increase in credit for buildings in high cost areas), before redesigna-

tion under subsection (g), is amended by adding at the end the

following new clause:

‘‘(v) B

UILDINGS DESIGNATED BY STATE HOUSING

CREDIT AGENCY

.—Any building which is designated by

the State housing credit agency as requiring the

increase in credit under this subparagraph in order

for such building to be financially feasible as part

of a qualified low-income housing project shall be

treated for purposes of this subparagraph as located

in a difficult development area which is designated

for purposes of this subparagraph. The preceding sen-

tence shall not apply to any building if paragraph

(1) of subsection (h) does not apply to any portion

of the eligible basis of such building by reason of para-

graph (4) of such subsection.’’.

(b) M

ODIFICATION TO

EHABILITATION

EQUIREMENTS

.—

(1) I

N GENERAL

.—Clause (ii) of section 42(e)(3)(A) is

amended—

(A) by striking ‘‘10 percent’’ in subclause (I) and

inserting ‘‘20 percent’’, and

(B) by striking ‘‘$3,000’’ in subclause (II) and inserting

‘‘$6,000’’.

(2) I

NFLATION ADJUSTMENT

.—Paragraph (3) of section 42(e)

is amended by adding at the end the following new subpara-

graph:

‘‘(D) I

NFLATION ADJUSTMENT

.—In the case of any

expenditures which are treated under paragraph (4) as

placed in service during any calendar year after 2009,

the $6,000 amount in subparagraph (A)(ii)(II) shall be

increased by an amount equal to—

‘‘(i) such dollar amount, multiplied by

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122 STAT. 2881 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) the cost-of-living adjustment determined

under section 1(f)(3) for such calendar year by sub-

stituting ‘calendar year 2008’ for ‘calendar year 1992’

in subparagraph (B) thereof.

Any increase under the preceding sentence which is not

a multiple of $100 shall be rounded to the nearest multiple

of $100.’’.

(3) C

ONFORMING AMENDMENT

.—Subclause (II) of section

42(f)(5)(B)(ii) is amended by striking ‘‘if subsection

(e)(3)(A)(ii)(II)’’ and all that follows and inserting ‘‘if the dollar

amount in effect under subsection (e)(3)(A)(ii)(II) were two-

thirds of such amount.’’.

NCREASE IN

LLOWABLE

OMMUNITY

ERVICE

ACILITY

PACE FOR

MALL

ROJECTS

.—Clause (ii) of section 42(d)(4)(C)

(relating to limitation) is amended by striking ‘‘10 percent of the

eligible basis of the qualified low-income housing project of which

it is a part. For purposes of’’ and inserting ‘‘the sum of—

‘‘(I) 25 percent of so much of the eligible basis

of the qualified low-income housing project of

which it is a part as does not exceed $15,000,000,

plus

‘‘(II) 10 percent of so much of the eligible basis

of such project as is not taken into account under

subclause (I).

For purposes of’’.

(d) C

LARIFICATION OF

REATMENT OF

EDERAL

RANTS

.—

Subparagraph (A) of section 42(d)(5) is amended to read as follows:

‘‘(A) F

EDERAL GRANTS NOT TAKEN INTO ACCOUNT IN

DETERMINING ELIGIBLE BASIS

.—The eligible basis of a

building shall not include any costs financed with the pro-

ceeds of a federally funded grant.’’.

(e) S

IMPLIFICATION OF

ELATED

ARTY

ULES

.—Clause (iii) of

section 42(d)(2)(D), before redesignation under subsection (g)(2),

is amended—

(1) by striking all that precedes subclause (II),

(2) by redesignating subclause (II) as clause (iii) and moving

such clause two ems to the left, and

(3) by striking the last sentence thereof.

(f) E

XCEPTION TO

10-Y

EAR

ONACQUISITION

ERIOD FOR

XISTING

UILDINGS

PPLICABLE TO

EDERALLY

TATE

-A

SSISTED

UILDINGS

.—Paragraph (6) of section 42(d) is amended to read

as follows:

‘‘(6) C

REDIT ALLOWABLE FOR CERTAIN BUILDINGS ACQUIRED

DURING 10

YEAR PERIOD DESCRIBED IN PARAGRAPH

(2)(B)(ii).—

‘‘(A) I

N GENERAL

.—Paragraph (2)(B)(ii) shall not apply

to any federally- or State-assisted building.

‘‘(B) B

UILDINGS ACQUIRED FROM INSURED DEPOSITORY

INSTITUTIONS IN DEFAULT

.—On application by the taxpayer,

the Secretary may waive paragraph (2)(B)(ii) with respect

to any building acquired from an insured depository institu-

tion in default (as defined in section 3 of the Federal

Deposit Insurance Act) or from a receiver or conservator

of such an institution.

‘‘(C) F

EDERALLY

OR STATE

ASSISTED BUILDING

.—For

purposes of this paragraph—

‘‘(i) F

EDERALLY

ASSISTED BUILDING

.—The term ‘fed-

erally-assisted building’ means any building which is

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122 STAT. 2882 PUBLIC LAW 110–289—JULY 30, 2008

substantially assisted, financed, or operated under sec-

tion 8 of the United States Housing Act of 1937, section

221(d)(3), 221(d)(4), or 236 of the National Housing

Act, section 515 of the Housing Act of 1949, or any

other housing program administered by the Depart-

ment of Housing and Urban Development or by the

Rural Housing Service of the Department of Agri-

culture.

‘‘(ii) S

TATE

ASSISTED BUILDING

.—The term ‘State-

assisted building’ means any building which is substan-

tially assisted, financed, or operated under any State

law similar in purposes to any of the laws referred

to in clause (i).’’.

(g) R

EPEAL OF

EADWOOD

.—

(1) Clause (ii) of section 42(d)(2)(B) is amended by striking

‘‘the later of—’’ and all that follows and inserting ‘‘the date

the building was last placed in service,’’.

(2) Subparagraph (D) of section 42(d)(2) is amended by

striking clause (i) and by redesignating clauses (ii) and (iii)

as clauses (i) and (ii), respectively.

(3) Paragraph (5) of section 42(d) is amended by striking

subparagraph (B) and by redesignating subparagraph (C) as

subparagraph (B).

(h) E

FFECTIVE

ATE

.—

(1) I

N GENERAL

.—Except as otherwise provided in para-

graph (2), the amendments made by this subsection shall apply

to buildings placed in service after the date of the enactment

of this Act.

(2) R

EHABILITATION REQUIREMENTS

.—

(A) I

N GENERAL

.—The amendments made by subsection

(b) shall apply to buildings with respect to which housing

credit dollar amounts are allocated after the date of the

enactment of this Act.

(B) B

UILDINGS NOT SUBJECT TO ALLOCATION LIMITS

.—

To the extent paragraph (1) of section 42(h) of the Internal

Revenue Code of 1986 does not apply to any building by

reason of paragraph (4) thereof, the amendments made

by subsection (b) shall apply buildings financed with bonds

issued pursuant to allocations made after the date of the

enactment of this Act.

SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME

HOUSING TAX INCENTIVES.

(a) R

EPEAL

ROHIBITION ON

ODERATE

EHABILITATION

SSIST

ANCE

.—Paragraph (2) of section 42(c) (defining qualified low-income

building) is amended by striking the flush sentence at the end.

(b) M

ODIFICATION OF

IME

IMIT FOR

NCURRING

10 P

ERCENT

ROJECT

’

OST

.—Clause (ii) of section 42(h)(1)(E) is amended

by striking ‘‘(as of the later of the date which is 6 months after

the date that the allocation was made or the close of the calendar

year in which the allocation is made)’’ and inserting ‘‘(as of the

date which is 1 year after the date that the allocation was made)’’.

EPEAL OF

ONDING

EQUIREMENT ON

ISPOSITION OF

UILDING

.—Paragraph (6) of section 42(j) (relating to no recapture

on disposition of building (or interest therein) where bond posted)

is amended to read as follows:

26 USC 42

note.

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122 STAT. 2883 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(6) N

O RECAPTURE ON DISPOSITION OF BUILDING WHICH

CONTINUES IN QUALIFIED USE

.—

‘‘(A) I

N GENERAL

.—The increase in tax under this sub-

section shall not apply solely by reason of the disposition

of a building (or an interest therein) if it is reasonably

expected that such building will continue to be operated

as a qualified low-income building for the remaining compli-

ance period with respect to such building.

‘‘(B) S

TATUTE OF LIMITATIONS

.—If a building (or an

interest therein) is disposed of during any taxable year

and there is any reduction in the qualified basis of such

building which results in an increase in tax under this

subsection for such taxable or any subsequent taxable year,

then—

‘‘(i) the statutory period for the assessment of any

deficiency with respect to such increase in tax shall

not expire before the expiration of 3 years from the

date the Secretary is notified by the taxpayer (in such

manner as the Secretary may prescribe) of such reduc-

tion in qualified basis, and

‘‘(ii) such deficiency may be assessed before the

expiration of such 3-year period notwithstanding the

provisions of any other law or rule of law which would

otherwise prevent such assessment.’’.

(d) E

NERGY

FFICIENCY AND

ISTORIC

ATURE

AKEN

NTO

CCOUNT IN

AKING

LLOCATIONS

.—Subparagraph (C) of section

42(m)(1) (relating to plans for allocation of credit among projects)

is amended by striking ‘‘and’’ at the end of clause (vii), by striking

the period at the end of clause (viii) and inserting a comma, and

by adding at the end the following new clauses:

‘‘(ix) the energy efficiency of the project, and

‘‘(x) the historic nature of the project.’’.

(e) C

ONTINUED

LIGIBILITY FOR

TUDENTS

ECEIVED

OSTER

ARE

SSISTANCE

.—Clause (i) of section 42(i)(3)(D) is

amended by striking ‘‘or’’ at the end of subclause (I), by redesig-

nating subclause (II) as subclause (III), and by inserting after

subclause (I) the following new subclause:

‘‘(II) a student who was previously under the

care and placement responsibility of the State

agency responsible for administering a plan under

part B or part E of title IV of the Social Security

Act, or’’.

(f) T

REATMENT OF

URAL

ROJECTS

.—Section 42(i) (relating

to definitions and special rules) is amended by adding at the end

the following new paragraph:

‘‘(8) T

REATMENT OF RURAL PROJECTS

.—For purposes of this

section, in the case of any project for residential rental property

located in a rural area (as defined in section 520 of the Housing

Act of 1949), any income limitation measured by reference

to area median gross income shall be measured by reference

to the greater of area median gross income or national non-

metropolitan median income. The preceding sentence shall not

apply with respect to any building if paragraph (1) of section

42(h) does not apply by reason of paragraph (4) thereof to

any portion of the credit determined under this section with

respect to such building.’’.

Notification.

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122 STAT. 2884 PUBLIC LAW 110–289—JULY 30, 2008

(g) C

LARIFICATION OF

ENERAL

UBLIC

EQUIREMENT

.—

Subsection (g) of section 42 is amended by adding at the end

the following new paragraph:

‘‘(9) C

LARIFICATION OF GENERAL PUBLIC USE REQUIRE

MENT

.—A project does not fail to meet the general public use

requirement solely because of occupancy restrictions or pref-

erences that favor tenants—

‘‘(A) with special needs,

‘‘(B) who are members of a specified group under a

Federal program or State program or policy that supports

housing for such a specified group, or

‘‘(C) who are involved in artistic or literary activities.’’.

(h) GAO S

TUDY

EGARDING

ODIFICATIONS TO

-I

NCOME

OUSING

REDIT

.—Not later than December 31, 2012, the

Comptroller General of the United States shall submit to Congress

a report which analyzes the implementation of the modifications

made by this subtitle to the low-income housing tax credit under

section 42 of the Internal Revenue Code of 1986. Such report

shall include an analysis of the distribution of credit allocations

before and after the effective date of such modifications.

(i) E

FFECTIVE

ATE

.—

(1) I

N GENERAL

.—Except as otherwise provided in this sub-

section, the amendments made by this section shall apply to

buildings placed in service after the date of the enactment

of this Act.

(2) R

EPEAL OF BONDING REQUIREMENT ON DISPOSITION OF

BUILDING

.—The amendment made by subsection (c) shall apply

to—

(A) interests in buildings disposed after the date of

the enactment of this Act, and

(B) interests in buildings disposed of on or before such

date if—

(i) it is reasonably expected that such building

will continue to be operated as a qualified low-income

building (within the meaning of section 42 of the

Internal Revenue Code of 1986) for the remaining

compliance period (within the meaning of such section)

with respect to such building, and

(ii) the taxpayer elects the application of this

subparagraph with respect to such disposition.

(3) E

NERGY EFFICIENCY AND HISTORIC NATURE TAKEN INTO

ACCOUNT IN MAKING ALLOCATIONS

.—The amendments made by

subsection (d) shall apply to allocations made after December

31, 2008.

(4) C

ONTINUED ELIGIBILITY FOR STUDENTS WHO RECEIVED

FOSTER CARE ASSISTANCE

.—The amendments made by sub-

section (e) shall apply to determinations made after the date

of the enactment of this Act.

(5) T

REATMENT OF RURAL PROJECTS

.—The amendment

made by subsection (f) shall apply to determinations made

after the date of the enactment of this Act.

(6) C

LARIFICATION OF GENERAL PUBLIC USE REQUIREMENT

.—

The amendment made by subsection (g) shall apply to buildings

placed in service before, on, or after the date of the enactment

of this Act.

Applicability.

26 USC 42

note.

Deadline.

Reports.

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122 STAT. 2885 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 3005. TREATMENT OF MILITARY BASIC PAY.

(a) I

ENERAL

.—Subparagraph (B) of section 142(d)(2)

(relating to income of individuals; area median gross income) is

amended—

(1) by striking ‘‘The income’’ and inserting the following:

‘‘(i) I

N GENERAL

.—The income’’, and

(2) by adding at the end the following:

‘‘(ii) S

PECIAL RULE RELATING TO BASIC HOUSING

ALLOWANCES

.—For purposes of determining income

under this subparagraph, payments under section 403

of title 37, United States Code, as a basic pay allowance

for housing shall be disregarded with respect to any

qualified building.

‘‘(iii) Q

UALIFIED BUILDING

.—For purposes of clause

(ii), the term ‘qualified building’ means any building

located—

‘‘(I) in any county in which is located a quali-

fied military installation to which the number of

members of the Armed Forces of the United States

assigned to units based out of such qualified mili-

tary installation, as of June 1, 2008, has increased

by not less than 20 percent, as compared to such

number on December 31, 2005, or

‘‘(II) in any county adjacent to a county

described in subclause (I).

‘‘(iv) Q

UALIFIED MILITARY INSTALLATION

.—For pur-

poses of clause (iii), the term ‘qualified military

installation’ means any military installation or facility

the number of members of the Armed Forces of the

United States assigned to which, as of June 1, 2008,

is not less than 1,000.’’.

(b) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to—

(1) determinations made after the date of the enactment

of this Act and before January 1, 2012, in the case of any

qualified building (as defined in section 142(d)(2)(B)(iii) of the

Internal Revenue Code of 1986)—

(A) with respect to which housing credit dollar amounts

have been allocated on or before the date of the enactment

of this Act, or

(B) with respect to buildings placed in service before

such date of enactment, to the extent paragraph (1) of

section 42(h) of such Code does not apply to such building

by reason of paragraph (4) thereof, but only with respect

to bonds issued before such date of enactment, and

(2) determinations made after the date of enactment of

this Act, in the case of qualified buildings (as so defined)—

(A) with respect to which housing credit dollar amounts

are allocated after the date of the enactment of this Act

and before January 1, 2012, or

(B) with respect to which buildings placed in service

after the date of enactment of this Act and before January

1, 2012, to the extent paragraph (1) of section 42(h) of

such Code does not apply to such building by reason of

paragraph (4) thereof, but only with respect to bonds issued

after such date of enactment and before January 1, 2012.

26 USC 142

note.

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122 STAT. 2886 PUBLIC LAW 110–289—JULY 30, 2008

PART II—MODIFICATIONS TO TAX-EXEMPT

HOUSING BOND RULES

SEC. 3007. RECYCLING OF TAX-EXEMPT DEBT FOR FINANCING RESI-

DENTIAL RENTAL PROJECTS.

(a) I

ENERAL

.—Subsection (i) of section 146 (relating to treat-

ment of refunding issues) is amended by adding at the end the

following new paragraph:

‘‘(6) T

REATMENT OF CERTAIN RESIDENTIAL RENTAL PROJECT

BONDS AS REFUNDING BONDS IRRESPECTIVE OF OBLIGOR

.—

‘‘(A) I

N GENERAL

.—If, during the 6-month period begin-

ning on the date of a repayment of a loan financed by

an issue 95 percent or more of the net proceeds of which

are used to provide projects described in section 142(d),

such repayment is used to provide a new loan for any

project so described, any bond which is issued to refinance

such issue shall be treated as a refunding issue to the

extent the principal amount of such refunding issue does

not exceed the principal amount of the bonds refunded.

‘‘(B) L

IMITATIONS

.—Subparagraph (A) shall apply to

only one refunding of the original issue and only if—

‘‘(i) the refunding issue is issued not later than

4 years after the date on which the original issue

was issued,

‘‘(ii) the latest maturity date of any bond of the

refunding issue is not later than 34 years after the

date on which the refunded bond was issued, and

‘‘(iii) the refunding issue is approved in accordance

with section 147(f) before the issuance of the refunding

issue.’’.

(b) L

-I

NCOME

OUSING

REDIT

.—Clause (ii) of section

42(h)(4)(A) is amended by inserting ‘‘or such financing is refunded

as described in section 146(i)(6)’’ before the period at the end.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to repayments of loans received after the date of the

enactment of this Act.

SEC. 3008. COORDINATION OF CERTAIN RULES APPLICABLE TO LOW-

INCOME HOUSING CREDIT AND QUALIFIED RESIDENTIAL

RENTAL PROJECT EXEMPT FACILITY BONDS.

(a) D

ETERMINATION OF

EXT

VAILABLE

NIT

.—Paragraph (3)

of section 142(d) (relating to current income determinations) is

amended by adding at the end the following new subparagraph:

‘‘(C) E

XCEPTION FOR PROJECTS WITH RESPECT TO WHICH

AFFORDABLE HOUSING CREDIT IS ALLOWED

.—In the case of

a project with respect to which credit is allowed under

section 42, the second sentence of subparagraph (B) shall

be applied by substituting ‘building (within the meaning

of section 42)’ for ‘project’.’’.

(b) S

TUDENTS

.—Paragraph (2) of section 142(d) (relating to

definitions and special rules) is amended by adding at the end

the following new subparagraph:

‘‘(C) S

TUDENTS

.—Rules similar to the rules of

42(i)(3)(D) shall apply for purposes of this subsection.’’.

INGLE

-R

OOM

CCUPANCY

NITS

.—Paragraph (2) of section

142(d) (relating to definitions and special rules), as amended by

26 USC 42

note.

Applicability.

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122 STAT. 2887 PUBLIC LAW 110–289—JULY 30, 2008

subsection (b), is amended by adding at the end the following

new subparagraph:

‘‘(D) S

INGLE

ROOM OCCUPANCY UNITS

.—A unit shall not

fail to be treated as a residential unit merely because

such unit is a single-room occupancy unit (within the

meaning of section 42).’’.

(d) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to determinations of the status of qualified residential

rental projects for periods beginning after the date of the enactment

of this Act, with respect to bonds issued before, on, or after such

date.

PART III—REFORMS RELATED TO THE LOW-IN-

COME HOUSING CREDIT AND TAX-EXEMPT

HOUSING BONDS

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

INCOME.

(a) I

ENERAL

.—Paragraph (2) of section 142(d), as amended

by section 3008, is amended by adding at the end the following

new subparagraph:

‘‘(E) H

OLD HARMLESS FOR REDUCTIONS IN AREA MEDIAN

GROSS INCOME

.—

‘‘(i) I

N GENERAL

.—Any determination of area

median gross income under subparagraph (B) with

respect to any project for any calendar year after 2008

shall not be less than the area median gross income

determined under such subparagraph with respect to

such project for the calendar year preceding the cal-

endar year for which such determination is made.

‘‘(ii) S

PECIAL RULE FOR CERTAIN CENSUS

CHANGES

.—In the case of a HUD hold harmless

impacted project, the area median gross income with

respect to such project for any calendar year after

2008 (hereafter in this clause referred to as the current

calendar year) shall be the greater of the amount deter-

mined without regard to this clause or the sum of—

‘‘(I) the area median gross income determined

under the HUD hold harmless policy with respect

to such project for calendar year 2008, plus

‘‘(II) any increase in the area median gross

income determined under subparagraph (B) (deter-

mined without regard to the HUD hold harmless

policy and this subparagraph) with respect to such

project for the current calendar year over the area

median gross income (as so determined) with

respect to such project for calendar year 2008.

‘‘(iii) HUD

HOLD HARMLESS POLICY

.—The term

‘HUD hold harmless policy’ means the regulations

under which a policy similar to the rules of clause

(i) applied to prevent a change in the method of deter-

mining area median gross income from resulting in

a reduction in the area median gross income deter-

mined with respect to certain projects in calendar years

2007 and 2008.

26 USC 142

note.

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122 STAT. 2888 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(iv) HUD

HOLD HARMLESS IMPACTED PROJECT

.—

The term ‘HUD hold harmless impacted project’ means

any project with respect to which area median gross

income was determined under subparagraph (B) for

calendar year 2007 or 2008 if such determination would

have been less but for the HUD hold harmless policy.’’.

(b) E

FFECTIVE

ATE

.—The amendment made by this section

shall apply to determinations of area median gross income for

calendar years after 2008.

SEC. 3010. EXCEPTION TO ANNUAL CURRENT INCOME DETERMINA-

TION REQUIREMENT WHERE DETERMINATION NOT REL-

EVANT.

(a) I

ENERAL

.—Subparagraph (A) of section 142(d)(3) is

amended by adding at the end the following new sentence: ‘‘The

preceding sentence shall not apply with respect to any project

for any year if during such year no residential unit in the project

is occupied by a new resident whose income exceeds the applicable

income limit.’’.

(b) E

FFECTIVE

ATE

.—The amendment made by this section

shall apply to years ending after the date of the enactment of

this Act.

Subtitle B—Single Family Housing

SEC. 3011. FIRST-TIME HOMEBUYER CREDIT.

(a) I

ENERAL

.—Subpart C of part IV of subchapter A of

chapter 1 is amended by redesignating section 36 as section 37

and by inserting after section 35 the following new section:

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

‘‘(a) A

LLOWANCE OF

REDIT

.—In the case of an individual who

is a first-time homebuyer of a principal residence in the United

States during a taxable year, there shall be allowed as a credit

against the tax imposed by this subtitle for such taxable year

an amount equal to 10 percent of the purchase price of the residence.

‘‘(b) L

IMITATIONS

.—

‘‘(1) D

OLLAR LIMITATION

.—

‘‘(A) I

N GENERAL

.—Except as otherwise provided in

this paragraph, the credit allowed under subsection (a)

shall not exceed $7,500.

‘‘(B) M

ARRIED INDIVIDUALS FILING SEPARATELY

.—In the

case of a married individual filing a separate return,

subparagraph (A) shall be applied by substituting ‘$3,750’

for ‘$7,500’.

‘‘(C) O

THER INDIVIDUALS

.—If two or more individuals

who are not married purchase a principal residence, the

amount of the credit allowed under subsection (a) shall

be allocated among such individuals in such manner as

the Secretary may prescribe, except that the total amount

of the credits allowed to all such individuals shall not

exceed $7,500.

‘‘(2) L

IMITATION BASED ON MODIFIED ADJUSTED GROSS

INCOME

.—

‘‘(A) I

N GENERAL

.—The amount allowable as a credit

under subsection (a) (determined without regard to this

paragraph) for the taxable year shall be reduced (but not

26 USC 142

note.

26 USC 142

note.

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122 STAT. 2889 PUBLIC LAW 110–289—JULY 30, 2008

below zero) by the amount which bears the same ratio

to the amount which is so allowable as—

‘‘(i) the excess (if any) of—

‘‘(I) the taxpayer’s modified adjusted gross

income for such taxable year, over

‘‘(II) $75,000 ($150,000 in the case of a joint

return), bears to

‘‘(ii) $20,000.

‘‘(B) M

ODIFIED ADJUSTED GROSS INCOME

.—For purposes

of subparagraph (A), the term ‘modified adjusted gross

income’ means the adjusted gross income of the taxpayer

for the taxable year increased by any amount excluded

from gross income under section 911, 931, or 933.

‘‘(c) D

EFINITIONS

.—For purposes of this section—

‘‘(1) F

IRST

TIME HOMEBUYER

.—The term ‘first-time home-

buyer’ means any individual if such individual (and if married,

such individual’s spouse) had no present ownership interest

in a principal residence during the 3-year period ending on

the date of the purchase of the principal residence to which

this section applies.

‘‘(2) P

RINCIPAL RESIDENCE

.—The term ‘principal residence’

has the same meaning as when used in section 121.

‘‘(3) P

URCHASE

.—

‘‘(A) I

N GENERAL

.—The term ‘purchase’ means any

acquisition, but only if—

‘‘(i) the property is not acquired from a person

related to the person acquiring such property, and

‘‘(ii) the basis of the property in the hands of

the person acquiring such property is not determined—

‘‘(I) in whole or in part by reference to the

adjusted basis of such property in the hands of

the person from whom acquired, or

‘‘(II) under section 1014(a) (relating to property

acquired from a decedent).

‘‘(B) C

ONSTRUCTION

.—A residence which is constructed

by the taxpayer shall be treated as purchased by the tax-

payer on the date the taxpayer first occupies such resi-

dence.

‘‘(4) P

URCHASE PRICE

.—The term ‘purchase price’ means

the adjusted basis of the principal residence on the date such

residence is purchased.

‘‘(5) R

ELATED PERSONS

.—A person shall be treated as

related to another person if the relationship between such

persons would result in the disallowance of losses under section

267 or 707(b) (but, in applying section 267(b) and (c) for pur-

poses of this section, paragraph (4) of section 267(c) shall be

treated as providing that the family of an individual shall

include only his spouse, ancestors, and lineal descendants).

‘‘(d) E

XCEPTIONS

.—No credit under subsection (a) shall be

allowed to any taxpayer for any taxable year with respect to the

purchase of a residence if—

‘‘(1) a credit under section 1400C (relating to first-time

homebuyer in the District of Columbia) is allowable to the

taxpayer (or the taxpayer’s spouse) for such taxable year or

any prior taxable year,

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122 STAT. 2890 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(2) the residence is financed by the proceeds of a qualified

mortgage issue the interest on which is exempt from tax under

section 103,

‘‘(3) the taxpayer is a nonresident alien, or

‘‘(4) the taxpayer disposes of such residence (or such resi-

dence ceases to be the principal residence of the taxpayer

(and, if married, the taxpayer’s spouse)) before the close of

such taxable year.

‘‘(e) R

EPORTING

.—If the Secretary requires information

reporting under section 6045 by a person described in subsection

(e)(2) thereof to verify the eligibility of taxpayers for the credit

allowable by this section, the exception provided by section 6045(e)

shall not apply.

‘‘(f) R

ECAPTURE OF

REDIT

.—

‘‘(1) I

N GENERAL

.—Except as otherwise provided in this

subsection, if a credit under subsection (a) is allowed to a

taxpayer, the tax imposed by this chapter shall be increased

by 6

⁄

percent of the amount of such credit for each taxable

year in the recapture period.

‘‘(2) A

CCELERATION OF RECAPTURE

.—If a taxpayer disposes

of the principal residence with respect to which a credit was

allowed under subsection (a) (or such residence ceases to be

the principal residence of the taxpayer (and, if married, the

taxpayer’s spouse)) before the end of the recapture period—

‘‘(A) the tax imposed by this chapter for the taxable

year of such disposition or cessation shall be increased

by the excess of the amount of the credit allowed over

the amounts of tax imposed by paragraph (1) for preceding

taxable years, and

‘‘(B) paragraph (1) shall not apply with respect to such

credit for such taxable year or any subsequent taxable

year.

‘‘(3) L

IMITATION BASED ON GAIN

.—In the case of the sale

of the principal residence to a person who is not related to

the taxpayer, the increase in tax determined under paragraph

(2) shall not exceed the amount of gain (if any) on such sale.

Solely for purposes of the preceding sentence, the adjusted

basis of such residence shall be reduced by the amount of

the credit allowed under subsection (a) to the extent not pre-

viously recaptured under paragraph (1).

‘‘(4) E

XCEPTIONS

.—

‘‘(A) D

EATH OF TAXPAYER

.—Paragraphs (1) and (2) shall

not apply to any taxable year ending after the date of

the taxpayer’s death.

‘‘(B) I

NVOLUNTARY CONVERSION

.—Paragraph (2) shall

not apply in the case of a residence which is compulsorily

or involuntarily converted (within the meaning of section

1033(a)) if the taxpayer acquires a new principal residence

during the 2-year period beginning on the date of the

disposition or cessation referred to in paragraph (2). Para-

graph (2) shall apply to such new principal residence during

the recapture period in the same manner as if such new

principal residence were the converted residence.

‘‘(C) T

RANSFERS BETWEEN SPOUSES OR INCIDENT TO

DIVORCE

.—In the case of a transfer of a residence to which

section 1041(a) applies—

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122 STAT. 2891 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) paragraph (2) shall not apply to such transfer,

and

‘‘(ii) in the case of taxable years ending after such

transfer, paragraphs (1) and (2) shall apply to the

transferee in the same manner as if such transferee

were the transferor (and shall not apply to the trans-

feror).

‘‘(5) J

OINT RETURNS

.—In the case of a credit allowed under

subsection (a) with respect to a joint return, half of such credit

shall be treated as having been allowed to each individual

filing such return for purposes of this subsection.

‘‘(6) R

ETURN REQUIREMENT

.—If the tax imposed by this

chapter for the taxable year is increased under this subsection,

the taxpayer shall, notwithstanding section 6012, be required

to file a return with respect to the taxes imposed under this

subtitle.

‘‘(7) R

ECAPTURE PERIOD

.—For purposes of this subsection,

the term ‘recapture period’ means the 15 taxable years begin-

ning with the second taxable year following the taxable year

in which the purchase of the principal residence for which

a credit is allowed under subsection (a) was made.

‘‘(g) E

LECTION TO

REAT

URCHASE IN

RIOR

EAR

.—In the

case of a purchase of a principal residence after December 31,

2008, and before July 1, 2009, a taxpayer may elect to treat such

purchase as made on December 31, 2008, for purposes of this

section (other than subsection (c)).

‘‘(h) A

PPLICATION OF

ECTION

.—This section shall only apply

to a principal residence purchased by the taxpayer on or after

April 9, 2008, and before July 1, 2009.’’.

(b) C

ONFORMING

MENDMENTS

.—

(1) Section 26(b)(2) is amended by striking ‘‘and’’ at the

end of subparagraph (U), by striking the period and inserting

‘‘, and’’ and the end of subparagraph (V), and by inserting

after subparagraph (V) the following new subparagraph:

‘‘(W) section 36(f) (relating to recapture of homebuyer

credit).’’.

(2) Section 6211(b)(4)(A) is amended by striking ‘‘34,’’ and

all that follows through ‘‘6428’’ and inserting ‘‘34, 35, 36, 53(e),

and 6428’’.

(3) Section 1324(b)(2) of title 31, United States Code, is

amended by inserting ‘‘36,’’ after ‘‘35,’’.

(4) The table of sections for subpart C of part IV of sub-

chapter A of chapter 1 is amended by redesignating the item

relating to section 36 as an item relating to section 37 and

by inserting before such item the following new item:

‘‘Sec. 36. First-time homebuyer credit.’’.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to residences purchased on or after April 9, 2008,

in taxable years ending on or after such date.

SEC. 3012. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY

TAXES FOR NONITEMIZERS.

(a) I

ENERAL

.—Section 63(c)(1) (defining standard deduction)

is amended by striking ‘‘and’’ at the end of subparagraph (A),

by striking the period at the end of subparagraph (B) and inserting

‘‘, and’’, and by adding at the end the following new subparagraph:

26 USC 26

note.

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122 STAT. 2892 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(C) in the case of any taxable year beginning in 2008,

the real property tax deduction.’’.

(b) D

EFINITION

.—Section 63(c) is amended by adding at the

end the following new paragraph:

‘‘(7) R

EAL PROPERTY TAX DEDUCTION

.—For purposes of para-

graph (1), the real property tax deduction is the lesser of—

‘‘(A) the amount allowable as a deduction under this

chapter for State and local taxes described in section

164(a)(1), or

‘‘(B) $500 ($1,000 in the case of a joint return).

Any taxes taken into account under section 62(a) shall not

be taken into account under this paragraph.’’.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2007.

Subtitle C—General Provisions

SEC. 3021. TEMPORARY LIBERALIZATION OF TAX-EXEMPT HOUSING

BOND RULES.

(a) T

EMPORARY

NCREASE IN

OLUME

.—

(1) I

N GENERAL

.—Subsection (d) of section 146 is amended

by adding at the end the following new paragraph:

‘‘(5) I

NCREASE AND SET ASIDE FOR HOUSING BONDS FOR

2008

.— ‘‘(A) I

NCREASE FOR 2008

.—In the case of calendar year

2008, the State ceiling for each State shall be increased

by an amount equal to $11,000,000,000 multiplied by a

fraction—

‘‘(i) the numerator of which is the State ceiling

applicable to the State for calendar year 2008, deter-

mined without regard to this paragraph, and

‘‘(ii) the denominator of which is the sum of the

State ceilings determined under clause (i) for all States.

‘‘(B) S

ET ASIDE

.—

‘‘(i) I

N GENERAL

.—Any amount of the State ceiling

for any State which is attributable to an increase under

this paragraph shall be allocated solely for one or

more qualified housing issues.

‘‘(ii) Q

UALIFIED HOUSING ISSUE

.—For purposes of

this paragraph, the term ‘qualified housing issue’

means—

‘‘(I) an issue described in section 142(a)(7)

(relating to qualified residential rental projects),

or ‘‘(II) a qualified mortgage issue (determined

by substituting ‘12-month period’ for ‘42-month

period’ each place it appears in section

143(a)(2)(D)(i)).’’.

(2) C

ARRYFORWARD OF UNUSED LIMITATIONS

.—Subsection

(f) of section 146 is amended by adding at the end the following

new paragraph:

‘‘(6) S

PECIAL RULES FOR INCREASED VOLUME CAP UNDER

SUBSECTION

(d)(5).—No amount which is attributable to the

increase under subsection (d)(5) may be used—

‘‘(A) for any issue other than a qualified housing issue

(as defined in subsection (d)(5)), or

26 USC 63

note.

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122 STAT. 2893 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(B) to issue any bond after calendar year 2010.’’.

(b) T

EMPORARY

ULE FOR

SE OF

UALIFIED

ORTGAGE

ONDS

ROCEEDS FOR

UBPRIME

EFINANCING

OANS

.—

(1) I

N GENERAL

.—Section 143(k) (relating to other defini-

tions and special rules) is amended by adding at the end

the following new paragraph:

‘‘(12) S

PECIAL RULES FOR SUBPRIME REFINANCINGS

.—

‘‘(A) I

N GENERAL

.—Notwithstanding the requirements

of subsection (i)(1), the proceeds of a qualified mortgage

issue may be used to refinance a mortgage on a residence

which was originally financed by the mortgagor through

a qualified subprime loan.

‘‘(B) S

PECIAL RULES

.—In applying subparagraph (A)

to any refinancing—

‘‘(i) subsection (a)(2)(D)(i) shall be applied by sub-

stituting ‘12-month period’ for ‘42-month period’ each

place it appears,

‘‘(ii) subsection (d) (relating to 3-year requirement)

shall not apply, and

‘‘(iii) subsection (e) (relating to purchase price

requirement) shall be applied by using the market

value of the residence at the time of refinancing in

lieu of the acquisition cost.

‘‘(C) Q

UALIFIED SUBPRIME LOAN

.—The term ‘qualified

subprime loan’ means an adjustable rate single-family resi-

dential mortgage loan made after December 31, 2001, and

before January 1, 2008, that the bond issuer determines

would be reasonably likely to cause financial hardship to

the borrower if not refinanced.

‘‘(D) T

ERMINATION

.—This paragraph shall not apply

to any bonds issued after December 31, 2010.’’.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to bonds issued after the date of the enactment of

this Act.

SEC. 3022. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITATIONS ON

TAX-EXEMPT HOUSING BONDS, LOW-INCOME HOUSING

TAX CREDIT, AND REHABILITATION CREDIT.

(a) T

-E

XEMPT

NTEREST ON

ERTAIN

OUSING

ONDS

XEMPTED

ROM

LTERNATIVE

INIMUM

.—

(1) I

N GENERAL

.—Subparagraph (C) of section 57(a)(5)

(relating to specified private activity bonds) is amended by

redesignating clauses (iii) and (iv) as clauses (iv) and (v), respec-

tively, and by inserting after clause (ii) the following new

clause: ‘‘(iii) E

XCEPTION FOR CERTAIN HOUSING BONDS

.—

For purposes of clause (i), the term ‘private activity

bond’ shall not include any bond issued after the date

of the enactment of this clause if such bond is—

‘‘(I) an exempt facility bond issued as part

of an issue 95 percent or more of the net proceeds

of which are to be used to provide qualified residen-

tial rental projects (as defined in section 142(d)),

‘‘(II) a qualified mortgage bond (as defined

in section 143(a)), or

‘‘(III) a qualified veterans’ mortgage bond (as

defined in section 143(b)).

26 USC 143

note.

Applicability.

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122 STAT. 2894 PUBLIC LAW 110–289—JULY 30, 2008

The preceding sentence shall not apply to any

refunding bond unless such preceding sentence applied

to the refunded bond (or in the case of a series of

refundings, the original bond).’’.

(2) N

O ADJUSTMENT TO ADJUSTED CURRENT EARNINGS

.—

Subparagraph (B) of section 56(g)(4) is amended by adding

at the end the following new clause:

‘‘(iii) T

AX EXEMPT INTEREST ON CERTAIN HOUSING

BONDS

.—Clause (i) shall not apply in the case of any

interest on a bond to which section 57(a)(5)(C)(iii)

applies.’’.

(b) A

LLOWANCE OF

-I

NCOME

OUSING

REDIT

GAINST

LTERNATIVE

INIMUM

.—Subparagraph (B) of section 38(c)(4)

(relating to specified credits) is amended by redesignating clauses

(ii) through (iv) as clauses (iii) through (v) and inserting after

clause (i) the following new clause:

‘‘(ii) the credit determined under section 42 to the

extent attributable to buildings placed in service after

December 31, 2007,’’.

LLOWANCE OF

EHABILITATION

REDIT

GAINST

LTER

NATIVE

INIMUM

.—Subparagraph (B) of section 38(c)(4), as

amended by subsection (b), is amended by striking ‘‘and’’ at the

end of clause (iv), by redesignating clause (v) as clause (vi), and

by inserting after clause (iv) the following new clause:

‘‘(v) the credit determined under section 47 to the

extent attributable to qualified rehabilitation expendi-

tures properly taken into account for periods after

December 31, 2007, and’’.

(d) E

FFECTIVE

ATE

.—

(1) H

OUSING BONDS

.—The amendments made by subsection

(a) shall apply to bonds issued after the date of the enactment

of this Act.

(2) L

OW INCOME HOUSING CREDIT

.—The amendments made

by subsection (b) shall apply to credits determined under section

42 of the Internal Revenue Code of 1986 to the extent attrib-

utable to buildings placed in service after December 31, 2007.

(3) R

EHABILITATION CREDIT

.—The amendments made by

subsection (c) shall apply to credits determined under section

47 of the Internal Revenue Code of 1986 to the extent attrib-

utable to qualified rehabilitation expenditures properly taken

into account for periods after December 31, 2007.

SEC. 3023. BONDS GUARANTEED BY FEDERAL HOME LOAN BANKS

ELIGIBLE FOR TREATMENT AS TAX-EXEMPT BONDS.

(a) I

ENERAL

.—Subparagraph (A) of section 149(b)(3)

(relating to exceptions for certain insurance programs) is amended

by striking ‘‘or’’ at the end of clause (ii), by striking the period

at the end of clause (iii) and inserting ‘‘, or’’ and by adding at

the end the following new clause:

‘‘(iv) subject to subparagraph (E), any guarantee

by a Federal home loan bank made in connection with

the original issuance of a bond during the period begin-

ning on the date of the enactment of this clause and

ending on December 31, 2010 (or a renewal or exten-

sion of a guarantee so made).’’.

26 USC 38

note.

26 USC 38

note.

26 USC 56

note.

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122 STAT. 2895 PUBLIC LAW 110–289—JULY 30, 2008

(b) S

AFETY AND

OUNDNESS

EQUIREMENTS

.—Paragraph (3) of

section 149(b) is amended by adding at the end the following new

subparagraph:

‘‘(E) S

AFETY AND SOUNDNESS REQUIREMENTS FOR FED

ERAL HOME LOAN BANKS

.—Clause (iv) of subparagraph (A)

shall not apply to any guarantee by a Federal home loan

bank unless such bank meets safety and soundness collat-

eral requirements for such guarantees which are at least

as stringent as such requirements which apply under regu-

lations applicable to such guarantees by Federal home

loan banks as in effect on April 9, 2008.’’.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to guarantees made after the date of the enactment

of this Act.

SEC. 3024. MODIFICATION OF RULES PERTAINING TO FIRPTA NONFOR-

EIGN AFFIDAVITS.

(a) I

ENERAL

.—Subsection (b) of section 1445 (relating to

exemptions) is amended by adding at the end the following:

‘‘(9) A

LTERNATIVE PROCEDURE FOR FURNISHING NONFOREIGN

AFFIDAVIT

.—For purposes of paragraphs (2) and (7)—

‘‘(A) I

N GENERAL

.—Paragraph (2) shall be treated as

applying to a transaction if, in connection with a disposition

of a United States real property interest—

‘‘(i) the affidavit specified in paragraph (2) is fur-

nished to a qualified substitute, and

‘‘(ii) the qualified substitute furnishes a statement

to the transferee stating, under penalty of perjury,

that the qualified substitute has such affidavit in his

possession.

‘‘(B) R

EGULATIONS

.—The Secretary shall prescribe such

regulations as may be necessary or appropriate to carry

out this paragraph.’’.

(b) Q

UALIFIED

UBSTITUTE

.—Subsection (f) of section 1445

(relating to definitions) is amended by adding at the end the fol-

lowing new paragraph:

‘‘(6) Q

UALIFIED SUBSTITUTE

.—The term ‘qualified substitute’

means, with respect to a disposition of a United States real

property interest—

‘‘(A) the person (including any attorney or title com-

pany) responsible for closing the transaction, other than

the transferor’s agent, and

‘‘(B) the transferee’s agent.’’.

XEMPTION

PPLY IF

NOWLEDGE OR

OTICE

HAT

FFIDAVIT OR

TATEMENT

ALSE

.—

(1) I

N GENERAL

.—Paragraph (7) of section 1445(b) (relating

to special rules for paragraphs (2) and (3)) is amended to

read as follows:

‘‘(7) S

PECIAL RULES FOR PARAGRAPHS (2)

(3)

AND (9)

.—Para-

graph (2), (3), or (9) (as the case may be) shall not apply

to any disposition—

‘‘(A) if—

‘‘(i) the transferee or qualified substitute has actual

knowledge that the affidavit referred to in such para-

graph, or the statement referred to in paragraph

(9)(A)(ii), is false, or

26 USC 149

note.

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122 STAT. 2896 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) the transferee or qualified substitute receives

a notice (as described in subsection (d)) from a trans-

feror’s agent, transferee’s agent, or qualified substitute

that such affidavit or statement is false, or

‘‘(B) if the Secretary by regulations requires the trans-

feree or qualified substitute to furnish a copy of such affi-

davit or statement to the Secretary and the transferee

or qualified substitute fails to furnish a copy of such affi-

davit or statement to the Secretary at such time and in

such manner as required by such regulations.’’.

(2) L

IABILITY

.—

(A) N

OTICE

.—Paragraph (1) of section 1445(d) (relating

to notice of false affidavit; foreign corporations) is amended

to read as follows:

‘‘(1) N

OTICE OF FALSE AFFIDAVIT

;

FOREIGN CORPORATIONS

.—

If— ‘‘(A) the transferor furnishes the transferee or qualified

substitute an affidavit described in paragraph (2) of sub-

section (b) or a domestic corporation furnishes the trans-

feree an affidavit described in paragraph (3) of subsection

(b), and

‘‘(B) in the case of—

‘‘(i) any transferor’s agent—

‘‘(I) such agent has actual knowledge that such

affidavit is false, or

‘‘(II) in the case of an affidavit described in

subsection (b)(2) furnished by a corporation, such

corporation is a foreign corporation, or

‘‘(ii) any transferee’s agent or qualified substitute,

such agent or substitute has actual knowledge that

such affidavit is false,

such agent or qualified substitute shall so notify the trans-

feree at such time and in such manner as the Secretary

shall require by regulations.’’.

(B) F

AILURE TO FURNISH NOTICE

.—Paragraph (2) of

section 1445(d) (relating to failure to furnish notice) is

amended to read as follows:

‘‘(2) F

AILURE TO FURNISH NOTICE

.—

‘‘(A) I

N GENERAL

.—If any transferor’s agent, trans-

feree’s agent, or qualified substitute is required by para-

graph (1) to furnish notice, but fails to furnish such notice

at such time or times and in such manner as may be

required by regulations, such agent or substitute shall have

the same duty to deduct and withhold that the transferee

would have had if such agent or substitute had complied

with paragraph (1).

‘‘(B) L

IABILITY LIMITED TO AMOUNT OF COMPENSA

TION

.—An agent’s or substitute’s liability under subpara-

graph (A) shall be limited to the amount of compensation

the agent or substitute derives from the transaction.’’.

ONFORMING AMENDMENT

.—The heading for sec-

tion 1445(d) is amended by striking ‘‘

RANSFEREE

’

GENTS

’’ and inserting ‘‘, T

RANSFEREE

’

GENTS

UALI

FIED

UBSTITUTES

’’.

(d) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to dispositions of United States real property interests

after the date of the enactment of this Act.

Real property.

26 USC 1445

note.

Regulations.

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122 STAT. 2897 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 3025. MODIFICATION OF DEFINITION OF TAX-EXEMPT USE PROP-

ERTY FOR PURPOSES OF THE REHABILITATION CREDIT.

(a) I

ENERAL

.—Subclause (I) of section 47(c)(2)(B)(v) is

amended by striking ‘‘section 168(h)’’ and inserting ‘‘section 168(h),

except that ‘50 percent’ shall be substituted for ‘35 percent’ in

paragraph (1)(B)(iii) thereof’’.

(b) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to expenditures properly taken into account for periods

after December 31, 2007.

SEC. 3026. EXTENSION OF SPECIAL RULE FOR MORTGAGE REVENUE

BONDS FOR RESIDENCES LOCATED IN DISASTER AREAS.

(a) I

ENERAL

.—Paragraph (11) of section 143(k) is amended—

(1) by striking ‘‘December 31, 1996’’ and inserting ‘‘May

1, 2008’’, and

(2) by striking ‘‘January 1, 1999’’ and inserting ‘‘January

1, 2010’’.

(b) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to bonds issued after May 1, 2008.

SEC. 3027. TRANSFER OF FUNDS APPROPRIATED TO CARRY OUT 2008

RECOVERY REBATES FOR INDIVIDUALS.

Of the funds made available by section 101(e)(1)(A) of the

Economic Stimulus Act of 2008 (Public Law 110-185), the Secretary

of the Treasury may transfer funds among the accounts specified

in such section to carry out section 6428 of the Internal Revenue

Code of 1986. The Secretary shall provide advance notification

of any such transfer to the Committees on Appropriations of the

House of Representatives and the Senate, and any transfer greater

than $5,000,000 shall be subject to the approval of such Committees.

TITLE II—REFORMS RELATED TO REAL

ESTATE INVESTMENT TRUSTS

Subtitle A—Foreign Currency and Other

Qualified Activities

SEC. 3031. REVISIONS TO REIT INCOME TESTS.

(a) F

OREIGN

URRENCY

AINS

ROSS

NCOME IN

PPLYING

REIT I

NCOME

ESTS

.—Section 856 (defining real estate investment

trust) is amended by adding at the end the following new subsection:

‘‘(n) R

ULES

EGARDING

OREIGN

URRENCY

RANSACTIONS

.—

‘‘(1) I

N GENERAL

.—For purposes of this part—

‘‘(A) passive foreign exchange gain for any taxable year

shall not constitute gross income for purposes of subsection

(c)(2), and

‘‘(B) real estate foreign exchange gain for any taxable

year shall not constitute gross income for purposes of sub-

section (c)(3).

‘‘(2) R

EAL ESTATE FOREIGN EXCHANGE GAIN

.—For purposes

of this subsection, the term ‘real estate foreign exchange gain’

means—

‘‘(A) foreign currency gain (as defined in section

988(b)(1)) which is attributable to—

Notification.

26 USC 143

note.

26 USC 47

note.

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122 STAT. 2898 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) any item of income or gain described in sub-

section (c)(3),

‘‘(ii) the acquisition or ownership of obligations

secured by mortgages on real property or on interests

in real property (other than foreign currency gain

attributable to any item of income or gain described

in clause (i)), or

‘‘(iii) becoming or being the obligor under obliga-

tions secured by mortgages on real property or on

interests in real property (other than foreign currency

gain attributable to any item of income or gain

described in clause (i)),

‘‘(B) section 987 gain attributable to a qualified busi-

ness unit (as defined by section 989) of the real estate

investment trust, but only if such qualified business unit

meets the requirements under—

‘‘(i) subsection (c)(3) for the taxable year, and

‘‘(ii) subsection (c)(4)(A) at the close of each quarter

that the real estate investment trust has directly or

indirectly held the qualified business unit, and

‘‘(C) any other foreign currency gain as determined

by the Secretary.

‘‘(3) P

ASSIVE FOREIGN EXCHANGE GAIN

.—For purposes of

this subsection, the term ‘passive foreign exchange gain’

means—

‘‘(A) real estate foreign exchange gain,

‘‘(B) foreign currency gain (as defined in section

988(b)(1)) which is not described in subparagraph (A) and

which is attributable to—

‘‘(i) any item of income or gain described in sub-

section (c)(2),

‘‘(ii) the acquisition or ownership of obligations

(other than foreign currency gain attributable to any

item of income or gain described in clause (i)), or

‘‘(iii) becoming or being the obligor under obliga-

tions (other than foreign currency gain attributable

to any item of income or gain described in clause

(i)), and

‘‘(C) any other foreign currency gain as determined

by the Secretary.

‘‘(4) E

XCEPTION FOR INCOME FROM SUBSTANTIAL AND REG

ULAR TRADING

.—Notwithstanding this subsection or any other

provision of this part, any section 988 gain derived by a corpora-

tion, trust, or association from dealing, or engaging in substan-

tial and regular trading, in securities (as defined in section

475(c)(2)) shall constitute gross income which does not qualify

under paragraph (2) or (3) of subsection (c). This paragraph

shall not apply to income which does not constitute gross income

by reason of subsection (c)(5)(G).’’.

(b) A

DDITION TO

REIT H

EDGING

ULE

.—Subparagraph (G) of

section 856(c)(5) is amended to read as follows:

‘‘(G) T

REATMENT OF CERTAIN HEDGING INSTRUMENTS

.—

Except to the extent as determined by the Secretary—

‘‘(i) any income of a real estate investment trust

from a hedging transaction (as defined in clause (ii)

or (iii) of section 1221(b)(2)(A)) which is clearly identi-

fied pursuant to section 1221(a)(7), including gain from

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122 STAT. 2899 PUBLIC LAW 110–289—JULY 30, 2008

the sale or disposition of such a transaction, shall

not constitute gross income under paragraphs (2) and

(3) to the extent that the transaction hedges any

indebtedness incurred or to be incurred by the trust

to acquire or carry real estate assets, and

‘‘(ii) any income of a real estate investment trust

from a transaction entered into by the trust primarily

to manage risk of currency fluctuations with respect

to any item of income or gain described in paragraph

(2) or (3) (or any property which generates such income

or gain), including gain from the termination of such

a transaction, shall not constitute gross income under

paragraphs (2) and (3), but only if such transaction

is clearly identified as such before the close of the

day on which it was acquired, originated, or entered

into (or such other time as the Secretary may pre-

scribe).’’.

UTHORITY TO

XCLUDE

TEMS OF

NCOME

ROM

REIT

NCOME

ESTS

.—Section 856(c)(5) is amended by adding at the

end the following new subparagraph:

‘‘(J) S

ECRETARIAL AUTHORITY TO EXCLUDE OTHER ITEMS

OF INCOME

.—To the extent necessary to carry out the pur-

poses of this part, the Secretary is authorized to determine,

solely for purposes of this part, whether any item of income

or gain which—

‘‘(i) does not otherwise qualify under paragraph

(2) or (3) may be considered as not constituting gross

income for purposes of paragraphs (2) or (3), or

‘‘(ii) otherwise constitutes gross income not quali-

fying under paragraph (2) or (3) may be considered

as gross income which qualifies under paragraph (2)

or (3).’’.

SEC. 3032. REVISIONS TO REIT ASSET TESTS.

(a) C

LARIFICATION OF

ALUATION

EST

.—The first sentence in

the matter following section 856(c)(4)(B)(iii)(III) is amended by

inserting ‘‘(including a discrepancy caused solely by the change

in the foreign currency exchange rate used to value a foreign

asset)’’ after ‘‘such requirements’’.

(b) C

LARIFICATION OF

ERMISSIBLE

SSET

ATEGORY

.—Section

856(c)(5), as amended by section 3031(c), is amended by adding

at the end the following new subparagraph:

‘‘(K) C

ASH

.—If the real estate investment trust or its

qualified business unit (as defined in section 989) uses

any foreign currency as its functional currency (as defined

in section 985(b)), the term ‘cash’ includes such foreign

currency but only to the extent such foreign currency—

‘‘(i) is held for use in the normal course of the

activities of the trust or qualified business unit which

give rise to items of income or gain described in para-

graph (2) or (3) of subsection (c) or are directly related

to acquiring or holding assets described in subsection

(c)(4), and

‘‘(ii) is not held in connection with an activity

described in subsection (n)(4).’’.

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122 STAT. 2900 PUBLIC LAW 110–289—JULY 30, 2008

SEC. 3033. CONFORMING FOREIGN CURRENCY REVISIONS.

(a) N

NCOME

ROM

ORECLOSURE

ROPERTY

.—Clause (i)

of section 857(b)(4)(B) is amended to read as follows:

‘‘(i) gain (including any foreign currency gain, as

defined in section 988(b)(1)) from the sale or other

disposition of foreclosure property described in section

1221(a)(1) and the gross income for the taxable year

derived from foreclosure property (as defined in section

856(e)), but only to the extent such gross income is

not described in (or, in the case of foreign currency

gain, not attributable to gross income described in)

section 856(c)(3) other than subparagraph (F) thereof,

over’’.

(b) N

NCOME

ROM

ROHIBITED

RANSACTIONS

.—Clause (i)

of section 857(b)(6)(B) is amended to read as follows:

‘‘(i) the term ‘net income derived from prohibited

transactions’ means the excess of the gain (including

any foreign currency gain, as defined in section

988(b)(1)) from prohibited transactions over the deduc-

tions (including any foreign currency loss, as defined

in section 988(b)(2)) allowed by this chapter which

are directly connected with prohibited transactions;’’.

Subtitle B—Taxable REIT Subsidiaries

SEC. 3041. CONFORMING TAXABLE REIT SUBSIDIARY ASSET TEST.

Section 856(c)(4)(B)(ii) is amended—

(1) by striking ‘‘20 percent’’ and inserting ‘‘25 percent’’,

and (2) by striking ‘‘REIT subsidiaries’’ and all that follows,

and inserting ‘‘REIT subsidiaries,’’.

Subtitle C—Dealer Sales

SEC. 3051. HOLDING PERIOD UNDER SAFE HARBOR.

(a) I

ENERAL

.—Section 857(b)(6) (relating to income from

prohibited transactions) is amended—

(1) by striking ‘‘4 years’’ in subparagraphs (C)(i), (C)(iv),

and (D)(i) and inserting ‘‘2 years’’,

(2) by striking ‘‘4-year period’’ in subparagraphs (C)(ii),

(D)(ii), and (D)(iii) and inserting ‘‘2-year period’’, and

(3) by striking ‘‘real estate asset’’and all that follows

through ‘‘if’’ in the matter preceding clause (i) of subparagraphs

defined in section 856(c)(5)(B)) and which is described in section

1221(a)(1) if’’.

(b) R

ETENTION OF

XISTING

.—Section 857(b)(6) is

amended—

(1) by striking subparagraph (G) and redesignating sub-

paragraphs (H) and (I) as subparagraphs (G) and (H), respec-

tively, and

(2) in subparagraph (G), as so redesignated, by adding

at the end the following: ‘‘For purposes of the preceding sen-

tence, the reference to subparagraph (D) shall be a reference

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122 STAT. 2901 PUBLIC LAW 110–289—JULY 30, 2008

to such subparagraph as in effect on the day before the enact-

ment of the Housing Assistance Tax Act of 2008, as modified

by subparagraph (G) as so in effect.’’.

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

Section 857(b)(6) is amended—

(1) by striking the semicolon at the end of subparagraph

(C)(iii) and inserting ‘‘, or (III) the fair market value of property

(other than sales of foreclosure property or sales to which

section 1033 applies) sold during the taxable year does not

exceed 10 percent of the fair market value of all of the assets

of the trust as of the beginning of the taxable year;’’, and

(2) by adding ‘‘or’’ at the end of subclause (II) of subpara-

graph (D)(iv) and by adding at the end of such subparagraph

the following new subclause:

‘‘(III) the fair market value of property (other than

sales of foreclosure property or sales to which section

1033 applies) sold during the taxable year does not

exceed 10 percent of the fair market value of all of

the assets of the trust as of the beginning of the

taxable year,’’.

Subtitle D—Health Care REITs

SEC. 3061. CONFORMITY FOR HEALTH CARE FACILITIES.

(a) R

ELATED

ARTY

ENTALS

.—Subparagraph (B) of section

856(d)(8) (relating to special rule for taxable REIT subsidiaries)

is amended to read as follows:

‘‘(B) E

XCEPTION FOR CERTAIN LODGING FACILITIES AND

HEALTH CARE PROPERTY

.—The requirements of this

subparagraph are met with respect to an interest in real

property which is a qualified lodging facility (as defined

in paragraph (9)(D)) or a qualified health care property

(as defined in subsection (e)(6)(D)(i)) leased by the trust

to a taxable REIT subsidiary of the trust if the property

is operated on behalf of such subsidiary by a person who

is an eligible independent contractor. For purposes of this

section, a taxable REIT subsidiary is not considered to

be operating or managing a qualified health care property

or qualified lodging facility solely because it—

‘‘(i) directly or indirectly possesses a license,

permit, or similar instrument enabling it to do so,

or ‘‘(ii) employs individuals working at such facility

or property located outside the United States, but only

if an eligible independent contractor is responsible for

the daily supervision and direction of such individuals

on behalf of the taxable REIT subsidiary pursuant

to a management agreement or similar service con-

tract.’’.

(b) E

LIGIBLE

NDEPENDENT

ONTRACTOR

.—Subparagraphs (A)

and (B) of section 856(d)(9) (relating to eligible independent con-

tractor) are amended to read as follows:

‘‘(A) I

N GENERAL

.—The term ‘eligible independent con-

tractor’ means, with respect to any qualified lodging facility

or qualified health care property (as defined in subsection

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122 STAT. 2902 PUBLIC LAW 110–289—JULY 30, 2008

(e)(6)(D)(i)), any independent contractor if, at the time such

contractor enters into a management agreement or other

similar service contract with the taxable REIT subsidiary

to operate such qualified lodging facility or qualified health

care property, such contractor (or any related person) is

actively engaged in the trade or business of operating quali-

fied lodging facilities or qualified health care properties,

respectively, for any person who is not a related person

with respect to the real estate investment trust or the

taxable REIT subsidiary.

‘‘(B) S

PECIAL RULES

.—Solely for purposes of this para-

graph and paragraph (8)(B), a person shall not fail to

be treated as an independent contractor with respect to

any qualified lodging facility or qualified health care prop-

erty (as so defined) by reason of the following:

‘‘(i) The taxable REIT subsidiary bears the

expenses for the operation of such qualified lodging

facility or qualified health care property pursuant to

the management agreement or other similar service

contract.

‘‘(ii) The taxable REIT subsidiary receives the reve-

nues from the operation of such qualified lodging

facility or qualified health care property, net of

expenses for such operation and fees payable to the

operator pursuant to such agreement or contract.

‘‘(iii) The real estate investment trust receives

income from such person with respect to another prop-

erty that is attributable to a lease of such other prop-

erty to such person that was in effect as of the later

of— ‘‘(I) January 1, 1999, or

‘‘(II) the earliest date that any taxable REIT

subsidiary of such trust entered into a manage-

ment agreement or other similar service contract

with such person with respect to such qualified

lodging facility or qualified health care property.’’.

AXABLE

EIT

UBSIDIARIES

.—The last sentence of section

856(l)(3) is amended—

(1) by inserting ‘‘or a health care facility’’ after ‘‘a lodging

facility’’, and

(2) by inserting ‘‘or health care facility’’ after ‘‘such lodging

facility’’.

Subtitle E—Effective Dates

SEC. 3071. EFFECTIVE DATES.

(a) I

ENERAL

.—Except as otherwise provided in this section,

the amendments made by this title shall apply to taxable years

beginning after the date of the enactment of this Act.

(b) REIT I

NCOME

ESTS

.—

(1) The amendments made by section 3031(a) and (c) shall

apply to gains and items of income recognized after the date

of the enactment of this Act.

(2) The amendment made by section 3031(b) shall apply

to transactions entered into after the date of the enactment

of this Act.

26 USC 856

note.

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122 STAT. 2903 PUBLIC LAW 110–289—JULY 30, 2008

ONFORMING

OREIGN

URRENCY

EVISIONS

.—

(1) The amendment made by section 3033(a) shall apply

to gains recognized after the date of the enactment of this

Act. (2) The amendment made by section 3033(b) shall apply

to gains and deductions recognized after the date of the enact-

ment of this Act.

(d) D

EALER

ALES

.—The amendments made by subtitle C shall

apply to sales made after the date of the enactment of this Act.

TITLE III—REVENUE PROVISIONS

Subtitle A—General Provisions

SEC. 3081. ELECTION TO ACCELERATE THE AMT AND RESEARCH

CREDITS IN LIEU OF BONUS DEPRECIATION.

(a) I

ENERAL

.—Section 168(k) is amended by adding at the

end the following new paragraph:

‘‘(4) E

LECTION TO ACCELERATE THE AMT AND RESEARCH

CREDITS IN LIEU OF BONUS DEPRECIATION

.—

‘‘(A) I

N GENERAL

.—If a corporation elects to have this

paragraph apply for the first taxable year of the taxpayer

ending after March 31, 2008, in the case of such taxable

year and each subsequent taxable year—

‘‘(i) paragraph (1) shall not apply to any eligible

qualified property placed in service by the taxpayer,

‘‘(ii) the applicable depreciation method used under

this section with respect to such property shall be

the straight line method, and

‘‘(iii) each of the limitations described in subpara-

graph (B) for any such taxable year shall be increased

by the bonus depreciation amount which is—

‘‘(I) determined for such taxable year under

subparagraph (C), and

‘‘(II) allocated to such limitation under

subparagraph (E).

‘‘(B) L

IMITATIONS TO BE INCREASED

.—The limitations

described in this subparagraph are—

‘‘(i) the limitation imposed by section 38(c), and

‘‘(ii) the limitation imposed by section 53(c).

‘‘(C) B

ONUS DEPRECIATION AMOUNT

.—For purposes of

this paragraph—

‘‘(i) I

N GENERAL

.—The bonus depreciation amount

for any taxable year is an amount equal to 20 percent

of the excess (if any) of—

‘‘(I) the aggregate amount of depreciation

which would be allowed under this section for

eligible qualified property placed in service by the

taxpayer during such taxable year if paragraph

(1) applied to all such property, over

‘‘(II) the aggregate amount of depreciation

which would be allowed under this section for

eligible qualified property placed in service by the

taxpayer during such taxable year if paragraph

(1) did not apply to any such property.

Applicability.

Effective dates.

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122 STAT. 2904 PUBLIC LAW 110–289—JULY 30, 2008

The aggregate amounts determined under subclauses

(I) and (II) shall be determined without regard to any

election made under subsection (b)(2)(C), (b)(3)(D), or

(g)(7) and without regard to subparagraph (A)(ii).

‘‘(ii) M

AXIMUM AMOUNT

.—The bonus depreciation

amount for any taxable year shall not exceed the max-

imum increase amount under clause (iii), reduced (but

not below zero) by the sum of the bonus depreciation

amounts for all preceding taxable years.

‘‘(iii) M

AXIMUM INCREASE AMOUNT

.—For purposes

of clause (ii), the term ‘maximum increase amount’

means, with respect to any corporation, the lesser of—

‘‘(I) $30,000,000, or

‘‘(II) 6 percent of the sum of the business credit

increase amount, and the AMT credit increase

amount, determined with respect to such corpora-

tion under subparagraph (E).

‘‘(iv) A

GGREGATION RULE

.—All corporations which

are treated as a single employer under section 52(a)

shall be treated—

‘‘(I) as 1 taxpayer for purposes of this para-

graph, and

‘‘(II) as having elected the application of this

paragraph if any such corporation so elects.

‘‘(D) E

LIGIBLE QUALIFIED PROPERTY

.—For purposes of

this paragraph, the term ‘eligible qualified property’ means

qualified property under paragraph (2), except that in

applying paragraph (2) for purposes of this paragraph—

‘‘(i) ‘March 31, 2008’ shall be substituted for

‘December 31, 2007’ each place it appears in subpara-

graph (A) and clauses (i) and (ii) of subparagraph

(E) thereof, and

‘‘(ii) only adjusted basis attributable to manufac-

ture, construction, or production after March 31, 2008,

and before January 1, 2009, shall be taken into account

under subparagraph (B)(ii) thereof.

‘‘(E) A

LLOCATION OF BONUS DEPRECIATION AMOUNTS

.—

‘‘(i) I

N GENERAL

.—Subject to clauses (ii) and (iii),

the taxpayer shall, at such time and in such manner

as the Secretary may prescribe, specify the portion

(if any) of the bonus depreciation amount for the tax-

able year which is to be allocated to each of the limita-

tions described in subparagraph (B) for such taxable

year.

‘‘(ii) L

IMITATION ON ALLOCATIONS

.—The portion of

the bonus depreciation amount which may be allocated

under clause (i) to the limitations described in subpara-

graph (B) for any taxable year shall not exceed—

‘‘(I) in the case of the limitation described in

subparagraph (B)(i), the excess of the business

credit increase amount over the bonus depreciation

amount allocated to such limitation for all pre-

ceding taxable years, and

‘‘(II) in the case of the limitation described

in subparagraph (B)(ii), the excess of the AMT

credit increase amount over the bonus depreciation

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122 STAT. 2905 PUBLIC LAW 110–289—JULY 30, 2008

amount allocated to such limitation for all pre-

ceding taxable years.

‘‘(iii) B

USINESS CREDIT INCREASE AMOUNT

.—For

purposes of this paragraph, the term ‘business credit

increase amount’ means the amount equal to the por-

tion of the credit allowable under section 38 (deter-

mined without regard to subsection (c) thereof) for

the first taxable year ending after March 31, 2008,

which is allocable to business credit carryforwards to

such taxable year which are—

‘‘(I) from taxable years beginning before

January 1, 2006, and

‘‘(II) properly allocable (determined under the

rules of section 38(d)) to the research credit deter-

mined under section 41(a).

‘‘(iv) AMT

CREDIT INCREASE AMOUNT

.—For pur-

poses of this paragraph, the term ‘AMT credit increase

amount’ means the amount equal to the portion of

the minimum tax credit under section 53(b) for the

first taxable year ending after March 31, 2008, deter-

mined by taking into account only the adjusted min-

imum tax for taxable years beginning before January

1, 2006. For purposes of the preceding sentence, credits

shall be treated as allowed on a first-in, first-out basis.

‘‘(F) C

REDIT REFUNDABLE

.—For purposes of section

6401(b), the aggregate increase in the credits allowable

under part IV of subchapter A for any taxable year

resulting from the application of this paragraph shall be

treated as allowed under subpart C of such part (and

not any other subpart).

‘‘(G) O

THER RULES

.—

‘‘(i) E

LECTION

.—Any election under this paragraph

(including any allocation under subparagraph (E)) may

be revoked only with the consent of the Secretary.

‘‘(ii) P

ARTNERSHIPS WITH ELECTING PARTNERS

.—In

the case of a corporation making an election under

subparagraph (A) and which is a partner in a partner-

ship, for purposes of determining such corporation’s

distributive share of partnership items under section

702—

‘‘(I) paragraph (1) shall not apply to any

eligible qualified property, and

‘‘(II) the applicable depreciation method used

under this section with respect to such property

shall be the straight line method.

‘‘(iii) S

PECIAL RULE FOR PASSENGER AIRCRAFT

.—

In the case of any passenger aircraft, the written

binding contract limitation under paragraph

(2)(A)(iii)(I) shall not apply for purposes of subpara-

graphs (C)(i)(I) and (D).’’.

(b) A

PPLICATION TO

ERTAIN

UTOMOTIVE

ARTNERSHIPS

.—

(1) I

N GENERAL

.—If an applicable partnership elects the

application of this subsection—

(A) the partnership shall be treated as having made

a payment against the tax imposed by chapter 1 of the

Internal Revenue Code of 1986 for any applicable taxable

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122 STAT. 2906 PUBLIC LAW 110–289—JULY 30, 2008

year of the partnership in the amount determined under

paragraph (3),

(B) in the case of any eligible qualified property placed

in service by the partnership during any applicable taxable

year— (i) section 168(k) of such Code shall not apply

in determining the amount of the deduction allowable

with respect to such property under section 168 of

such Code,

(ii) the applicable depreciation method used with

respect to such property shall be the straight line

method, and

41 of such Code for any applicable taxable year with respect

to the partnership shall be reduced by the amount of the

deemed payment under subparagraph (A) for the taxable

year.

(2) T

REATMENT OF DEEMED PAYMENT

.—

(A) I

N GENERAL

.—Notwithstanding any other provision

of the Internal Revenue Code of 1986, the Secretary of

the Treasury or his delegate shall not use the payment

of tax described in paragraph (1) as an offset or credit

against any tax liability of the applicable partnership or

any partner but shall refund such payment to the

applicable partnership.

(B) N

O INTEREST

.—The payment described in para-

graph (1) shall not be taken into account in determining

any amount of interest under such Code.

(3) A

MOUNT OF DEEMED PAYMENT

.—The amount determined

under this paragraph for any applicable taxable year shall

be the least of the following:

(A) The amount which would be determined for the

taxable year under section 168(k)(4)(C)(i) of the Internal

Revenue Code of 1986 (as added by the amendments made

by this section) if an election under section 168(k)(4) of

such Code were in effect with respect to the partnership.

(B) The amount of the credit determined under section

41 of such Code for the taxable year with respect to the

partnership.

ment under this subsection for any preceding taxable year.

(4) D

EFINITIONS

.—For purposes of this subsection—

(A) A

PPLICABLE PARTNERSHIP

.—The term ‘‘applicable

partnership’’ means a domestic partnership that—

(i) was formed effective on August 3, 2007, and

(ii) will produce in excess of 675,000 automobiles

during the period beginning on January 1, 2008, and

ending on June 30, 2008.

(B) A

PPLICABLE TAXABLE YEAR

.—The term ‘‘applicable

taxable year’’ means any taxable year during which eligible

qualified property is placed in service.

LIGIBLE QUALIFIED PROPERTY

.—The term ‘‘eligible

qualified property’’ has the meaning given such term by

section 168(k)(4)(D) of the Internal Revenue Code of 1986

(as added by the amendments made by this section).

ONFORMING

MENDMENT

.—Section 1324(b)(2) of title 31,

United States Code, as amended by this Act, is amended—

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122 STAT. 2907 PUBLIC LAW 110–289—JULY 30, 2008

(1) by inserting ‘‘168(k)(4)(F),’’ after ‘‘36,’’, and

(2) by inserting ‘‘, or due under section 3081(b)(2) of the

Housing Assistance Tax Act of 2008’’ before the period at the

end.

(d) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to taxable years ending after March 31, 2008.

SEC. 3082. CERTAIN GO ZONE INCENTIVES.

(a) U

SE OF

MENDED

NCOME

ETURNS TO

AKE

NTO

CCOUNT

ECEIPT OF

ERTAIN

URRICANE

-R

ELATED

ASUALTY

OSS

RANTS BY

ISALLOWING

REVIOUSLY

AKEN

ASUALTY

OSS

EDUCTIONS

.—

(1) I

N GENERAL

.—Notwithstanding any other provision of

the Internal Revenue Code of 1986, if a taxpayer claims a

deduction for any taxable year with respect to a casualty loss

to a principal residence (within the meaning of section 121

of such Code) resulting from Hurricane Katrina, Hurricane

Rita, or Hurricane Wilma and in a subsequent taxable year

receives a grant under Public Law 109–148, 109–234, or 110–

116 as reimbursement for such loss, such taxpayer may elect

to file an amended income tax return for the taxable year

in which such deduction was allowed (and for any taxable

year to which such deduction is carried) and reduce (but not

below zero) the amount of such deduction by the amount of

such reimbursement.

(2) T

IME OF FILING AMENDED RETURN

.—Paragraph (1) shall

apply with respect to any grant only if any amended income

tax returns with respect to such grant are filed not later than

the later of—

(A) the due date for filing the tax return for the taxable

year in which the taxpayer receives such grant, or

(B) the date which is 1 year after the date of the

enactment of this Act.

(3) W

AIVER OF PENALTIES AND INTEREST

.—Any under-

payment of tax resulting from the reduction under paragraph

(1) of the amount otherwise allowable as a deduction shall

not be subject to any penalty or interest under such Code

if such tax is paid not later than 1 year after the filing of

the amended return to which such reduction relates.

(b) W

AIVER OF

EADLINE ON

ONSTRUCTION OF

GO Z

ONE

ROP

ERTY

LIGIBLE FOR

ONUS

EPRECIATION

.—

(1) I

N GENERAL

.—Subparagraph (B) of section 1400N(d)(3)

is amended to read as follows:

‘‘(B) without regard to ‘and before January 1, 2009’

in clause (i) thereof, and’’.

(2) E

FFECTIVE DATE

.—The amendment made by this sub-

section shall apply to property placed in service after December

31, 2007.

NCLUSION OF

ERTAIN

OUNTIES IN

ULF

PPORTUNITY

ONE FOR

URPOSES OF

-E

XEMPT

OND

INANCING

.—

(1) I

N GENERAL

.—Subsection (a) of section 1400N is

amended by adding at the end the following new paragraph:

‘‘(8) I

NCLUSION OF CERTAIN COUNTIES

.—For purposes of this

subsection, the Gulf Opportunity Zone includes Colbert County,

Alabama and Dallas County, Alabama.’’.

Alabama.

26 USC 1400N

note.

Deadline.

26 USC 168

note.

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122 STAT. 2908 PUBLIC LAW 110–289—JULY 30, 2008

(2) E

FFECTIVE DATE

.—The amendment made by this sub-

section shall take effect as if included in the provisions of

the Gulf Opportunity Zone Act of 2005 to which it relates.

SEC. 3083. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.

Subsection (b) of section 3101 of title 31, United States Code,

is amended by striking out the dollar limitation contained in such

subsection and inserting in lieu thereof $10,615,000,000,000.

Subtitle B—Revenue Offsets

SEC. 3091. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT

OF PAYMENT CARD AND THIRD PARTY NETWORK TRANS-

ACTIONS.

(a) I

ENERAL

.—Subpart B of part III of subchapter A of

chapter 61 is amended by adding at the end the following new

section:

‘‘SEC. 6050W. RETURNS RELATING TO PAYMENTS MADE IN SETTLE-

MENT OF PAYMENT CARD AND THIRD PARTY NETWORK

TRANSACTIONS.

‘‘(a) I

ENERAL

.—Each payment settlement entity shall make

a return for each calendar year setting forth—

‘‘(1) the name, address, and TIN of each participating payee

to whom one or more payments in settlement of reportable

payment transactions are made, and

‘‘(2) the gross amount of the reportable payment trans-

actions with respect to each such participating payee.

Such return shall be made at such time and in such form and

manner as the Secretary may require by regulations.

‘‘(b) P

AYMENT

ETTLEMENT

NTITY

.—For purposes of this sec-

tion— ‘‘(1) I

N GENERAL

.—The term ‘payment settlement entity’

means—

‘‘(A) in the case of a payment card transaction, the

merchant acquiring entity, and

‘‘(B) in the case of a third party network transaction,

the third party settlement organization.

‘‘(2) M

ERCHANT ACQUIRING ENTITY

.—The term ‘merchant

acquiring entity’ means the bank or other organization which

has the contractual obligation to make payment to participating

payees in settlement of payment card transactions.

‘‘(3) T

HIRD PARTY SETTLEMENT ORGANIZATION

.—The term

‘third party settlement organization’ means the central

organization which has the contractual obligation to make pay-

ment to participating payees of third party network trans-

actions.

‘‘(4) S

PECIAL RULES RELATED TO INTERMEDIARIES

.—For pur-

poses of this section—

‘‘(A) A

GGREGATED PAYEES

.—In any case where report-

able payment transactions of more than one participating

payee are settled through an intermediary—

‘‘(i) such intermediary shall be treated as the

participating payee for purposes of determining the

reporting obligations of the payment settlement entity

with respect to such transactions, and

26 USC 1400N

note.

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122 STAT. 2909 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(ii) such intermediary shall be treated as the pay-

ment settlement entity with respect to the settlement

of such transactions with the participating payees.

‘‘(B) E

LECTRONIC PAYMENT FACILITATORS

.—In any case

where an electronic payment facilitator or other third party

makes payments in settlement of reportable payment trans-

actions on behalf of the payment settlement entity, the

return under subsection (a) shall be made by such electronic

payment facilitator or other third party in lieu of the pay-

ment settlement entity.

‘‘(c) R

EPORTABLE

AYMENT

RANSACTION

.—For purposes of this

section—

‘‘(1) I

N GENERAL

.—The term ‘reportable payment trans-

action’ means any payment card transaction and any third

party network transaction.

‘‘(2) P

AYMENT CARD TRANSACTION

.—The term ‘payment card

transaction’ means any transaction in which a payment card

is accepted as payment.

‘‘(3) T

HIRD PARTY NETWORK TRANSACTION

.—The term ‘third

party network transaction’ means any transaction which is

settled through a third party payment network.

‘‘(d) O

THER

EFINITIONS

.—For purposes of this section—

‘‘(1) P

ARTICIPATING PAYEE

.—

‘‘(A) I

N GENERAL

.—The term ‘participating payee’

means—

‘‘(i) in the case of a payment card transaction,

any person who accepts a payment card as payment,

and

‘‘(ii) in the case of a third party network trans-

action, any person who accepts payment from a third

party settlement organization in settlement of such

transaction.

‘‘(B) E

XCLUSION OF FOREIGN PERSONS

.—Except as pro-

vided by the Secretary in regulations or other guidance,

such term shall not include any person with a foreign

address.

‘‘(C) I

NCLUSION OF GOVERNMENTAL UNITS

.—The term

‘person’ includes any governmental unit (and any agency

or instrumentality thereof).

‘‘(2) P

AYMENT CARD

.—The term ‘payment card’ means any

card which is issued pursuant to an agreement or arrangement

which provides for—

‘‘(A) one or more issuers of such cards,

‘‘(B) a network of persons unrelated to each other,

and to the issuer, who agree to accept such cards as pay-

ment, and

‘‘(C) standards and mechanisms for settling the trans-

actions between the merchant acquiring entities and the

persons who agree to accept such cards as payment.

The acceptance as payment of any account number or other

indicia associated with a payment card shall be treated for

purposes of this section in the same manner as accepting such

payment card as payment.

‘‘(3) T

HIRD PARTY PAYMENT NETWORK

.—The term ‘third

party payment network’ means any agreement or arrange-

ment—

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122 STAT. 2910 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(A) which involves the establishment of accounts with

a central organization by a substantial number of persons

who— ‘‘(i) are unrelated to such organization,

‘‘(ii) provide goods or services, and

‘‘(iii) have agreed to settle transactions for the

provision of such goods or services pursuant to such

agreement or arrangement,

‘‘(B) which provides for standards and mechanisms

for settling such transactions, and

‘‘(C) which guarantees persons providing goods or serv-

ices pursuant to such agreement or arrangement that such

persons will be paid for providing such goods or services.

Such term shall not include any agreement or arrangement

which provides for the issuance of payment cards.

‘‘(e) E

XCEPTION FOR

INIMIS

AYMENTS BY

HIRD

ARTY

ETTLEMENT

RGANIZATIONS

.—A third party settlement organiza-

tion shall be required to report any information under subsection

(a) with respect to third party network transactions of any partici-

pating payee only if—

‘‘(1) the amount which would otherwise be reported under

subsection (a)(2) with respect to such transactions exceeds

$20,000, and

‘‘(2) the aggregate number of such transactions exceeds

200.

‘‘(f) S

TATEMENTS TO

URNISHED TO

ERSONS

ITH

ESPECT

HOM

NFORMATION

EQUIRED

.—Every person required to

make a return under subsection (a) shall furnish to each person

with respect to whom such a return is required a written statement

showing—

‘‘(1) the name, address, and phone number of the informa-

tion contact of the person required to make such return, and

‘‘(2) the gross amount of the reportable payment trans-

actions with respect to the person required to be shown on

the return.

The written statement required under the preceding sentence shall

be furnished to the person on or before January 31 of the year

following the calendar year for which the return under subsection

(a) was required to be made. Such statement may be furnished

electronically, and if so, the email address of the person required

to make such return may be shown in lieu of the phone number.

‘‘(g) R

EGULATIONS

.—The Secretary may prescribe such regula-

tions or other guidance as may be necessary or appropriate to

carry out this section, including rules to prevent the reporting

of the same transaction more than once.’’.

(b) P

ENALTY FOR

AILURE TO

ILE

.—

(1) R

ETURN

.—Subparagraph (B) of section 6724(d)(1) is

amended—

(A) by striking ‘‘or’’ at the end of clause (xx),

(B) by redesignating the clause (xix) that follows clause

(xx) as clause (xxi),

redesignated by subparagraph (B) and inserting ‘‘or’’, and

(D) by adding at the end the following:

‘‘(xxii) section 6050W (relating to returns to pay-

ments made in settlement of payment card trans-

actions), and’’.

E-mail.

Deadline.

Records.

Reports.

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122 STAT. 2911 PUBLIC LAW 110–289—JULY 30, 2008

(2) S

TATEMENT

.—Paragraph (2) of section 6724(d) is

amended by striking ‘‘or’’ at the end of subparagraph (BB),

by striking the period at the end of the subparagraph (CC)

and inserting ‘‘, or’’, and by inserting after subparagraph (CC)

the following:

‘‘(DD) section 6050W(c) (relating to returns relating

to payments made in settlement of payment card trans-

actions).’’.

PPLICATION OF

ACKUP

ITHHOLDING

.—Paragraph (3) of

section 3406(b) is amended by striking ‘‘or’’ at the end of subpara-

graph (D), by striking the period at the end of subparagraph (E)

and inserting ‘‘, or’’, and by adding at the end the following new

subparagraph:

‘‘(F) section 6050W (relating to returns relating to pay-

ments made in settlement of payment card transactions).’’.

(d) C

LERICAL

MENDMENT

.—The table of sections for subpart

B of part III of subchapter A of chapter 61 is amended by inserting

after the item relating to section 6050V the following:

‘‘Sec. 6050W. Returns relating to payments made in settlement of payment card

transactions.’’.

(e) E

FFECTIVE

ATE

.—

(1) I

N GENERAL

.—Except as otherwise provided in this sub-

section, the amendments made by this section shall apply to

returns for calendar years beginning after December 31, 2010.

(2) A

PPLICATION OF BACKUP WITHHOLDING

.—

(A) I

N GENERAL

.—The amendment made by subsection

(B) E

LIGIBILITY FOR TIN MATCHING PROGRAM

.—Solely

for purposes of carrying out any TIN matching program

established by the Secretary under section 3406(i) of the

Internal Revenue Code of 1986—

(i) the amendments made this section shall be

treated as taking effect on the date of the enactment

of this Act, and

(ii) each person responsible for setting the stand-

ards and mechanisms referred to in section

6050W(d)(2)(C) of such Code, as added by this section,

for settling transactions involving payment cards shall

be treated in the same manner as a payment settle-

ment entity.

SEC. 3092. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED

TO NONQUALIFIED USE NOT EXCLUDED FROM INCOME.

(a) I

ENERAL

.—Subsection (b) of section 121 of the Internal

Revenue Code of 1986 (relating to limitations) is amended by adding

at the end the following new paragraph:

‘‘(4) E

XCLUSION OF GAIN ALLOCATED TO NONQUALIFIED

USE

.—

‘‘(A) I

N GENERAL

.—Subsection (a) shall not apply to

so much of the gain from the sale or exchange of property

as is allocated to periods of nonqualified use.

‘‘(B) G

AIN ALLOCATED TO PERIODS OF NONQUALIFIED

USE

.—For purposes of subparagraph (A), gain shall be allo-

cated to periods of nonqualified use based on the ratio

which—

26 USC 3406

note.

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122 STAT. 2912 PUBLIC LAW 110–289—JULY 30, 2008

‘‘(i) the aggregate periods of nonqualified use

during the period such property was owned by the

taxpayer, bears to

‘‘(ii) the period such property was owned by the

taxpayer.

‘‘(C) P

ERIOD OF NONQUALIFIED USE

.—For purposes of

this paragraph—

‘‘(i) I

N GENERAL

.—The term ‘period of nonqualified

use’ means any period (other than the portion of any

period preceding January 1, 2009) during which the

property is not used as the principal residence of the

taxpayer or the taxpayer’s spouse or former spouse.

‘‘(ii) E

XCEPTIONS

.—The term ‘period of nonqualified

use’ does not include—

‘‘(I) any portion of the 5-year period described

in subsection (a) which is after the last date that

such property is used as the principal residence

of the taxpayer or the taxpayer’s spouse,

‘‘(II) any period (not to exceed an aggregate

period of 10 years) during which the taxpayer or

the taxpayer’s spouse is serving on qualified official

extended duty (as defined in subsection (d)(9)(C))

described in clause (i), (ii), or (iii) of subsection

(d)(9)(A), and

‘‘(III) any other period of temporary absence

(not to exceed an aggregate period of 2 years)

due to change of employment, health conditions,

or such other unforeseen circumstances as may

be specified by the Secretary.

‘‘(D) C

OORDINATION WITH RECOGNITION OF GAIN ATTRIB

UTABLE TO DEPRECIATION

.—For purposes of this para-

graph— ‘‘(i) subparagraph (A) shall be applied after the

application of subsection (d)(6), and

‘‘(ii) subparagraph (B) shall be applied without

regard to any gain to which subsection (d)(6) applies.’’.

(b) E

FFECTIVE

ATE

.—The amendment made by this section

shall apply to sales and exchanges after December 31, 2008.

SEC. 3093. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF

INTEREST.

(a) I

ENERAL

.—Paragraphs (5)(D) and (6) of section 864(f)

are each amended by striking ‘‘December 31, 2008’’ and inserting

‘‘December 31, 2010’’.

(b) T

RANSITIONAL

ULE

.—Subsection (f) of section 864 is

amended by adding at the end the following new paragraph:

‘‘(7) T

RANSITION

.—In the case of the first taxable year

to which this subsection applies, the increase (if any) in the

amount of the interest expense allocable to sources within

the United States by reason of the application of this subsection

shall be 30 percent of the amount of such increase determined

without regard to this paragraph.’’.

FFECTIVE

ATE

.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2008.

SEC. 3094. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

(a) R

EPEAL OF

DJUSTMENT FOR

2012.—Subparagraph (B) of

section 401(1) of the Tax Increase Prevention and Reconciliation

26 USC 864

note.

26 USC 121

note.

Applicability.

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122 STAT. 2913 PUBLIC LAW 110–289—JULY 30, 2008

LEGISLATIVE HISTORY—H.R. 3221:

CONGRESSIONAL RECORD:

Vol. 153 (2007): Aug. 4, considered and passed House.

Vol. 154 (2008): Apr. 3, 4, 7–10, considered and passed Senate, amended.

May 8, House concurred in Senate amendment with

amendments.

June 19, 20, 23–26, July 7–11, Senate considered and

concurred in House amendments with amendment.

July 23, House concurred in Senate amendment with

amendment.

July 25, 26, Senate considered and concurred in House

amendment.

Act of 2005 is amended by striking the percentage contained therein

and inserting ‘‘100 percent’’. No other provision of law which would

change such percentage shall have any force and effect.

(b) M

ODIFICATION OF

DJUSTMENT FOR

2013.—The percentage

under subparagraph (C) of section 401(1) of the Tax Increase

Prevention and Reconciliation Act of 2005 in effect on the date

of the enactment of this Act is increased by 16.75 percentage

points.

Approved July 30, 2008.

26 USC 6655

note.

26 USC 6655

note.

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PUBL289.PS Hera PLAW 110publ289

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