Sec. 705. Securitization platform

1,184 words·~5 min read·/bill/114/s/1484/pcs/section-705

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It is the sense of Congress that— at the direction of the Agency, the enterprises have established a joint venture called Common Securitization Solutions intended to facilitate the issuance of mortgage-backed securities through the Platform; at the direction of the Agency, the development of the Platform is currently geared toward the issuance of mortgage-backed securities by the enterprises; as soon as practicable, the capacity and functionality of the Platform should be expanded to facilitate the issuance of mortgage-backed securities by issuers other than the enterprises, and CSS should undertake to develop the contractual and disclosure framework for issuers other than the enterprises; the property of the enterprises, including intellectual property, technology, systems, and infrastructure (including technology, systems, and infrastructure developed by the enterprises for the Platform), as well as any other legacy systems, infrastructure, processes, and the Platform itself are valuable assets of the enterprises; and the enterprises should receive appropriate compensation for the transfer of any such assets.

Not later than 1 year after the date of enactment of this Act, and every year thereafter, the Agency shall submit to Congress a report on the status of the development of the Platform and the contractual and disclosure framework, which shall include— the projected timelines for— completing development of the Platform to support the securitization needs of the enterprises; and completing development of the Platform and the contractual and disclosure framework to support the securitization needs of issuers other than the enterprises; and the projected budget for the development of the Platform and the contractual and disclosure framework.

Not later than 3 years after the date of enactment of this Act, the Agency shall develop a plan, and 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 on such plan, to transition the Platform and the contractual and disclosure framework from a joint venture owned by the enterprises into a private, nonprofit entity that best facilitates a deep, liquid, and resilient secondary mortgage market for mortgage-backed securities.

Not later than 6 months after the date of enactment of this Act, the Agency shall direct the enterprises and CSS to re-constitute a CSS Board of Directors that meets the composition requirements set forth in paragraphs

(2)and (3). Not later than 1 year after the date of enactment of this Act, as determined by the Agency, the Board of Directors shall be comprised of 7 directors, 3 of whom— shall have demonstrated knowledge of, or experience in, financial management, financial services, risk management, information technology, or housing finance; and are not simultaneously employed by an enterprise or serving as a director of an enterprise. Not later than 18 months after the date of enactment of this Act, as determined by the Agency, the Board of Directors shall be comprised of 9 directors, 5 of whom— shall have demonstrated knowledge of, or experience in, financial management, financial services, risk management, information technology, or housing finance; and are not simultaneously employed by an enterprise or serving as a director of an enterprise. Not later than 2 years after the date of enactment of this Act, CSS shall— for an entity other than an enterprise, develop standards for— becoming an approved issuer of securities issued through the Platform; loans that may serve as collateral for securities issued through the Platform; and originating, servicing, pooling, dispute resolution, disclosure, and securitizing residential mortgage loans that collateralize securities issued through the Platform; and operate and maintain the Platform and establish fees for use of the Platform. Not later than 3 years after the date of enactment of this Act— CSS shall facilitate the issuance of securities by any approved issuer other than an enterprise through the Platform; and issuances of securities facilitated through the Platform shall not be limited to those made by the enterprises. The Director may delay the requirement under subparagraph

(B)for 2 1-year periods if the Director and the Secretary of the Treasury— determine that facilitation of such securities is not feasible within that period of time and could adversely impact the housing market; and submit to Congress a report describing the justification for the determination made in clause (i). CSS may not, through the Platform or otherwise— guarantee any mortgage loans or mortgage-backed securities; assume or hold mortgage loan credit risk; purchase any mortgage loans for cash on a single loan basis for the purpose of securitization; own or hold any mortgage loans or mortgage-backed securities for investment purposes; make or be a party to any representation and warranty agreement on any mortgage loans; or take lender representation and warranty risk. All authorized and prohibited activities of CSS under this subsection shall transfer to the private successor at the time of transition under subsection (g), and shall transfer to any future successor to the private successor at the time of any such transition. The Agency shall have general regulatory authority over CSS, the private successor, and any successor to the private successor to ensure the safety and soundness of CSS and such successors At a time established by the Agency, the Agency shall transfer to CSS such funds from the enterprises as the Agency, after consultation with the Board of Directors, determines may be reasonably necessary for CSS to begin carrying out the activities and operations of the Platform. The Agency shall direct the enterprises to transfer or sell to the Platform any property, including intellectual property, technology, systems, and infrastructure (including technology, systems, and infrastructure developed by the enterprises for the Platform), as well as any other legacy systems, infrastructure, and processes that may be necessary for the Platform to carry out the functions and operations of the Platform. As may be necessary for the Agency and the enterprises to comply with legal, contractual, or other obligations, the Agency shall have the authority to require that any transfer authorized under subparagraph

(A)occurs as an exchange for value, including through the provision of appropriate compensation to the enterprises or other entities responsible for creating, or contracting with, the Platform. Not later than 5 years after the date of enactment of this Act, the Agency shall oversee the transition of ownership of the Platform and the contractual and disclosure framework from the enterprises and CSS to a private, nonprofit entity in accordance with the plan developed under subsection (b)(2). The private successor shall determine the structure of the Board of Directors following the transition under paragraph (1). Not later than 10 years after the date of the transition described in paragraph (1), the total cost of the property transferred in accordance with subsection (f)(2) at the time of the transition, as determined jointly by the Agency and the Secretary, shall be repaid to the enterprises. Nothing in this section shall be construed to prohibit the Agency or CSS from first developing a common securitization platform for use only by the enterprises, if all of the provisions in this Act relating to the development of the Platform and the contractual and disclosure framework are complied with in a timely manner.