Sec. 213. Approval of issuers
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The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of issuers to issue covered securities, including standards with respect to an issuer's ability to— aggregate eligible mortgage loans into pools; securitize eligible mortgage loans for sale to private investors as a covered security; transfer investment risk and credit to private market participants in accordance with the risk-sharing mechanisms developed by the Corporation under section 202; ensure equitable access to the secondary mortgage market for covered securities for all institutions regardless of size or geographic location; create mechanisms for multi-lender pools; and ensure that eligible mortgage loans that collateralize a covered security insured under this title are originated in compliance with the requirements of this Act.
The standards required under paragraph
(1)shall also include— the financial history and condition of the issuer; the adequacy of the capital structure of the issuer; the general character and fitness of the management of the issuer, including compliance history with Federal and State laws; the risk presented by such issuer to the Mortgage Insurance Fund; the adequacy of insurance and fidelity coverage of the issuer; a requirement that the issuer submit audited financial statements to the Corporation; the capacity of the issuer to secure first loss credit enhancement; and any other standard the Corporation determines necessary or appropriate. The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of issuers under this section. If an insured depository institution seeks to become an approved issuer under this section, such institution may only submit its application via a separately capitalized affiliate or subsidiary. The Corporation— may approve— any application made pursuant to paragraph
(1)provided the issuer meets the standards adopted under subsection (a); and any application to become an approved issuer made by the Federal Home Loan Bank System; and shall ensure that at least one issuer approved to issue covered securities under this section is dedicated to serving the securitization needs of credit unions and community and mid-size banks without securitization capabilities. The Corporation shall— publish in the Federal Register a list of newly approved issuers; and maintain an updated list of approved issuers on the website of the Corporation. If the Federal Home Loan Bank System is approved by the Corporation to become an approved issuer under this section, the Corporation shall— develop a process by which each individual Federal Home Loan Bank may elect not to engage or otherwise contribute to any activity practiced by the Federal Home Loan Bank System as an approved issuer; ensure that, notwithstanding section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431), any covered securities issued by the Federal Home Loan Bank System as an approved issuer are not issued as consolidated Federal Home Loan Bank debentures and are explicitly designated or otherwise treated as not being the joint and several obligations of any individual Federal Home Loan Bank that has made an election under subparagraph (A); and ensure that in establishing the capital standards set forth under subsection (a)(2)(B) with respect to the Federal Home Loan Bank System, that such standards shall— not be applicable to any individual Federal Home Loan Bank that has made an election under subparagraph (A); be based on the volume of eligible mortgage loan originations made by the Federal Home Loan Banks that have not made an election under subparagraph (A); and not adversely impact the traditional liquidity and advance business of the Federal Home Loan Banks or the Federal Home Loan Bank System. Section 12 of the Federal Home Loan Bank Act ( 12 U.S.C. 1432 ) is amended by adding at the end the following: Subject to such regulations as may be prescribed by the Corporation, one or more Federal Home Loan Banks may establish a subsidiary. Any subsidiary established under this subsection shall be subject to supervision by the Office of Federal Home Loan Bank Supervision of the Corporation and shall be restricted to engaging in activities related to being an approved issuer, as that term is defined under section 2(2) of the Housing Finance Reform and Taxpayer Protection Act of 2013 . . The amendment made by subparagraph
(A)shall take effect on the transfer date. The Corporation may review the status of any approved issuer if the Corporation is notified of or becomes aware of any violation by the issuer of this Act or the rules promulgated pursuant to this Act. If the Corporation determines, in a review pursuant to paragraph (1), that an approved issuer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such issuer. The suspension or revocation of an approved issuer's approved status under this paragraph shall have no effect on the status of any covered security. The Corporation shall— publish in the Federal Register a list of any approved issuers who lost their approved status; and maintain an updated list of such issuers on the website of the Corporation. An issuer who submits an application under subsection (b)(1) to become an approved issuer may appeal a decision of the Corporation denying such application. An approved issuer may appeal a decision of the Corporation suspending or revoking the approved status of such issuer. Any issuer who files an appeal under paragraph
(1)shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed. The Corporation shall make a final determination with respect to an appeal under paragraph
(1)not later than 180 days after the date on which the appeal is filed under paragraph (2). The Corporation may not enter into any contract, covenant, or other agreement with an approved issuer, if such contract, covenant, or agreement would provide the issuer a share of the covered security issuer market in excess of 15 percent of the total market, as such market is measured by the total outstanding principal balance at origination of eligible mortgages collateralizing covered securities issued in the previous 12-month period. The limitation set forth under paragraph
(1)shall not apply to— an approved issuer described under subsection (b)(2)(A)(ii); the FMIC Mutual Securitization Company; any approved issuer which securitizes only eligible mortgage loans originated by the issuer or an affiliate of the issuer; or any approved issuer to which the Corporation grants a waiver pursuant to paragraph (3). The Corporation may, during the 3-year period beginning on the FMIC certification date, grant a waiver from the limitation set forth under paragraph
(1)to an approved issuer if the Corporation determines that the number of approved issuers is insufficient, such that imposition of the limitation would adversely affect the availability of mortgage credit. An approved issuer may, for a period not to exceed 6-months, hold— eligible mortgage loans on the balance sheet of such issuer; and the first loss position in a covered security for purposes of obtaining insurance under this title.
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