Sec. 203. Authority to protect taxpayers in unusual and exigent market conditions
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/bill/114/hr/1491/ih/section-203·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
If Ginnie Mae, by a majority vote of its Board of Directors, or the Financial Stability Oversight Council ( FSOC ), by a majority vote of its voting members, determines that unusual and exigent circumstances have created or threaten to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States, Ginnie Mae or the FSOC may, for as such time as either deems necessary— modify or waive the reinsurance requirements under section 202(b); establish provisional standards for approved entities; and temporarily increase loan limits under section 201(f).
In exercising the authority granted under subsection (a), Ginnie Mae and the FSOC shall consider the severity of the conditions present in the housing markets and the risks presented to the Fund in exercising such authority. Insurance provided under subsection
(a)shall be subject to such additional or different limitations, restrictions, and regulations as Ginnie Mae or the FSOC may prescribe. In exercising the authority granted under subsection (a), Ginnie Mae and the FSOC may not— provide aid to an approved entity or an affiliate of the approved entity, if such approved entity is in bankruptcy or any other Federal or State insolvency proceeding; provide aid for the purpose of assisting a single and specific company avoid bankruptcy or any other Federal or State insolvency proceeding; or rescind any contracts entered into by Ginnie Mae or the FSOC. Not later than 7 days after authorizing insurance or establishing provisional standards under subsection (a), Ginnie Mae or the FSOC, as appropriate, shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes— the justification for the exercise of authority to provide such insurance or establish such provisional standards; evidence that unusual and exigent circumstances have created or threatened to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States; and evidence that failure to exercise such authority would have undermined the safety and soundness of the housing finance system. The authority granted to Ginnie Mae and the FSOC under this section may not be exercised more than 3 times in any given 3-year period, which 3-year period shall commence upon the initial exercise of authority under subsection (a). Following any exercise of authority under this section, Ginnie Mae and the FSOC shall— establish a timeline for approved entities to meet the approval standards set forth in this Act; and in a manner and pursuant to a timeline that will minimize losses to the Fund, establish a program to either— sell, in whole or in part, the first loss position on securities described in this section to private market holders; or transfer for value to approved entities, or work with approved entities to sell, in whole or in part, the first lost position on securities described in this section. In the event of a significant decline of national home prices, in at least 2 consecutive calendar quarters, Ginnie Mae or the FSOC may for a period of 6 months permit the transfer of guarantees of eligible mortgage loans that secure securities issued under this Act if such eligible mortgage loans are refinanced, regardless of the value of the underlying collateral securing such eligible mortgage loans. The authority granted to Ginnie Mae and the FSOC under paragraph
(1)may be exercised for additional 6-month periods. Ginnie Mae and the FSOC shall not provide insurance under this Act to any security issued under this Act that includes mortgage loans that do not meet the definition of an eligible mortgage loan, except for mortgage loans refinanced from eligible mortgage loans in securities issued under this Act. No provision in this section shall be construed as permitting Ginnie Mae or the FSOC to lower any other requirement related to the requirements set forth under the definition of an eligible mortgage loan.