Sec. 2. Definitions
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For purposes of this Act, unless the context otherwise requires, the following definitions shall apply: The term Board of Directors means the Board of Directors of the Mortgage Finance Agency. The term charter means— with respect to the Federal National Mortgage Association, the Federal National Mortgage Association Charter Act ( 12 U.S.C. 1716 et seq. ); and with respect to the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act ( 12 U.S.C. 1451 et seq. ).
The term Director , other than in the context of the Director of the Federal Housing Finance Agency, means the Director of the Mortgage Finance Agency. The term enterprise means— the Federal National Mortgage Association; and the Federal Home Loan Mortgage Corporation. The term FHFA means the Federal Housing Finance Agency. The terms Mortgage Finance Agency and MFA mean the agency established under title II. The term MFA certification date means the date on which the Director certifies that the MFA is operational and able to perform the guarantee function for qualified mortgage-backed securities collateralized by qualified residential mortgages, as provided in this Act, which date shall be not later than 18 months after the date of enactment of this Act.
The term qualified issuer means a person who originates or purchases, and services, a qualified residential mortgage or a qualified multifamily mortgage, and is approved to issue securities guaranteed by the MFA, in accordance with this Act and with the guidelines issued by the MFA under section 302. The term qualified mortgage-backed securities means securities collateralized by qualified residential mortgages or qualified multifamily mortgages, as the case may be, issued by a qualified issuer and guaranteed by the MFA with respect to the timely payment of principal and interest, all in accordance with this Act.
The term qualified multifamily mortgage means a commercial real estate loan secured by a property with 5 or more single family units, the primary source of repayment for which is expected to be derived from the proceeds of the sale, refinancing, or permanent financing of the property, or rental income generated by the property, that— has been originated with an initial loan to value ratio of not more than 75 percent and with an initial debt service coverage ratio of at least 1.25; or with respect to which, the mortgage lender retains a pro rata vertical slice of credit risk in an amount to be determined by the MFA.
The term qualified residential mortgage means a residential real estate loan secured by a property with 1 to 4 single family units that has been originated in compliance with the following underwriting standards and product features: Documentation and verification of the financial resources relied upon to qualify the mortgagor. Standards with respect to the income and scheduled debt payments of the mortgagor, including— 1 or more of— the residual income of the mortgagor after all monthly obligations; the ratio of the housing payments of the mortgagor to the monthly income of the mortgagor; and the ratio of total monthly installment payments of the mortgagor to the income of the mortgagor; and mitigation of the potential for payment shock on adjustable rate mortgages.
Downpayments which shall be equal to not less than 5 percent of purchase price, and— in the case of such mortgages with downpayments equal to not less than 5 percent but less than 30 percent of the purchase price, the mortgage is covered by private mortgage insurance purchased at the time of origination in an amount sufficient to cover each loan to the equivalent of not less than a 30-percent downpayment; and such mortgage insurance is issued by an entity that is subject to regulation as a mortgage guaranty insurer by the State of domicile of such entity or by the Federal Insurance Office (which regulation includes risk-based capital and reserve requirements).
Prohibition of or restrictions on the use of balloon payments, negative amortization, prepayment penalties, interest-only payments, and other features that have been demonstrated to exhibit a higher risk of borrower default. The term Secretary means the Secretary of the Treasury.
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