---
kind: "range"
citation: "12 U.S.C. §§ 1716–1723i"
title: "12"
from: "1716"
to: "1723i"
count: 21
release: "119-102"
url: "https://uscodex.org/usc/12/1716..1723i"
---

# §1716. Declaration of purposes of subchapter


The Congress declares that the purposes of this subchapter are to establish secondary market facilities for [residential mortgages](/usc/12/1717.md?p=b-7-A-ii), to provide that the operations thereof shall be financed by private [capital](/usc/12/51c.md) to the maximum extent feasible, and to authorize such facilities to—

- (1) provide stability in the secondary market for [residential mortgages](/usc/12/1717.md?p=b-7-A-ii);
- (2) respond appropriately to the private [capital](/usc/12/51c.md) market;
- (3) provide ongoing assistance to the secondary market for [residential mortgages](/usc/12/1717.md?p=b-7-A-ii) ([including](/usc/12/25b.md?p=a-3) activities relating to [mortgages](/usc/12/1707.md?p=a) on housing for low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A) involving a reasonable economic return that may be less than the return earned on other activities) by increasing the liquidity of [mortgage](/usc/12/1707.md?p=a) investments and improving the distribution of investment [capital](/usc/12/51c.md) available for [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) financing;
- (4) promote access to [mortgage](/usc/12/1707.md?p=a) [credit](/usc/12/5481.md?p=7) throughout the Nation ([including](/usc/12/25b.md?p=a-3) central cities, rural areas, and underserved areas) by increasing the liquidity of [mortgage](/usc/12/1707.md?p=a) investments and improving the distribution of investment [capital](/usc/12/51c.md) available for [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) financing; and
- (5) manage and liquidate federally owned [mortgage](/usc/12/1707.md?p=a) portfolios in an orderly manner, with a minimum of adverse effect upon the [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) market and minimum loss to the Federal Government.

# [§1716–1. Repealed. Aug. 2, 1954, ch. 649, title II, § 206, 68 Stat. 622 — repealed]



# [§1716a. Repealed. Aug. 2, 1954, ch. 649, title II, § 206, 68 Stat. 622 — repealed]



# §1716b. Partition of Federal National Mortgage Association into Federal National Mortgage Association and Government National Mortgage Association; assets and liabilities; operations


The purposes of this title[^1] include the partition of the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) as heretofore existing into two separate and distinct [corporations](/usc/12/2277a.md?p=2), each of which shall have continuity and corporate succession as a separated portion of the previously existing [corporation](/usc/12/2277a.md?p=2). One of such [corporations](/usc/12/2277a.md?p=2), to be known as Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i), will be a Government-sponsored private [corporation](/usc/12/2277a.md?p=2), will retain the assets and liabilities of the previously existing [corporation](/usc/12/2277a.md?p=2) accounted for under [section 1719 of this title](/usc/12/1719.md), and will continue to operate the secondary market operations authorized by such [section 1719](/usc/12/1719.md). The other, to be known as Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i), will remain in the Government, will retain the assets and liabilities of the previously existing [corporation](/usc/12/2277a.md?p=2) accounted for under [sections 1720](/usc/12/1720.md)[^1] and 1721 of this title, and will continue to operate the special assistance functions and management and liquidating functions authorized by such [sections 1720](/usc/12/1720.md)[^1] and 1721.


# §1717. Federal National Mortgage Association and Government National Mortgage Association

- (a) **Creation; succession; principal and other offices—**
  - (1) There is created a body corporate to be known as the “Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i)”, which shall be in the Department of Housing and Urban Development. The [Association](/usc/12/1828.md?p=s-4-E-i) shall have succession until dissolved by Act of Congress. It shall maintain its principal [office](/usc/12/2279bb.md?p=4) in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof. [Agencies](/usc/12/1422.md?p=12) or [offices](/usc/12/2279bb.md?p=4) may be established by the [Association](/usc/12/1828.md?p=s-4-E-i) in such other place or places as it may deem necessary or appropriate in the conduct of its business.
  - (2) On September 1, 1968, the body corporate described in the foregoing paragraph shall cease to exist in that form and is hereby partitioned into two separate and distinct bodies corporate, each of which shall have continuity and corporate succession as a separated portion of the previously existing body corporate, as follows:
    - (A) One of such separated portions shall be a body corporate without [capital stock](/usc/12/51c.md) to be known as Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) (hereinafter referred to as the “[Association](/usc/12/1828.md?p=s-4-E-i)”), which shall be in the Department of Housing and Urban Development and which shall retain the assets and liabilities acquired and incurred under [sections 1720](/usc/12/1720.md)[^1] and 1721 of this title prior to such date, [including](/usc/12/25b.md?p=a-3) any and all liabilities incurred pursuant to [subsection (c)](#c). The [Association](/usc/12/1828.md?p=s-4-E-i) shall have succession until dissolved by Act of Congress. It shall maintain its principal [office](/usc/12/2279bb.md?p=4) in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof. [Agencies](/usc/12/1422.md?p=12) or [offices](/usc/12/2279bb.md?p=4) may be established by the [Association](/usc/12/1828.md?p=s-4-E-i) in such other place or places as it may deem necessary or appropriate in the conduct of its business.
    - (B) The other such separated portion shall be a body corporate to be known as Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) (hereinafter referred to as the “[corporation](/usc/12/2277a.md?p=2)”), which shall retain the assets and liabilities acquired and incurred under sections [1718](/usc/12/1718.md) and [1719](/usc/12/1719.md) of this title prior to such date. The [corporation](/usc/12/2277a.md?p=2) shall have succession until dissolved by Act of Congress. It shall maintain its principal [office](/usc/12/2279bb.md?p=4) in the District of Columbia or the metropolitan area thereof and shall be deemed, for purposes of jurisdiction and venue in civil actions, to be a District of Columbia [corporation](/usc/12/2277a.md?p=2).
  - (3) The partition transaction effected pursuant to the foregoing paragraph constitutes a reorganization within the meaning of [section 368(a)(1)(E) of title 26](/usc/26/368.md?p=a-1-E); and for the purposes of such title 26, no gain or loss is recognized by the previously existing body corporate by reason of the partition, and the basis and holding period of the assets of the [corporation](/usc/12/2277a.md?p=2) immediately following such partition are the same as the basis and holding period of such assets immediately prior to such partition.
- (b) **Purchase and sale of insured and conventional mortgages; transactions in loans and advances of credit—**
  - (1) For the purposes set forth in [section 1716 of this title](/usc/12/1716.md) and subject to the limitations and restrictions of this subchapter, each of the bodies corporate named in [subsection (a)(2)](#a-2) is authorized pursuant to commitments or otherwise, to purchase, service, sell, or otherwise deal in any mortgages which are insured under this chapter or title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.], or which are insured or guaranteed under the Servicemen’s Readjustment Act of 1944 or [chapter 37](/usc/38/chptIII-ch37.md) of title 38; and to purchase, service, sell, or otherwise deal in any loans made or guaranteed under part B of title VI of the Public Health Service Act [[42 U.S.C. 291j–1](/usc/42/291j–1.md) et seq.]; and the [corporation](/usc/12/2277a.md?p=2) is authorized to lend on the security of any such mortgages and to purchase, sell, or otherwise deal in any securities guaranteed by the [Association](/usc/12/1828.md?p=s-4-E-i) under [section 1721(g) of this title](/usc/12/1721.md?p=g): Provided, That (1) the [Association](/usc/12/1828.md?p=s-4-E-i) may not purchase any [mortgage](/usc/12/1707.md?p=a) at a price exceeding 100 per centum of the unpaid principal amount thereof at the time of purchase, with adjustments for interest and any comparable items; (2) the [Association](/usc/12/1828.md?p=s-4-E-i) may not purchase any [mortgage](/usc/12/1707.md?p=a), except a [mortgage](/usc/12/1707.md?p=a) insured under title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.], if it is offered by, or covers property held by, a [State](/usc/12/1707.md?p=d), territorial, or municipal instrumentality; and (3) the [Association](/usc/12/1828.md?p=s-4-E-i) may not purchase any [mortgage](/usc/12/1707.md?p=a) under [section 1720](/usc/12/1720.md)[^1] of this title, except a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715k of this title](/usc/12/1715k.md) or subchapter VIII or [section 1709(k) of this title](/usc/12/1709.md?p=k), or under subchapter IX–A[^1] with respect to a new community approved under section 1749cc–1[^1] of this title, or insured under [section 1715e of this title](/usc/12/1715e.md) and covering property located in an urban renewal area, or a [mortgage](/usc/12/1707.md?p=a) covering property located in Alaska, Guam, or Hawaii, if the original principal obligation thereof exceeds or exceeded $55,000 in the case of property upon which is located a dwelling designed principally for a one-[family](/usc/12/1715z–1.md?p=j-2-A) residence; or $60,000 in the case of a two- or three-[family](/usc/12/1715z–1.md?p=j-2-A) residence; or $68,750 in the case of a four-[family](/usc/12/1715z–1.md?p=j-2-A) residence; or, in the case of a property containing more than four dwelling units, $38,000 per dwelling unit (or such higher amount not in excess of $45,000 per dwelling unit as the [Secretary](/usc/12/1715z–22a.md?p=4) may by regulation specify in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require) for that part of the property attributable to dwelling use. Notwithstanding the provisions of [clause (3)](#b-3) of the preceding sentence, the [Association](/usc/12/1828.md?p=s-4-E-i) may purchase a [mortgage](/usc/12/1707.md?p=a) under [section 1720](/usc/12/1720.md)[^1] of this title with an original principal obligation which exceeds the otherwise applicable maximum amount per dwelling unit if the [mortgage](/usc/12/1707.md?p=a) is insured under section [1713(c)(3)](/usc/12/1713.md?p=c-3), [1715e(b)(2)](/usc/12/1715e.md?p=b-2), [1715k(d)(3)(B)(iii)](/usc/12/1715k.md?p=d-3-B-iii), [1715l(d)(3)(ii)](/usc/12/1715l.md), [1715l(d)(4)(ii)](/usc/12/1715l.md), [1715v(c)(2)](/usc/12/1715v.md?p=c-2), [1715y(e)(3)](/usc/12/1715y.md?p=e-3), or [1715z–1](/usc/12/1715z–1.md) of this title. For the purposes of this subchapter, the terms “mortgages” and “home mortgages” shall be inclusive of any mortgages or other loans insured under any of the provisions of this chapter or title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.].
  - (2) For the purposes set forth in [section 1716(a) of this title](/usc/12/1716.md), the [corporation](/usc/12/2277a.md?p=2) is authorized, pursuant to commitments or otherwise, to purchase, service, sell, lend on the security of, or otherwise deal in mortgages which are not insured or guaranteed as provided in [paragraph (1)](#b-1) (such mortgages referred to hereinafter as “conventional mortgages”). No such purchase of a conventional [mortgage](/usc/12/1707.md?p=a) secured by a property comprising one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling units shall be made if the outstanding principal balance of the [mortgage](/usc/12/1707.md?p=a) at the time of purchase exceeds 80 per centum of the value of the property securing the [mortgage](/usc/12/1707.md?p=a), unless (A) the seller retains a [participation](/usc/12/2206a.md?p=a-1) of not less than 10 per centum in the [mortgage](/usc/12/1707.md?p=a); (B) for such period and under such circumstances as the [corporation](/usc/12/2277a.md?p=2) may require, the seller agrees to repurchase or replace the [mortgage](/usc/12/1707.md?p=a) upon demand of the [corporation](/usc/12/2277a.md?p=2) in the event that the [mortgage](/usc/12/1707.md?p=a) is in [default](/usc/12/1467a.md?p=e-7-A); or (C) that portion of the unpaid principal balance of the [mortgage](/usc/12/1707.md?p=a) which is in excess of such 80 per centum is guaranteed or insured by a qualified insurer as determined by the [corporation](/usc/12/2277a.md?p=2). The [corporation](/usc/12/2277a.md?p=2) shall not issue a commitment to purchase a conventional [mortgage](/usc/12/1707.md?p=a) prior to the date the [mortgage](/usc/12/1707.md?p=a) is originated, if such [mortgage](/usc/12/1707.md?p=a) is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause (A) of such sentence. The [corporation](/usc/12/2277a.md?p=2) may purchase a conventional [mortgage](/usc/12/1707.md?p=a) which was originated more than one year prior to the purchase date only if the seller is the Federal [Deposit](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2), the Resolution Trust [Corporation](/usc/12/2277a.md?p=2), the National [Credit Union](/usc/12/3423.md?p=a-1-E) Administration, or any other seller currently engaged in [mortgage](/usc/12/1707.md?p=a) lending or investing activities. For the purpose of this section, the term “conventional mortgages” shall include a [mortgage](/usc/12/1707.md?p=a), lien, or other security interest on the stock or membership certificate issued to a tenant-stockholder or resident-[member](/usc/12/1426a.md?p=g-1) of a cooperative housing [corporation](/usc/12/2277a.md?p=2), as defined in [section 216 of title 26](/usc/26/216.md), and on the proprietary lease, occupancy agreement, or right of tenancy in the dwelling unit of the tenant-stockholder or resident-[member](/usc/12/1426a.md?p=g-1) in such cooperative housing [corporation](/usc/12/2277a.md?p=2). The [corporation](/usc/12/2277a.md?p=2) shall establish limitations governing the maximum original principal obligation of conventional mortgages that are purchased by it; in any case in which the [corporation](/usc/12/2277a.md?p=2) purchases a [participation](/usc/12/2206a.md?p=a-1) interest in such a [mortgage](/usc/12/1707.md?p=a), the limitation shall be calculated with respect to the total [original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c) and not merely with respect to the interest purchased by the [corporation](/usc/12/2277a.md?p=2). Such limitations shall not exceed $417,000 for a [mortgage](/usc/12/1707.md?p=a) secured by a single-[family](/usc/12/1715z–1.md?p=j-2-A) residence, $533,850 for a [mortgage](/usc/12/1707.md?p=a) secured by a 2-[family](/usc/12/1715z–1.md?p=j-2-A) residence, $645,300 for a [mortgage](/usc/12/1707.md?p=a) secured by a 3-[family](/usc/12/1715z–1.md?p=j-2-A) residence, and $801,950 for a [mortgage](/usc/12/1707.md?p=a) secured by a 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the effective date of the Federal Housing Finance Regulatory Reform Act of 2008, subject to the limitations in this paragraph. Each adjustment shall be made by adding to each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase, during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) (pursuant to [section 4542 of this title](/usc/12/4542.md)). If the change in such house price index during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment is a decrease, then no adjustment shall be made for the next year, and the next adjustment shall take into account prior declines in the house price index, so that any adjustment shall reflect the net change in the house price index since the last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines. The foregoing limitations may be increased by not to exceed 50 per centum with respect to properties located in Alaska, Guam, Hawaii, and the Virgin Islands. Such foregoing limitations shall also be increased, with respect to properties of a particular size located in any area for which 115 percent of the median house price for such size residence exceeds the foregoing limitation for such size residence, to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.
  - (3) The [corporation](/usc/12/2277a.md?p=2) is authorized to purchase, service, sell, lend on the security of, and otherwise deal in loans or advances of [credit](/usc/12/5481.md?p=7) for the purchase and installation of home improvements, [including](/usc/12/25b.md?p=a-3) energy conserving improvements or solar energy systems described in the last paragraph of [section 1703(a) of this title](/usc/12/1703.md) and residential energy conservation measures as described in section 210(11) of the National Energy Conservation Policy Act [[42 U.S.C. 8211(11)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s8211/11))][^1] and financed by a public utility in accordance with the requirements of title II of such Act [[42 U.S.C. 8211](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s8211)) et seq.]. To be eligible for purchase, any such loan or advance of [credit](/usc/12/5481.md?p=7) (other than a loan or advance made with respect to energy conserving improvements or solar energy systems or residential energy conservation measures) not insured under subchapter I of this chapter shall be secured by a lien against the property to be improved.
  - (4) The [corporation](/usc/12/2277a.md?p=2) is authorized to purchase, service, sell, lend on the security of, and otherwise deal in loans or advances of [credit](/usc/12/5481.md?p=7) secured by mortgages or other liens against manufactured homes.
  - (5)
    - (A) The [corporation](/usc/12/2277a.md?p=2) is authorized to purchase, service, sell, lend on the security of, and otherwise deal in (i) conventional mortgages that are secured by a subordinate lien against a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence that is the principal residence of the [mortgagor](/usc/12/1707.md?p=b); and (ii) conventional mortgages that are secured by a subordinate lien against a property comprising five or more [family](/usc/12/1715z–1.md?p=j-2-A) dwelling units. If the [corporation](/usc/12/2277a.md?p=2), pursuant to [paragraphs (1) through (4)](#b-1..b-4), shall have purchased, serviced, sold, or otherwise dealt with any other outstanding [mortgage](/usc/12/1707.md?p=a) secured by the same residence, the aggregate original amount of such other [mortgage](/usc/12/1707.md?p=a) and the [mortgage](/usc/12/1707.md?p=a) authorized to be purchased, serviced, sold, or otherwise dealt with under this paragraph shall not exceed the applicable limitation determined under [paragraph (2)](#b-2).
    - (B) The [corporation](/usc/12/2277a.md?p=2) shall establish limitations governing the maximum original principal obligation of conventional mortgages described in [subparagraph (A)](#b-5-A). In any case in which the [corporation](/usc/12/2277a.md?p=2) purchases a [participation](/usc/12/2206a.md?p=a-1) interest in such a [mortgage](/usc/12/1707.md?p=a), the limitation shall be calculated with respect to the total original principal obligation of such [mortgage](/usc/12/1707.md?p=a) described in [subparagraph (A)](#b-5-A) and not merely with respect to the interest purchased by the [corporation](/usc/12/2277a.md?p=2). Such limitations shall not exceed (i) with respect to mortgages described in subparagraph (A)(i), 50 per centum of the single-[family](/usc/12/1715z–1.md?p=j-2-A) residence [mortgage](/usc/12/1707.md?p=a) limitation determined under [paragraph (2)](#b-2); and (ii) with respect to mortgages described in subparagraph (A)(ii), the applicable limitation determined under [paragraph (2)](#b-2).
    - (C) No subordinate [mortgage](/usc/12/1707.md?p=a) against a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence shall be purchased by the [corporation](/usc/12/2277a.md?p=2) if the total outstanding indebtedness secured by the property as a result of such [mortgage](/usc/12/1707.md?p=a) exceeds 80 per centum of the value of such property unless (i) that portion of such total outstanding indebtedness that exceeds such 80 per centum is guaranteed or insured by a qualified insurer as determined by the [corporation](/usc/12/2277a.md?p=2); (ii) the seller retains a [participation](/usc/12/2206a.md?p=a-1) of not less than 10 per centum in the [mortgage](/usc/12/1707.md?p=a); or (iii) for such period and under such circumstances as the [corporation](/usc/12/2277a.md?p=2) may require, the seller agrees to repurchase or replace the [mortgage](/usc/12/1707.md?p=a) upon demand of the [corporation](/usc/12/2277a.md?p=2) in the event that the [mortgage](/usc/12/1707.md?p=a) is in [default](/usc/12/1467a.md?p=e-7-A). The [corporation](/usc/12/2277a.md?p=2) shall not issue a commitment to purchase a subordinate [mortgage](/usc/12/1707.md?p=a) prior to the date the [mortgage](/usc/12/1707.md?p=a) is originated, if such [mortgage](/usc/12/1707.md?p=a) is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause (ii) of such sentence.
  - (6) The [corporation](/usc/12/2277a.md?p=2) may not implement any new program (as such term is defined in [section 4502 of this title](/usc/12/4502.md)) before obtaining the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 4542](/usc/12/4542.md)[^1] of this title.
  - (7)
    - (A) **Definitions.—** In this paragraph—
      - (i) the term “credit score” means a numerical value or a categorization created by a third party derived from a statistical tool or modeling system used by a [person](/usc/12/5481.md?p=19) who makes or arranges a loan to predict the likelihood of certain [credit](/usc/12/5481.md?p=7) behaviors, [including](/usc/12/25b.md?p=a-3) [default](/usc/12/1467a.md?p=e-7-A); and
      - (ii) the term “residential mortgage” has the meaning given the term in [section 1451 of this title](/usc/12/1451.md).
    - (B) **Use of Credit Scores.—** The [corporation](/usc/12/2277a.md?p=2) shall condition purchase of a [residential mortgage](#b-7-A-ii) by the [corporation](/usc/12/2277a.md?p=2) under this subsection on the provision of a [credit score](#b-7-A-i) for the borrower only if—
      - (i) the [credit score](#b-7-A-i) is derived from any [credit](/usc/12/5481.md?p=7) scoring model that has been validated and approved by the [corporation](/usc/12/2277a.md?p=2) under this paragraph; and
      - (ii) the [corporation](/usc/12/2277a.md?p=2) provides for the use of the [credit score](#b-7-A-i) by all of the automated underwriting systems of the [corporation](/usc/12/2277a.md?p=2) and any other procedures and systems used by the [corporation](/usc/12/2277a.md?p=2) to purchase [residential mortgages](#b-7-A-ii) that use a [credit score](#b-7-A-i).
    - (C) **Validation and Approval Process.—** The [corporation](/usc/12/2277a.md?p=2) shall establish a validation and approval process for the use of [credit score](#b-7-A-i) models, under which the [corporation](/usc/12/2277a.md?p=2) may not validate and approve a [credit score](#b-7-A-i) model unless the [credit score](#b-7-A-i) model—
      - (i) satisfies minimum requirements of integrity, reliability, and accuracy;
      - (ii) has a historical record of measuring and predicting [default](/usc/12/1467a.md?p=e-7-A) rates and other [credit](/usc/12/5481.md?p=7) behaviors;
      - (iii) is consistent with the safe and sound operation of the [corporation](/usc/12/2277a.md?p=2);
      - (iv) complies with any standards and criteria established by the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) under [section 4548(1) of this title](/usc/12/4548.md?p=1); and
      - (v) satisfies any other requirements, as determined by the [corporation](/usc/12/2277a.md?p=2).
    - (D) **Replacement of Credit Score Model.—** If the [corporation](/usc/12/2277a.md?p=2) has validated and approved 1 or more [credit score](#b-7-A-i) models under [subparagraph (C)](#b-7-C) and the [corporation](/usc/12/2277a.md?p=2) validates and approves an additional [credit score](#b-7-A-i) model, the [corporation](/usc/12/2277a.md?p=2) may determine that—
      - (i) the additional [credit score](#b-7-A-i) model has replaced the [credit score](#b-7-A-i) model or [credit score](#b-7-A-i) models previously validated and approved; and
      - (ii) the [credit score](#b-7-A-i) model or [credit score](#b-7-A-i) models previously validated and approved shall no longer be considered validated and approved for the purposes of [subparagraph (B)](#b-7-B).
    - (E) **Public Disclosure.—** Upon establishing the validation and approval process required under [subparagraph (C)](#b-7-C), the [corporation](/usc/12/2277a.md?p=2) shall make publicly available a description of the validation and approval process.
    - (F) **Application.—** Not later than 30 days after the effective date of this paragraph, the [corporation](/usc/12/2277a.md?p=2) shall solicit applications from developers of [credit](/usc/12/5481.md?p=7) scoring models for the validation and approval of those models under the process required under [subparagraph (C)](#b-7-C).
    - (G) **Timeframe for Determination; Notice.—**
      - (i) **In general.—** The [corporation](/usc/12/2277a.md?p=2) shall make a determination with respect to any application submitted under [subparagraph (F)](#b-7-F), and provide notice of that determination to the applicant, before a date established by the [corporation](/usc/12/2277a.md?p=2) that is not later than 180 days after the date on which an application is submitted to the [corporation](/usc/12/2277a.md?p=2).
      - (ii) **Extensions.—** The [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) may authorize not more than 2 extensions of the date established under [clause (i)](#b-7-G-i), each of which shall not exceed 30 days, upon a written request and a showing of good cause by the [corporation](/usc/12/2277a.md?p=2).
      - (iii) **Status notice.—** The [corporation](/usc/12/2277a.md?p=2) shall provide notice to an applicant regarding the status of an application submitted under [subparagraph (F)](#b-7-F) not later than 60 days after the date on which the application was submitted to the [corporation](/usc/12/2277a.md?p=2).
      - (iv) **Reasons for disapproval.—** If an application submitted under [subparagraph (F)](#b-7-F) is disapproved, the [corporation](/usc/12/2277a.md?p=2) shall provide to the applicant the reasons for the disapproval not later than 30 days after a determination is made under this subparagraph.
    - (H) **Authority of Director.—** If the [corporation](/usc/12/2277a.md?p=2) elects to use a [credit score](#b-7-A-i) model under this paragraph, the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) shall require the [corporation](/usc/12/2277a.md?p=2) to periodically review the validation and approval process required under [subparagraph (C)](#b-7-C) as the [Director](/usc/12/2279bb.md?p=3) determines necessary to ensure that the process remains appropriate and adequate and complies with any standards and criteria established pursuant to [section 4548(1) of this title](/usc/12/4548.md?p=1).
    - (I) **Extension.—** If, as of the effective date of this paragraph, a [credit score](#b-7-A-i) model has not been approved under [subparagraph (C)](#b-7-C), the [corporation](/usc/12/2277a.md?p=2) may use a [credit score](#b-7-A-i) model that was in use before the effective date of this paragraph, if necessary to prevent substantial market disruptions, until the earlier of—
      - (i) the date on which a [credit score](#b-7-A-i) model is validated and approved under [subparagraph (C)](#b-7-C); or
      - (ii) the date that is 2 years after the effective date of this paragraph.
- (c) **Administration of trusts; obligations of departments and agencies of the United States; exemption of interest income from taxation; authorization of appropriations for differential reimbursements—**
  - (1) Notwithstanding any other provision of this chapter or of any other law, the [Association](/usc/12/1828.md?p=s-4-E-i) is authorized under [section 1721 of this title](/usc/12/1721.md) to create, accept, execute, and otherwise administer in all respects such trusts, receiverships, conservatorships, liquidating or other [agencies](/usc/12/1422.md?p=12), or other fiduciary and representative undertakings and activities, hereinafter in this subsection called “trusts”, as might be appropriate for financing purposes; and in relation thereto the [Association](/usc/12/1828.md?p=s-4-E-i) may [acquire](/usc/12/1467a.md?p=a-1-J), hold and manage, dispose of, and otherwise deal in any mortgages or other types of obligations in which any department or [agency](/usc/12/1422.md?p=12) of the United States listed in paragraph (2) of this subsection may have a financial interest. The [Association](/usc/12/1828.md?p=s-4-E-i) may join in any such undertakings and activities, hereinafter in this subsection called “trusts”; notwithstanding that it is also serving in a fiduciary or representative capacity; and is authorized to guarantee any [participations](/usc/12/2206a.md?p=a-1) or other instruments, whether evidence of property rights or debt, issued for such financing purposes. [Participations](/usc/12/2206a.md?p=a-1) or other instruments issued by the [Association](/usc/12/1828.md?p=s-4-E-i) pursuant to this subsection shall to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The amounts of any mortgages and their obligations acquired by the [Association](/usc/12/1828.md?p=s-4-E-i) under [section 1721 of this title](/usc/12/1721.md), pursuant to this subsection, shall not be included in the total amounts set forth in [section 1721(c) of this title](/usc/12/1721.md?p=c).
  - (2) Subject to the limitations provided in paragraph (4) of this subsection, one or more trusts may be established as provided in this subsection by each of the following departments or [agencies](/usc/12/1422.md?p=12):
    - (A) The Farmers Home Administration of the Department of Agriculture, but only with respect to operating loans, direct farm ownership loans, direct housing loans, and direct soil and water loans. Such trusts may not be established with respect to loans for housing for the elderly under sections 502 and 515(a) of the Housing Act of 1949 [[42 U.S.C. 1472](/usc/42/1472.md) and 1485(a)], nor with respect to loans for nonfarm recreational development.
    - (B) The Department of Education, but only with respect to loans made by the [Secretary](/usc/12/1715z–22a.md?p=4) of Education for construction of academic facilities, and loans to help finance student loan programs.
    - (C) The Department of Housing and Urban Development.
    - (D) The Department of Veterans Affairs.
    - (E) The Export-Import [Bank](/usc/12/1426a.md?p=g-1).
    - (F) The Small Business Administration.

    The head of each such department or [agency](/usc/12/1422.md?p=12), hereinafter in this subsection called the “trustor,” is authorized to set aside a part or all of any obligations held by the trustor and subject them to a trust or trusts and, incident thereto, shall guarantee to the trustee timely payment thereof. The trust instrument may provide for the issuance and sale of beneficial interests or [participations](/usc/12/2206a.md?p=a-1), by the trustee, in such obligations or in the right to receive interest and principal collections therefrom; and may provide for the substitution or withdrawal of such obligations, or for the substitution of cash for obligations. The trust or trusts shall be exempt from all taxation. The trust instrument may also contain other appropriate provisions in keeping with the purposes of this subsection. The [Association](/usc/12/1828.md?p=s-4-E-i) shall be named and shall act as trustee of any such trusts and, for the purposes thereof, the title to such obligations shall be deemed to have passed to the [Association](/usc/12/1828.md?p=s-4-E-i) in trust. The trust instrument shall provide that custody, [control](/usc/12/24a.md?p=g-1), and administration of the obligations shall remain in the trustor subjecting the obligations to the trust, subject to transfer to the trustee in event of [default](/usc/12/1467a.md?p=e-7-A) or probable [default](/usc/12/1467a.md?p=e-7-A), as determined by the trustee, in the payment of principal and interest of the beneficial interests or [participations](/usc/12/2206a.md?p=a-1). Collections from obligations subject to the trust shall be dealt with as provided in the instrument creating the trust. The trust instrument shall provide that the trustee will promptly pay to the trustor the full net proceeds of any sale of beneficial interests or [participations](/usc/12/2206a.md?p=a-1) to the extent they are based upon such obligations or collections. Such proceeds shall be dealt with as otherwise provided by law for sales or repayment of such obligations. The effect of both past and future sales of any issue of beneficial interests or [participations](/usc/12/2206a.md?p=a-1) shall be the same, to the extent of the principal of such issue, as the direct sale with recourse of the obligations subject to the trust. Any trustor creating a trust or trusts hereunder is authorized to purchase, through the facilities of the trustee, outstanding beneficial interests or [participations](/usc/12/2206a.md?p=a-1) to the extent of the amount of the trustor’s responsibility to the trustee on beneficial interests or [participations](/usc/12/2206a.md?p=a-1) outstanding, and to pay the trustor’s proper share of the costs and expenses incurred by the [Association](/usc/12/1828.md?p=s-4-E-i) as trustee pursuant to the trust instrument.

  - (3) When any trustor guarantees to the trustee the timely payment of obligations the trustor subjects to a trust pursuant to this subsection, and it becomes necessary for such trustor to meet his responsibilities under such guaranty, the trustor is authorized to fulfill such guaranty.
  - (4) Beneficial interests or [participations](/usc/12/2206a.md?p=a-1) shall not be issued for the account of any trustor in an aggregate principal amount greater than is authorized with respect to such trustor in an appropriation Act. Any such authorization shall remain available only for the fiscal year for which it is granted and for the succeeding fiscal year.
  - (5) The [Association](/usc/12/1828.md?p=s-4-E-i), as trustee, is authorized to issue and sell beneficial interests or [participations](/usc/12/2206a.md?p=a-1) under this subsection, notwithstanding that there may be an insufficiency in aggregate receipts from obligations subject to the related trust to provide for the payment by the trustee (on a timely basis out of current receipts or otherwise) of all interest or principal on such interests or [participations](/usc/12/2206a.md?p=a-1) (after provision for all costs and expenses incurred by the trustee, fairly prorated among trustors). There are authorized to be appropriated without fiscal year limitation such sums as may be necessary to enable any trustor to pay the trustee such insufficiency as the trustee may require on account of outstanding beneficial interests or [participations](/usc/12/2206a.md?p=a-1) authorized to be issued pursuant to paragraph (4) of this subsection. Such trustor shall make timely payments to the trustee from such appropriations, subject to and in accord with the trust instrument. In the event that the insufficiency required by the trustee is on account of principal maturities of outstanding beneficial interests or [participations](/usc/12/2206a.md?p=a-1) authorized to be issued pursuant to paragraph (4) of this subsection, or pursuant hereto, the trustee is authorized to elect to issue additional beneficial interests or [participations](/usc/12/2206a.md?p=a-1) for refinancing purposes in lieu of requiring any trustor or trustors to make payments to the trustee from appropriated [funds](/usc/12/4702.md?p=10) or other sources. Each such issue of beneficial interests or [participations](/usc/12/2206a.md?p=a-1) shall be in an amount determined by the trustee but not in excess of the aggregate amount which the trustee would otherwise require the trustor or trustors to pay from appropriated [funds](/usc/12/4702.md?p=10) or other sources, and may be issued without regard to the provisions of paragraph (4) of this subsection. All refinancing issues of beneficial interests or [participations](/usc/12/2206a.md?p=a-1) shall be deemed to have been issued pursuant to the authority contained in the appropriation Act or Acts under which the beneficial interests or [participations](/usc/12/2206a.md?p=a-1) were originally issued.

# §1717a. Prohibition against sale of obligations by Federal departments and agencies after June 30, 1966, without compliance with requirements of section 1717(c) of this title or without approval by Secretary of the Treasury; exemption


After June 30, 1966, no department or [agency](/usc/12/1422.md?p=12) listed in [section 1717(c)(2) of this title](/usc/12/1717.md?p=c-2) may sell any obligation held by it except as provided in [section 1717(c) of this title](/usc/12/1717.md?p=c), or as approved by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, except that this prohibition shall not apply to the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i).


# §1718. Capitalization of Federal National Mortgage Association

- (a) **Common stock; preferred stock; transferability of shares—** The [corporation](/usc/12/2277a.md?p=2) shall have [common stock](/usc/12/51c.md), without par value, which shall be vested with all voting rights, each share being entitled to one vote with rights of cumulative voting at all elections of [directors](/usc/12/2279bb.md?p=3). The [corporation](/usc/12/2277a.md?p=2) may eliminate such rights of cumulative voting by a resolution adopted by its [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) and approved by the holders of a majority of the shares of [common stock](/usc/12/51c.md) voting in [person](/usc/12/5481.md?p=19) or by proxy at the annual meeting, or other special meeting, at which such resolution is considered. The [corporation](/usc/12/2277a.md?p=2) may have preferred stock on such terms and conditions as the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) shall prescribe. The free transferability of the stock at all times to [any person](/usc/12/1715z–4a.md?p=a-2), firm, [corporation](/usc/12/2277a.md?p=2), or other entity shall not be restricted except that, as to the [corporation](/usc/12/2277a.md?p=2), it shall be transferable only on the books of the [corporation](/usc/12/2277a.md?p=2). The [corporation](/usc/12/2277a.md?p=2) may issue shares of [common stock](/usc/12/51c.md) in return for appropriate payments into [capital](/usc/12/51c.md) or [capital](/usc/12/51c.md) and surplus.
- (b) **Fees and charges; annual transfer of earnings to general surplus account—**
  - (1) The [corporation](/usc/12/2277a.md?p=2) may impose charges or fees, which may be regarded as elements of pricing, with the objective that all costs and expenses of the operations of the [corporation](/usc/12/2277a.md?p=2) should be within its income derived from such operations and that such operations should be fully self-supporting.
  - (2) All earnings from the operations of the [corporation](/usc/12/2277a.md?p=2) shall annually be transferred to the general surplus account of the [corporation](/usc/12/2277a.md?p=2). At any time, [funds](/usc/12/4702.md?p=10) of the general surplus account may, in the discretion of the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3), be transferred to reserves.
- (c) **Capital distributions from general surplus account; minimum capitalization levels—**
  - (1) Except as provided in [paragraph (2)](#c-2), the [corporation](/usc/12/2277a.md?p=2) may make such [capital](/usc/12/51c.md) distributions (as such term is defined in [section 4502 of this title](/usc/12/4502.md)) as may be declared by the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3). All [capital](/usc/12/51c.md) distributions shall be charged against the general surplus account of the [corporation](/usc/12/2277a.md?p=2).
  - (2) The [corporation](/usc/12/2277a.md?p=2) may not make any [capital](/usc/12/51c.md) distribution that would decrease the total [capital](/usc/12/51c.md) of the [corporation](/usc/12/2277a.md?p=2) (as such term is defined in [section 4502 of this title](/usc/12/4502.md)) to an amount less than the risk-based [capital](/usc/12/51c.md) level for the [corporation](/usc/12/2277a.md?p=2) established under [section 4611 of this title](/usc/12/4611.md) or that would decrease the core [capital](/usc/12/51c.md) of the [corporation](/usc/12/2277a.md?p=2) (as such term is defined in [section 4502 of this title](/usc/12/4502.md)) to an amount less than the minimum [capital](/usc/12/51c.md) level for the [corporation](/usc/12/2277a.md?p=2) established under [section 4612 of this title](/usc/12/4612.md), without prior written approval of the distribution by the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12).
- (d) **Institutions eligible to purchase stock—** Notwithstanding any other provision of law, any institution, [including](/usc/12/25b.md?p=a-3) a [national bank](/usc/12/221a.md?p=a) or [State member bank](/usc/12/5301.md?p=18-A) of the Federal Reserve System or any [member](/usc/12/1426a.md?p=g-1) of the Federal [Deposit](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2), trust [company](/usc/12/24a.md?p=g-1), or other banking organization, organized under any law of the United States, [including](/usc/12/25b.md?p=a-3) the laws relating to the District of Columbia, shall be authorized to purchase shares of [common stock](/usc/12/51c.md) of the [corporation](/usc/12/2277a.md?p=2) and to hold or dispose of such stock, subject to the provisions of this subchapter.

# §1719. Secondary market operations

- (a) **Purchase and sale of mortgages; secondary market operations; advance of funds or origination of loans; settlement or extinguishment of borrower’s rights—**
  - (1) To carry out the purposes set forth in [paragraph (a)](#a)[^1] of [section 1716 of this title](/usc/12/1716.md), the operations of the [corporation](/usc/12/2277a.md?p=2) under this section shall be confined, so far as practicable, to [mortgages](/usc/12/1707.md?p=a) which are deemed by the [corporation](/usc/12/2277a.md?p=2) to be of such quality, type, and class as to meet, generally, the purchase standards imposed by private institutional [mortgage](/usc/12/1707.md?p=a) investors. In the interest of assuring sound operation, the prices to be paid by the [corporation](/usc/12/2277a.md?p=2) for [mortgages](/usc/12/1707.md?p=a) purchased in its secondary market operations under this section, should be established, from time to time, within the range of market prices for the particular class of [mortgages](/usc/12/1707.md?p=a) involved, as determined by the [corporation](/usc/12/2277a.md?p=2). The volume of the [corporation](/usc/12/2277a.md?p=2)’s purchases and sales, and the establishment of the purchase prices, sale prices, and charges or fees, in its secondary market operations under this section, should be determined by the [corporation](/usc/12/2277a.md?p=2) from time to time, and such determinations should be consistent with the objectives that such purchases and sales should be effected only at such prices and on such terms as will reasonably prevent excessive use of the [corporation](/usc/12/2277a.md?p=2)’s facilities, and that the operations of the [corporation](/usc/12/2277a.md?p=2) under this section should be within its income derived from such operations and that such operations should be fully self-supporting. Nothing in this subchapter shall prohibit the [corporation](/usc/12/2277a.md?p=2) from purchasing, and making commitments to purchase, any [mortgage](/usc/12/1707.md?p=a) with respect to which the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development has entered into a contract with the [corporation](/usc/12/2277a.md?p=2) to make interest subsidy payments under [section 1715z–8 of this title](/usc/12/1715z–8.md).
  - (2) The volume of the [corporation](/usc/12/2277a.md?p=2)’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees, in its secondary market operations under this section, should be determined by the [corporation](/usc/12/2277a.md?p=2) from time to time; and such determinations, in conjunction with determinations made under [paragraph (1)](#a-1), should be consistent with the objectives that the lending activities should be conducted on such terms as will reasonably prevent excessive use of the [corporation](/usc/12/2277a.md?p=2)’s facilities, and that the operations of the [corporation](/usc/12/2277a.md?p=2) under this section should be within its income derived from such operations and that such operations should be fully self-supporting. The [corporation](/usc/12/2277a.md?p=2) shall not be permitted to use its lending authority (A) to advance [funds](/usc/12/4702.md?p=10) to a [mortgage](/usc/12/1707.md?p=a) seller on an interim basis, using [mortgage](/usc/12/1707.md?p=a) loans as collateral, pending the sale of the [mortgages](/usc/12/1707.md?p=a) in the secondary market; or (B) to originate [mortgage](/usc/12/1707.md?p=a) loans. Notwithstanding any Federal, [State](/usc/12/1707.md?p=d), or other law to the contrary, the [corporation](/usc/12/2277a.md?p=2) is empowered, in connection with any loan under this section, whether before or after any [default](/usc/12/1467a.md?p=e-7-A), to provide by contract with the borrower for the settlement or extinguishment, upon [default](/usc/12/1467a.md?p=e-7-A), of any redemption, equitable, legal, or other right, title, or interest of the borrower in any [mortgage](/usc/12/1707.md?p=a) or [mortgages](/usc/12/1707.md?p=a) that constitute the security for the loan; and with respect to any such loan, in the event of [default](/usc/12/1467a.md?p=e-7-A) and pursuant otherwise to the terms of the contract, the [mortgages](/usc/12/1707.md?p=a) that constitute such security shall become the absolute property of the [corporation](/usc/12/2277a.md?p=2).
- (b) **Obligations of the Corporation—** For the purposes of this section, the [corporation](/usc/12/2277a.md?p=2) is authorized to issue, upon the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, and have outstanding at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by the [corporation](/usc/12/2277a.md?p=2) with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, to be redeemable at the option of the [corporation](/usc/12/2277a.md?p=2) before maturity in such manner as may be stipulated in such obligations. The [corporation](/usc/12/2277a.md?p=2) shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any [agency](/usc/12/1422.md?p=12) or instrumentality thereof other than the [corporation](/usc/12/2277a.md?p=2). The [corporation](/usc/12/2277a.md?p=2) is authorized to purchase in the open market any of its obligations outstanding under this subsection at any time and at any price.
- (c) **Purchase of obligations by Treasury; conditions and restrictions—** The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion to purchase any obligations issued pursuant to [subsection (b)](#b) of this section, as now or hereafter in force, and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31, and the purposes for which securities may be issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31 are extended to include such purchases. The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury shall not at any time purchase any obligations under this subsection if such purchase would increase the aggregate principal amount of the [Secretary](/usc/12/1715z–22a.md?p=4)’s then outstanding holdings of such obligations under this subsection to an amount greater than $2,250,000,000. Each purchase of obligations by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury under this subsection shall be upon such terms and conditions as to yield a return at a rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of such purchase. The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury may, at any time, sell, upon such terms and conditions and at such price or prices as the [Secretary](/usc/12/1715z–22a.md?p=4) shall determine, any of the obligations acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subsection. All redemptions, purchases, and sales by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury of such obligations under this subsection shall be treated as public debt transactions of the United States.
- (d) **Mortgage-backed securities; issuance; maturities; rates of interest; exempt securities; adequacy of mortgages to permit principal and interest payments; statement in securities—** To provide a greater degree of liquidity to the [mortgage](/usc/12/1707.md?p=a) investment market and an additional means of financing its operations under this section, the [corporation](/usc/12/2277a.md?p=2) is authorized to set aside any [mortgages](/usc/12/1707.md?p=a) held by it under this section, and, upon approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, to issue and sell securities based upon the [mortgages](/usc/12/1707.md?p=a) so set aside. Securities issued under this subsection may be in the form of debt obligations or trust certificates of beneficial interest, or both. Securities issued under this subsection shall have such maturities and bear such rate or rates of interest as may be determined by the [corporation](/usc/12/2277a.md?p=2) with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury. Securities issued by the [corporation](/usc/12/2277a.md?p=2) under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal and interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. [Mortgages](/usc/12/1707.md?p=a) set aside pursuant to this subsection shall at all times be adequate to enable the [corporation](/usc/12/2277a.md?p=2) to make timely principal and interest payments on the securities issued and sold pursuant to this subsection. The [corporation](/usc/12/2277a.md?p=2) shall insert appropriate language in all of the securities issued under this subsection clearly indicating that such securities, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any [agency](/usc/12/1422.md?p=12) or instrumentality thereof other than the [corporation](/usc/12/2277a.md?p=2).
- (e) **Subordinated or convertible obligations; issuance; maturities; rate of interest; redemption; exempt securities; debt or obligation of United States; purchases in open market—** For the purposes of this section, the [corporation](/usc/12/2277a.md?p=2) is authorized to issue, upon the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, obligations which are subordinated to any or all other obligations of the [corporation](/usc/12/2277a.md?p=2), [including](/usc/12/25b.md?p=a-3) subsequent obligations. The obligations issued under this subsection shall have such maturities and bear such rate or rates of interest as may be determined by the [corporation](/usc/12/2277a.md?p=2) with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury and may be made redeemable at the option of the [corporation](/usc/12/2277a.md?p=2) before maturity in such manner as may be stipulated in such obligations. Any of such obligations may be made convertible into shares of [common stock](/usc/12/51c.md) in such manner, at such price or prices, and at such time or times as may be stipulated therein. Obligations issued by the [corporation](/usc/12/2277a.md?p=2) under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The [corporation](/usc/12/2277a.md?p=2) shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any [agency](/usc/12/1422.md?p=12) or instrumentality thereof other than the [corporation](/usc/12/2277a.md?p=2). The [corporation](/usc/12/2277a.md?p=2) is authorized to purchase in the open market any of its obligations outstanding under this subsection at any time and at any price.
- (f) **Prohibition on assessment or collection of fee or charge by United States—** Except for fees paid pursuant to [section 1723a(g) of this title](/usc/12/1723a.md?p=g) and assessments pursuant to [section 4516 of this title](/usc/12/4516.md), no fee or charge may be assessed or collected by the United States ([including](/usc/12/25b.md?p=a-3) any executive department, [agency](/usc/12/1422.md?p=12), or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any [mortgage](/usc/12/1707.md?p=a), asset, obligation, trust certificate of beneficial interest, or other security by the [corporation](/usc/12/2277a.md?p=2). No provision of this subsection shall affect the purchase of any obligation by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury pursuant to [subsection (c)](#c).
- (g) **Temporary authority of Treasury to purchase obligations and securities; conditions—**
  - (1) **Authority to purchase—**
    - (A) **General authority—** In addition to the authority under [subsection (c)](#c) of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized to purchase any obligations and other securities issued by the [corporation](/usc/12/2277a.md?p=2) under any section of this chapter, on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine and in such amounts as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine. Nothing in this subsection requires the [corporation](/usc/12/2277a.md?p=2) to issue obligations or securities to the [Secretary](/usc/12/1715z–22a.md?p=4) without mutual agreement between the [Secretary](/usc/12/1715z–22a.md?p=4) and the [corporation](/usc/12/2277a.md?p=2). Nothing in this subsection permits or authorizes the [Secretary](/usc/12/1715z–22a.md?p=4), without the agreement of the [corporation](/usc/12/2277a.md?p=2), to engage in open market purchases of the common securities of the [corporation](/usc/12/2277a.md?p=2).
    - (B) **Emergency determination required—** In connection with any use of this authority, the [Secretary](/usc/12/1715z–22a.md?p=4) must determine that such actions are necessary to—
      - (i) provide stability to the financial markets;
      - (ii) prevent disruptions in the availability of [mortgage](/usc/12/1707.md?p=a) finance; and
      - (iii) protect the taxpayer.
    - (C) **Considerations—** To protect the taxpayers, the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:
      - (i) The need for preferences or priorities regarding payments to the Government.
      - (ii) Limits on maturity or disposition of obligations or securities to be purchased.
      - (iii) The [corporation](/usc/12/2277a.md?p=2)’s plan for the orderly resumption of private market funding or [capital](/usc/12/51c.md) market access.
      - (iv) The probability of the [corporation](/usc/12/2277a.md?p=2) fulfilling the terms of any such obligation or other security, [including](/usc/12/25b.md?p=a-3) repayment.
      - (v) The need to maintain the [corporation](/usc/12/2277a.md?p=2)’s status as a private shareholder-owned [company](/usc/12/24a.md?p=g-1).
      - (vi) Restrictions on the use of [corporation](/usc/12/2277a.md?p=2) resources, [including](/usc/12/25b.md?p=a-3) limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.
    - (D) **Reports to Congress—** Upon exercise of this authority, the [Secretary](/usc/12/1715z–22a.md?p=4) shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and the determinations made by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subparagraph (B)](#g-1-B) and with respect to the considerations required under [subparagraph (C)](#g-1-C), and the size, terms, and probability of repayment or fulfillment of other terms of such purchase.
  - (2) **Rights; sale of obligations and securities—**
    - (A) **Exercise of rights—** The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury may, at any time, exercise any rights received in connection with such purchases.
    - (B) **Sale of obligation and securities—** The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury may, at any time, subject to the terms of the security or otherwise upon terms and conditions and at prices determined by the [Secretary](/usc/12/1715z–22a.md?p=4), sell any obligation or security acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subsection.
    - (C) **Deficit reduction—** The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury shall [deposit](/usc/12/5301.md?p=18-A) in the General [Fund](/usc/12/4702.md?p=10) of the Treasury any amounts received by the [Secretary](/usc/12/1715z–22a.md?p=4) from the sale of any obligation acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subsection, where such amounts shall be—
      - (i) dedicated for the sole purpose of deficit reduction; and
      - (ii) prohibited from use as an offset for other spending increases or revenue reductions.
    - (D) **Application of sunset to purchased obligations or securities—** The authority of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased is not subject to the provisions of [paragraph (4)](#g-4).
  - (3) **Funding—** For the purpose of the authorities granted in this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury may use the proceeds of the sale of any securities issued under [chapter 31](/usc/31/chstIII-ch31.md) of Title 31, and the purposes for which securities may be issued under [chapter 31](/usc/31/chstIII-ch31.md) of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any [funds](/usc/12/4702.md?p=10) expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.
  - (4) **Termination of authority—** The authority under this [subsection (g)](#g), with the exception of paragraphs (2) and (3) of this subsection, shall expire December 31, 2009.
  - (5) **Authority of the Director with respect to executive compensation—** The [Director](/usc/12/2279bb.md?p=3) shall have the power to approve, disapprove, or modify the executive compensation of the [corporation](/usc/12/2277a.md?p=2), as defined under Regulation S-K, [17 C.F.R. 229](/cfr/17/229.md).

# [§1720. Repealed. Pub. L. 98–181, title I [title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240 — repealed]



# §1721. Management and liquidation functions of Government National Mortgage Association

- (a) **Separate accountability of assets and liabilities—** To carry out the purposes set forth in [paragraph (c)](#c)[^1] of [section 1716 of this title](/usc/12/1716.md), the [Association](/usc/12/1828.md?p=s-4-E-i) is authorized and directed, as of the close of the cutoff date determined by the [Association](/usc/12/1828.md?p=s-4-E-i) pursuant to [section 1718(d)](/usc/12/1718.md?p=d)[^1] of this title, to establish separate accountability for all of its assets and liabilities (exclusive of [capital](/usc/12/51c.md), surplus, surplus reserves, and undistributed earnings to be evidenced by preferred stock as provided in [section 1718(d)](/usc/12/1718.md?p=d)[^1] of this title, but inclusive of all rights and obligations under any outstanding contracts), and to maintain such separate accountability for the management and orderly liquidation of such assets and liabilities as provided in this section.
- (b) **Issuance of obligations to expedite substitution of private financing—** For the purposes of this section and to assure that, to the maximum extent, and as rapidly as possible, private financing will be substituted for Treasury borrowings otherwise required to carry [mortgages](/usc/12/1707.md?p=a) held under the aforesaid separate accountability, the [Association](/usc/12/1828.md?p=s-4-E-i) is authorized to issue, upon the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, and have outstanding at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by the [Association](/usc/12/1828.md?p=s-4-E-i) with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, to be redeemable at the option of the [Association](/usc/12/1828.md?p=s-4-E-i) before maturity in such manner as may be stipulated in such obligations; but in no event shall any such obligations be issued if, at the time of such proposed issuance, and as a consequence thereof, the resulting aggregate amount of its outstanding obligations under this subsection would exceed the amount of the [Association](/usc/12/1828.md?p=s-4-E-i)’s ownership under the aforesaid separate accountability, free from any liens or encumbrances, of cash, [mortgages](/usc/12/1707.md?p=a), and obligations of the United States or guaranteed thereby, or obligations, [participations](/usc/12/2206a.md?p=a-1), or other instruments which are lawful investments for fiduciary, trust or public [funds](/usc/12/4702.md?p=10). The proceeds of any private financing effected under this subsection shall be paid to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury in reduction of the indebtedness of the [Association](/usc/12/1828.md?p=s-4-E-i) to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury under the aforesaid separate accountability. The [Association](/usc/12/1828.md?p=s-4-E-i) shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any [agency](/usc/12/1422.md?p=12) or instrumentality thereof other than the [Association](/usc/12/1828.md?p=s-4-E-i). The [Association](/usc/12/1828.md?p=s-4-E-i) is authorized to purchase in the open market any of its obligations outstanding under this subsection at any time and at any price.
- (c) **Cutoff date as controlling purchases; total amount of mortgages and commitments—** No [mortgage](/usc/12/1707.md?p=a) shall be purchased by the [Association](/usc/12/1828.md?p=s-4-E-i) in its operations under this section except pursuant to and in accordance with the terms of a contract or commitment to purchase the same made prior to the cutoff date provided for in [section 1718(d)](/usc/12/1718.md?p=d)[^1] of this title, which contract or commitment became a part of the aforesaid separate accountability, and the total amount of [mortgages](/usc/12/1707.md?p=a) and commitments held by the [Association](/usc/12/1828.md?p=s-4-E-i) under this section shall not, in any event, exceed $3,350,000,000: Provided, That such maximum amount shall be progressively reduced by the amount of cash realizations on account of principal of [mortgages](/usc/12/1707.md?p=a) held under the aforesaid separate accountability and by cancellation of any commitments to purchase [mortgages](/usc/12/1707.md?p=a) thereunder, as reflected by the books of the [Association](/usc/12/1828.md?p=s-4-E-i), with the objective that the entire aforesaid maximum amount shall be eliminated with the orderly liquidation of all [mortgages](/usc/12/1707.md?p=a) held under the aforesaid separate accountability: And provided further, That nothing in this subsection shall preclude the [Association](/usc/12/1828.md?p=s-4-E-i) from granting such usual and customary increases in the amounts of outstanding commitments (resulting from increased costs or otherwise) as have theretofore been covered by like increases in commitments granted by the [agencies](/usc/12/1422.md?p=12) of the Federal Government insuring or guaranteeing the [mortgages](/usc/12/1707.md?p=a). There shall be excluded from the total amounts set forth in this subsection the amounts of any [mortgages](/usc/12/1707.md?p=a) which, subsequent to May 31, 1954, are transferred by law to the [Association](/usc/12/1828.md?p=s-4-E-i) and held under the aforesaid separate accountability.
- (d) **Issuance of obligations sufficient to carry out functions; character; purchase—** The [Association](/usc/12/1828.md?p=s-4-E-i) may issue to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury its obligations in an amount outstanding at any one time sufficient to enable the [Association](/usc/12/1828.md?p=s-4-E-i) to carry out its functions under this section, such obligations to mature not more than five years from their respective dates of issue, to be redeemable at the option of the [Association](/usc/12/1828.md?p=s-4-E-i) before maturity in such manner as may be stipulated in such obligations. Each such obligation shall bear interest at a rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the issuance of the obligation of the [Association](/usc/12/1828.md?p=s-4-E-i). The [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized to purchase any obligations of the [Association](/usc/12/1828.md?p=s-4-E-i) to be issued under this section, and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31, and the purposes for which securities may be issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31 are extended to include any purchases of the [Association](/usc/12/1828.md?p=s-4-E-i)’s obligations hereunder.
- (e) **Acquisition of mortgages offered by Secretary of Housing and Urban Development—** Notwithstanding any other provision of law, the [Association](/usc/12/1828.md?p=s-4-E-i) is authorized, under the aforesaid separate accountability, to make commitments to purchase, and to purchase, service, or sell any obligations offered to it by the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, or any [mortgages](/usc/12/1707.md?p=a) covering residential property offered to it by any Federal instrumentality, or the head thereof. These shall be excluded from the total amounts set forth in [subsection (c)](#c) the amounts of any obligations or [mortgages](/usc/12/1707.md?p=a) purchased by the [Association](/usc/12/1828.md?p=s-4-E-i) pursuant to this subsection.
- (f) **Transfer of funds—** Notwithstanding any of the provisions of this chapter or of any other law, an amount equal to the net decrease for the preceding fiscal year in the aggregate principal amount of all [mortgages](/usc/12/1707.md?p=a) owned by the [Association](/usc/12/1828.md?p=s-4-E-i) under this section shall, as of July 1 of each of the years 1961 through 1964, be transferred to and merged with the authority provided under [section 1720(a)](/usc/12/1720.md)[^1] of this title, and the amount of such authority as specified in [section 1720(c)](/usc/12/1720.md)[^1] of this title shall be increased by any amounts so transferred.
- (g) **Guarantee of principal and interest on trust certificates and other securities; fees and charges; subrogation; contract for extinguishment of right, title, or interest in mortgages; protection of interests; full faith and credit; commitments limited; limitation on fees or charges—**
  - (1) The [Association](/usc/12/1828.md?p=s-4-E-i) is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or other securities as shall (i) be issued by the [corporation](/usc/12/2277a.md?p=2) under [section 1719(d) of this title](/usc/12/1719.md?p=d), or by any other issuer approved for the purposes of this subsection by the [Association](/usc/12/1828.md?p=s-4-E-i), and (ii) be based on and backed by a trust or pool composed of [mortgages](/usc/12/1707.md?p=a) which are insured under this chapter, or which are insured or guaranteed under the Servicemen’s Readjustment Act of 1944, title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.], or [chapter 37](/usc/38/chptIII-ch37.md) of title 38, or which are guaranteed under title XIII of the Public Health Service Act [[42 U.S.C. 300e](/usc/42/300e.md) et seq.];[^2] or guaranteed under [section 1715z–13a of this title](/usc/12/1715z–13a.md). The [Association](/usc/12/1828.md?p=s-4-E-i) shall collect from the issuer a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to be reasonable for the analysis of any trust or other security arrangement proposed by the issuer. In the event the issuer is unable to make any payment of principal of or interest on any security guaranteed under this subsection, the [Association](/usc/12/1828.md?p=s-4-E-i) shall make such payment as and when due in cash, and thereupon shall be subrogated fully to the rights satisfied by such payment. In any case in which (I) Federal law requires the reduction of the interest rate on any [mortgage](/usc/12/1707.md?p=a) backing a security guaranteed under this subsection, (II) the [mortgagor](/usc/12/1707.md?p=b) under the [mortgage](/usc/12/1707.md?p=a) is a [person](/usc/12/5481.md?p=19) in the military service, and (III) the issuer of such security fails to receive from the [mortgagor](/usc/12/1707.md?p=b) the full amount of interest payment due, the [Association](/usc/12/1828.md?p=s-4-E-i) may make payments of interest on the security in amounts not exceeding the difference between the amount payable under the interest rate on the [mortgage](/usc/12/1707.md?p=a) and the amount of interest actually paid by the [mortgagor](/usc/12/1707.md?p=b). The [Association](/usc/12/1828.md?p=s-4-E-i) is hereby empowered, in connection with any guaranty under this subsection, whether before or after any [default](/usc/12/1467a.md?p=e-7-A), to provide by contract with the issuer for the extinguishment, upon [default](/usc/12/1467a.md?p=e-7-A) by the issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any [mortgage](/usc/12/1707.md?p=a) or [mortgages](/usc/12/1707.md?p=a) constituting the trust or pool against which the guaranteed securities are issued; and with respect to any issue of guaranteed securities, in the event of [default](/usc/12/1467a.md?p=e-7-A) and pursuant otherwise to the terms of the contract, the [mortgages](/usc/12/1707.md?p=a) that constitute such trust or pool shall become the absolute property of the [Association](/usc/12/1828.md?p=s-4-E-i) subject only to the unsatisfied rights of the holders of the securities based on and backed by such trust or pool. No [State](/usc/12/1707.md?p=d) or local law, and no Federal law (except Federal law enacted expressly in limitation of this subsection after October 8, 1980), shall preclude or limit the exercise by the [Association](/usc/12/1828.md?p=s-4-E-i) of (A) its power to contract with the issuer on the terms stated in the preceding sentence, (B) its rights to enforce any such contract with the issuer, or (C) its ownership rights, as provided in the preceding sentence, in the [mortgages](/usc/12/1707.md?p=a) constituting the trust or pool against which the guaranteed securities are issued. The full faith and [credit](/usc/12/5481.md?p=7) of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty under this subsection. There shall be excluded from the total amounts set forth in [subsection (c)](#c) the amounts of any [mortgages](/usc/12/1707.md?p=a) acquired by the [Association](/usc/12/1828.md?p=s-4-E-i) as a result of its operations under this subsection.
  - (2) Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection, and to the extent of or in such amounts as any funding limitation approved in appropriation Acts, the [Association](/usc/12/1828.md?p=s-4-E-i) shall enter into commitments to issue guarantees under this subsection in an aggregate amount of $110,000,000,000 during fiscal year 1996. There are authorized to be appropriated to cover the costs (as such term is defined in [section 661a of title 2](/usc/2/661a.md)) of guarantees issued under this chapter by the [Association](/usc/12/1828.md?p=s-4-E-i) such sums as may be necessary for fiscal year 1996.
  - (3)
    - (A) No fee or charge in excess of 6 basis points may be assessed or collected by the United States ([including](/usc/12/25b.md?p=a-3) any executive department, [agency](/usc/12/1422.md?p=12), or independent establishment of the United States) on or with regard to any guaranty of the timely payment of principal or interest on securities or notes based on or backed by [mortgages](/usc/12/1707.md?p=a) that are secured by 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwellings and (i) insured by the Federal Housing Administration under subchapter II of this chapter; or (ii) insured or guaranteed under the Serviceman’s Readjustment Act of 1944, [chapter 37](/usc/38/chptIII-ch37.md) of title 38, or title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.].
    - (B) The fees charged for the guaranty of securities or on notes based on or backed by [mortgages](/usc/12/1707.md?p=a) not referred to in [subparagraph (A)](#g-3-A), as authorized by other provisions of law, shall be set by the [Association](/usc/12/1828.md?p=s-4-E-i) at a level not more than necessary to create reserves sufficient to meet anticipated claims based upon actuarial analysis, and for no other purpose.
    - (C) Fees or charges for the issuance of commitments or miscellaneous administrative fees of the [Association](/usc/12/1828.md?p=s-4-E-i) shall not be on a competitive auction basis and shall remain at the level set for such fees or charges as of September 1, 1985, except that such fees or charges may be increased if reasonably related to the cost of administering the program, and for no other purpose.
    - (D) Not less than 90 days before increasing any fee or charge under subparagraph [(B)](#g-3-B) or [(C)](#g-3-C), the [Secretary](/usc/12/1715z–22a.md?p=4) shall submit to the Congress a certification that such increase is solely for the purpose specified in such subparagraph.
    - (E)
      - (i) Notwithstanding [subparagraphs (A) through (D)](#g-3-A..g-3-D), fees charged for the guarantee of, or commitment to guarantee, multiclass securities backed by a trust or pool of securities or notes guaranteed by the [Association](/usc/12/1828.md?p=s-4-E-i) under this subsection, and other related fees shall be charged by the [Association](/usc/12/1828.md?p=s-4-E-i) in an amount the [Association](/usc/12/1828.md?p=s-4-E-i) deems appropriate. The [Association](/usc/12/1828.md?p=s-4-E-i) shall take such action as may be necessary to reasonably assure that such portion of the benefit, resulting from the [Association](/usc/12/1828.md?p=s-4-E-i)’s multiclass securities program, as the [Association](/usc/12/1828.md?p=s-4-E-i) determines is appropriate accrues to [mortgagors](/usc/12/1707.md?p=b) who execute eligible [mortgages](/usc/12/1707.md?p=a) after August 10, 1993.
      - (ii) The [Association](/usc/12/1828.md?p=s-4-E-i) shall provide for the initial implementation of the program for which fees are charged under the first sentence of [clause (i)](#g-3-E-i) by notice published in the Federal Register. The notice shall be effective upon publication and shall provide an opportunity for public comment. Not later than 12 months after publication of the notice, the [Association](/usc/12/1828.md?p=s-4-E-i) shall issue regulations for such program based on the notice, comments received, and the experience of the [Association](/usc/12/1828.md?p=s-4-E-i) in carrying out the program during such period.
      - (iii) The [Association](/usc/12/1828.md?p=s-4-E-i) shall consult with [persons](/usc/12/5481.md?p=19) or entities in such manner as the [Association](/usc/12/1828.md?p=s-4-E-i) deems appropriate to ensure the efficient commencement and operation of the multiclass securities program.
      - (iv) No [State](/usc/12/1707.md?p=d) or local law, and no Federal law (except Federal law enacted expressly in limitation of this clause after August 10, 1993) shall preclude or limit the exercise by the [Association](/usc/12/1828.md?p=s-4-E-i) of its power to contract with [persons](/usc/12/5481.md?p=19) or entities, and its rights to enforce such contracts, for the purpose of ensuring the efficient commencement and continued operation of the multiclass securities program.

# §1722. Benefits and burdens incident to administration of functions and operations under sections 1720 and 1721


All of the benefits and burdens incident to the administration of the functions and operations of the [Association](/usc/12/1828.md?p=s-4-E-i) under sections [1720](/usc/12/1720.md) and [1721](/usc/12/1721.md), respectively, of this title, after allowance for related obligations of the [Association](/usc/12/1828.md?p=s-4-E-i), its prorated expenses, and the like, [including](/usc/12/25b.md?p=a-3) amounts required for the establishment of such reserves as the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall deem appropriate, shall inure solely to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, and such related earnings or other amounts as become available shall be paid annually by the [Association](/usc/12/1828.md?p=s-4-E-i) to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury for covering into miscellaneous receipts.


# §1723. Management

- (a) **Government National Mortgage Association—** All the powers and duties of the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) shall be vested in the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development and the [Association](/usc/12/1828.md?p=s-4-E-i) shall be administered under the direction of the [Secretary](/usc/12/1715z–22a.md?p=4). Within the limitations of law, the [Secretary](/usc/12/1715z–22a.md?p=4) shall determine the general policies which shall govern the operations of the [Association](/usc/12/1828.md?p=s-4-E-i), and shall have power to adopt, amend, and repeal bylaws governing the performance of the powers and duties granted to or imposed upon it by law. There is hereby established in the Department of Housing and Urban Development the position of President, Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i), who shall be appointed by the President, by and with the advice and consent of the Senate. The [Secretary](/usc/12/1715z–22a.md?p=4) shall select and effect the appointment of qualified [persons](/usc/12/5481.md?p=19) to fill the [offices](/usc/12/2279bb.md?p=4) of vice president, and such other [offices](/usc/12/2279bb.md?p=4) as may be provided for in the bylaws. [Persons](/usc/12/5481.md?p=19) appointed under the preceding sentence shall perform such executive functions, powers, and duties as may be prescribed by the bylaws or by the [Secretary](/usc/12/1715z–22a.md?p=4), and such [persons](/usc/12/5481.md?p=19) shall be [executive officers](/usc/12/1831o.md?p=b-2-H) of the [Association](/usc/12/1828.md?p=s-4-E-i) and shall discharge all such executive functions, powers, and duties.
- (b) **Federal National Mortgage Association—** The Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) shall have a [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3), which shall consist of 13 [persons](/usc/12/5481.md?p=19), or such other number that the [Director](/usc/12/2279bb.md?p=3) determines appropriate, who shall be elected annually by the common stockholders. Except to the extent that action under [section 4636a of this title](/usc/12/4636a.md) temporarily results in a lesser number, the [board](/usc/12/221a.md?p=a) shall at all times have as [members](/usc/12/1426a.md?p=g-1) at least one [person](/usc/12/5481.md?p=19) from the homebuilding industry, at least one [person](/usc/12/5481.md?p=19) from the [mortgage](/usc/12/1707.md?p=a) lending industry, at least one [person](/usc/12/5481.md?p=19) from the [real estate](/usc/12/1715z–20.md?p=b-2) industry, and at least one [person](/usc/12/5481.md?p=19) from an organization that has represented [consumer](/usc/12/5481.md?p=4) or community interests for not less than 2 years or one [person](/usc/12/5481.md?p=19) who has demonstrated a career commitment to the provision of housing for low-income households. Each [member](/usc/12/1426a.md?p=g-1) of the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) shall be elected for a term ending on the date of the next annual meeting of the stockholders. Any seat on the [board](/usc/12/221a.md?p=a) which becomes vacant after the annual election of the [directors](/usc/12/2279bb.md?p=3) shall be filled by the [board](/usc/12/221a.md?p=a), but only for the unexpired portion of the term. Within the limitations of law and regulation, the [board](/usc/12/221a.md?p=a) shall determine the general policies which shall govern the operations of the [corporation](/usc/12/2277a.md?p=2), and shall have power to adopt, amend, and repeal bylaws governing the performance of the powers and duties granted to or imposed upon it by law. The [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) shall select and effect the appointment of qualified [persons](/usc/12/5481.md?p=19) to fill the [offices](/usc/12/2279bb.md?p=4) of president and vice president, and such other [offices](/usc/12/2279bb.md?p=4) as may be provided for in the bylaws. Any [member](/usc/12/1426a.md?p=g-1) of the [board](/usc/12/221a.md?p=a) who is a full-time officer or employee of the Federal Government shall not, as such [member](/usc/12/1426a.md?p=g-1), receive compensation for his services.

# §1723a. General powers of Government National Mortgage Association and Federal National Mortgage Association

- (a) **Seal, and other matters incident to operation—** Each of the bodies corporate named in [section 1717(a)(2) of this title](/usc/12/1717.md?p=a-2) shall have power to adopt, alter, and use a corporate seal, which shall be judicially noticed; to enter into and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any [agency](/usc/12/1422.md?p=12) or instrumentality of the United States, or with any [State](/usc/12/1707.md?p=d), Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with [any person](/usc/12/1715z–4a.md?p=a-2), firm, [association](/usc/12/1828.md?p=s-4-E-i), or [corporation](/usc/12/2277a.md?p=2); to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers; in its corporate name, to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, [State](/usc/12/1707.md?p=d) or Federal, but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the [Association](/usc/12/1828.md?p=s-4-E-i) or against the [Association](/usc/12/1828.md?p=s-4-E-i) with respect to its property; to conduct its business without regard to any qualification or similar statute in any [State](/usc/12/1707.md?p=d) of the United States, [including](/usc/12/25b.md?p=a-3) the District of Columbia, the Commonwealth of Puerto Rico, and the Territories and possessions of the United States; to lease, purchase, or [acquire](/usc/12/1467a.md?p=a-1-J) any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or [credit](/usc/12/5481.md?p=7), lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate; to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted; to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes; and to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.
- (b) **Determination with respect to obligations and expenditures—** Except as may be otherwise provided in this subchapter, in [chapter 91](/usc/31/chstVI-ch91.md) of title 31, or in other laws specifically applicable to Government [corporations](/usc/12/2277a.md?p=2), the [Association](/usc/12/1828.md?p=s-4-E-i) shall determine the necessity for and the character and amount of its obligations and expenditures and the manner in which they shall be incurred, allowed, paid, and accounted for.
- (c) **Exemption from taxation—**
  - (1) The [Association](/usc/12/1828.md?p=s-4-E-i), [including](/usc/12/25b.md?p=a-3) its franchise, [capital](/usc/12/51c.md), reserves, surplus, [mortgages](/usc/12/1707.md?p=a) or other security holdings, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any [State](/usc/12/1707.md?p=d), county, municipality, or local taxing authority, except that any real property of the [Association](/usc/12/1828.md?p=s-4-E-i) shall be subject to [State](/usc/12/1707.md?p=d), territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
  - (2) The [corporation](/usc/12/2277a.md?p=2), [including](/usc/12/25b.md?p=a-3) its franchise, [capital](/usc/12/51c.md), reserves, surplus, [mortgages](/usc/12/1707.md?p=a) or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by any [State](/usc/12/1707.md?p=d), territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the [corporation](/usc/12/2277a.md?p=2) shall be subject to [State](/usc/12/1707.md?p=d), territorial, county, municipal, or local taxation to the same extent as other real property is taxed.
- (d) **Appointment and compensation of personnel; use of services of other agencies—**
  - (1) Subject to the provisions of [section 1723(a) of this title](/usc/12/1723.md?p=a), the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall have power to select and appoint or employ such officers, attorneys, employees, and agents of the [Association](/usc/12/1828.md?p=s-4-E-i), to vest them with such powers and duties, and to fix and to cause the [Association](/usc/12/1828.md?p=s-4-E-i) to pay such compensation to them for their services, as he may determine, subject to the civil service and classification laws. With the consent of any Government [corporation](/usc/12/2277a.md?p=2) or Federal [Reserve bank](/usc/12/221a.md?p=a), or of any [board](/usc/12/221a.md?p=a), commission, independent establishment, or executive department of the Government, the [Association](/usc/12/1828.md?p=s-4-E-i) may avail itself on a reimbursable basis of the use of information, services, facilities, officers, and employees thereof, [including](/usc/12/25b.md?p=a-3) any field service thereof, in carrying out the provisions of the subchapter.
  - (2) The [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) of the [corporation](/usc/12/2277a.md?p=2) shall have the power to select and appoint or employ such officers, attorneys, employees, and agents, to vest them with such powers and duties, and to fix and to cause the [corporation](/usc/12/2277a.md?p=2) to pay such compensation to them for their services, as the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) determines reasonable and comparable with compensation for employment in other similar businesses ([including](/usc/12/25b.md?p=a-3) other publicly held [financial institutions](/usc/12/1715k.md?p=h-1-C) or major financial services [companies](/usc/12/24a.md?p=g-1)) involving similar duties and responsibilities, except that a significant portion of potential compensation of all [executive officers](/usc/12/1831o.md?p=b-2-H) (as such term is defined in [paragraph (3)(C)](#d-3-C)) of the [corporation](/usc/12/2277a.md?p=2) shall be based on the performance of the [corporation](/usc/12/2277a.md?p=2); and any such action shall be without regard to the Federal civil service and classification laws. Appointments, promotions, and separations so made shall be based on merit and efficiency, and no political tests or qualifications shall be permitted or given consideration. Each officer and employee of the [corporation](/usc/12/2277a.md?p=2) who is employed by the [corporation](/usc/12/2277a.md?p=2) prior to January 31, 1972, and who on the day previous to the beginning of such employment will have been subject to the civil service retirement law (subch. III of [ch. 83](/usc/5/chptIII-sptG-ch83.md) of title 5) shall, so long as the employment of such officer or employee by the [corporation](/usc/12/2277a.md?p=2) continues without a break in continuity of service, continue to be subject to such law; and for the purpose of such law the employment of such officer or employee by the [corporation](/usc/12/2277a.md?p=2) without a break in continuity of service shall be deemed to be employment by the Government of the United States. The [corporation](/usc/12/2277a.md?p=2) shall contribute to the Civil Service Retirement and Disability [Fund](/usc/12/4702.md?p=10) a sum as provided by [section 8334(a) of title 5](/usc/5/8334.md?p=a), except that such sum shall be determined by applying to the total basic pay (as defined in [section 8331(3) of title 5](/usc/5/8331.md?p=3) and except as hereinafter provided) paid to the employees of the [corporation](/usc/12/2277a.md?p=2) who are covered by the civil service retirement law, the per centum rate determined annually by the [Director](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Personnel Management to be the excess of the total normal cost per centum rate of the civil service retirement system over the employee deduction rate specified in [section 8334(a) of title 5](/usc/5/8334.md?p=a). The [corporation](/usc/12/2277a.md?p=2) shall also pay into the Civil Service Retirement and Disability [Fund](/usc/12/4702.md?p=10) such portion of the cost of administration of the [fund](/usc/12/4702.md?p=10) as is determined by the [Director](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Personnel Management to be attributable to its employees. Notwithstanding the foregoing provisions, there shall not be considered for the purposes of the civil service retirement law that portion of the basic pay in any one year of any officer or employee of the [corporation](/usc/12/2277a.md?p=2) which exceeds the basic pay provided for positions listed in [section 5312 of title 5](/usc/5/5312.md) on the last day of such year: Provided, That with respect to [any person](/usc/12/1715z–4a.md?p=a-2) whose employment is made subject to the civil service retirement law by [section 806](/usc/5/806.md) of the Housing and Community Development Act of 1974, there shall not be considered for the purposes of such law that portion of the basic pay of such [person](/usc/12/5481.md?p=19) in any one year which exceeds the basic pay provided for positions listed in [section 5316](/usc/5/5316.md) of such title 5 on the last day of such year. Except as provided in this subsection, the [corporation](/usc/12/2277a.md?p=2) shall not be subject to the provisions of [title 5](/usc/5.md).
  - (3)
    - (A) Not later than June 30, 1993, and annually thereafter, the [corporation](/usc/12/2277a.md?p=2) shall submit a report to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on (i) the comparability of the compensation policies of the [corporation](/usc/12/2277a.md?p=2) with the compensation policies of other similar businesses, (ii) in the aggregate, the percentage of total cash compensation and payments under employee benefit plans (which shall be defined in a manner consistent with the [corporation](/usc/12/2277a.md?p=2)’s proxy statement for the annual meeting of shareholders for the preceding year) earned by [executive officers](#d-3-C) of the [corporation](/usc/12/2277a.md?p=2) during the preceding year that was based on the [corporation](/usc/12/2277a.md?p=2)’s performance, and (iii) the comparability of the [corporation](/usc/12/2277a.md?p=2)’s financial performance with the performance of other similar businesses. The report shall include a copy of the [corporation](/usc/12/2277a.md?p=2)’s proxy statement for the annual meeting of shareholders for the preceding year.
    - (B) Notwithstanding the first sentence of [paragraph (2)](#d-2), after October 28, 1992, the [corporation](/usc/12/2277a.md?p=2) may not enter into any agreement or contract to provide any payment of money or other thing of current or potential value in connection with the termination of employment of any [executive officer](#d-3-C) of the [corporation](/usc/12/2277a.md?p=2), unless such agreement or contract is approved in advance by the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12). The [Director](/usc/12/2279bb.md?p=3) may not approve any such agreement or contract unless the [Director](/usc/12/2279bb.md?p=3) determines that the benefits provided under the agreement or contract are comparable to benefits under such agreements for officers of other public and private entities involved in financial services and housing interests who have comparable duties and responsibilities. For purposes of this subparagraph, any renegotiation, amendment, or change after October 28, 1992, to any such agreement or contract entered into on or before October 28, 1992, shall be considered entering into an agreement or contract.
    - (C) For purposes of this paragraph, the term “executive officer” has the meaning given the term in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [[12 U.S.C. 4502](/usc/12/4502.md)].
  - (4) Notwithstanding any other provision of this section, the [corporation](/usc/12/2277a.md?p=2) shall not transfer, disburse, or pay compensation to any [executive officer](/usc/12/1831o.md?p=b-2-H), or enter into an agreement with such [executive officer](/usc/12/1831o.md?p=b-2-H), without the approval of the [Director](/usc/12/2279bb.md?p=3), for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ([12 U.S.C. 4518](/usc/12/4518.md)).
- (e) **Prohibition against use of names; injunction; damages—** No individual, [association](/usc/12/1828.md?p=s-4-E-i), partnership, or [corporation](/usc/12/2277a.md?p=2), except the bodies corporate named in [section 1717(a)(2) of this title](/usc/12/1717.md?p=a-2), shall hereafter use the words “Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i),” “Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i),” or any combination of such words, as the name or a part thereof under which the individual, [association](/usc/12/1828.md?p=s-4-E-i), partnership, or [corporation](/usc/12/2277a.md?p=2) shall do business. Violations of the foregoing sentence may be enjoined by any court of general jurisdiction at the suit of the proper body corporate. In any such suit, the plaintiff may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damages) of not exceeding $100 for each day during which such violation is committed or repeated.
- (f) **Preparation of forms of obligations and certificates—** In order that the [Association](/usc/12/1828.md?p=s-4-E-i) may be supplied with such forms of obligations or certificates as it may need for issuance under this subchapter, the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury is authorized, upon request of the [Association](/usc/12/1828.md?p=s-4-E-i), to prepare such forms as shall be suitable and approved by the [Association](/usc/12/1828.md?p=s-4-E-i), to be held in the Treasury subject to delivery, upon order of the [Association](/usc/12/1828.md?p=s-4-E-i). The engraved plates, dies, bed pieces, and other material executed in connection therewith shall remain in the custody of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury. The [Association](/usc/12/1828.md?p=s-4-E-i) shall reimburse the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury for any expenses incurred in the preparation, custody, and delivery of such forms.
- (g) **Depositaries, custodians, and fiscal agents—** The Federal [Reserve banks](/usc/12/221a.md?p=a) are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in [section 1717(a)(2) of this title](/usc/12/1717.md?p=a-2), for its own account or as fiduciary, and such [banks](/usc/12/221a.md?p=a) shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.
- (h) **, (i) Repealed. Pub. L. 102–550, title XIII, § 1381(k), Oct. 28, 1992, 106 Stat. 3997—**
- (j) **Audit; access to books, etc.; report of audit—**
  - (1) The programs, activities, receipts, expenditures, and financial transactions of the [corporation](/usc/12/2277a.md?p=2) shall be subject to audit by the Comptroller General of the United States under such rules and regulations as may be prescribed by the Comptroller General. The representatives of the Government Accountability [Office](/usc/12/2279bb.md?p=4) shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the [corporation](/usc/12/2277a.md?p=2) and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General to the Congress. The [corporation](/usc/12/2277a.md?p=2) shall reimburse the Government Accountability [Office](/usc/12/2279bb.md?p=4) for the full cost of any such audit as billed therefor by the Comptroller General.
  - (2) To carry out this subsection, the representatives of the Government Accountability [Office](/usc/12/2279bb.md?p=4) shall have access, upon request to the [corporation](/usc/12/2277a.md?p=2) or any auditor for an audit of the [corporation](/usc/12/2277a.md?p=2) under [subsection (l)](#l), to any books, accounts, financial records, reports, files, or other papers, things, or property belonging to or in use by the [corporation](/usc/12/2277a.md?p=2) and used in any such audit and to any papers, records, files, and reports of the auditor used in such an audit.
- (k) **Financial reports; submission to Director; contents—**
  - (1) The [corporation](/usc/12/2277a.md?p=2) shall submit to the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) annual and quarterly reports of the financial condition and operations of the [corporation](/usc/12/2277a.md?p=2) which shall be in such form, contain such information, and be submitted on such dates as the [Director](/usc/12/2279bb.md?p=3) shall require.
  - (2) Each such annual report shall include—
    - (A) financial statements prepared in accordance with generally accepted accounting principles;
    - (B) any supplemental information or alternative presentation that the [Director](/usc/12/2279bb.md?p=3) may require; and
    - (C) an assessment (as of the end of the [corporation](/usc/12/2277a.md?p=2)’s most recent fiscal year), signed by the chief [executive officer](/usc/12/1831o.md?p=b-2-H) and chief accounting or financial officer of the [corporation](/usc/12/2277a.md?p=2), of—
      - (i) the effectiveness of the internal [control](/usc/12/24a.md?p=g-1) structure and procedures of the [corporation](/usc/12/2277a.md?p=2); and
      - (ii) the compliance of the [corporation](/usc/12/2277a.md?p=2) with designated safety and soundness laws.
  - (3) The [corporation](/usc/12/2277a.md?p=2) shall also submit to the [Director](/usc/12/2279bb.md?p=3) any other reports required by the [Director](/usc/12/2279bb.md?p=3) pursuant to section 1314 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [[12 U.S.C. 4514](/usc/12/4514.md)].
  - (4) Each report of financial condition shall contain a declaration by the president, vice president, treasurer, or any other officer designated by the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) of the [corporation](/usc/12/2277a.md?p=2) to make such declaration, that the report is true and correct to the best of such officer’s knowledge and belief.
- (l) **Independent audits of financial statements—**
  - (1) The [corporation](/usc/12/2277a.md?p=2) shall have an annual independent audit made of its financial statements by an independent public accountant in accordance with generally accepted auditing standards.
  - (2) In conducting an audit under this subsection, the independent public accountant shall determine and report on whether the financial statements of the [corporation](/usc/12/2277a.md?p=2) (A) are presented fairly in accordance with generally accepted accounting principles, and (B) to the extent determined necessary by the [Director](/usc/12/2279bb.md?p=3), comply with any disclosure requirements imposed under [subsection (k)(2)(B)](#k-2-B).
- (m) **Mortgage data collection and reporting requirements—**
  - (1) The [corporation](/usc/12/2277a.md?p=2) shall collect, maintain, and provide to the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12), in a form determined by the [Director](/usc/12/2279bb.md?p=3), data relating to its [mortgages](/usc/12/1707.md?p=a) on housing consisting of 1 to 4 dwelling units. Such data shall include—
    - (A) the income, census tract location, race, and gender of [mortgagors](/usc/12/1707.md?p=b) under such [mortgages](/usc/12/1707.md?p=a);
    - (B) the loan-to-value ratios of purchased [mortgages](/usc/12/1707.md?p=a) at the time of origination;
    - (C) whether a particular [mortgage](/usc/12/1707.md?p=a) purchased is newly originated or seasoned;
    - (D) the number of units in the housing subject to the [mortgage](/usc/12/1707.md?p=a) and whether the units are [owner](/usc/12/4146.md?p=2)-occupied; and
    - (E) any other characteristics that the [Secretary](/usc/12/1715z–22a.md?p=4) considers appropriate, to the extent practicable.
  - (2) The [corporation](/usc/12/2277a.md?p=2) shall collect, maintain, and provide to the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12), in a form determined by the [Director](/usc/12/2279bb.md?p=3), data relating to its [mortgages](/usc/12/1707.md?p=a) on housing consisting of more than 4 dwelling units. Such data shall include—
    - (A) census tract location of the housing;
    - (B) income levels and characteristics of tenants of the housing (to the extent practicable);
    - (C) rent levels for units in the housing;
    - (D) [mortgage](/usc/12/1707.md?p=a) characteristics (such as the number of units financed per [mortgage](/usc/12/1707.md?p=a) and the amount of loans);
    - (E) [mortgagor](/usc/12/1707.md?p=b) characteristics (such as nonprofit, for-profit, limited equity cooperatives);
    - (F) use of [funds](/usc/12/4702.md?p=10) (such as new construction, rehabilitation, refinancing);
    - (G) type of originating institution; and
    - (H) any other information that the [Secretary](/usc/12/1715z–22a.md?p=4) considers appropriate, to the extent practicable.
  - (3)
    - (A) Except as provided in [subparagraph (B)](#m-3-B), this subsection shall apply only to [mortgages](/usc/12/1707.md?p=a) purchased by the [corporation](/usc/12/2277a.md?p=2) after December 31, 1992.
    - (B) This subsection shall apply to any [mortgage](/usc/12/1707.md?p=a) purchased by the [corporation](/usc/12/2277a.md?p=2) after the date determined under [subparagraph (A)](#m-3-A) if the [mortgage](/usc/12/1707.md?p=a) was originated before such date, but only to the extent that the data referred in paragraph [(1)](#m-1) or [(2)](#m-2), as applicable, is available to the [corporation](/usc/12/2277a.md?p=2).
- (n) **Report on housing activities; contents; public disclosure—**
  - (1) The [corporation](/usc/12/2277a.md?p=2) shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) a report on its activities under subpart B of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [[12 U.S.C. 4561](/usc/12/4561.md) et seq.].
  - (2) The report under this subsection shall—
    - (A) include, in aggregate form and by appropriate category, statements of the dollar volume and number of [mortgages](/usc/12/1707.md?p=a) on [owner](/usc/12/4146.md?p=2)-occupied and rental properties purchased which relate to each of the annual housing goals established under such subpart;
    - (B) include, in aggregate form and by appropriate category, statements of the number of [families](/usc/12/1715z–1.md?p=j-2-A) served by the [corporation](/usc/12/2277a.md?p=2), the income class, race, and gender of homebuyers served, the income class of tenants of rental housing (to the extent such information is available), the characteristics of the census tracts, and the geographic distribution of the housing financed;
    - (C) include a statement of the extent to which the [mortgages](/usc/12/1707.md?p=a) purchased by the [corporation](/usc/12/2277a.md?p=2) have been used in conjunction with public subsidy programs under Federal law;
    - (D) include statements of the proportion of [mortgages](/usc/12/1707.md?p=a) on housing consisting of 1 to 4 dwelling units purchased by the [corporation](/usc/12/2277a.md?p=2) that have been made to first-time homebuyers, as soon as providing such data is practicable, and identifying any special programs (or revisions to conventional practices) facilitating homeownership opportunities for first-time homebuyers;
    - (E) include, in aggregate form and by appropriate category, the data provided to the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) under [subsection (m)(1)(B)](#m-1-B);
    - (F) compare the level of securitization versus portfolio activity;
    - (G) assess underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures, that affect the purchase of [mortgages](/usc/12/1707.md?p=a) for low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A), or that may yield disparate results based on the race of the borrower, [including](/usc/12/25b.md?p=a-3) revisions thereto to promote affordable housing or [fair lending](/usc/12/5481.md?p=13);
    - (H) describe trends in both the primary and secondary [multifamily housing](/usc/12/1715z–22a.md?p=1) [mortgage](/usc/12/1707.md?p=a) markets, [including](/usc/12/25b.md?p=a-3) a description of the progress made, and any factors impeding progress toward standardization and securitization of [mortgage](/usc/12/1707.md?p=a) products for [multifamily housing](/usc/12/1715z–22a.md?p=1);
    - (I) describe trends in the delinquency and [default](/usc/12/1467a.md?p=e-7-A) rates of [mortgages](/usc/12/1707.md?p=a) secured by housing for low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A) that have been purchased by the [corporation](/usc/12/2277a.md?p=2), [including](/usc/12/25b.md?p=a-3) a comparison of such trends with delinquency and [default](/usc/12/1467a.md?p=e-7-A) information for [mortgage](/usc/12/1707.md?p=a) products serving households with incomes above the median level that have been purchased by the [corporation](/usc/12/2277a.md?p=2), and evaluate the impact of such trends on the standards and levels of risk of [mortgage](/usc/12/1707.md?p=a) products serving low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A);
    - (J) describe in the aggregate the seller and [servicer](/usc/12/4901.md?p=16) network of the [corporation](/usc/12/2277a.md?p=2), [including](/usc/12/25b.md?p=a-3) the volume of [mortgages](/usc/12/1707.md?p=a) purchased from minority-owned, [women](/usc/12/2907.md?p=b-2)-owned, and community-oriented lenders, and any efforts to facilitate relationships with such lenders;
    - (K) describe the activities undertaken by the [corporation](/usc/12/2277a.md?p=2) with nonprofit and for-profit organizations and with [State](/usc/12/1707.md?p=d) and local governments and housing finance [agencies](/usc/12/1422.md?p=12), [including](/usc/12/25b.md?p=a-3) how the [corporation](/usc/12/2277a.md?p=2)’s activities support the objectives of comprehensive housing affordability strategies under [section 12705 of title 42](/usc/42/12705.md); and
    - (L) include any other information that the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) considers appropriate.
  - (3)
    - (A) The [corporation](/usc/12/2277a.md?p=2) shall make each report under this subsection available to the public at the principal and regional [offices](/usc/12/2279bb.md?p=4) of the [corporation](/usc/12/2277a.md?p=2).
    - (B) Before making a report under this subsection available to the public, the [corporation](/usc/12/2277a.md?p=2) may exclude from the report information that the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) has determined is proprietary information under section 1326 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [[12 U.S.C. 4546](/usc/12/4546.md)].
- (o) **Affordable Housing Advisory Council—**
  - (1) Not later than 4 months after October 28, 1992, the [corporation](/usc/12/2277a.md?p=2) shall appoint an Affordable Housing Advisory Council to advise the [corporation](/usc/12/2277a.md?p=2) regarding possible methods for promoting affordable housing for low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A).
  - (2) The Affordable Housing Advisory Council shall consist of 15 individuals, who shall include representatives of community-based and other nonprofit and for-profit organizations and [State](/usc/12/1707.md?p=d) and local government [agencies](/usc/12/1422.md?p=12) actively engaged in the promotion, development, or financing of housing for low- and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A).

# §1723b. Investment of funds


Moneys of the [Association](/usc/12/1828.md?p=s-4-E-i) not invested in [mortgages](/usc/12/1707.md?p=a) or other security holdings or in operating facilities shall be kept in cash on hand or on [deposit](/usc/12/5301.md?p=18-A), or invested in obligations of the United States or guaranteed thereby, or in obligations, [participations](/usc/12/2206a.md?p=a-1), or other instruments which are lawful investments for fiduciary, trust, or public [funds](/usc/12/4702.md?p=10).


# §1723c. Obligations, participations, or other instruments as lawful investments; acceptance as security; exempt securities


All obligations, [participations](/usc/12/2206a.md?p=a-1), or other instruments issued by either of the bodies corporate named in [section 1717(a)(2) of this title](/usc/12/1717.md?p=a-2) shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public [funds](/usc/12/4702.md?p=10), the investment or [deposit](/usc/12/5301.md?p=18-A) of which shall be under the authority and [control](/usc/12/24a.md?p=g-1) of the United States or any officer or officers thereof. All stock, obligations, securities, [participations](/usc/12/2206a.md?p=a-1), or other instruments issued pursuant to this subchapter shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission.


# §1723d. Transfer of certain functions to Association


The functions of the Housing and Home Finance [Administrator](/usc/12/4702.md?p=1) ([including](/usc/12/25b.md?p=a-3) the function of making payments to the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury) under [section 2](/usc/12/2.md) of Reorganization Plan Numbered 22 of 1950, together with the notes and [capital stock](/usc/12/51c.md) of the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) held by said [Administrator](/usc/12/4702.md?p=1) thereunder, are transferred to the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i).


# [§1723e. Repealed. Pub. L. 98–181, title I [title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240 — repealed]



# [§1723f. Repealed. Pub. L. 96–294, title V, § 533, June 30, 1980, 94 Stat. 740 — repealed]



# [§1723g. Repealed. Pub. L. 102–550, title IX, § 912(i)(2), Oct. 28, 1992, 106 Stat. 3876 — repealed]



# [§1723h. Repealed. Pub. L. 102–550, title IX, § 912(i)(2), Oct. 28, 1992, 106 Stat. 3876 — repealed]



# §1723i. Civil money penalties against issuers

- (a) **In general—**
  - (1) **Authority—** Whenever an issuer or custodian approved under [section 1721(g) of this title](/usc/12/1721.md?p=g) [knowingly](#g) and materially violates any provisions of [subsection (b)](#b), the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development may impose a civil money penalty on the issuer or the custodian in accordance with the provisions of this section. The penalty shall be in addition to any other available civil remedy or any available criminal penalty and may be imposed whether or not the [Secretary](/usc/12/1715z–22a.md?p=4) imposes other administrative sanctions.
  - (2) **Amount of penalty—** The amount of the penalty, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4), may not exceed $5,000 for each violation, except that the maximum penalty for all violations by a particular issuer or custodian during any one-year period shall not exceed $1,000,000. Each violation of a provision of [subsection (b)(1)](#b-1) shall constitute a separate violation with respect to each pool of [mortgages](/usc/12/1707.md?p=a). In the case of a continuing violation, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4), each day shall constitute a separate violation.
- (b) **Violations for which penalty may be imposed—**
  - (1) **Violations—** The violations by an issuer or a custodian for which the [Secretary](/usc/12/1715z–22a.md?p=4) may impose a civil money penalty under [subsection (a)](#a) are the following:
    - (A) Failure to make timely payments of principal and interest to holders of securities guaranteed under [section 1721(g) of this title](/usc/12/1721.md?p=g).
    - (B) Failure to segregate cash flow from pooled [mortgages](/usc/12/1707.md?p=a) or to [deposit](/usc/12/5301.md?p=18-A) either principal and interest [funds](/usc/12/4702.md?p=10) or escrow [funds](/usc/12/4702.md?p=10) into special accounts with a [depository institution](/usc/12/24a.md?p=g-2) whose accounts are insured by the National [Credit Union](/usc/12/3423.md?p=a-1-E) Administration or by the Federal [Deposit](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2) through the [Deposit Insurance Fund](/usc/12/1813.md?p=y-1).
    - (C) Use of escrow [funds](/usc/12/4702.md?p=10) for any purpose other than that for which they were received.
    - (D) Transfer of [servicing](/usc/12/2605.md?p=i-3) for a pool of [mortgages](/usc/12/1707.md?p=a) to an issuer not approved under this subchapter, unless expressly permitted by statute, regulation, or contract approved by the [Secretary](/usc/12/1715z–22a.md?p=4).
    - (E) Failure to maintain a minimum net worth in accordance with requirements prescribed by the [Association](/usc/12/1828.md?p=s-4-E-i);
    - (F) Failure to promptly notify the [Association](/usc/12/1828.md?p=s-4-E-i) in writing of any changes that materially affect the business status of an issuer.
    - (G) Submission to the [Association](/usc/12/1828.md?p=s-4-E-i) of false information in connection with any securities guaranteed, or [mortgages](/usc/12/1707.md?p=a) pooled, under [section 1721(g) of this title](/usc/12/1721.md?p=g).
    - (H) Hiring, or retaining in employment, an officer, [director](/usc/12/2279bb.md?p=3), principal, or employee whose duties involve, directly or indirectly, programs administered by the [Association](/usc/12/1828.md?p=s-4-E-i) while such [person](/usc/12/5481.md?p=19) was under suspension or debarment by the [Secretary](/usc/12/1715z–22a.md?p=4).
    - (I) Submission to the [Association](/usc/12/1828.md?p=s-4-E-i) of a false certification either on its own behalf or on behalf of another [person](/usc/12/5481.md?p=19) or entity.
    - (J) Failure to comply with an agreement, certification, or condition of approval set forth on, or applicable to, the application for approval as an issuer of securities under [section 1721(g) of this title](/usc/12/1721.md?p=g).
    - (K) Violation of any provisions of this subchapter or any implementing regulation, handbook, or participant letter issued under authority of this subchapter.
  - (2) **Notification to Attorney General—** Before taking action to impose a civil money penalty for a violation under [paragraph (1)(G)](#b-1-G) or [paragraph (1)(I)](#b-1-I), the [Secretary](/usc/12/1715z–22a.md?p=4) shall inform the Attorney General of the United States.
- (c) **Agency procedures—**
  - (1) **Establishment—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish standards and procedures governing the imposition of civil money penalties under [subsection (a)](#a). The standards and procedures—
    - (A) shall provide for the [Secretary](/usc/12/1715z–22a.md?p=4) to make the determination to impose the penalty;
    - (B) shall provide for the imposition of a penalty only after an issuer or a custodian has been given notice of, and opportunity for, a hearing on the record; and
    - (C) may provide for review by the [Secretary](/usc/12/1715z–22a.md?p=4) of any determination or order, or interlocutory ruling, arising from a hearing.
  - (2) **Final orders—** If no hearing is requested within 15 days of receipt of a notice of opportunity for hearing, the imposition of a penalty shall constitute a final and unappealable determination. If the [Secretary](/usc/12/1715z–22a.md?p=4) reviews the determination or order, the [Secretary](/usc/12/1715z–22a.md?p=4) may affirm, modify, or reverse that determination or order. If the [Secretary](/usc/12/1715z–22a.md?p=4) does not review the determination or order within 90 days of the issuance of the determination or order, the determination or order shall be final.
  - (3) **Factors in determining amount of penalty—** In determining the amount of a penalty under [subsection (a)](#a), consideration shall be given to such factors as the gravity of the offense, any history of prior offenses ([including](/usc/12/25b.md?p=a-3) offenses occurring before December 15, 1989), ability to pay the penalty, injury to the public, benefits received, deterrence of future violations, and such other factors as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine by regulations.
  - (4) **Reviewability of imposition of penalty—** The [Secretary](/usc/12/1715z–22a.md?p=4)’s determination or order imposing a penalty under [subsection (a)](#a) shall not be subject to review, except as provided in [subsection (d)](#d).
- (d) **Judicial review of agency determination—**
  - (1) **In general—** After exhausting all administrative remedies established by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subsection (c)(1)](#c-1), an issuer or a custodian against which the [Secretary](/usc/12/1715z–22a.md?p=4) has imposed a civil money penalty under [subsection (a)](#a) may obtain a review of the penalty and such ancillary issues as may be addressed in the notice provided under [subsection (c)(1)(A)](#c-1-A) in the appropriate court of appeals of the United States, by filing in such court, within 20 days after the entry of such order or determination, a written petition praying that the [Secretary](/usc/12/1715z–22a.md?p=4)’s order or determination be modified or be set aside in whole or in part.
  - (2) **Objections not raised in hearing—** A court shall not consider any objection that was not raised in the hearing conducted pursuant to [subsection (c)(1)](#c-1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence, which was not presented at such hearing, is material and that there were reasonable grounds for the failure to present such evidence at the hearing, the court shall remand the matter to the [Secretary](/usc/12/1715z–22a.md?p=4) for consideration of such additional evidence.
  - (3) **Scope of review—** The decisions, findings, and determinations of the [Secretary](/usc/12/1715z–22a.md?p=4) shall be reviewed pursuant to [section 706 of title 5](/usc/5/706.md).
  - (4) **Order to pay penalty—** Notwithstanding any other provision of law, the court shall have the power in any such review to order payment of the penalty imposed by the [Secretary](/usc/12/1715z–22a.md?p=4).
- (e) **Action to collect penalty—** If any issuer or custodian fails to comply with the [Secretary](/usc/12/1715z–22a.md?p=4)’s determination or order imposing a civil money penalty under [subsection (a)](#a), after the determination or order is no longer subject to review as provided by subsections [(c)(1)](#c-1) and [(d)](#d), the [Secretary](/usc/12/1715z–22a.md?p=4) may request the Attorney General of the United States to bring an action in an appropriate United States [district](/usc/12/221a.md?p=a) court to obtain a monetary judgment against the issuer or custodian and such other relief as may be available. The monetary judgment may, in the discretion of the court, include any attorneys fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the [Secretary](/usc/12/1715z–22a.md?p=4)’s determination or order imposing the penalty shall not be subject to review.
- (f) **Settlement by Secretary—** The [Secretary](/usc/12/1715z–22a.md?p=4) may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.
- (g) **“Knowingly” defined—** The term “knowingly” means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under this section.
- (h) **Regulations—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall issue such regulations as the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate to implement this section.
- (i) **Deposit of penalties—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall [deposit](/usc/12/5301.md?p=18-A) all civil money penalties collected under this section into moneys of the [Association](/usc/12/1828.md?p=s-4-E-i) pursuant to [section 1722 of this title](/usc/12/1722.md).