Housing Finance Restructuring Act of 2016

Housing Finance Restructuring Act of 2016

This bill directs the Department of the Treasury to modify the Senior Preferred Stock Purchase Agreement for each of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (enterprises) to:

• reduce to zero (deem as repaid in full) the liquidation preference on the Variable Liquidation Preference Senior Preferred Stocks of each enterprise;
• require redemption of the Variable Liquidation Preference Senior Preferred Stock of each enterprise upon a specified date, deeming it no longer outstanding and terminating all rights of the stockholders.

Treasury shall exercise the warrants for the purchase of common stock of the enterprises under the Senior Preferred Stock Purchase Agreements.

At any time an enterprise is not fully capitalized, the Federal Housing Finance Agency (FHFA) shall require that the net income (after deduction of all associated expenses) of each enterprise for the fiscal year be retained as capital reserves, and not be allocated to fund the Housing Trust Fund or the Capital Magnet Fund for affordable housing.

The FHFA shall:

• report a capital restoration plan for each enterprise, and
• terminate the conservatorship of an enterprise when it attains an amount of capital equal to or exceeding 5% of its risk-weighted assets.

Any individual or entity adversely affected or aggrieved by action or inaction on the part of the FHFA or Treasury in violation of this bill or the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 may commence a civil action in a U.S. district court for prospective injunctive relief against the FHFA or Treasury, as appropriate.