12 U.S.C. § 1719 — Secondary market operations

Page 760 TITLE 12—BANKS AND BANKING § 1719 1 See References in Text note below. percentage as the Association may determine, but not less than 1 percent, for former provisions that contribu- tions equal 3 percent of the unpaid amount of the mort- gages or such greater percentage as from time to time the Association may determine. 1954—Act Aug. 2, 1954, amended section generally to substitute provisions relating to capitalization (for- merly covered in section 1716 of this title) and to gen- eral financial arrangements and operations for provi- sions relating merely to use and investment of moneys not invested in mortgages or in operating facilities (such provisions now being covered by section 1723b of this title), and the maintenance of necessary reserves. 1948—Act July 1, 1948, made section applicable to the Association instead of to any of the national mortgage associations. 1938—Act Feb. 3, 1938, inserted ‘‘or in bonds or other obligations’’ and inserted ‘‘and may purchase in the open market notes, bonds, debentures, or such other obligations issued under section 1717 of this title’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1968 AMENDMENT For effective date of amendment by title VIII of Pub. L. 90–448, see section 808 of Pub. L. 90–448, set out as an Effective Date note under section 1716b of this title. SPECIAL ASSISTANCE FUNDS OF ASSOCIATION FOR FINANCING LOW-COST HOMES Pub. L. 89–754, title X, § 1006, Nov. 3, 1966, 80 Stat. 1285, provided that the Congress found that the sharp decline in new home construction over the past year threat- ened to undercut the present high level of prosperity and employment as such declines had in the past; that the substantial reduction which had taken place had its greatest impact on families of modest income who were seeking to achieve the goal of homeownership; that this decline in homebuilding was due primarily to the shortage of mortgage financing on terms which mod- erate income families could afford; and that national policy objectives in the field of housing and community development were thereby being thwarted. The Con- gress therefore expressed its intent that the special as- sistance funds made available to the Federal National Mortgage Association for the financing of new low-cost homes by the Act of September 10, 1966 (Public Law 89–556) [amending sections 1718, 1719, and 1720 of this title], should be released immediately to halt the con- tinuing decline in the construction of new homes for families of moderate incomes. § 1719. Secondary market operations (a) Purchase and sale of mortgages; secondary market operations; advance of funds or origi- nation of loans; settlement or extinguishment of borrower’s rights (1) To carry out the purposes set forth in para- graph (a) 1 of section 1716 of this title, the oper- ations of the corporation under this section shall be confined, so far as practicable, to mort- gages which are deemed by the corporation to be of such quality, type, and class as to meet, gen- erally, the purchase standards imposed by pri- vate institutional mortgage investors. In the in- terest of assuring sound operation, the prices to be paid by the corporation for mortgages pur- chased 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 involved, as deter- mined by the corporation. The volume of the corporation’s purchases and sales, and the estab- lishment of the purchase prices, sale prices, and charges or fees, in its secondary market oper- ations under this section, should be determined by the corporation 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’s facilities, and that the oper- ations of the corporation 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 from purchasing, and making commitments to purchase, any mortgage with respect to which the Secretary of Housing and Urban Development has entered into a contract with the corporation to make in- terest subsidy payments under section 1715z–8 of this title. (2) The volume of the corporation’s lending ac- tivities 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 corpora- tion from time to time; and such determina- tions, in conjunction with determinations made under paragraph (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’s facili- ties, and that the operations of the corporation under this section should be within its income derived from such operations and that such op- erations should be fully self-supporting. The cor- poration shall not be permitted to use its lend- ing authority (A) to advance funds to a mort- gage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mort- gages in the secondary market; or (B) to origi- nate mortgage loans. Notwithstanding any Fed- eral, State, or other law to the contrary, the corporation is empowered, in connection with any loan under this section, whether before or after any default, to provide by contract with the borrower for the settlement or extinguish- ment, upon default, of any redemption, equi- table, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with re- spect to any such loan, in the event of default and pursuant otherwise to the terms of the con- tract, the mortgages that constitute such secu- rity shall become the absolute property of the corporation. (b) Obligations of the Corporation For the purposes of this section, the corpora- tion is authorized to issue, upon the approval of the Secretary of the Treasury, and have out- standing at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by the corpora- tion with the approval of the Secretary of the Treasury, to be redeemable at the option of the corporation before maturity in such manner as may be stipulated in such obligations. The cor- poration shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, to- gether with the interest thereon, are not guar- Page 761 TITLE 12—BANKS AND BANKING § 1719 anteed by the United States and do not con- stitute a debt or obligation of the United States or any agency or instrumentality thereof other than the corporation. The corporation is author- ized 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; condi- tions and restrictions The Secretary of the Treasury is authorized in the Secretary’s discretion to purchase any obli- gations issued pursuant to subsection (b) of this section, as now or hereafter in force, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities here- after issued under chapter 31 of title 31, and the purposes for which securities may be issued under chapter 31 of title 31 are extended to in- clude such purchases. The Secretary of the Treasury shall not at any time purchase any ob- ligations under this subsection if such purchase would increase the aggregate principal amount of the Secretary’s then outstanding holdings of such obligations under this subsection to an amount greater than $2,250,000,000. Each pur- chase of obligations by the Secretary 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 of the Treas- ury, taking into consideration the current aver- age 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 of the Treasury may, at any time, sell, upon such terms and conditions and at such price or prices as the Secretary shall determine, any of the obligations acquired by the Secretary under this subsection. All redemptions, pur- chases, and sales by the Secretary of the Treas- ury of such obligations under this subsection shall be treated as public debt transactions of the United States. (d) Mortgage-backed securities; issuance; matu- rities; rates of interest; exempt securities; adequacy of mortgages to permit principal and interest payments; statement in securi- ties To provide a greater degree of liquidity to the mortgage investment market and an additional means of financing its operations under this sec- tion, the corporation is authorized to set aside any mortgages held by it under this section, and, upon approval of the Secretary of the Treasury, to issue and sell securities based upon the mortgages so set aside. Securities issued under this subsection may be in the form of debt obligations or trust certificates of beneficial in- terest, or both. Securities issued under this sub- section shall have such maturities and bear such rate or rates of interest as may be determined by the corporation with the approval of the Sec- retary of the Treasury. Securities issued by the corporation under this subsection shall, to the same extent as securities which are direct obli- gations of or obligations guaranteed as to prin- cipal 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 set aside pursuant to this subsection shall at all times be adequate to enable the corporation to make timely principal and interest payments on the securities issued and sold pursuant to this sub- section. The corporation shall insert appropriate language in all of the securities issued under this subsection clearly indicating that such se- curities, 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 or instrumentality thereof other than the corporation. (e) Subordinated or convertible obligations; issuance; maturities; rate of interest; re- demption; exempt securities; debt or obliga- tion of United States; purchases in open mar- ket For the purposes of this section, the corpora- tion is authorized to issue, upon the approval of the Secretary of the Treasury, obligations which are subordinated to any or all other obligations of the corporation, including subsequent obliga- tions. The obligations issued under this sub- section shall have such maturities and bear such rate or rates of interest as may be determined by the corporation with the approval of the Sec- retary of the Treasury and may be made re- deemable at the option of the corporation 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 in such manner, at such price or prices, and at such time or times as may be stipulated therein. Obligations issued by the corporation under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or inter- est by the United States, be deemed to be ex- empt securities within the meaning of laws ad- ministered by the Securities and Exchange Com- mission. The corporation shall insert appro- priate 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 or instru- mentality thereof other than the corporation. The corporation 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 and assessments pursuant to section 4516 of this title, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certifi- cate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to sub- section (c). Page 762 TITLE 12—BANKS AND BANKING § 1719 (g) Temporary authority of Treasury to purchase obligations and securities; conditions (1) Authority to purchase (A) General authority In addition to the authority under sub- section (c) of this section, the Secretary of the Treasury is authorized to purchase any obligations and other securities issued by the corporation under any section of this chapter, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires the cor- poration to issue obligations or securities to the Secretary without mutual agreement be- tween the Secretary and the corporation. Nothing in this subsection permits or au- thorizes the Secretary, without the agree- ment of the corporation, to engage in open market purchases of the common securities of the corporation. (B) Emergency determination required In connection with any use of this author- ity, the Secretary must determine that such actions are necessary to— (i) provide stability to the financial mar- kets; (ii) prevent disruptions in the avail- ability of mortgage finance; and (iii) protect the taxpayer. (C) Considerations To protect the taxpayers, the Secretary 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’s plan for the or- derly resumption of private market fund- ing or capital market access. (iv) The probability of the corporation fulfilling the terms of any such obligation or other security, including repayment. (v) The need to maintain the corpora- tion’s status as a private shareholder- owned company. (vi) Restrictions on the use of corpora- tion resources, including 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 Sec- retary 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 Sec- retary under subparagraph (B) and with re- spect to the considerations required under subparagraph (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 of the Treasury may, at any time, exercise any rights received in connec- tion with such purchases. (B) Sale of obligation and securities The Secretary 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, sell any obligation or security acquired by the Sec- retary under this subsection. (C) Deficit reduction The Secretary of the Treasury shall de- posit in the General Fund of the Treasury any amounts received by the Secretary from the sale of any obligation acquired by the Secretary under this subsection, where such amounts shall be— (i) dedicated for the sole purpose of def- icit reduction; and (ii) prohibited from use as an offset for other spending increases or revenue reduc- tions. (D) Application of sunset to purchased obli- gations or securities The authority of the Secretary of the Treasury to hold, exercise any rights re- ceived in connection with, or sell, any obli- gations or securities purchased is not sub- ject to the provisions of paragraph (4). (3) Funding For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securi- ties issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to in- clude such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modi- fications 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), 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 shall have the power to ap- prove, disapprove, or modify the executive compensation of the corporation, as defined under Regulation S-K, 17 C.F.R. 229. (June 27, 1934, ch. 847, title III, § 304, 48 Stat. 1254; July 1, 1948, ch. 784, § 1, 62 Stat. 1206; Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 615; Aug. 7, 1956, ch. 1029, title II, §§ 203, 204, 70 Stat. 1096; Pub. L. 85–10, § 1(c), Mar. 27, 1957, 71 Stat. 7; Pub. L. 85–104, title II, § 203, July 12, 1957, 71 Stat. 298; Pub. L. 86–372, title III, §§ 302, 305(a), Sept. 23, 1959, 73 Stat. 669, 670; Pub. L. 87–70, title VI, § 603(d), (e), June 30, 1961, 75 Stat. 176, 177; Pub. L. 88–560, title VII, §§ 701(b)(2), 703, 704, Sept. 2, Page 763 TITLE 12—BANKS AND BANKING § 1719 1964, 78 Stat. 800, 802; Pub. L. 89–566, § 1, Sept. 10, 1966, 80 Stat. 738; Pub. L. 89–754, title X, § 1007, Nov. 3, 1966, 80 Stat. 1285; Pub. L. 90–448, title VIII, §§ 802(p)–(s), 804(a), 805, Aug. 1, 1968, 82 Stat. 538, 542, 543; Pub. L. 91–351, title V, § 504, July 24, 1970, 84 Stat. 461; Pub. L. 93–383, title VIII, § 806(j), Aug. 22, 1974, 88 Stat. 728; Pub. L. 97–320, title VII, § 707(b), Oct. 15, 1982, 96 Stat. 1540; Pub. L. 98–479, title II, § 203(a)(1), Oct. 17, 1984, 98 Stat. 2229; Pub. L. 100–242, title IV, § 441(a), Feb. 5, 1988, 101 Stat. 1921; Pub. L. 101–73, title VII, § 731(m)(2), Aug. 9, 1989, 103 Stat. 436; Pub. L. 102–550, title XIII, § 1381(e)–(g), (s)(2), Oct. 28, 1992, 106 Stat. 3996, 4001; Pub. L. 110–289, div. A, title I, § 1117(a), July 30, 2008, 122 Stat. 2683; Pub. L. 111–203, title XIII, § 1304(a), July 21, 2010, 124 Stat. 2134.) Editorial Notes REFERENCES IN TEXT Paragraph (a) of section 1716 of this title, referred to in subsec. (a)(1), was repealed by Pub. L. 101–73, title VII, § 731(m)(1)(A), Aug. 9, 1989, 103 Stat. 435. See section 1716(3) of this title. AMENDMENTS 2010—Subsec. (g)(2)(C), (D). Pub. L. 111–203 added sub- par. (C) and redesignated former subpar. (C) as (D). 2008—Subsec. (g). Pub. L. 110–289 added subsec. (g). 1992—Subsec. (b). Pub. L. 102–550, § 1381(e)(1), sub- stituted a period for ‘‘; but the aggregate amount of ob- ligations of the corporation under this subsection out- standing at any one time shall not exceed fifteen times the sum of its capital, capital surplus, general surplus, reserves, and undistributed earnings unless a greater ratio shall be fixed at any time or from time to time by the Secretary of Housing and Urban Development. In no event shall any such obligations be issued if, at the time of such proposed issuance, and as a con- sequence thereof, the resulting aggregate amount of its outstanding obligations under this subsection would exceed the amount of the corporation’s ownership pur- suant to this section, free from any liens or encum- brances, of cash, mortgages or other security holdings, and obligations of the United States or guaranteed thereby, or obligations, participations, or other instru- ments which are lawful investments for fiduciary, trust, or public funds.’’ after ‘‘in such obligations’’. Subsec. (c). Pub. L. 102–550, § 1381(s)(2), substituted ‘‘the Secretary’s’’ for ‘‘his’’ in two places, ‘‘the Sec- retary’’ for ‘‘he’’ after ‘‘such price or prices as’’, and ‘‘the Secretary’’ for ‘‘him’’ after ‘‘the obligations ac- quired by’’. Subsec. (d). Pub. L. 102–550, § 1381(f), inserted at end ‘‘The corporation shall insert appropriate language in all of the securities issued under this subsection clearly indicating that such securities, together with the inter- est thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any agency or instrumentality thereof other than the corporation.’’ Subsec. (e). Pub. L. 102–550, § 1381(e)(2), struck out after third sentence ‘‘The outstanding total principal amount of such obligations, which are entirely subordi- nated to the obligations of the corporation issued or to be issued under subsection (b) of this section, shall be deemed to be capital of the corporation for the purpose of determining the aggregate amount of obligations issued under subsection (b) of this section which may be outstanding at any one time.’’ Subsec. (f). Pub. L. 102–550, § 1381(g), inserted ‘‘of this title and assessments pursuant to section 4516 of this title’’ in first sentence. 1989—Subsec. (a)(2). Pub. L. 101–73 inserted after third sentence ‘‘The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans.’’ and struck out first two sentences which read as follows: ‘‘In the further interest of assuring sound operation, any loan made by the corporation in its sec- ondary market operations under this section, and any extension or renewal thereof, shall not exceed 90 per centum of the unpaid principal balances of the mort- gages securing the loan, and shall bear interest at a rate consistent with general loan policies established from time to time by the corporation’s board of direc- tors. Any such loan shall mature in not more than twelve months and the term of any extension or re- newal shall not exceed twelve months.’’ 1988—Subsec. (f). Pub. L. 100–242 added subsec. (f). 1984—Subsec. (c). Pub. L. 98–479 substituted ‘‘chapter 31 of title 31’’ for ‘‘the Second Liberty Bond Act, as now or hereafter in force’’ in two places. 1982—Subsec. (e). Pub. L. 97–320 struck out provision that the total principal amount of subordinated obliga- tions which could be outstanding at any one time could not exceed two times the sum of (1) the capital of the corporation represented by its outstanding common stock and (2) its surplus and undistributed earnings at such time. 1974—Subsec. (a)(1). Pub. L. 93–383 substituted ‘‘sec- tion 243 of the National Housing Act’’, classified to sec- tion 1715z–8 of this title, for ‘‘section 502 of the Emer- gency Home Finance Act of 1970’’, which enacted such section 1715z–8. For purposes of amendment of subsec. (a)(1) of this section no change in text was required. 1970—Subsec. (a)(1). Pub. L. 91–351 inserted provision that nothing in this subchapter shall prohibit the cor- poration from purchasing, and making commitments to purchase, any mortgage with respect to which the Sec- retary of Housing and Urban Development has entered into a contract with the corporation to make interest subsidy payments pursuant to section 1715z–8 of this title. 1968—Subsec. (a)(1). Pub. L. 90–448, § 802(p), (s), sub- stituted ‘‘corporation’’ for ‘‘Association’’ in six places, and ‘‘corporation’s’’ for ‘‘Association’s’’ in two places, and struck out provisions which prohibited the Asso- ciation from purchasing any mortgage insured or guar- anteed prior to Aug. 2, 1954. Subsec. (a)(2). Pub. L. 90–448, § 802(s), substituted ‘‘corporation’’ for ‘‘Association’’ in five places, and ‘‘corporation’s’’ for ‘‘Association’s’’, in three places. Subsec. (b). Pub. L. 90–448, § 802(q), (s), substituted ‘‘corporation’’ for ‘‘Association’’ in seven places, and ‘‘corporation’s’’ for ‘‘Association’s’’, and inserted provi- sions permitting the Secretary to establish a greater ratio than fifteen times for the aggregate amount of obligations outstanding. Subsec. (c). Pub. L. 90–448, § 802(r), struck out provi- sions which prohibited the Secretary of the Treasury from purchasing obligations under this subsection if all of the preferred stock of the Association held by him has been retired. Subsec. (d). Pub. L. 90–448, § 804(a), added subsec. (d). A prior subsec. (d) was repealed by Pub. L. 88–560. Subsec. (e). Pub. L. 90–448, § 805, added subsec. (e). 1966—Subsec. (a)(1). Pub. L. 89–754 struck out require- ment that Association’s advance commitments to pur- chase mortgages in its secondary market operations be issued at prices which are sufficient to facilitate home financing, but which are sufficiently below the price then offered by the Association for immediate purchase to prevent excessive sales to the Association pursuant to such commitments. Subsec. (b). Pub. L. 89–566 raised limit on maximum amount of obligations outstanding under the sub- section from ten times the sum of capital, capital sur- plus, general surplus, reserves, and undistributed earn- ings to fifteen times that sum. 1964—Subsec. (a)(2). Pub. L. 88–560, § 703, substituted ‘‘90 per centum’’ for ‘‘80 per centum’’. Subsec. (b). Pub. L. 88–560, § 701(b)(2), substituted ‘‘or obligations, participations, or other instruments which Page 764 TITLE 12—BANKS AND BANKING § 1720 1 See References in Text note below. are lawful investments’’ for ‘‘or obligations which are lawful investments’’. Subsec. (d). Pub. L. 88–560, § 704, repealed provisions which prohibited the Association from purchasing par- ticipations in its operations under this section. 1961—Subsec. (a). Pub. L. 87–70, § 603(d), designated ex- isting provisions as par. (1) and added par. (2). Subsec. (b). Pub. L. 87–70, § 603(e), inserted ‘‘or other security holdings’’ after ‘‘mortgages’’. 1959—Subsec. (a). Pub. L. 86–372, § 302, substituted ‘‘home financing’’ for ‘‘advance planning of home con- struction’’ after ‘‘sufficient to facilitate’’. Subsec. (b). Pub. L. 86–372, § 305(a), substituted ‘‘and obligations of the United States or guaranteed thereby, or obligations which are lawful investments for fidu- ciary, trust, or public funds’’ for ‘‘and bonds or other obligations of, or bonds or other obligations guaranteed as to principal and interest by, the United States’’. 1957—Subsec. (c). Pub. L. 85–104 substituted ‘‘$2,250,000,000’’ for ‘‘$1,350,000,000’’. Pub. L. 85–10 substituted ‘‘$1,350,000,000’’ for ‘‘$500,000,000 plus an amount equal to the total of such reductions in the maximum dollar amount prescribed by section 1721(c) of this title as have theretofore been effected pursuant to that section: Provided, That such aggregate principal amount under this subsection shall in no event exceed $1,000,000,000’’. 1956—Subsec. (a). Act Aug. 7, 1956, §§ 203, 204(a), sub- stituted in second sentence ‘‘within the range of mar- ket prices’’ for ‘‘at the market prices’’; and inserted sentence that advance commitments to purchase mort- gages in secondary market operations shall be issued only at prices which are sufficient to facilitate advance planning of home construction but sufficiently below price then offered by Association for immediate pur- chase to prevent excessive sales to the Association pur- suant to such commitments. Subsec. (d). Act Aug. 7, 1956, § 204(b), struck out provi- sions prohibiting Association from making advance contracts or commitments to purchase mortgages but allowed Association to issue a purchase contract in an amount not exceeding the amount of the sale of mort- gages purchased from the Association, entitling the holder to sell to the Association mortgages in the amount of the contract, upon terms prescribed by the Association. 1954—Act Aug. 2, 1954, amended section generally to substitute new provisions (formerly covered in sections 1716 and 1717 of this title) for provisions which related to exemption from taxation. See section 1723a(c) of this title. 1948—Act July 1, 1948, amended section generally to provide for exemption from taxation for the Associa- tion. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of this title. EFFECTIVE DATE OF 1968 AMENDMENT For effective date of amendment by title VIII of Pub. L. 90–448, see section 808 of Pub. L. 90–448, set out as an Effective Date note under section 1716b of this title. § 1720. Repealed. Pub. L. 98–181, title I [title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240 Section, acts June 27, 1934, ch. 847, title III, § 305, 48 Stat. 1254; July 1, 1948, ch. 784, § 1, 62 Stat. 1206; Apr. 20, 1950, ch. 94, title I, § 118, 64 Stat. 57; Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 616; Aug. 11, 1955, ch. 783, title I, § 103, title IV, § 402, 69 Stat. 636, 651; Aug. 7, 1956, ch. 1029, title II, §§ 205–208, 70 Stat. 1096; Pub. L. 85–10, § 2, Mar. 27, 1957, 71 Stat. 8; Pub. L. 85–104, title II, §§ 204–207, July 12, 1957, 71 Stat. 298; Pub. L. 85–364, §§ 2, 3(a), 4, Apr. 1, 1958, 72 Stat. 73, 74; Pub. L. 86–372, title III, §§ 303(a), 304, Sept. 23, 1959, 73 Stat. 669; Pub. L. 87–70, title I, § 101(c), title VI, § 601(a), (b), June 30, 1961, 75 Stat. 153, 175, 176; Pub. L. 88–560, title I, § 109(b), Sept. 2, 1964, 78 Stat. 777; Pub. L. 89–117, title VIII, § 801, Aug. 10, 1965, 79 Stat. 493; Pub. L. 89–429, § 3(a), May 24, 1966, 80 Stat. 166; Pub. L. 89–566, § 3, Sept. 10, 1966, 80 Stat. 738; Pub. L. 89–754, title III, § 310(d), title X, §§ 1005, 1020(c), Nov. 3, 1966, 80 Stat. 1270, 1285, 1296; Pub. L. 90–19, § 1(a)(2), May 25, 1967, 81 Stat. 17; Pub. L. 90–448, title II, § 201(g), title VIII, § 806, Aug. 1, 1968, 82 Stat. 503, 544; Pub. L. 91–152, § 2, title I, § 115, Dec. 24, 1969, 83 Stat. 379, 385; Pub. L. 91–351, title IV, § 401, July 24, 1970, 84 Stat. 458; Pub. L. 95–557, title III, § 318(b), Oct. 31, 1978, 92 Stat. 2101; Pub. L. 96–399, title III, § 338, Oct. 8, 1980, 94 Stat. 1657; Pub. L. 97–35, title III, § 333(a)(1), (2), Aug. 13, 1981, 95 Stat. 413, related to the special assistance functions of the Government National Mortgage Asso- ciation. Statutory Notes and Related Subsidiaries SAVINGS PROVISION Pub. L. 98–181, title I [title IV, § 483(b)], Nov. 30, 1983, 97 Stat. 1240, provided that: ‘‘Any purchase or commit- ment to purchase any mortgage pursuant to section 305 or 313 of the Federal National Mortgage Association Charter Act [former sections 1720 and 1723e of this title] made before the date of the enactment of this Act [Nov. 30, 1983], and the servicing and disposition of any such mortgage, shall continue to be governed by the provi- sions of such sections as they existed immediately be- fore the effective date of this section [Nov. 30, 1983].’’ § 1721. Management and liquidation functions of Government National Mortgage Association (a) Separate accountability of assets and liabil- ities To carry out the purposes set forth in para- graph (c) 1 of section 1716 of this title, the Asso- ciation is authorized and directed, as of the close of the cutoff date determined by the Asso- ciation pursuant to section 1718(d) 1 of this title, to establish separate accountability for all of its assets and liabilities (exclusive of capital, sur- plus, surplus reserves, and undistributed earn- ings to be evidenced by preferred stock as pro- vided in section 1718(d) 1 of this title, but inclu- sive of all rights and obligations under any out- standing contracts), and to maintain such sepa- rate accountability for the management and or- derly liquidation of such assets and liabilities as provided in this section. (b) Issuance of obligations to expedite substi- tution 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 held under the aforesaid sepa- rate accountability, the Association is author- ized to issue, upon the approval of the Secretary 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 with the ap- proval of the Secretary of the Treasury, to be redeemable at the option of the Association be- fore maturity in such manner as may be stipu- lated in such obligations; but in no event shall any such obligations be issued if, at the time of