Requirements of ownership of certain mortgage assets

(a) Freddie Mac (1) Mortgage operations Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended— (A) in subsection (a)(2)— (i) by striking No conventional and inserting the following: Limits on purchases of high loan-to-value mortgages— (A) In general No conventional; (ii) in subparagraph (A), as amended by clause (i)— (I) by striking value of and inserting lesser of appraised value or purchase price of; (II) by striking not less than 10 per centum in the mortgage and inserting not less than the same percentage of the first-loss portion of the unpaid principal balance of the mortgage that is required to be insured or guaranteed as described in subsection (e)(1); (III) by striking for such period and; (IV) by inserting not later than 120 days after the default of such mortgage after is in default; and (V) by striking as determined by the Corporation and inserting, subject to the coverage and the qualified insurer requirements described in subsection (e); and (iii) by adding at the end the following: (B) Exception for refinancing Notwithstanding the first sentence of subparagraph (A), the Corporation may purchase a conventional mortgage with an outstanding principal balance exceeding 97 percent of the value of the property securing the mortgage if the Corporation or the Federal National Mortgage Association, during the 30 day period before the origination of such mortgage, replaced a mortgage with the same borrower secured by the same property and the new conventional mortgage— (i) reduces payment amounts for the borrower; (ii) shortens the amortization term of the mortgage; or (iii) replaces variable rate mortgage with fixed rate mortgage for a minimum of a 60 month term.; and (B) by adding at the end the following: (e) Insurance or guarantee on unpaid principal balance of a mortgage (1) Requirements (A) In general With respect to the insurance or guarantee on the portion of the unpaid principal balance at the time of purchase of a mortgage which is in excess of 80 percent of the value of the property securing the mortgage that is required under subsection (a)(2)(A), the following requirements apply: (i) For a mortgage with an unpaid principal balance that is equal to an amount that is above 80 percent and not more than 85 percent of the value of the property— (I) an amount that is not less than 12 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 6 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (ii) For a mortgage with an unpaid principal balance that is equal to an amount that is above 85 percent and not more than 90 percent of the value of the property— (I) an amount that is not less than 25 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 12 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (iii) For a mortgage with an unpaid principal balance that is equal to an amount that is above 90 percent and not more than 95 percent of the value of the property— (I) an amount that is not less than 30 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 25 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (iv) For a mortgage with an unpaid principal balance that is equal to an amount that is above 95 percent and not more than 97 percent of the value of the property, an amount that is not less than 35 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (B) Exceptions (i) State agencies and certain mortgage programs With respect to a seller that is a State or political subdivision thereof, for mortgages purchased on behalf of a State or political subdivision thereof, and for mortgages acquired under section 1335 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4565), the following coverage requirements apply for unpaid principal balances at the time of purchase: (I) For a mortgage with an unpaid principal balance that is equal to an amount that is above 80 percent and not more than 85 percent of the value of the property, an amount that is not less than 6 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (II) For a mortgage with an unpaid principal balance that is equal to an amount that is above 85 percent and not more than 90 percent of the value of the property, an amount that is not less than 12 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (III) For a mortgage with an unpaid principal balance that is equal to an amount that is above 90 percent and not more than 95 percent of the value of the property, an amount that is not less than 16 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (IV) For a mortgage with an unpaid principal balance that is equal to an amount that is above 95 percent and not more than 97 percent of the value of the property, an amount that is not less than 18 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (ii) Low income mortgagor (I) In general For a mortgage with an unpaid principal balance at the time of purchase that is equal to an amount that is above 90 percent and not more than 97 percent of the value of the property, and for which the mortgagor of the mortgage is a low-income mortgagor, the Director of the Federal Housing Finance Agency may permit that an amount that is not less than 25 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (II) Low-income mortgagor defined (aa) In general The term low-income mortgagor means a mortgagor with a household income of not more than 80 percent of the area median income. (bb) Area median income qualification The Director of the Federal Housing Finance Agency may adjust the area median income qualification described in item (aa). (2) Qualified insurer (A) In general To be a qualified insurer under this subsection, an insurer shall— (i) be subject to any State insurance law or regulations that are applicable to insurance companies in the respective State in which the insurer operates; (ii) be subject to any eligibility standards as described in subparagraph (B); and (iii) be a private enterprise. (B) Eligibility standards from Corporation (i) In general The Corporation may set eligibility standards, as described in clause (ii), for qualified insurers. (ii) Imposition of standards Any eligibility standards imposed by the Corporation on qualified insurers shall be approved by the Director of the Federal Housing Finance Agency and subject to a 30 day notice and comment period for the public, including insurers to provide input on the proposed eligibility requirements or changes thereto. The Director may only approve such proposed eligibility requirements from the public comment period. (f) Holding of assets (1) In general The value of the covered assets held by the Corporation at any time may not exceed the greater of— (A) 8 percent of the Corporation’s total assets; or (B) an amount that the Secretary of the Treasury and the Director of the Federal Housing Finance Agency determine is necessary on a quarterly basis to— (i) engage in the business of securitizing mortgage-backed securities guaranteed the Corporation; and (ii) comply with the liquidity requirements prescribed by the Director. (2) Covered assets defined In this subsection, the term covered assets — (A) means mortgages, mortgage loans, mortgage-related securities, participation certificates, mortgage-backed commercial paper, obligations of real estate mortgage investment conduits, and any substantially similar assets; and (B) does not include loans for the construction of residential dwelling units. (g) Requirements applying to the purchase of single-Family residential mortgages (1) In general The Corporation may not vary the pricing or any other contractual term of the acquisition by the Corporation of any single-family residential mortgage (including by granting any variance) based on the size, charter type, or volume of business of the seller of such mortgage. (2) Equivalent offers The Corporation shall offer to purchase at all times, for equivalent cash consideration (subject to an appropriate adjustment for the value of any servicing rights retained by an approved seller-servicer and for the cost of bearing or otherwise managing any incremental credit, market, operational, liquidity, or other risk associated with the cash window), and on substantially similar terms, including pricing, any single-family residential mortgage that— (A) is of a class of single-family residential mortgages that the Corporation offers to acquire for mortgage-backed securities guaranteed by the Corporation or other non­cash consideration; (B) is offered for sale to the Corporation by a seller that has been approved to do business with the Corporation; and (C) has been originated and, if sold, sold in compliance with any underwriting or other similar restrictions prescribed by the Corporation or the Director of the Federal Housing Finance Agency as a conservator; (3) Simultaneous mortgage leins The Corporation may not purchase a single-family residential mortgage that was originated in combination with a subordinate lien secured against the same property if at the time of origination, such mortgage or such subordinate lien provided access to a home equity line of credit that, if used by the mortgagor could, in combination with the original principal obligation of such mortgage and the original principal obligation of such subordinate lien, exceed 80 percent of the value of such property.. (2) Obligations and securities Section 306(l)(2)(C)(i) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(l)(2)(C)(i)) is amended to read as follows: (i) dedicated for— (I) the purpose of deficit reduction; or (II) the purpose of supporting housing supply initiatives, including affordable and middle-income housing developments, as defined by the Secretary of the Treasury; and. (3) Effective dates The amendments made by— (A) paragraph (1) shall take effect on the date that is 180 days after the date of the enactment of this section; and (B) paragraph (2) shall take effect on the date of the enactment of this section. (b) Fannie Mae (1) Mortgage operations Section 302 of the National Housing Act (12 U.S.C. 1717(b)(2))— (A) in subsection (b)(2)— (i) by striking For the and inserting the following: Limits on purchases of high loan-to-value mortgages— (A) In general For the; (ii) in subparagraph (A), as amended by clause (i)— (I) by striking value of and inserting lesser of appraised value or purchase price of; (II) by striking not less than 10 per centum in the mortgage and inserting not less than the same percentage of the first-loss portion of the unpaid principal balance of the mortgage that is required to be insured or guaranteed as described in subsection (d)(1); (III) by striking for such period and; (IV) by inserting not later than 120 days after the default of such mortgage after is in default; and (V) by striking as determined by the corporation and inserting, subject to the coverage and the qualified insurer requirements described in subsection (d); and (iii) by adding at the end the following: (B) Exception for refinancing Notwithstanding the second sentence of subparagraph (A), the corporation may purchase a conventional mortgage with an outstanding principal balance exceeding 97 percent of the value of the property securing the mortgage if the corporation or the Federal Home Loan Mortgage Corporation, during the 30 day period before the origination of such mortgage, replaced a mortgage with the same borrower secured by the same property and the new conventional mortgage— (i) reduces payment amounts for the borrower; (ii) shortens the amortization term of the mortgage; or (iii) replaces variable rate mortgage with fixed rate mortgage for a minimum of a 60 month term.; and (B) by adding at the end the following: (d) Insurance or guarantee on unpaid principal balance of a mortgage (1) Requirements (A) In general With respect to the insurance or guarantee on the portion of the unpaid principal balance at the time of purchase of a mortgage which is in excess of 80 percent of the value of the property securing the mortgage that is required under subsection (b)(2)(A), the following requirements apply: (i) For a mortgage with an unpaid principal balance that is equal to an amount that is above 80 percent and not more than 85 percent of the value of the property— (I) an amount that is not less than 12 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 6 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (ii) For a mortgage with an unpaid principal balance that is equal to an amount that is above 85 percent and not more than 90 percent of the value of the property— (I) an amount that is not less than 25 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 12 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (iii) For a mortgage with an unpaid principal balance that is equal to an amount that is above 90 percent and not more than 95 percent of the value of the property— (I) an amount that is not less than 30 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer; or (II) if the mortgage is a fixed-rate mortgage with a fully amortizing term of less than or equal to 20 years, an amount that is not less than 25 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (iv) For a mortgage with an unpaid principal balance that is equal to an amount that is above 95 percent and not more than 97 percent of the value of the property, an amount that is not less than 35 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (B) Exceptions (i) State agencies and certain mortgage programs With respect to a seller that is a State or political subdivision thereof, for mortgages purchased on behalf of a State or political subdivision thereof, and for mortgages acquired under section 1335 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4565), the following coverage requirements apply for unpaid principal balances at the time of purchase: (I) For a mortgage with an unpaid principal balance that is equal to an amount that is above 80 percent and not more than 85 percent of the value of the property, an amount that is not less than 6 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (II) For a mortgage with an unpaid principal balance that is equal to an amount that is above 85 percent and not more than 90 percent of the value of the property, an amount that is not less than 12 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (III) For a mortgage with an unpaid principal balance that is equal to an amount that is above 90 percent and not more than 95 percent of the value of the property, an amount that is not less than 16 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (IV) For a mortgage with an unpaid principal balance that is equal to an amount that is above 95 percent and not more than 97 percent of the value of the property, an amount that is not less than 18 percent the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (ii) Low income mortgagor (I) In general For a mortgage with an unpaid principal balance at the time of purchase that is equal to an amount that is above 90 percent and not more than 97 percent of the value of the property, and for which the mortgagor of the mortgage is a low-income mortgagor, the Director of the Federal Housing Finance Agency may permit that an amount that is not less than 25 percent of the portion of the unpaid principal balance of the mortgage shall be guaranteed or insured by a qualified insurer. (II) Low-income mortgagor defined (aa) In general The term low-income mortgagor means a mortgagor with a household income of not more than 80 percent of the area median income. (bb) Area median income qualification The Director of the Federal Housing Finance Agency may adjust the area median income qualification described in item (aa). (2) Qualified insurer (A) In general To be a qualified insurer under this subsection, an insurer shall— (i) be subject to any State insurance law or regulations that are applicable to insurance companies in the respective State in which the insurer operates; (ii) be subject to any eligibility standards as described in subparagraph (B); and (iii) be a private enterprise. (B) Eligibility standards from corporation (i) In general The corporation may set eligibility standards, as described in clause (ii), for qualified insurers. (ii) Imposition of standards Any eligibility standards imposed by the corporation on qualified insurers shall be approved by the Director of the Federal Housing Finance Agency and subject to a 30 day notice and comment period for the public, including insurers to provide input on the proposed eligibility requirements or changes thereto. The Director may only approve such proposed eligibility requirements from the public comment period. (e) Holding of assets (1) In general The value of the covered assets held by the corporation at any time may not exceed the greater of— (A) 8 percent of the corporation’s total assets; or (B) an amount that the Secretary of the Treasury and the Director of the Federal Housing Finance Agency determine is necessary on a quarterly basis to— (i) engage in the business of securitizing mortgage-backed securities guaranteed the corporation; and (ii) comply with the liquidity requirements prescribed by the Director. (2) Covered assets defined In this subsection, the term covered assets — (A) means mortgages, mortgage loans, mortgage-related securities, participation certificates, mortgage-backed commercial paper, obligations of real estate mortgage investment conduits, and any substantially similar assets; and (B) does not include loans for the construction of residential dwelling units. (f) Requirements applying to the purchase of single-Family residential mortgages (1) In general The corporation may not vary the pricing or any other contractual term of the acquisition by the corporation of any single-family residential mortgage (including by granting any variance) based on the size, charter type, or volume of business of the seller of such mortgage. (2) Equivalent offers The corporation shall offer to purchase at all times, for equivalent cash consideration (subject to an appropriate adjustment for the value of any servicing rights retained by an approved seller-servicer and for the cost of bearing or otherwise managing any incremental credit, market, operational, liquidity, or other risk associated with the cash window), and on substantially similar terms, including pricing, any single-family residential mortgage that— (A) is of a class of single-family residential mortgages that the corporation offers to acquire for mortgage-backed securities guaranteed by the corporation or other non­cash consideration; (B) is offered for sale to the corporation by a seller that has been approved to do business with the corporation; and (C) has been originated and, if sold, sold in compliance with any underwriting or other similar restrictions prescribed by the corporation or the Director of the Federal Housing Finance Agency as a conservator; (3) Simultaneous mortgage leins The corporation may not purchase a single-family residential mortgage that was originated in combination with a subordinate lien secured against the same property if at the time of origination, such mortgage or such subordinate lien provided access to a home equity line of credit that, if used by the mortgagor could, in combination with the original principal obligation of such mortgage and the original principal obligation of such subordinate lien, exceed 80 percent of the value of such property.. (2) Obligations and securities Section 304(g)(2)(C)(i) of the National Housing Act (12 U.S.C. 1719(g)(2)(C)(i)) is amended to read as follows: (i) dedicated for— (I) the purpose of deficit reduction; or (II) the purpose of supporting housing supply initiatives, including affordable and middle-income housing developments, as defined by the Secretary of the Treasury; and. (3) Effective dates The amendments made by— (A) paragraph (1) shall take effect on the date that is 180 days after the date of the enactment of this section; and (B) paragraph (2) shall take effect on the date of the enactment of this section.