Moving Housing Forward Act of 2016

Catastrophic credit loss— The term “catastrophic credit loss” means all potential credit loss that exceeds both expected and unexpected credit loss.

Counterparty risk— The term “coun­ter­par­ty risk” means, with regard to an enterprise, the risk that any person contractually obligated to the enterprise in any transaction will fail to perform in accordance with the terms of the contractual obligation.

Credit risk— The term “credit risk” means the risk of loss to an enterprise on a residential mortgage loan held or guaranteed by the enterprise or on any security guaranteed by the enterprise that could result from a mortgagor’s failure to repay the loan in accordance with its terms.

Credit risk transfer— The term “credit risk transfer” means, with regard to an enterprise, the sale or disposition of credit risk on loans guaranteed by an enterprise to another party, who assumes the credit risk in accordance with agreed upon terms.

Excluded refinancing— The term “excluded refinancing” means a single family residential mortgage loan that was originated under the Home Affordable Refinance Program established by FHFA or any other mortgage loan refinanced under a temporary program that FHFA has determined not to include in a credit risk transfer transaction entered into by an enterprise prior to the date of enactment of this Act. Such a determination not to include any refinanced mortgage loan may be demonstrated by prior actual exclusion and no other determination by FHFA is required.

Expected credit loss— The term “expected credit loss” means credit loss that is reasonably anticipated under baseline economic conditions.

FHFA— The term “FHFA” means the Federal Housing Finance Agency.

Pari passu— The term “pari passu” means having equal rights of payment and equal seniority.

Unexpected credit loss— The term “unexpected credit loss” means credit loss that is reasonably anticipated under stressful, yet plausible, economic conditions, and does not include expected loss or catastrophic loss.

at the direction of FHFA, the enterprises have entered into transactions to transfer credit risk they assume by guaranteeing the payment of principal and interest on securities backed by certain residential mortgage loans; and

credit risk transfer transactions should be encouraged that reduce taxpayer exposure to credit risk assumed by an enterprise and do not expose an enterprise to excessive counterparty risk.

Targeted loans— Credit risk shall be transferred on targeted loans. Targeted loans are residential mortgage loans that—

Scope of the Pilot Program— The Director shall require that credit risk on at least 5 percent of new acquisitions, as defined by the Director, of targeted loans described in paragraph (1) shall be transferred through the Pilot Program. Each enterprise may vary the percentage of new acquisitions of targeted loans transferred through the Pilot Program, provided that the average annual percentage over each year of the Pilot Program is not less than 5 percent.

Measurements— In carrying out the Pilot Program, FHFA shall measure the credit risk and the amount of risk transferred.

Additional requirements— In carrying out the Pilot Program, the enterprises shall—

Work to ensure a secondary market for credit risk transfer products that will give investors as deep and liquid a market.

Not later than 1 year after the date of the enactment of this Act, in consultation with the Securities Exchange Commission, the Commodity Futures Trading Commission, and any Federal banking agency as appropriate, issue a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that provides recommendations on how to incentivize additional sources of private capital to participate in credit risk transfer transactions, including regulatory actions taken and recommendations for legislative proposals to remove impediments to such participation. Nothing in the preceding sentence is intended to prevent or delay FHFA or another agency from developing and implementing a regulatory action to remove any impediment to or incentivize such participation prior to issuance of such report as authorized under current law.

Require the enterprises to make 60 percent of mortgages available to be subject to credit risk transactions in the first fiscal year after the date of the enactment of this Act, 70 percent in the second fiscal year after such date of enactment, and 80 percent in the third fiscal year after such date of enactment.