Sec. 4. Guarantee fees

271 words·~1 min read·/bill/113/s/1373/is/section-4

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Each enterprise shall charge a guarantee fee in connection with any guarantee of the timely payment of principal and interest on securities, notes, and other obligations based on or backed by eligible mortgages refinanced under this Act. The amount of the guarantee fee required to be charged by an enterprise pursuant to subsection

(a)shall be actuarially determined by the Director to cover the expected risk of default on the pool of eligible mortgages refinanced under this Act backing the security, note, or other obligation to which the enterprises' guarantee applies. In calculating the expected risk of default pursuant to paragraph (1), the Director shall ensure that any default probability assumptions used to model such risk— are reasonable, including with respect to the arrival rate of default and the magnitude risk of default; and are not unduly weighted to cover historical stress or crisis scenarios. In determining the amount of any guarantee fee required to be charged pursuant to subsection (a), neither the Director nor an enterprise may charge any additional fee, price adjustment, premium, or other amount other than that which is determined in accordance with paragraph (1). The Director shall prohibit an enterprise from offsetting the cost of the guarantee fee required to by charged pursuant to subsection

(a)to mortgage originators, borrowers, and investors by decreasing other charges, fees, or premiums, or in any other manner. The Director shall prohibit an enterprise from consummating any offer for a guarantee on any security, note, or other obligation based on or backed by eligible mortgages refinanced under this Act, if the guarantee is inconsistent with the requirements of this section.