,,ii #aacth ,,congress #ast ,session ,s4 #ajdh ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #bc1 #bjac ,mr4 ,isakson introduced the following bill2 which was read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,a ,,bill ,to revoke the charters for the ,federal ,national ,mortgage ,corporation and the ,federal ,home ,loan ,mortgage ,corporation upon resolution of their obligations1 to create a new ,mortgage ,finance ,agency for the securitization of single family and multifamily mortgages1 and for other purposes4 #a4 ,short title2 findings 7a7 ,short title ,this ,act may be cited as the ,mortgage ,finance ,act of #bjac4 7b7 ,findings ,congress finds that-- 7#a7 dependable1 transparent1 and liquid primary and secondary markets for high-quality residential and multifamily mortgages are critical to a safe and sound housing market2 7#b7 ,congress wishes to terminate the ,congressional charters and operations of the ,federal ,national ,mortgage ,association and the ,federal ,home ,loan ,mortgage ,corporation1 and to wind them down through an orderly receivership process1 without disrupting the housing markets2 7#c7 taxpayers have expended billions of dollars on behalf of the ,federal ,national ,mortgage ,association and the ,federal ,home ,loan ,mortgage ,corporation during the period of their conservatorship1 and such expenditures should be recouped2 7#d7 increased participation by the private sector to provide mortgage market liquidity and credit risk mitigation is necessary and desirable to reduce dependence on ,government guarantees1 and to make remote any future needs for taxpayer assistance2 7#e7 this ,act creates a new transitional facility to guarantee securitizations of high-quality residential mortgages1 to ensure a sound and stable housing market2 7#f7 multiple layers of private capital and the creation of an industry-funded ,catastrophic ,fund will make future risk to taxpayers highly remote2 and 7#g7 this ,act provides for the privatization of the transitional facility after #aj years1 with proceeds being paid to the ,united ,states ,treasury4 #b4 ,definitions ,for purposes of this ,act1 unless the context otherwise requires1 the following definitions shall apply3 7#a7 ,board of directors ,the term ,board of ,directors means the ,board of ,directors of the ,mortgage ,finance ,agency4 7#b7 ,charter ,the term charter means-- 7,a7 with respect to the ,federal ,national ,mortgage ,association1 the ,federal ,national ,mortgage ,association ,charter ,act 7#ab ,u4,s4,c4 #agaf et seq472 and 7,b7 with respect to the ,federal ,home ,loan ,mortgage ,corporation1 the ,federal ,home ,loan ,mortgage ,corporation ,act 7#ab ,u4,s4,c4 #adea et seq474 7#c7 ,director ,the term ,director1 other than in the context of the ,director of the ,federal ,housing ,finance ,agency1 means the ,director of the ,mortgage ,finance ,agency4 7#d7 ,enterprise ,the term enterprise means-- 7,a7 the ,federal ,national ,mortgage ,association2 and 7,b7 the ,federal ,home ,loan ,mortgage ,corporation4 7#e7 ,,fhfa ,the term ,,fhfa means the ,federal ,housing ,finance ,agency4 7#f7 ,mortgage ,finance ,agency2 ,,mfa ,the terms ,mortgage ,finance ,agency and ,,mfa mean the agency established under title ,,ii4 7#g7 ,,mfa certification date ,the term ,,mfa certification date means the date on which the ,director certifies that the ,,mfa is operational and able to perform the guarantee function for qualified mortgage-backed securities collateralized by qualified residential mortgages1 as provided in this ,act1 which date shall be not later than #ah months after the date of enactment of this ,act4 7#h7 ,qualified issuer ,the term qualified issuer means a person who originates or purchases1 and services1 a qualified residential mortgage or a qualified multifamily mortgage1 and is approved to issue securities guaranteed by the ,,mfa1 in accordance with this ,act and with the guidelines issued by the ,,mfa under section #cjb4 7#i7 ,qualified mortgage-backed securities ,the term qualified mortgage-backed securities means securities collateralized by qualified residential mortgages or qualified multifamily mortgages1 as the case may be1 issued by a qualified issuer and guaranteed by the ,,mfa with respect to the timely payment of principal and interest1 all in accordance with this ,act4 7#aj7 ,qualified multifamily mortgage ,the term qualified multifamily mortgage means a commercial real estate loan secured by a property with #e or more single family units1 the primary source of repayment for which is expected to be derived from the proceeds of the sale1 refinancing1 or permanent financing of the property1 or rental income generated by the property1 that-- 7,a7 has been originated with an initial loan to value ratio of not more than #ge percent and with an initial debt service coverage ratio of at least #a4be2 or 7,b7 with respect to which1 the mortgage lender retains a pro rata vertical slice of credit risk in an amount to be determined by the ,,mfa4 7#aa7 ,qualified residential mortgage ,the term qualified residential mortgage means a residential real estate loan secured by a property with #a to #d single family units that has been originated in compliance with the following underwriting standards and product features3 7,a7 ,documentation and verification of the financial resources relied upon to qualify the mortgagor4 7,b7 ,standards with respect to the income and scheduled debt payments of the mortgagor1 including-- 7i7 one or more of-- 7,i7 the residual income of the mortgagor after all monthly obligations2 7,,ii7 the ratio of the housing payments of the mortgagor to the monthly income of the mortgagor2 and 7,,iii7 the ratio of total monthly installment payments of the mortgagor to the income of the mortgagor2 and 7ii7 mitigation of the potential for payment shock on adjustable rate mortgages4 7,c7 ,downpayments which shall be equal to not less than #e percent of purchase price1 and-- 7i7 in the case of such mortgages with downpayments equal to not less than #e percent but less than #cj percent of the purchase price1 the mortgage is covered by private mortgage insurance purchased at the time of origination in an amount sufficient to cover each loan to the equivalent of not less than a #cj percent downpayment2 and 7ii7 such mortgage insurance is issued by an entity that is subject to regulation as a mortgage guaranty insurer by the ,state of domicile of such entity or by the ,federal ,insurance ,office 7which regulation includes risk-based capital and reserve requirements74 7,d7 ,prohibition of or restrictions on the use of balloon payments1 negative amortization1 prepayment penalties1 interest-only payments1 and other features that have been demonstrated to exhibit a higher risk of borrower default4 7#ab7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury4 ,i ,termination of ,fannie ,mae and ,freddie ,mac ,charters #aja4 ,receivership of the enterprises 7a7 ,irrevocable receivership 7#a7 ,in general ,effective on the ,,mfa certification date1 the ,,fhfa is appointed receiver of the enterprises1 and the enterprises shall be placed into irrevocable receivership by the ,,fhfa1 in accordance with section #acfg of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dfag71 except that-- 7,a7 paragraphs 7#a7 through 7#e7 of subsection 7a7 of that section #acfg do not apply with respect to such appointment2 and 7,b7 prior to the ,,mfa certification date1 the enterprises shall be permitted to engage in the business of guaranteeing the timely payment of principal and interest on qualified mortgage-backed securities and to undertake all functions necessary to carry out such business1 to the extent that such guarantees are necessary to provide a dependable1 transparent1 and liquid market for high quality mortgages for securitization4 7#b7 ,commencement of liquidation ,immediately upon placement of the enterprises into receivership1 the ,,fhfa shall commence liquidation of the enterprises4 7b7 ,repeal of ,,gse charters 7#a7 ,fannie ,mae ,the charter of the ,federal ,national ,mortgage ,association1 is repealed1 effective #ij days after the date on which liquidation thereof is complete1 in accordance with this ,act4 7#b7 ,freddie ,mac ,the charter of the ,federal ,home ,loan ,mortgage ,corporation1 is repealed1 effective #ij days after the date on which liquidation thereof is complete1 in accordance with this ,act4 7c7 ,rule of construction ,for purposes of any provision of ,federal law that refers to or relies on a decision by the ,director of the ,,fhfa to place an enterprise into receivership1 such determination shall be deemed to have been made by operation of the placement of the enterprises into receivership under subsection 7a74 #ajb4 ,repayment of ,government assistance2 maximizing return to taxpayers 7a7 ,in general ,after fully satisfying the outstanding obligations of the enterprises in a manner consistent with their receivership status1 all remaining proceeds from the operations of the enterprises in receivership shall be paid by the ,,fhfa to the ,general ,fund of the ,united ,states ,treasury in repayment of ,government assistance provided in connection with ensuring the solvency and resolution of the enterprises prior to the date of enactment of this ,act4 7b7 ,maximum return to taxpayer ,the combined assets of the enterprises1 including on-balance sheet portfolios1 shall be managed by the ,,fhfa as receiver to obtain resolutions that maximize the return for the taxpayer1 to the extent that-- 7#a7 such resolutions are consistent with the goal of supporting a sound1 stable1 and liquid housing market2 and 7#b7 such resolutions are consistent with applicable law4 7c7 ,transfer of proceeds of privatization and catastrophic fund ,the proceeds from privatization of the ,,mfa upon termination of its authority in accordance with section #cjd shall be deposited into the ,general ,fund of the ,united ,states ,treasury4 ,upon such termination of the authority of the ,,mfa1 the ,catastrophic ,fund shall be transferred to the ,general ,fund of the ,united ,states ,treasury1 and the ,united ,states ,treasury shall assume responsibility for and honor any remaining obligations of the ,,mfa1 of whatever nature and until such time as they are extinguished4 #ajc4 ,report to ,congress ,upon the resolution of all valid claims of the enterprises1 the ,director of the ,,fhfa shall submit a report by the ,,fhfa as receiver of the enterprises to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives1 certifying the completion of the receivership4 ,,ii ,mortgage ,finance ,agency #bja4 ,establishment of ,,mfa ,there is established the ,mortgage ,finance ,agency1 which shall be an independent agency of the ,federal ,government4 #bjb4 ,governance 7a7 ,director 7#a7 ,in general ,the ,,mfa shall be headed1 on a day-to-day basis1 by a ,director1 appointed by the ,president1 by and with the advice and consent of the ,senate4 ,such appointment shall be made not later than #f months after the date of enactment of this ,act4 7#b7 ,regulatory authority ,the ,director shall have general regulatory authority over the ,,mfa1 and shall exercise such general regulatory authority as necessary to carry out this ,act4 7#c7 ,term ,the ,director shall serve for a term of #e years4 ,an individual may serve as ,director after the expiration of the term for which appointed1 until a successor has been appointed and qualified4 7#d7 ,vacancies ,a vacancy in the office of the ,director shall be filled in the same manner as the original appointment4 7#e7 ,compensation ,the ,director shall be compensated at the rate prescribed for level ,,ii of the ,executive ,schedule under section #ecac of title #e1 ,united ,states ,code4 7b7 ,board of directors 7#a7 ,members ,the operations of the ,,mfa shall be directed by a #e-member ,board of ,directors1 including the ,director1 who shall serve as the chairperson of the ,board of ,directors1 a ,vice ,chairman1 who shall be appointed by the ,president1 the ,chairman of the ,securities and ,exchange ,commission1 or a designee thereof1 the ,secretary of ,housing and ,urban ,development1 or a designee thereof1 and the ,chairman of the ,board of ,governors of the ,federal ,reserve ,system1 or a designee thereof4 7#b7 ,majority vote ,a majority vote of all members of the ,board of ,directors is necessary to resolve all voting issues of the ,,mfa4 7#c7 ,meetings ,the ,board of ,directors shall meet at the call of the ,director1 but in no event less frequently than once in each calendar quarter4 7#d7 ,federal employees ,the members of the ,board of ,directors shall serve without additional pay 7or benefits in the nature of compensation7 for service as a member of the ,board of ,directors4 7#e7 ,travel expenses ,members of the ,board of ,directors shall be entitled to receive travel expenses1 including per diem in lieu of subsistence1 equivalent to those set forth in subchapter ,i of chapter #eg of title #e1 ,united ,states ,code4 7#f7 ,bylaws ,the ,board of ,directors may prescribe1 amend1 and repeal such bylaws as may be necessary for carrying out the functions of the ,board of ,directors4 7#g7 ,quorum ,a majority of the ,board of ,directors shall constitute a quorum4 7c7 ,privatization ,advisory ,board 7#a7 ,members ,there shall be appointed by the ,president a #aj-member privatization advisory board4 ,to the extent practicable1 the ,president shall seek at all times to have advisory board members with expertise in-- 7,a7 single family housing finance2 7,b7 multifamily housing finance2 7,c7 residential real estate development and sales2 7,d7 secondary market structuring and pricing2 7,e7 private mortgage insurance2 7,f7 privatization structuring and execution2 and 7,g7 macroeconomic policy4 7#b7 ,role ,the roles of the advisory board shall be-- 7,a7 to advise the ,board of ,directors on the privatization of the ,,mfa upon termination of its authority under this ,act1 including how best to facilitate a smooth1 efficient1 and orderly transition of the guarantee business2 7,b7 to review and opine on the status of the planning for privatization2 and 7,c7 concurrently with the plan and annual and quarterly reports presented by the ,,mfa to ,congress under section #cjd7;c71 to present to ,congress its own independent reports on the plan for privatization and the status thereof4 7d7 ,inspector general ,there shall be within the ,,mfa an ,inspector ,general1 who shall be appointed by the ,president in accordance with section #c7;a7 of the ,inspector ,general ,act of #aigh 7#e ,u4,s4,c4 ,app47 not later than #f months after the date of enactment of this ,act4 #bjc4 ,funding ,annual appropriations to the ,,mfa shall be based upon a budget submitted to ,congress by the ,,mfa and approved by the ,board of ,directors4 ,in accordance with section #cjc7;a77#b71 amounts appropriated shall be recouped through collection of the guarantee fee4 #bjd4 ,regulations2 reports 7a7 ,startup ,not later than #ab months after the date of the appointment of the ,director1 the ,,mfa shall issue such regulations1 guidelines1 orders1 requirements1 and standards as may be necessary for the establishment and operation of the ,,mfa4 7b7 ,report to ,congress ,not later than #f months after the date of the appointment of the ,director1 the ,board of ,directors shall provide to ,congress a progress report on the drafting of regulations and other conditions precedent to the ,,mfa becoming fully operational4 #bje4 ,appearances before congress ,the ,director shall appear before ,congress annually regarding-- 7#a7 the safety and soundness of the ,,mfa and the ,catastrophic ,fund1 including1 beginning #a year after the date on which the ,,mfa becomes operational1 a report by the ,inspector ,general of the ,,mfa1 and a report of an independent actuary regarding the adequacy of guarantee fees1 the adequacy of the ,catastrophic ,fund1 and the adequacy of the percentage of the guarantee fee that is being allocated to the ,catastrophic ,fund2 7#b7 any material deficiencies in the conduct of the operations of the ,,mfa2 7#c7 the overall operational status of the ,,mfa2 7#d7 operations1 resources1 and performance of the ,board of ,directors2 and 7#e7 such other relevant matters relating to the ,board of ,directors and the ,,mfa4 #bjf4 ,staff1 experts1 and consultants 7a7 ,compensation 7#a7 ,in general ,the ,,mfa may appoint and fix the compensation of such officers1 attorneys1 economists1 examiners1 and other employees as may be necessary for carrying out its functions4 ,the ,,mfa shall appoint a ,chief ,risk ,officer not later than #ij days after the date of the appointment of the ,director4 7#b7 ,rates of pay ,rates of basic pay for all employees of the ,,mfa may be set and adjusted by the ,,mfa without regard to the provisions of chapter #ea or subchapter ,,iii of chapter #ec of title #e1 ,united ,states ,code4 7#c7 ,parity ,the ,,mfa may provide additional compensation and benefits to employees of the ,,mfa1 if the same type of compensation or benefits are then being provided by any agency referred to under section #abjf of the ,financial ,institutions ,reform1 ,recovery1 and ,enforcement ,act of #aihi 7#ab ,u4,s4,c4 #ahcc;b7 or1 if not then being provided1 could be provided by such an agency under applicable provisions of law1 rule1 or regulation4 ,in setting and adjusting the total amount of compensation and benefits for employees1 the ,,mfa shall consult with1 and seek to maintain comparability with1 the agencies referred to under section #abjf of the ,financial ,institutions ,reform1 ,recovery1 and ,enforcement ,act of #aihi 7#ab ,u4,s4,c4 #ahcc;b74 7b7 ,detail of government employees ,upon request of the ,director1 any ,federal ,government employee may be detailed to the ,,mfa or the ,board of ,directors without reimbursement1 and such detail shall be without interruption or loss of civil service status or privilege4 7c7 ,experts and consultants ,the ,director shall procure the services of experts and consultants as the ,director considers necessary or appropriate4 ,,iii ,duties and responsibilities of the ,,mfa #cja4 ,,mfa responsibilities ,the ,,mfa is authorized-- 7#a7 to guarantee securities issued by qualified issuers and collateralized by pools of qualified residential mortgages in order to provide a dependable1 transparent1 and liquid market for high quality mortgages for securitization2 7#b7 to guarantee securities issued by qualified issuers and collateralized by pools of qualified multifamily mortgages1 in order to provide a dependable1 transparent1 and liquid market for high quality multifamily mortgages for securitization2 7#c7 to charge and collect a guarantee fee sufficient to protect the ,,mfa and the ,united ,states ,treasury from the risks of guaranteeing the timely payment of principal and interest on qualified mortgage-backed securities2 7#d7 to establish and maintain a ,catastrophic ,fund to minimize the burden on the ,federal ,government1 by setting aside amounts that will be available solely to pay obligations under the ,,mfa guarantee in the event of any future mortgage market collapse2 and 7#e7 to purchase supplemental insurance coverage1 as provided in section #cjc7;d74 #cjb4 ,,mfa ,guarantee business 7a7 ,in general ,the ,,mfa shall guarantee the timely payment of principal and interest to holders of qualified mortgage-backed securities4 ,in the event of a payment default on a mortgage that collateralizes a qualified mortgage-backed security1 the ,,mfa guarantee shall cover any shortfalls to security holders after giving effect to proceeds1 if any1 from liquidation of the property securing the mortgage and from claims paid pursuant to any private mortgage insurance coverage 7including supplemental insurance coverage1 if any74 ,the ,,mfa guarantee of timely payment of principal and interest on qualified mortgage-backed securities shall be backed by the full faith and credit of the ,united ,states ,government4 ,the ,,mfa shall charge a fee for such guarantee in accordance with section #cjc4 7b7 ,qualified ,residential ,mortgages and ,qualified ,multifamily ,mortgages ,the ,,mfa shall issue guidelines consistent with this ,act specifying the terms and conditions of mortgages that satisfy-- 7#a7 the definition of a qualified residential mortgage1 not later than #f months after the date of confirmation of the ,director2 and 7#b7 the definition of a qualified multifamily mortgage1 not later than #a year after the date of confirmation of the ,director4 7c7 ,guidelines 7#a7 ,in general ,not later than #ab months after the date of confirmation of the ,director1 the ,,mfa shall issue guidelines designed to oversee the financial condition and origination and servicing standards of qualified issuers and servicers of qualified residential mortgages and qualified multifamily mortgages that collateralize qualified mortgage-backed securities4 7#b7 ,inclusions ,guidelines issued under this subsection shall-- 7,a7 include specific financial and operational standards for such qualified issuers and such servicers2 and 7,b7 ensure-- 7i7 broad participation in the issuance of qualified mortgage-backed securities by community banks1 credit unions1 national banks1 and ,state-licensed mortgage lenders2 7ii7 that qualified issuers bear the risk of noncompliance with representations and warranties made in connection with the issuance of qualified mortgage-backed securities2 and 7iii7 that qualified issuers have the financial resources to support any obligations arising from any violations of representations and warranties made in connection with the issuance of qualified mortgage-backed securities4 7d7 ,limitations 7#a7 ,qualified residential mortgage loan limits ,the ,,mfa shall set loan limits for qualified residential mortgages that secure qualified mortgage-backed securities4 ,such loan limits shall be calculated and set annually1 on a county-by-county basis1 at an amount equal to not more than #aej percent of the area median home price for the preceding year1 and not less than the national median home price for such year1 in each case calculated using home price data compiled by the ,,fhfa or1 if the ,,fhfa no longer compiles such data1 by the ,,mfa4 ,in no event shall the loan limits in effect under this section in any county be lower than amounts applicable to single family mortgages insured by the ,federal ,housing ,administration under title ,,ii of the ,national ,housing ,act 7#ab ,u4,s4,c4 #agjg et seq47 in such county4 7#b7 ,qualified multifamily mortgage loan limits ,the ,,mfa1 in consultation with the ,board of ,directors1 shall consider setting loan limits for qualified multifamily mortgages that secure qualified mortgage-backed securities1 if such limits would foster competition between the ,,mfa and private issuers in advance of the privatization of the ,,mfa4 7#c7 ,prohibition on investment portfolio ,the ,,mfa shall not invest in mortgage-backed securities or otherwise maintain an investment portfolio1 other than to the extent necessary for the ,,mfa to carry out its responsibilities as guarantor of qualified mortgage-backed securities4 #cjc4 ,guarantee fees2 catastrophic fund2 supplemental insurance 7a7 ,guarantee ,fees 7#a7 ,guarantee ,fees ,the ,,mfa shall charge a guarantee fee under this section in connection with any guarantee issued by the ,,mfa of timely payment of principal and interest on the qualified mortgage-backed securities4 ,at all times1 the guarantee fee shall be set at an equal amount for all qualified issuers4 ,the amount of the guarantee fee shall be adjusted periodically1 as necessary to fulfill the purposes described in paragraph 7#b74 7#b7 ,purposes ,the purposes of the guarantee fees are-- 7,a7 to fund the operations of the ,,mfa2 7,b7 to capitalize the ,catastrophic ,fund2 7,c7 to cover any losses2 and 7,d7 to purchase supplemental insurance coverage1 as provided in subsection 7d74 7#c7 ,approval ,the ,board of ,directors shall approve the amount of guarantee fees and any adjustments thereto1 and shall determine the percentage of the guarantee fees1 if any1 that will be allocated to the ,catastrophic ,fund in accordance with subsection 7b74 ,such percentage may be adjusted by the ,board of ,directors semiannually1 as necessary to ensure that the ,catastrophic ,fund is adequately capitalized4 7b7 ,creation of ,catastrophic ,fund 7#a7 ,establishment ,there is established in the ,treasury of the ,united ,states a fund to be known as the ,catastrophic ,fund1 which the ,,mfa shall-- 7,a7 maintain and administer2 7,b7 use to carry out its insurance and guarantee functions1 in the manner provided by this ,act2 and 7,c7 invest in accordance with subsection 7c74 7#b7 ,deposits ,the ,catastrophic ,fund shall be credited with-- 7,a7 the amount of guarantee fees1 if any1 that the ,board of ,directors determines should be allocated to the ,catastrophic ,fund to protect against catastrophic losses2 7,b7 any amounts earned on investments of the ,catastrophic ,fund1 other than as needed in connection with the routine operation of the guarantee business2 and 7,c7 such other amounts as may otherwise be credited to the ,catastrophic ,fund by the ,board of ,directors4 7#c7 ,uses ,the ,catastrophic ,fund shall be solely available to the ,,mfa for use by the ,,mfa to satisfy obligations under its guarantee in accordance with this ,act4 ,amounts remaining in the ,catastrophic ,fund following the repayment of all qualified mortgage-backed securities shall be distributed to the ,united ,states ,treasury in accordance with section #ajb7;c74 7c7 ,actuarial review ,beginning #a year after the date on which the ,,mfa becomes fully operational1 and each year thereafter1 the ,board of ,directors shall commission an independent actuarial study to determine the adequacy of the guarantee fees and of the capitalization of the ,catastrophic ,fund1 the results of which study shall be made available to the public by the ,board of ,directors4 ,the ,board of ,directors shall rely on such study to determine the amount of the guarantee fee that shall be charged and the percentage of the guarantee fees that shall be allocated to the ,catastrophic ,fund4 7d7 ,investments 7#a7 ,authority ,amounts in the ,catastrophic ,fund that are not otherwise employed shall be invested in obligations of the ,united ,states or in obligations guaranteed as to principal and interest by the ,united ,states4 7#b7 ,limitation ,the ,,mfa may not sell or purchase any obligations described in paragraph 7#a7 for its own account1 at any one time aggregating in excess of #a1jjj1jjj1 without the approval of the ,secretary4 ,the ,secretary may approve a transaction or class of transactions subject to the provisions of this paragraph under such conditions as the ,secretary may determine4 7e7 ,supplemental coverage 7#a7 ,in general ,the ,,mfa may use a portion of the guarantee fee to purchase supplemental insurance coverage on offerings of qualified mortgage-backed securities4 ,the guarantee fee shall be set in an amount that is sufficient to cover the cost of such supplemental insurance1 in addition to the other purposes set forth in subsection 7a77#b74 ,the supplemental insurance shall insure against losses1 if any1 after giving effect to the primary1 first loss mortgage insurance coverage on mortgages collateralizing the mortgage-backed securities4 7#b7 ,reduced exposure ,the supplemental insurance shall be structured to further reduce the exposure of the ,united ,states ,government to losses arising under its guarantee on qualified mortgage-backed securities that are covered by supplemental insurance4 ,separate insurance coverage shall be provided for each new offering of qualified mortgage-backed securities4 7#c7 ,purchase of supplemental coverage required 7,a7 ,in general ,not later than #a year after the ,,mfa certification date1 the ,board of ,directors shall issue guidelines to determine whether supplemental coverage-- 7i7 is being offered on commercially reasonable terms2 and 7ii7 is reasonably likely to mitigate the risk that the ,,mfa will have to make any payment pursuant to its guarantee4 7,b7 ,coverage required ,beginning not later than #c years after the ,,mfa certification date1 the ,,mfa shall purchase supplemental coverage for each offering of qualified mortgage-backed securities if the ,,mfa determines that the supplemental coverage meets the guidelines issued by the ,board of ,directors under subparagraph 7,a74 7#d7 ,authority to purchase supplemental coverage ,the ,,mfa may purchase supplemental coverage from any mortgage insurance company authorized to provide mortgage insurance on a qualified residential mortgage1 or from any other licensed insurance company with comparable regulatory oversight1 capital1 and reserve requirements4 #cjd4 ,no limit on private sector involvement2 termination of authority 7a7 ,private entities encouraged ,nothing in this ,act shall be construed as preventing the private sector from securitizing qualified residential mortgages1 qualified multifamily mortgages1 or other non-qualified residential single family or multifamily mortgages4 ,the ,,mfa shall encourage robust competition between the ,,mfa and private issuers to facilitate the soonest possible privatization of the ,,mfa4 7b7 ,termination of authority ,the authority granted to the ,,mfa under this ,act shall expire #aj years after the date of enactment of this ,act1 and the ,,mfa shall be terminated on that date4 ,the ,,mfa1 in consultation with the ,board of ,directors1 shall begin planning for such termination during the third year following the date of enactment of this ,act4 7c7 ,periodic ,reports on ,privatization 7#a7 ,initial report ,during the fifth year following the date of enactment of this ,act1 the ,,mfa shall present to ,congress a detailed plan for privatization of the ,,mfa upon termination of its authority in accordance with subsection 7b74 7#b7 ,regular reports ,to ensure the transfer to privatization1 the ,,mfa shall report to ,congress on the implementation of the detailed plan for privatization submitted under paragraph 7#a7-- 7,a7 annually through the seventh year following the date of enactment of this ,act2 and 7,b7 quarterly1 beginning in the eighth year following the date of enactment of this ,act4 ,,iv ,conforming amendments #dja4 ,amendments to ,dodd-,frank ,act ,section #ae;,g of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#aa7 is amended-- 7#a7 in subsection 7a7-- 7,a7 by redesignating paragraphs 7#c7 and 7#d7 as paragraphs 7#d7 and 7#e71 respectively2 and 7,b7 by inserting after paragraph 7#b7 the following3 7#c7 the term qualified residential mortgage has the same meaning as in section #b of the ,mortgage ,finance ,act of #bjac2 2 and 7#b7 by adding at the end the following3 7j7 ,exemption for qualified mortgage-,backed securities ,qualified mortgage-backed securities1 as defined in section #b of the ,mortgage ,finance ,act of #bjac1 and any other securitizations of qualified residential mortgages1 shall be exempt from the risk retention provisions of subsection 7c77#a77;,b77i74 4 #djb4 ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7a7 ,definitions ,section #acjc7bj7 of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dejb7bj77 is amended by striking means-- and all that follows through 7,c7 any and inserting means any4 7b7 ,transfer of functions ,all functions of the ,,fhfa with respect to the enterprises1 as that term is defined in section #acjc of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dejb71 other than any function related to receivership of the enterprises1 are transferred to the ,,mfa1 effective #ij days after the date on which liquidation of the enterprises is complete1 in accordance with this ,act4