12 U.S.C. § 1719 : US Code - Section 1719: Secondary market operations

Search 12 U.S.C. § 1719 : US Code - Section 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) (!1) of
section 1716 of this title, the operations of the corporation under
this section shall be confined, so far as practicable, to mortgages
which are deemed by the corporation to be of such quality, type,
and class as to meet, generally, the purchase standards imposed by
private institutional mortgage investors. In the interest of
assuring sound operation, the prices to be paid by the corporation
for mortgages 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
involved, as determined by the corporation. The volume of the
corporation'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 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 operations 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 interest subsidy payments
under section 1715z-8 of this title.
(2) The volume of the corporation'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 from time to time;
and such determinations, 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 facilities,
and that the operations of the corporation under this section
should be within its income derived from such operations and that
such operations should be fully self-supporting. 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.
Notwithstanding any Federal, 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 extinguishment,
upon default, of any redemption, equitable, legal, or other right,
title, or interest of the borrower in any mortgage or mortgages
that constitute the security for the loan; and with respect to any
such loan, in the event of default and pursuant otherwise to the
terms of the contract, the mortgages that constitute such security
shall become the absolute property of the corporation.
(b) Obligations of the Corporation
For the purposes of this section, the corporation is authorized
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 corporation 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
corporation 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 or instrumentality
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.
(c) Purchase of obligations by Treasury; conditions and
restrictions
The Secretary of the Treasury is authorized in the Secretary's
discretion to purchase any obligations 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 hereafter 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 include such purchases. The Secretary 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'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 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 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 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, purchases, and
sales by the Secretary 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
investment market and an additional means of financing its
operations under this section, 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 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 with the approval of the Secretary of the Treasury.
Securities 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 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 subsection. The corporation 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
or instrumentality thereof other than the corporation.
(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 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 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 with the approval of the Secretary of the Treasury and
may be made redeemable 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 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 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 or instrumentality
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 certificate 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 subsection (c) of this section.