Sec. 214. Approval of bond guarantors
728 words·~3 min read·
/bill/113/s/1217/rs/section-214A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of bond guarantors to guarantee the timely payment of principal and interest on securities collateralized by eligible mortgages and insured by the Corporation. The standards required under paragraph
(1)shall include— the financial history and condition of the guarantor; that the guarantor maintain a minimum capital level equal to not less than 10 percent of the unpaid principal balance of outstanding mortgage-backed securities for which the guarantor is providing insurance, net of any transactions, including derivative transactions, repurchase agreements, reverse repurchase agreements, securities lending transactions, or securities borrowing transactions, that in the determination of the Corporation are used by the guarantor to hedge or mitigate against credit risk, provided that any such hedging transaction does not diminish the total amount of loss absorption capital in the secondary mortgage market that stands in front of the insurance provided by the Corporation under this title; the general character and fitness of the management of the guarantor, including compliance history with Federal and State laws; the risk presented by such guarantor to the Mortgage Insurance Fund; the adequacy of insurance and fidelity coverage of the guarantor; a requirement that the guarantor submit audited financial statements to the Director; a requirement that the guarantor meet a minimum tangible common equity level, or other minimum capital threshold as the Corporation determines necessary; and any other standard the Corporation determines necessary or appropriate. Any covered security issued by an approved issuer and insured by an approved bond guarantor shall be deemed to have satisfied the credit-risk sharing requirements under section 202(a)(1) with respect to the eligibility of that security to obtain insurance under this title. 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 bond guarantors under this section. If an insured depository institution seeks to become an approved bond guarantor 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 bond guarantor meets the standards adopted under subsection (a). The Corporation shall— publish in the Federal Register a list of newly approved bond guarantors; and maintain an updated list of approved bond guarantors on the website of the Corporation. The Corporation may review the status of any approved bond guarantor if the Corporation is notified of or becomes aware of any violation by the insurer 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 bond guarantor no longer meets the standards for approval, the Corporation shall revoke the approved status of such guarantor. The revocation of an approved bond guarantor'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 bond guarantors who lost their approved status; and maintain an updated list of such guarantors on the website of the Corporation. A bond guarantor who submits an application under subsection (c)(1) to become an approved bond guarantor may appeal a decision of the Corporation denying such application. An approved bond guarantor may appeal a decision of the Corporation suspending or revoking the approved status of such guarantor. Any bond guarantor 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). With respect to any eligible mortgage collateralizing a covered security insured under this Act, an approved bond guarantor may not provide insurance— in satisfaction of the credit enhancement required under section 2(11)(C) or as an approved private mortgage insurer pursuant to section 211; and as an approved bond guarantor under this section. Nothing in this Act prohibits an approved bond guarantor from being or controlling an approved issuer, provided that each issuer and bond guarantor, independent of each other, meet the approval standards established by the Corporation under this title.