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The Sustainable Homeownership Act modifies how Freddie Mac and Fannie Mae operate by imposing new restrictions on high loan-to-value mortgages (those with less than 20 percent down payments), requiring private mortgage insurance with coverage ranging from 6 to 35 percent depending on the loan amount, while allowing exceptions for low-income borrowers and certain refinances. The bill caps both enterprises' mortgage asset holdings at 8 percent of total assets, requires them to transfer most credit risk to private investors within two years, mandates non-discriminatory pricing practices, and prohibits purchases of mortgages with simultaneous home equity lines of credit. Additionally, it authorizes the Treasury Secretary to convert the government's stock holdings in these enterprises into common equity and directs the Federal Housing Finance Agency to establish capital standards within 90 days to enable the enterprises to exit conservatorship within two years. Revenues from mortgage-backed securities would be directed toward deficit reduction or affordable and middle-income housing development, with most provisions taking effect 180 days after the bill becomes law.

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