§ 4547 — Enterprise Guarantee Fees

(a) For purposes of this section, the following definitions shall apply: (1) The term “guarantee fee”— (A) means a fee described in subsection (b); and (B) includes— (i) the guaranty fee charged by the Federal National Mortgage Association with respect to mortgage-backed securities; and (ii) the management and guarantee fee charged by the Federal Home Loan Mortgage Corporation with respect to participation certificates. (2) The term “average fees” means the average contractual fee rate of single-family guaranty arrangements by an enterprise entered into during 2011, plus the recognition of any up-front cash payments over an estimated average life, expressed in terms of basis points. Such definition shall be interpreted in a manner consistent with the annual report on guarantee fees by the Federal Housing Finance Agency. (A) Subject to subsection (c), the Director shall require each enterprise to charge a guarantee fee in connection with any guarantee of the timely payment of principal and interest on securities, notes, and other obligations based on or backed by mortgages on residential real properties designed principally for occupancy of from 1 to 4 families, consummated after December 23, 2011. (B) the cost of capital allocated to similar assets held by other fully private regulated financial institutions, but such amount shall be not less than an average increase of 10 basis points for each origination year or book year above the average fees imposed in 2011 for such guarantees. The Director shall prohibit an enterprise from offsetting the cost of the fee to mortgage originators, borrowers, and investors by decreasing other charges, fees, or premiums, or in any other manner. (2) The Director shall prohibit an enterprise from consummating any offer for a guarantee to a lender for mortgage-backed securities, if— (A) the guarantee is inconsistent with the requirements of this section; or (B) the risk of loss is allowed to increase, through lowering of the underwriting standards or other means, for the primary purpose of meeting the requirements of this section. (3) Amounts received from fee increases imposed under this section shall be deposited directly into the United States Treasury, and shall be available only to the extent provided in subsequent appropriations Acts. The fees charged pursuant to this section shall not be considered a reimbursement to the Federal Government for the costs or subsidy provided to an enterprise. (1) The Director may provide for compliance with subsection (b) by allowing each enterprise to increase the guarantee fee charged by the enterprise gradually over the 2-year period beginning on December 23, 2011, in a manner sufficient to comply with this section. In determining a schedule for such increases, the Director shall— (A) provide for uniform pricing among lenders; (B) provide for adjustments in pricing based on risk levels; and (C) take into consideration conditions in financial markets. (2) Nothing in this subsection shall be interpreted to undermine the minimum increase required by subsection (b). (d) The Director shall require each enterprise to provide to the Director, as part of its annual report submitted to Congress— (1) a description of— (A) changes made to up-front fees and annual fees as part of the guarantee fees negotiated with lenders; (B) changes to the riskiness of the new borrowers compared to previous origination years or book years; and (C) any adjustments required to improve for future origination years or book years, in order to be in complete compliance with subsection (b); and (2) an assessment of how the changes in the guarantee fees described in paragraph (1) met the requirements of subsection (b). (1) Based on the information from subsection (d) and any other information the Director deems necessary, the Director shall require an enterprise to make adjustments in its guarantee fee in order to be in compliance with subsection (b). (2) An enterprise that has been found to be out of compliance with subsection (b) for any 2 consecutive years shall be precluded from providing any guarantee for a period, determined by rule of the Director, but in no case less than 1 year. (3) Nothing in this subsection shall be interpreted as preventing the Director from initiating and implementing an enforcement action against an enterprise, at a time the Director deems necessary, under other existing enforcement authority. (f) The provisions of this section shall expire on October 1, 2032.