,i  #aad? ,,congress  #b;d ,session  ,h4
 ,r4 #fejj  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,decemb] #h1 #bjaf,mr4
 ,delaney 7= himself1 ,mr4 ,c>ney1 &    
,mr4 ,himes7 introduc$ ! foll[+ bill2   
:i* 0 ref]r$ to ! ,committee on         
,f9ancial ,s]vices1 & 9 addition to !   
,committee on ,ways & ,means1 = a p]iod 
to be subsequ5tly det]m9$ by ! ,speak]1 
9 ea* case = consid]ation ( su*         
provisions z fall )9 ! jurisdiction ( ! 
committee conc]n$  ,a ,,bill  ,to       
e/abli% a ,mortgage ,cr$it ,risk ,%>+   
,pilot ,program at ,fannie ,mae &       
,fr$die ,mac1 & = o!r purposes4  #a4    
,%ort title ,?is ,act may be cit$ z !   
,mov+ ,h\s+ ,=w>d ,act ( #bjaf4  #b4    
,def9itions  7a7 ,incorporation (       
def9itions ,except z o!rwise provid$ 9  
?is ,act1 ! t]ms us$ 9 ?is ,act h !     
mean+ giv5 ^? t]ms1 respectively1 "u    
section #acjc ( ! ,f$]al ,h\s+          
,ent]prises ,f9ancial ,safety &         
,s\ndness ,act ( #aiib 7#ab ,u4,s4,c4   
#dejb74  7b7 ,o!r def9itions ,= purposes

 ( ?is ,act3 7#a7 ,cata/rophic cr$it    
loss ,! t]m cata/rophic cr$it loss means
 all pot5tial cr$it loss t exce$s bo?   
expect$ & unexpect$ cr$it loss4  7#b7   
,c\nt]p>ty risk ,! t]m c\nt]p>ty risk   
means1 ) reg>d to an ent]prise1 ! risk t
 any p]son contractually obligat$ to !  
ent]prise 9 any transaction w fail to   
p]=m 9 accordance ) ! t]ms ( !          
contractual obligation4  7#c7 ,cr$it    
risk ,! t]m cr$it risk means ! risk (   
loss to an ent]prise on a resid5tial    
mortgage loan held or gu>ante$ by !     
ent]prise or on any security gu>ante$ by
 ! ent]prise t c\ld result f a          
mortgagor's failure to repay ! loan 9   
accordance ) its t]ms4  7#d7 ,cr$it risk
 transf] ,! t]m cr$it risk transf]      
means1 ) reg>d to an ent]prise1 ! sale  
or disposition ( cr$it risk on loans    
gu>ante$ by an ent]prise to ano!r p>ty1 
:o assumes ! cr$it risk 9 accordance )  
agre$ ^u t]ms4  7#e7 ,exclud$ ref9anc+  
,! t]m exclud$ ref9anc+ means a s+le    
family resid5tial mortgage loan t 0     

orig9at$ "u ! ,home ,af=dable ,ref9ance 
,program e/abli%$ by ,,fhfa or any o!r  
mortgage loan ref9anc$ "u a tempor>y    
program t ,,fhfa has det]m9$ n to       
include 9 a cr$it risk transf]          
transaction ent]$ into by an ent]prise  
prior to ! date ( enactm5t ( ?is ,act4  
,su* a det]m9ation n to include any     
ref9anc$ mortgage loan may be demon/rat$
 by prior actual exclusion & no o!r     
det]m9ation by ,,fhfa is requir$4  7#f7 
,expect$ cr$it loss ,! t]m expect$ cr$it
 loss means cr$it loss t is reasonably  
anticipat$ "u basel9e economic          
conditions4  7#g7 ,,fhfa ,! t]m ,,fhfa  
means ! ,f$]al ,h\s+ ,f9ance ,ag5cy4    
7#h7 ,p>i passu ,! t]m p>i passu means  
hav+ equal rights ( paym5t & equal      
s5iority4  7#i7 ,unexpect$ cr$it loss ,!
 t]m unexpect$ cr$it loss means cr$it   
loss t is reasonably anticipat$ "u      
/ressful1 yet plausible1 economic       
conditions1 & does n include expect$    
loss or cata/rophic loss4  #c4 ,mortgage
 ,cr$it ,risk ,%>+ ,pilot ,program  7a7 

,s5se ( ,congress ,x is ! s5se (        
,congress t-- 7#a7 at ! direction (     
,,fhfa1 ! ent]prises h ent]$ into       
transactions to transf] cr$it risk !y   
assume by gu>antee+ ! paym5t ( pr9cipal 
& int]e/ on securities back$ by c]ta9   
resid5tial mortgage loans2 &  7#b7 cr$it
 risk transf] transactions %\ld be      
enc\rag$ t r$uce taxpay] exposure to    
cr$it risk assum$ by an ent]prise & d n 
expose an ent]prise to excessive        
c\nt]p>ty risk4  7b7 ,e/abli%m5t        
,subject to ! requirem5ts ( ?is section1
 ! ,director %all require ea* ent]prise 
to e/abli% a ,mortgage ,cr$it ,risk ,%>+
 ,pilot ,program 79 ?is section ref]r$  
to z ! ,pilot ,program74  7c7 ,pilot    
program requirem5ts ,"u ! ,pilot        
,program1 ,,fhfa %all direct ea*        
ent]prise to1 ea* qu>t] beg9n+ ) ! fir/ 
qu>t] foll[+ ! end ( ! #i-mon? p]iod    
beg9n+ on ! date ( ! enactm5t ( ?is     
,act1 conduct risk-%>+ transactions t   
provide = an ent]prise to %>e cr$it risk
 on a pool ( s+le-family resid5tial     

mortgage loans t back securities on :i* 
! ent]prise gu>antees ! timely paym5t ( 
pr9cipal & int]e/ ) ! private sector4   
,su* transactions %all meet ! foll[+    
requirem5ts3  7#a7 ,t>get$ loans ,cr$it 
risk %all be transf]r$ on t>get$ loans4 
,t>get$ loans are resid5tial mortgage   
loans t--  7,a7 are s+le family         
resid5tial mortgage loans2  7,b7 are n !
 result ( an exclud$ ref9anc+1 z det]m9$
 by ,,fhfa2 &  7,c7 are a repres5tative 
sample ( ! unpaid pr9cipal balance loans
 eligible = ! to-be-ann\nc$ m>ket4  7#b7
 ,losses transf]r$ ?r\gh ! ,pilot       
,program  7,a7 ,9 g5]al ,ea* ent]prise  
%all transf] to ! private sector-- 7i7  
ei!r all or ! majority ( ! aggregate    
risk %>$ on a p>i passu basis ( !       
expect$ & unexpect$ loss on ! unpaid    
pr9cipal balance on ! transactions2 &   
7ii7 a t>get ( at lea/ #aj p]c5t 9 a    
v]tical position ( ! risk ( all ( !     
cata/rophic cr$it loss on ! unpaid      
pr9cipal balance on ! transactions4     
7,b7 ,au?ority ( ! ,director ,!         

,director may p]mit an ent]prise to     
transf] less ?an #aj p]c5t 9 a v]tical  
position ( ! risk ( cata/rophic cr$it   
loss dur+ a transition p]iod1 up until  
#ae mon?s aft] ! date ( ! enactm5t ( ?is
 ,act1 to compliance ) ! #aj p]c5t t>get
 ( ! ,pilot ,program4  7,c7 ,treatm5t ( 
cata/rophic risk ,risk ( cata/rophic    
cr$it loss %all be transf]r$ on a p>i   
passu basis4  7#c7 ,scope ( ! ,pilot    
,program ,! ,director %all require t    
cr$it risk on at lea/ #e p]c5t ( new    
acquisitions1 z def9$ by ! ,director1 ( 
t>get$ loans describ$ 9 p>agraph 7#a7   
%all be transf]r$ ?r\gh ! ,pilot        
,program4 ,ea* ent]prise may v>y !      
p]c5tage ( new acquisitions ( t>get$    
loans transf]r$ ?r\gh ! ,pilot ,program1
 provid$ t ! av]age annual p]c5tage ov] 
ea* ye> ( ! ,pilot ,program is n less   
?an #e p]c5t4  7#d7 ,measurem5ts ,9     
c>ry+ out ! ,pilot ,program1 ,,fhfa %all
 measure ! cr$it risk & ! am\nt ( risk  
transf]r$4  7#e7 ,additional requirem5ts
 ,9 c>ry+ out ! ,pilot ,program1 !      

ent]prises %all-- 7,a7 collect &        
disclose loan-level data on ea* ( !     
mortgage loans back+ ! cr$it risk       
transactions1 includ+ consum] cr$it     
score in=mation & ! loan-to-value ratio 
( ! loan2 &  7,b7 ref9e transaction     
/ructure designs to improve execution4  
7d7 ,promotion ( m>ket = cr$it risk     
transactions ,) respect to all cr$it    
risk transf] transactions ( an          
ent]prise1 includ+ any transaction "u ! 
,pilot ,program1 ! ,director %all d !   
foll[+3  7#a7 ,"w to ensure a second>y  
m>ket = cr$it risk transf] products t w 
give inve/ors z deep & liquid a m>ket4  
7#b7 ,n lat] ?an #a ye> aft] ! date ( ! 
enactm5t ( ?is ,act1 9 consultation ) ! 
,securities ,ex*ange ,commission1 !     
,commodity ,futures ,trad+ ,commission1 
& any ,f$]al bank+ ag5cy z appropriate1 
issue a report to ! ,committee on       
,f9ancial ,s]vices ( ! ,h\se (          
,repres5tatives & ! ,committee on       
,bank+1 ,h\s+1 & ,urban ,affairs ( !    
,s5ate t provides recomm5dations on h[  

to inc5tivize additional s\rces (       
private capital to p>ticipate 9 cr$it   
risk transf] transactions1 includ+      
regulatory actions tak5 & recomm5dations
 = legislative proposals to remove      
imp$im5ts to su* p>ticipation4 ,no?+ 9 !
 prec$+ s5t5ce is int5d$ to prev5t or   
delay ,,fhfa or ano!r ag5cy f develop+ &
 implem5t+ a regulatory action to remove
 any imp$im5t to or inc5tivize su*      
p>ticipation prior to issuance ( su*    
report z au?oriz$ "u curr5t law4  7#c7  
,require ! ent]prises to make #fj p]c5t 
( mortgages available to be subject to  
cr$it risk transactions 9 ! fir/ fiscal 
ye> aft] ! date ( ! enactm5t ( ?is ,act1
 #gj p]c5t 9 ! second fiscal ye> aft]   
su* date ( enactm5t1 & #hj p]c5t 9 !    
?ird fiscal ye> aft] su* date (         
enactm5t4  7e7 ,capital /&>ds  7#a7 ,9  
g5]al ,! ,director may set capital or   
collat]al requirem5ts = p>ticipants 9 ! 
,pilot ,program4  7#b7 ,use ( c]ta9     
capital m>kets transactions ,9 sett+    
capital /&>ds "u p>agraph 7#a71 !       

,director %all all[ p>ticipants to      
prud5tly r$uce or elim9ate any capital  
requirem5ts = cr$it-risk %>+            
transactions ?r\gh ! use ( capital      
m>kets transactions t pre-fund ! risk1  
includ+ cr$it-l9k$ notes4  7f7 ,economic
 consid]ations ,if ! ,director ( !      
,,fhfa & ! ,secret>y ( ! ,treasury      
det]m9e t ! ,pilot ,program is          
economically unreasonable due to h\s+   
m>ket conditions1 ! ,director may l[] ! 
p]c5tage am\nts specifi$ "u subsection  
7c77#b71 7c77#c71 or 7d77#a77;,c74  7g7 
,,fhfa reports  7#a7 ,9 g5]al ,n lat]   
?an #a ye> aft] ! date ( ! enactm5t (   
?is ,act1 & annually !reaft]1 !         
,director %all provide a report to !    
,committee on ,f9ancial ,s]vices ( !    
,h\se ( ,repres5tatives & ! ,committee  
on ,bank+1 ,h\s+1 & ,urban ,affairs ( ! 
,s5ate conta9+--  7,a7 in=mation on     
cr$it risk transf] transaction pric+ on 
qu>t]ly basis2  7,b7 ! am\nt ( cr$it    
risk t has be5 transf]r$ f ! ent]prises 
on a qu>t]ly basis2  7,c7 metrics &     

annual goals reg>d+ ! ,pilot ,program2  
7,d7 ! p]c5tage ( ! unpaid pr9cipal     
balance ( mortgage loans cov]$ "u !     
,pilot ,program 9 ea* ye>2  7,e7 a      
description ( h[ ! ,,fhfa int5ds to move
 =w>d ) mortgage insurance focus$       
transactions foll[+ ! rec5tly f9aliz$   
mortgage insurance ma/] policy          
requirem5ts & private mortgage insur]   
eligibility requirem5ts1 & h[ ! ,,fhfa  
evaluates ! rema9+ c\nt]p>ty risk )     
mortgage insur]s2  7,f7 a description ( 
new cr$it risk transf] pilot programs t 
,,fhfa int5ds an ent]prise to und]take  
ov] ! next ?ree ye>s & /eps ,,fhfa      
int5ds to take to solicit new ideas =   
new & innovative ways to transf] cr$it  
risk away f ! ent]prises & ! taxpay]s1  
includ+ transf]s ( expect$1 unexpect$1 &
 cata/rophic cr$it loss2 &  7,g7 a      
description ( h[ ,,fhfa plans to        
transition f cr$it risk %>+ pilot       
programs to a regul> /&>diz$ program (  
cr$it risk transf]s t e/abli% a /able & 
liquid m>ket = mortgage cr$it risk4     

7#b7 ,solicitation ( public fe$back ,9  
prep>+ any report requir$ "u p>agraph   
7#a71 ! ,director %all solicit public   
fe$back1 includ+ fe$back to--  7,a7     
g5]ate new pot5tial =ms ( cr$it risk    
transf]2 &  7,b7 id5tify pot5tial b>ri]s
 to entry = private sector p>ties to    
inve/ 9 su* transactions4  7#c7         
,confid5tiality ,9 issu+ any report "u  
p>agraph 7#a71 ! ,director %all protect 
c\nt]p>ty propriet>y data1 includ+ 9    
mak+ in=mation available ab\t ! ,pilot  
,program4  7h7 ,rule ( con/ruction ,no?+
 9 ?is section %all be con/ru$ to limit 
! ability ( ! ,director to conduct      
cu/omiz$ risk %>+ transactions z        
au?oriz$ "u curr5t law4  7i7 ,duration (
 ! ,pilot ,program  7#a7 ,9 g5]al ,!    
,pilot ,program %all la/ a m9imum ( #c  
ye>s aft] ! fir/ transf] ( cata/rophic  
cr$it loss4 ,! ,director may cont9ue to 
direct ! ent]prises to transf] risk (   
cr$it loss1 includ+ risk ( cata/rophic  
cr$it loss1 & may cont9ue to ent] into  
cr$it risk transf] transactions to      

transf] su* risk aft] ! end ( #c ye>s "u
 au?ority prior to ! enactm5t ( ! ,pilot
 ,program4  7#b7 ,analysis ,aft] !      
,pilot ,program is execut$ = #c ye>s1 ! 
,director %all exam9e ! economics (     
develop+ ! ,pilot ,program into a       
cont9u\s risk %>+ program4  #d4         
,regulatory implem5tation ( cr$it       
risk-%>+ m>ket  7a7 ,application (      
section #c ( ! ,inve/m5t ,company ,act (
 #aidj ,= any cr$it risk transf]        
transaction approv$ by ! ,director1     
includ+ a transaction 9 :i* cr$it risk  
is transf]r$ on mortgage loans t d n    
directly back ! securities be+ issu$1 ! 
issu] %all be deem$ to be a p]son       
prim>ily engag$ 9 ! bus9ess ( pur*as+ or
 o!rwise acquir+ mortgages or o!r li5s  
on & int]e/s 9 real e/ate = purposes (  
section #c7;c77#e7 ( ! ,inve/m5t        
,company ,act ( #aidj 7#ae ,u4,s4,c4    
#hj;a-#c74  7b7 ,f$]al income tax       
treatm5t  7#a7 ,real e/ate mortgage     
inve/m5t conduits ,= purposes ( sections
 #hfj;,a ?r\gh #hfj;,g ( ! ,int]nal     

,rev5ue ,code ( #aihf 7! ,code7-- 7,a7  
any f9ancial in/rum5t issu$ by an       
ent]prise 7or a legal entity sponsor$ by
 an ent]prise to implem5t a cr$it risk  
transf] transaction7 z "p ( a cr$it risk
 transf] transaction %all be treat$ z a 
qualifi$ mortgage2 &  7,b7 any am\nt    
includible 9 gross income ) respect to  
su* a f9ancial in/rum5t %all be treat$ z
 int]e/ on a qualifi$ mortgage4  7#b7   
,real e/ate inve/m5t tru/s ,= purposes (
 ,code sections #hef ?r\gh #hfj-- 7,a7  
any f9ancial in/rum5t issu$ by an       
ent]prise 7or a legal entity sponsor$ by
 an ent]prise to implem5t a cr$it risk  
transf] transaction7 z "p ( a cr$it risk
 transf] transaction %all be treat$ z a 
real e/ate asset2 &  7,b7 any am\nt     
includible 9 gross income ) respect to  
su* a f9ancial in/rum5t %all be treat$ z
 int]e/ on an obligation secur$ by a    
mortgage on real prop]ty4  7#c7 ,taxable
 mortgage pools ,a cr$it risk transf]   
transaction ent]$ into by an ent]prise  
7or a legal entity sponsor$ by an       

ent]prise7 %all n be treat$ z a taxable 
mortgage pool = purposes ( section      
#ggja7;i7 ( ! ,code4  7#d7 ,regulations 
,! ,secret>y ( ! ,treasury %all         
prescribe su* regulations or            
adm9i/rative guidance z may be necess>y 
or appropriate to c>ry out ! purposes ( 
?is subsection4  7c7 ,rule ( application
 ,subsections 7a7 & 7b7 %all apply 9 !  
case ( any risk transf] transaction &   
any f9ancial in/rum5t issu$ by !        
ent]prise 7or a legal entity sponsor$ by
 an ent]prise to implem5t a cr$it risk  
transf] transaction7 z "p ( a cr$it risk
 transf] transaction t is out/&+ on1 or 
is issu$ aft]1 ! date ( ! enactm5t ( ?is
 ,act4  7d7 ,con=m+ am5dm5ts  7#a7      
,inve/m5t ,company ,act ( #aidj ,section
 #c7;c77#e7 ( ! ,inve/m5t ,company ,act 
( #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;c77#e77
 is am5d$ by add+ at ! end ! foll[+3 ,= 
any cr$it risk transf] transaction      
approv$ by ! ,director ( ! ,f$]al ,h\s+ 
,f9ance ,ag5cy1 includ+ a transaction 9 
:i* cr$it risk is transf]r$ on mortgage 

loans t d n directly back ! securities  
be+ issu$1 ! issu] %all be deem$ to be a
 p]son prim>ily engag$ 9 ! bus9ess (    
pur*as+ or o!rwise acquir+ mortgages or 
o!r li5s on & int]e/s 9 real e/ate44    
7#b7 ,rule ( application ,! am5dm5ts    
made by p>agraph 7#a7 %all apply 9 !    
case ( any cr$it risk transf]           
transaction & any f9ancial in/rum5t     
issu$ by an ent]prise 7or a legal entity
 sponsor$ by an ent]prise to implem5t a 
cr$it risk transf] transaction7 z "p ( a
 cr$it risk transf] transaction t is    
out/&+ on1 or is issu$ aft]1 ! date ( ! 
enactm5t ( ?is ,act4