12 U.S.C. § 1453 — Capitalization of Federal Home Loan

Page 342 TITLE 12—BANKS AND BANKING § 1453 mittee on Banking and Financial Services of House of Representatives by section 1(a) of Pub. L. 104–14, set out as a note preceding section 21 of Title 2, The Con- gress. Committee on Banking and Financial Services of House of Representatives abolished and replaced by Committee on Financial Services of House of Rep- resentatives, and jurisdiction over matters relating to securities and exchanges and insurance generally trans- ferred from Committee on Energy and Commerce of House of Representatives by House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001. EFFECTIVE DATE OF 1992 AMENDMENT Pub. L. 102–550, title XIII, § 1382(c)(2), Oct. 28, 1992, 106 Stat. 4002, provided that: ‘‘The amendments made by paragraph (1) [amending this section] shall apply to the first annual appointment by the President of members to the Board of Directors of the Federal Home Loan Mortgage Corporation that occurs after the date of the enactment of this Act [Oct. 28, 1992].’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369, effective Jan. 1, 1985, see section 177(d) of Pub. L. 98–369, set out as a note under section 172 of Title 26, Internal Revenue Code. TRANSITIONAL PROVISIONS Pub. L. 110–289, div. A, title I, § 1162(b)(2), July 30, 2008, 122 Stat. 2782, provided that: ‘‘The amendments made by paragraph (1) [amending this section] shall not apply to any appointed position of the board of direc- tors of the Federal Home Loan Mortgage Corporation until the expiration of the annual term for such posi- tion during which the effective date under section 1163 [set out as an Effective Date of 2008 Amendment note under section 3132 of Title 5, Government Organization and Employees] occurs.’’ Pub. L. 101–73, title VII, § 731(b)(2), Aug. 9, 1989, 103 Stat. 430, provided that: ‘‘(A) INTERIM BOARD.— ‘‘(i) ESTABLISHMENT.—There shall be an interim Board of Directors of the Federal Home Loan Mort- gage Corporation, which shall serve from the date of the enactment of this Act [Aug. 9, 1989] until the date of the 1st meeting of the voting common shareholders of the Corporation at which the first election of the directors elected by the shareholders occurs. ‘‘(ii) MEMBERS.—The interim Board of Directors of the Federal Home Loan Mortgage Corporation shall consist of— ‘‘(I) the President of the Corporation; and ‘‘(II) the persons who were (on the day before the date of the enactment of this Act) the Chairman of the Federal Home Loan Bank Board and the Sec- retary of Housing and Urban Development (or their designees). ‘‘(iii) QUORUM.—A quorum of the interim Board of Directors of the Federal Home Loan Mortgage Cor- poration shall consist of a majority of the directors duly serving from time to time. ‘‘(B) ELECTION OF PERMANENT DIRECTORS.—The first meeting of the voting common shareholders of the Fed- eral Home Loan Mortgage Corporation for election of directors shall occur, under procedures established by the Corporation, within 6 months after the date of the enactment of this Act.’’ § 1453. Capitalization of Federal Home Loan Mortgage Corporation (a) Common stock; issuance The common stock of the Corporation shall consist of voting common stock, which shall be issued to such holders in the manner and amount, and subject to any limitations on con- centration of ownership, as may be established by the Corporation. (b) Par value The voting common stock shall have such par value and other characteristics as the Corpora- tion provides. The voting common stock shall be vested with all voting rights, each share being entitled to 1 vote. The free transferability of the voting common stock at all times to any person, firm, corporation or other entity shall not be re- stricted except that, as to the Corporation, it shall be transferable only on the books of the Corporation. (Pub. L. 91–351, title III, § 304, July 24, 1970, 84 Stat. 454; Pub. L. 101–73, title VII, § 731(d)(1), (3), Aug. 9, 1989, 103 Stat. 432; Pub. L. 102–550, title XIII, § 1382(i), Oct. 28, 1992, 106 Stat. 4004.) Editorial Notes AMENDMENTS 1992—Subsec. (a). Pub. L. 102–550, § 1382(i)(2), (3)(C), re- designated par. (1) as subsec. (a), struck out provisions of par. (1)(A) which related to common stock of Cor- poration consisting in part of nonvoting common stock issued only to Federal home loan banks, restate provi- sions of par. (1)(B) as text of subsec. (a), and redesig- nated par. (2) as subsec. (b). Subsec. (b). Pub. L. 102–550, § 1382(i)(1), (3), redesig- nated subsec. (a)(2) as (b), struck out ‘‘nonvoting com- mon stock and the’’ before ‘‘voting common stock shall have such’’, struck out at end ‘‘Nonvoting common stock of the Corporation shall be evidenced in the man- ner and shall be transferable only to the extent, to the transferees, and in the manner, provided by the Cor- poration.’’, and struck out former subsec. (b) which read as follows: ‘‘The Federal home loan banks shall from time to time subscribe, at such price not less than par as the Corporation shall from time to time fix, for such amounts of nonvoting common stock as the Cor- poration prescribes, and such banks shall pay therefor at such time or times and in such amount or amounts as may from time to time be fixed by call of the Cor- poration. The amount of the payments for which such banks may be obligated under such subscriptions shall not exceed a cumulative total of $100,000,000.’’ Subsec. (c). Pub. L. 102–550, § 1382(i)(1), struck out sub- sec. (c) which read as follows: ‘‘Subscriptions of the re- spective Federal home loan banks to nonvoting com- mon stock shall be allocated by the Corporation.’’ Subsec. (d). Pub. L. 102–550, § 1382(i)(1), struck out sub- sec. (d) which read as follows: ‘‘The Corporation may retire at any time all or any part of the nonvoting com- mon stock of the Corporation, or may call for retire- ment all or any part of the nonvoting common stock of the Corporation by (1) publishing a notice of the call in the Federal Register or providing such notice in such other manner as the Corporation may determine to be appropriate, and (2) depositing with the Treasurer of the United States, for the purpose of such retirement, funds sufficient to effect such retirement. No call for the retirement of any nonvoting common stock shall be made, and no nonvoting common stock shall be retired without call, if immediately after such action, the total of the nonvoting common stock not called for re- tirement and of the reserves and surplus of the Cor- poration would be less than $100,000,000. The retirement of nonvoting common stock shall be at the par value thereof, or at the price at which such nonvoting com- mon stock was issued if such price is greater than par value. No declaration of any dividend on nonvoting common stock of the Corporation shall be effective with respect to nonvoting common stock which at the time of such declaration is the subject of an out- standing retirement call the effective date of which has arrived.’’ 1989—Subsec. (a). Pub. L. 101–73, § 731(d)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: ‘‘The capital stock of the Corporation shall consist of nonvoting common stock which shall be issued only to Federal home loan banks and shall have such par value and such other characteristics as the Page 343 TITLE 12—BANKS AND BANKING § 1454 Corporation prescribes. Stock of the Corporation shall be evidenced in such manner and shall be transferable only to such extent, to such transferees, and in such manner as the Corporation prescribes.’’ Subsec. (b). Pub. L. 101–73, § 731(d)(3)(A), substituted ‘‘nonvoting common stock’’ for ‘‘common stock’’. Subsec. (c). Pub. L. 101–73, § 731(d)(3)(B), substituted ‘‘nonvoting common stock’’ for ‘‘such stock’’. Subsec. (d). Pub. L. 101–73, § 731(d)(3)(C), inserted ‘‘nonvoting common’’ before ‘‘stock’’ wherever appear- ing. Statutory Notes and Related Subsidiaries CONVERSION OF STOCK Pub. L. 101–73, title VII, § 731(d)(2), Aug. 9, 1989, 103 Stat. 432, provided that: ‘‘On the date of the enactment of this Act [Aug. 9, 1989], each share of outstanding sen- ior participating preferred stock of the Federal Home Loan Mortgage Corporation, with a par value of $2.50 per share, shall be changed into and shall become 1 share of voting common stock of the Corporation. Such voting common stock shall, with respect to the non- voting common stock of the Corporation, retain all of the rights, priorities and privileges of the senior par- ticipating preferred stock. The transformation of the senior participating preferred stock into voting com- mon stock under this paragraph shall be deemed to sat- isfy the obligation of the Corporation to redeem senior participating preferred stock for non-callable common stock.’’ § 1454. Purchase and sale of mortgages; residen- tial mortgages; conventional mortgages; terms and conditions of sale or other disposi- tion; authority to enter into, perform, and carry out transactions (a) Authority for purchase and sale; residential mortgages; conventional mortgages; terms and conditions of sale or other disposition; lending activities (1) The Corporation is authorized to purchase, and make commitments to purchase, residential mortgages. The Corporation may hold and deal with, and sell or otherwise dispose of, pursuant to commitments or otherwise, any such mort- gage or interest therein. The operations of the Corporation under this section shall be confined so far as practicable to residential mortgages 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. The Cor- poration may establish requirements, and im- pose charges or fees, which may be regarded as elements of pricing, for different classes of sell- ers or servicers, and for such purposes the Cor- poration is authorized to classify sellers or servicers according to type, size, location, as- sets, or, without limitation on the generality of the foregoing, on such other basis or bases of differentiation as the Corporation may consider necessary or appropriate to effectuate the pur- poses or provisions of this chapter. The Corpora- tion may specify requirements concerning among other things, (A) minimum net worth; (B) supervisory mechanisms; (C) warranty com- pensation mechanisms; (D) prior approval of fa- cilities; (E) prior origination and servicing expe- rience with respect to different types of mort- gages; (F) capital contributions and substitutes; (G) mortgage purchase volume limits; and (H) reduction of mortgage purchases during periods of borrowing. With respect to any particular type of seller, the Corporation shall not be re- quired to make available programs involving prior approval of mortgages, optional delivery of mortgages, and purchase of other than conven- tional mortgages to an extent greater than the Corporation elects to make such programs avail- able to other types of eligible sellers. Any re- quirements specified by the Corporation pursu- ant to the preceding three sentences must bear a rational relationship to the purposes or provi- sions of this chapter, but will not be considered discriminatory solely on the grounds of differen- tial effects on types of eligible sellers. Insofar as is practicable, the Corporation shall make rea- sonable efforts to encourage participation in its programs by each type of eligible seller. Nothing in this section authorizes the Corporation to im- pose any charge or fee upon any mortgagee ap- proved by the Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act [12 U.S.C. 1701 et seq.] solely because of such status. (2) No conventional mortgage secured by a property comprising one- to four-family dwell- ing units shall be purchased under this section if the outstanding principal balance of the mort- gage at the time of purchase exceeds 80 per cen- tum of the value of the property securing the mortgage, unless (A) the seller retains a partici- pation of not less than 10 per centum in the mortgage; (B) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the mortgage upon demand of the Corporation in the event that the mortgage is in default; or (C) that portion of the unpaid principal balance of the mortgage which is in excess of such 80 per centum is guaranteed or insured by a qualified insurer as determined by the Corporation. The Corporation shall not issue a commitment to purchase a conventional mortgage prior to the date the mortgage is originated, if such mort- gage is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause (A) of such sentence. The Corporation may purchase a conventional mort- gage which was originated more than one year prior to the purchase date only if the seller is the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the National Credit Union Administration, or any other seller currently engaged in mortgage lending or in- vesting activities. With respect to any trans- action in which a seller contemporaneously sells mortgages originated more than one year old prior to the date of sale to the Corporation and receives in payment for such mortgages securi- ties representing undivided interests only in those mortgages, the Corporation shall not im- pose any fee or charge upon an eligible seller which is not a member of a Federal Home Loan Bank which differs from that imposed upon an eligible seller which is such a member. The Cor- poration shall establish limitations governing the maximum original principal obligation of conventional mortgages that are purchased by it; in any case in which the Corporation pur- chases a participation interest in such a mort- gage, the limitation shall be calculated with re-