amendments to the federal national mortgage association charter act

amendments to the federal national mortgage association charter act Sec. 802. (a) The heading of title III of the National Housing Act is amended by striking out “FEDERAL NATIONAL MORTGAGE ASSOCIATION” and inserting in lieu thereof “NATIONAL MORTGAGE ASSOCIATIONS”. (b) Section 301 of such Act is amended— (1) by striking out “in the Federal Government a”; (2) by striking out “facility for” and inserting in lieu thereof “facilities for”; (3) by striking out “of such facility” and inserting in lieu thereof “thereof”; (4) by striking out “facility to” and inserting in lieu thereof “facilities to”; and (5) by striking out “the existing mortgage portfolio of the Federal National Mortgage Association” and inserting in lieu thereof “federally owned mortgage portfolios”. (c) Section 302(a) of such Act is amended— (1) by inserting“(1)” immediately following“(a)”; (2) by striking out “(hereinafter referred to as the ‘Association’)”; and (3) by adding at the end thereof the fol lowing new paragraph: “(2) On the effective date established pursuant to section 808 of the Housing and Urban Development Act of 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 lie a body corporate without capital stock to be known as Government National Mortgage Association (hereinafter referred to as the ‘Association’), which shall lie in the Department of Housing and Urban Development and which shall retain the assets and liabilities acquired and incurred under sections 305 and 306 prior to such effective date, including any and all liabilities incurred pursuant to section 302(c). The Association shall have succession until dissolved by Act of Congress. It shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof. Agencies or 82 Stat. 537offices may be established by the Association 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 Association (hereinafter referred to as the ‘corporation’), which shall retain the assets and liabilities acquired and incurred under sections 303 and 304 prior to such effective date. The corporation shall have succession until dissolved by Act of Congress. It shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof.” (d) Section 302(b) of such Act is amended— (1) by striking out “the Association is authorized” and inserting in lieu thereof “each of the bodies corporate named in subsection (a) (2) is authorized”; (2) by striking out “lend (under section 304) on the security” (3) by inserting immediately before the colon in the first sentence “; and the corporation 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 under section 306(g)”; and (4) j by striking out “no mortgage may be purchased” and inserting in lieu thereof “the Association may not purchase any mortgage”, (e) Section 302(c)(1) of such Act is amended by striking out “, consistent with section 307,”. (f) Section 302(c)(2)(C) of such Act is amended to read as follows: “(C) The Department of Housing and Urban Development.” (g) Section 302(c)(2) of such Act is amended by striking out “incurred by the Federal National Mortgage” and inserting in lieu thereof “incurred by the”. (h) The heading of section 303 of such Act is amended to read as follows: “capitalization-—federal national mortgage association”. (i) Section 303(a) of such Act is amended— (1) by striking out “nonvoting common stock” and inserting in lieu thereof “common stock, 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”; (2) by striking out “nonvoting preferred stock” and inserting in lieu thereof “nonvoting preferred stock, with a par value of $100 per share,”; (3) by striking out the second and third sentences thereof and inserting in lieu thereof “The free transferability of the common stock at all times to any person, firm, corporation, or other entity shall not be restricted except that, as to the corporation, it shall be transferable only on the books of the corporation.”; (4) by striking out “of the capital surplus and the general surplus accounts”; (5) by striking out “retire” and inserting in lieu thereof “retire, at par,”; and (6) by striking out “the Association shall deem feasible” and inserting in lieu thereof “possible subsequent to the effective date established pursuant to section 808 of the Housing and Urban Development Act of 1968”. (j) Section 303(b) of such Act is amended— (1) by striking out “for its services” and inserting in lieu thereof “, which may be regarded as elements of pricing,”; and 82 Stat. 538 (2) by striking out the last sentence. (k) Section 303(c) of such Act is amended— (1) by striking out “(only in denominations of $100 or multiples thereof)”; (2) by inserting immediately after the first sentence the following: “In addition to the shares of common stock issued under the foregoing sentence, the corporation may issue additional shares in return for appropriate payments into capital or capital and surplus. The corporation shall at all times require each servicer of its mortgages to own a minimum amount of common stock of the corporation, measured by its stated value. Such minimum amount shall not exceed 2 per centum, as determined from time to time by the corporation with the approval of the Secretary of Housing and Urban Development, of the aggregate outstanding principal balances of all mortgages of the corporation which have been purchased subsequent to the effective date established pursuant to section 808 or the Housing and Urban Development Act of 1968 and which are then serviced by such servicer for the corporation.”; and (3) by striking out “the general surplus account of the Association shall not be reduced through the payment of dividends applicable to such common stock which exceed in the aggregate 5 per centum of the par value of the outstanding common stock of the Association” and inserting in lieu thereof “the aggregate amount of cash dividends paid on account of any share of such stock shall not exceed any rate which may be determined from time to time by the Secretary’ of Housing and Urban Development to be a fair rate of return after consideration of the current earnings and capital condition of the corporation”. (l) Section 303(d) of such Act is amended by striking out “$225,-000,000” and inserting in lieu thereof “$225,000,000; but no such stock may be issued subsequent to the effective date established pursuant, to section 808 of the Housing and Urban Development Act of 1968”. (m) Section 303 (f) of such Act. is amended by striking out “contributions, and” inserting in lieu thereof “contributions, to purchase additional shares of such stock, and”. (n) Section 303(g) of such Act is repealed. (o) The heading of section 304 of such Act is amended to read as follows: “SECONDARY MARKET OPERATIONS—FEDERAL NATIONAL MORTGAGE association”. (p) Section 304(a) (1) of such Act is amended by striking out “and the Association shall not purchase any mortgage insured or guaranteed prior to the effective date of the Housing Act of 1954”. (q) Section 304(b) of such Act is amended by striking out “earnings and in” and inserting in lieu thereof “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”. (r) Section 304(c) of such Act is amended by striking out “(1) all of the preferred stock of the Association held by the Secretary of the Treasury has been retired, or (2) ”. (s) Sections 303 and 304 of such Act, as amended by the foregoing subsections of this section, are further amended— (1) by striking out “Association” each place it appears and inserting in lieu thereof, in each such place, “corporation”; and (2) by striking out “Association’s” each place it appears and inserting in lieu thereof, in each such place, “corporation’s”. (t) The heading of section 305 of such Act is amended to read as follows: “special assistance functions—government national mortgage association”. 82 Stat. 539 (u) The heading of section 306 of such Act is amended to read as follows: “management and liquidating functions—government national mortgage association”. (v) Subsections (a) and (b) of section 307 of such Act are repealed. (w) Section 307 of such Act is further amended— (1) by striking out “Sec. 307.”; (2) by striking out “(c) All of the benefits and burdens incident to the administration of” and inserting in lieu thereof the following: “Sec. 307. All of the benefits and burdens incident to the administration of”; and (3) by striking out “board of directors of the Association” and inserting in lieu thereof “Secretary of Housing and Urban Development.” (x) The heading of section 308 of such Act is amended to read as follows: “management”. (y) Section 308 of such Act is amended— (1) by inserting “(a)” immediately following “308”; (2) by striking out the first two sentences and inserting in lieu thereof “AH the powers and duties of the Government National Mortgage Association shall be vested in the Secretary of Housing and Urban Development and the Association shall be administered tinder the direction of the Secretary.”; (3) by striking out “the board shall determine” and inserting in lieu thereof “the Secretary shall determine”; (4) by striking out “Association. The chairman of the board” and inserting in lieu thereof “Association, 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 Secretary”; (5) by striking out “by the board of directors,” and inserting in lieu thereof “by the Secretary,”; (6) by striking out the last sentence; and (7) by adding at the end thereof the following new subsection: “(b) The Federal National Mortgage Association shall have a board of directors which shall consist of fifteen persons, one-third of whom shall be appointed annually by the President of the United States, and I he remainder of whom shall be elected annually by the common stockholders. The board shall at all times have as members appointed by the President at least one person from the homebuilding industry, at least one person from the mortgage lending industry, and at least one person from the real estate industry. Each member of the board of directors shall be appointed or elected for a term ending on the date of the next annual meeting of the stockholders, except that any such member may be removed from office by the President for good cause. Any elective seat on the board which becomes vacant after the annual election of the directors shall be filled by the board, but only for the unexpired portion of the term. Any appointive seat which becomes vacant shall be filled by appointment of the President, but only for the unexpired portion of the term. Within the limitations of law and regulation, the board shall determine the general policies which shall govern the operations of the corporation, 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 of directors shall select and effect the appointment of qualified persons to fill the offices of president and vice president, and such other offices as may be provided for in the bylaws. Any member of the board who is a full-time officer or employee of the Federal Government shall not, as such member, receive compensation for his services.” 82 Stat. 540 (z) Section309(a) of such Act is amended— (1) by striking out “The Association” and inserting in lieu thereof “Each of the bodies corporate named in section 302(a)(2)”; (2) by striking out “by its board of directors, to adopt, amend, and repeal bylaws governing the performance of the powers and duties granted to or imposed upon it by law;”; (3) by striking out “conduct its business” and inserting in lieu thereof “conduct its business without regard to any qualification or similar statute”; (4) by striking out “the Association may deem” and inserting in lieu thereof “it may deem”; and (5) by striking out “the purposes of the Association” and inserting in lieu thereof “its purposes”. (aa) Section 309(c) of such Act is amended— (1) by striking out“(1)”; (2) by striking out “The Association” and inserting in lieu thereof “(1) The Association”; (3) by striking out “, and (2) the Association shall, with respect to its secondary market operations under section 304 after the cutoff date referred to in section 303(d) of this title, pay annually to the Secretary of the Treasury, for covering into miscellaneous receipts, an amount equivalent to the amount of Federal income taxes for which it would be subject if it were not exempt from such taxes with respect to such secondary market operations”; and (4) by adding at the end thereof the following new paragraph: “(2) The corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by any State, 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 shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed.” (bb) Section 309 (d) of such Act is amended— (1) by in setting “(1)” immediately following “(d)”; (2) by striking out “Chairman of the Board” and inserting in lieu thereof “Secretary of Housing and Urban Development”; (3) by striking out “agents,” and inserting in lieu thereof “agents of the Association,”; and (4) by adding at the end thereof the following new paragraph: “(2) The board of directors of the corporation 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 to pay such compensation to them for their services, as it. may determine; 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 who is employed by the corporation prior to the termination of the transitional period referred to in section 810(b) of the Housing and Urban Development Act of 1968 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 of title 5, United States Code) shall, so long as his employment by the corporation continues without a break in continuity of service, continue to be subject to such law; and 82 Stat. 541for the purpose of such law his employment by the corporation without a break in continuity of service shall be deemed to be employment by the Government of the United States. The corporation shall contribute to the Civil Service Retirement and Disability Fund a sum as provided by section 8334(a) of title 5, United States Code, except that such sum shall be determined by applying to the total basic pay (as defined in 5 US.C. 8331(3) and except as hereinafter provided) paid to the employees of the corporation who are covered by the civil service retirement law, the per centum rate determined annually by the United States Civil Service Commission 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, United States Code. The corporation shall also pay into the Civil Service Retirement and Disability Fund such portion of the cost of administration of the fund as is determined by the United States Civil Service Commission 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 which exceeds the basic pay provided for in section 5312 of title 5, United States Code, on the last day of such year. Except as provided in this subsection, the corporation shall not be subject to the provisions of title 5, United States Code.” (cc) Section 309 (e) of such Act is amended— (1) by striking out “body corporate created by section 302” and inserting in lieu thereof “bodies corporate named in section 302(a)(2)”; (2) by inserting “, ‘Government National Mortgage Association’,” immediately following“ ‘Federal National Mortgage Association’”; and (3) by striking out the second sentence and inserting in lieu thereof the following: “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.” (dd) Section 309 (g) of such Act is amended to read as follows: “(g) The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a) (2), for its own account or as fiduciary, and such banks 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.” (ee) Section 309 of such Act is amended by adding at the end thereof the following new subsection: “(h) The Secretary of Housing and Urban Development shall have general regulatory power over the Federal National Mortgage Association and shall make such rules and regulations as shall be necessary and proper to insure that the purposes of this title are accomplished. No stock, obligation, security, or other instrument shall be issued by the corporation without the prior approval of the Secretary. The Secretary may require that a reasonable portion of the corporation’s mortgage purchases be related to the national goal of providing adequate housing for low and moderate income families, but with reasonable economic return to the corporation. The Secretary may examine and audit the books and financial transactions of the corporation, mid 82 Stat. 542he may require the corporation to make such reports on its activities as he deems advisable.” (ff) Section 311 of such Act is amended— (1) by striking out “the Association” and inserting in lieu thereof “either of the bodies corporate named in section 302(a) (2)”; and (2) by adding at the end thereof the following: “All stock, obligations, securities, participations, or other instruments issued pursuant to this title shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States lie deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission; but all such issuances shall lie made only with the approval of the Secretary of Housing and Urban Development.”