[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2012 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                                Title 12

                            Banks and Banking


________________________

                             Part 1100 to End

                         Revised as of January 1, 2012

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2012
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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          U.S. GOVERNMENT OFFICIAL EDITION NOTICE

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As of January 1, 2012

Title 12, Part 900 to End

Revised as of January 1, 2011

Is Replaced by

Title 12, Parts 900 to 1099

and

Title 12, Part 1100 to End



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                            Table of Contents



                                                                    Page
  Explanation.................................................     vii

  Title 12:
          Chapter XI--Federal Financial Institutions 
          Examination Council                                        3
          Chapter XII--Federal Housing Finance Agency               39
          Chapter XIII--Financial Stability Oversight Council      315
          Chapter XIV--Farm Credit System Insurance 
          Corporation                                              323
          Chapter XV--Department of the Treasury                   361
          Chapter XVI--Office of Financial Research, 
          Department of the Treasury                               383
          Chapter XVII--Office of Federal Housing Enterprise 
          Oversight, Department of Housing and Urban 
          Development                                              389
          Chapter XVIII--Community Development Financial 
          Institutions Fund, Department of the Treasury            551
  Finding Aids:
      Table of CFR Titles and Chapters........................     603
      Alphabetical List of Agencies Appearing in the CFR......     623
      List of CFR Sections Affected...........................     633

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 12 CFR 1101.1 refers 
                       to title 12, part 1101, 
                       section 1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2012), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page viii]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
April 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in eleven separate 
volumes. For the period beginning April 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
issued the regulation containing that incorporation. If, after 
contacting the agency, you find the material is not available, please 
notify the Director of the Federal Register, National Archives and 
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001, 
or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page ix]]

    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail fedreg.info@nara.gov.

SALES

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.ofr.gov. For more 
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mail, gpo@custhelp.com.
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.

    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    January 1, 2012.







[[Page xi]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of nine volumes. The parts 
in these volumes are arranged in the following order: Parts 1-199, 200-
219, 220-229, 230-299, 300-499, 500-599, 600-899, 900-1099, and 1100-
end. The first volume containing parts 1-199 is comprised of chapter I--
Comptroller of the Currency, Department of the Treasury. The second, 
third and fourth volumes containing parts 200-299 are comprised of 
chapter II--Federal Reserve System. The fifth volume containing parts 
300-499 is comprised of chapter III--Federal Deposit Insurance 
Corporation and chapter IV--Export-Import Bank of the United States. The 
sixth volume containing parts 500-599 is comprised of chapter V--Office 
of Thrift Supervision, Department of the Treasury. The seventh volume 
containing parts 600-899 is comprised of chapter VI--Farm Credit 
Administration, chapter VII--National Credit Union Administration, 
chapter VIII--Federal Financing Bank. The eighth volume containing parts 
900-1099 is comprised of chapter IX--Federal Housing Finance Board and 
Chapter X--Bureau of Consumer Financial Protection. The ninth volume 
containing parts 1100 to end is comprised of chapter XI--Federal 
Financial Institutions Examination Council, chapter XIV--Farm Credit 
System Insurance Corporation, chapter XV--Department of the Treasury, 
chapter XVII--Office of Federal Housing Enterprise Oversight, Department 
of Housing and Urban Development and chapter XVIII--Community 
Development Financial Institutions Fund, Department of the Treasury. The 
contents of these volumes represent all of the current regulations 
codified under this title of the CFR as of January 1, 2012.

    For this volume, Jonn V. Lilyea was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.

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                       TITLE 12--BANKS AND BANKING




                  (This book contains part 1100 to end)

  --------------------------------------------------------------------
                                                                    Part

chapter xi--Federal Financial Institutions Examination 
  Council...................................................        1101

chapter xii--Federal Housing Finance Agency.................        1206

chapter xiii--Financial Stability Oversight Council.........        1320

chapter xiv--Farm Credit System Insurance Corporation.......        1400

chapter xv--Department of the Treasury......................        1510

chapter xvi--Office of Financial Research, Department of the 
  Treasury..................................................        1600

chapter xvii--Office of Federal Housing Enterprise 
  Oversight, Department of Housing and Urban Development....        1700

chapter xviii--Community Development Financial Institutions 
  Fund, Department of the Treasury..........................        1805

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     CHAPTER XI--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL




  --------------------------------------------------------------------
Part                                                                Page
1101            Description of office, procedures, public 
                    information.............................           5
1102            Appraiser regulation........................          11

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PART 1101_DESCRIPTION OF OFFICE, PROCEDURES, PUBLIC INFORMATION--
Table of Contents



Sec.
1101.1 Scope and purpose.
1101.2 Authority and functions.
1101.3 Organization and methods of operation.
1101.4 Disclosure of information, policies, and records.
1101.5 Testimony and production of documents in response to subpoena, 
          order, etc.

    Authority: 5 U.S.C. 552; 12 U.S.C. 3307.

    Source: 45 FR 46794, July 11, 1980, unless otherwise noted.



Sec. 1101.1  Scope and purpose.

    This part implements the Freedom of Information Act (FOIA), 5 U.S.C. 
552, with respect to the Federal Financial Institutions Examination 
Council (Council), and establishes related information disclosure 
procedures.



Sec. 1101.2  Authority and functions.

    (a) The Council was established by the Federal Financial 
Institutions Examination Council Act of 1978 (Act), 12 U.S.C. 3301-3308. 
It is composed of the Comptroller of the Currency; the Chairman of the 
Federal Deposit Insurance Corporation; a Governor of the Board of 
Governors of the Federal Reserve System; the Chairman of the Federal 
Home Loan Bank Board; and the Chairman of the National Credit Union 
Administration Board.
    (b) The statutory functions of the Council are set out at 12 U.S.C. 
3305. In summary, the mission of the Council is to promote consistency 
and progress in federal examination and supervision of financial 
institutions and their affiliates. The Council is empowered to prescribe 
uniform principles, standards, and reporting forms and systems; make 
recommendations in the interest of uniformity; and conduct examiner 
schools open to personnel of the agencies represented on the Council and 
employees of state financial institutions supervisory agencies.



Sec. 1101.3  Organization and methods of operation.

    (a) Statutory requirements relating to the Council's organization 
are stated in 12 U.S.C. 3303.
    (b) Council staff. Administrative support and substantive 
coordination for Council activities are provided by a small staff 
detailed on a full-time basis from the five member agencies. The 
Executive Secretary and Deputy Executive Secretary of the Council 
supervise this staff.
    (c) Agency Liaison Group, Task Forces and Legal Advisory Group. Most 
staff support in the substantive areas of the Council's duties is 
provided by interagency task forces and the Council's Legal Advisory 
Group (LAG). These task forces and the LAG are responsible for securing 
the services, as needed, of staff experts from the five agencies; 
supervising research and other investigative work for the Council; and 
preparing reports and recommendations for the Council. The Agency 
Liaison Group (ALG) is responsible for the overall coordination of the 
respective agencies' staff contributions to Council business. The ALG, 
the task forces, and the LAG are each composed of Council member agency 
staff serving the Council on a part-time basis.
    (d) State Liaison Committee. Under 12 U.S.C. 3306, the Council has 
established a State Liaison Committee, composed of five representatives 
of state financial institutions supervisory agencies.
    (e) Council address. Council offices are located at 3501 Fairfax 
Drive, Room B-7081a, Arlington, VA, 22226-3550.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988; 75 
FR 71014, Nov. 22, 2010]



Sec. 1101.4  Disclosure of information, policies, and records.

    (a) Statements of policy published in the Federal Register or 
available for public inspection and copying; indices. Under 5 U.S.C. 
552(a)(1), the Council publishes general rules, policies and 
interpretations in the Federal Register. Under 5 U.S.C. 552(a)(2), 
policies and interpretations adopted by the Council, including 
instructions to Council staff affecting members of the public, and an 
index to the same, are available for

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public inspection and copying at the office of the Executive Secretary 
of the Council, 3501 Fairfax Drive, Room B-7081a, Arlington, VA, 22226-
3550, during regular business hours. Policies and interpretations of the 
Council may be withheld from disclosure under the principles stated in 
paragraph (b)(1) of this section.
    (b) Other records of the Council available to the public upon 
request; procedures--(1) General rule and exemptions. Under 5 U.S.C. 
552(a)(3), all other records of the Council are available to the public 
upon request, except to the extent exempted from disclosure as provided 
in this paragraph (b). Except as specifically authorized by the Council, 
the following records, and portions thereof, are not available to the 
public:
    (i) A record, or portion thereof, which is specifically authorized 
under criteria established by an Executive Order to be kept secret in 
the interest of national defense or foreign policy and which is, in 
fact, properly classified pursuant to such Executive Order.
    (ii) A record, or portion thereof, relating solely to the internal 
personnel rules and practices of an agency.
    (iii) A record, or portion thereof, specifically exempted from 
disclosure by statute (other than 5 U.S.C. 552b), provided that such 
statute (A) requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or (B) establishes 
particular criteria for withholding or refers to particular types of 
matters to be withheld.
    (iv) A record, or portion thereof, containing trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential.
    (v) An intra-agency or interagency memorandum or letter that would 
not be routinely available by law to a private party in litigation, 
including, but not limited to, memoranda, reports, and other documents 
prepared by the personnel of the Council or its constituent agencies, 
and records of deliberations of the Council and discussions of meetings 
of the Council, any Council Committee, or Council staff, that are not 
subject to 5 U.S.C. 552b (the Government in the Sunshine Act).
    (vi) A personnel, medical, or similar record, including a financial 
record, or any portion thereof, the disclosure of which would constitute 
a clearly unwarranted invasion of personal privacy.
    (vii) Records or information compiled for law enforcement purposes, 
to the extent permitted under 5 U.S.C. 552(b)(7), including records 
relating to a proceeding by a financial institution's state or federal 
regulatory agency for the issuance of a cease-and-desist order, or order 
of suspension or removal, or assessment of a civil money penalty and the 
granting, withholding, or revocation of any approval, permission, or 
authority.
    (viii) A record, or portion thereof, containing, relating to, or 
derived from an examination, operating, or condition report prepared by, 
or on behalf of, or for the use of any state or federal agency directly 
or indirectly responsible for the regulation or supervision of financial 
institutions.
    (ix) A record, or portion thereof, which contains or is related to 
geological and geophysical information and data, including maps, 
concerning wells.
    (2) Discretionary release of exempt information. Notwithstanding the 
applicability of an exemption, the Council or the Council's designee may 
elect, under the circumstances of a particular request, to disclose all 
or a portion of any requested record where permitted by law. Such 
disclosure has no precedential significance.
    (3) Procedure for records request--(i) Initial request. Requests for 
records shall be submitted in writing to the Executive Secretary of the 
Council:
    (A) By sending a letter to: FFIEC, Attn: Executive Secretary, 3501 
Fairfax Drive, Room B-7081a, Arlington, VA 22226-3550. Both the mailing 
envelope and the request should be marked ``Freedom of Information 
Request,'' ``FOIA Request,'' or the like; or
    (B) By facsimile clearly marked ``Freedom of Information Act 
Request,'' ``FOIA Request,'' or the like to the Executive Secretary at 
(703) 562-6446; or
    (C) By e-mail to the address provided on the FFIEC's World Wide Web 
page, found at: http://www.ffiec.gov. Requests must reasonably describe 
the records sought.

[[Page 7]]

    (ii) Contents of request. All requests should contain the following 
information:
    (A) The name and mailing address of the requester, an electronic 
mail address, if available, and the telephone number at which the 
requester may be reached during normal business hours;
    (B) A statement as to whether the information is intended for 
commercial use, and whether the requester is an educational or 
noncommercial scientific institution, or news media representative;
    (C) A statement agreeing to pay all applicable fees, or a statement 
identifying any desired fee limitation, or a request for a waiver or 
reduction of fees that satisfies paragraph (b)(5)(ii)(H) of this 
section.
    (iii) Defective requests. The Council need not accept or process a 
request that does not reasonably describe the records requested or that 
does not otherwise comply with the requirements of this section. The 
Executive Secretary may return a defective request specifying the 
deficiency. The requester may submit a corrected request, which will be 
treated as an initial request.
    (iv) Expedited processing. (A) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the Executive Secretary has determined to expedite the response, 
the Executive Secretary shall process the request as soon as 
practicable. To show a compelling need for expedited processing, the 
requester shall provide a statement demonstrating that:
    (1) Failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (2) The requester is primarily engaged in information dissemination 
as a main professional occupation or activity, and there is urgency to 
inform the public of the government activity involved in the request.
    (B) The requester's statement must be certified to be true and 
correct to the best of the person's knowledge and belief and explain in 
detail the basis for requesting expedited processing.
    (C) The formality of the certification required to obtain expedited 
treatment may be waived by the Executive Secretary as a matter of 
administrative discretion.
    (v) Response to initial requests. (A) Except where the Executive 
Secretary has determined to expedite the processing of a request, the 
Executive Secretary will respond by mail or electronic mail to all 
properly submitted initial requests within 20 working days of receipt. 
The time for response may be extended up to 10 additional working days, 
as provided in 5 U.S.C. 552(a)(6)(B), or for other periods by agreement 
between the requester and the Executive Secretary.
    (B) In response to a request that reasonably describes the records 
sought and otherwise satisfies the requirements of this section, a 
search shall be conducted of records in existence and maintained by the 
Council on the date of receipt of the request, and a review made of any 
responsive information located. The Executive Secretary shall notify the 
requester of:
    (1) The Executive Secretary's determination of the response to the 
request;
    (2) The reasons for the determination;
    (3) If the response is a denial of an initial request or if any 
information is withheld, the Executive Secretary will advise the 
requester in writing:
    (i) If the denial is in part or in whole;
    (ii) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (iii) The exemptions relied on for the denial; and
    (iv) The right of the requester to appeal the denial to the Chairman 
of the Council within 10 working days following the date of issuance of 
the notification, as specified in paragraph (b)(3)(vi) of this section.
    (vi) Appeals of responses to initial requests. If a request is 
denied in whole or in part, the requester may appeal in writing, within 
10 working days of the date of issuance of a denial determination. 
Appeals shall be submitted to the Chairman of the Council: (A) By 
sending a letter to: FFIEC, Attn: Executive Secretary, 3501 Fairfax 
Drive, Room B-

[[Page 8]]

7081a, Arlington, VA, 22226-3550. Both the mailing envelope and the 
request should be marked ``Freedom of Information Act Appeal,'' ``FOIA 
Appeal,'' or the like; or (B) By facsimile clearly marked ``Freedom of 
Information Act Appeal,'' ``FOIA Appeal,'' or the like to the Executive 
Secretary at (703) 562-6446. Appeals should refer to the date and 
tracking number of the original request and the date of the Council's 
initial ruling. Appeals should include an explanation of the basis for 
the appeal.
    (vii) Council response to appeals. The Chairman of the Council, or 
another member designated by the Chairman, will respond to all properly 
submitted appeals within 20 working days of actual receipt of the appeal 
by the Executive Secretary. The time for response may be extended up to 
10 additional working days, as provided in 5 U.S.C. 552(a)(6)(B), or for 
other periods by agreement between the requester and the Chairman or the 
Chairman's designee.
    (4) Procedure for access to records if request is granted. (i) When 
a request for access to records is granted, in whole or in part, a copy 
of the records to be disclosed will be promptly delivered to the 
requester or made available for inspection, whichever was requested. 
Inspection of records, or duplication and delivery of copies of records 
will be arranged so as not to interfere with their use by the Council 
and other users of the records.
    (ii) When delivery to the requester is to be made, copies of 
requested records shall be sent to the requester by regular U.S. mail to 
the address indicated in the request, unless the Executive Secretary 
deems it appropriate to send the documents by another means.
    (iii) The Council shall provide a copy of the record in any form or 
format requested if the record is readily reproducible by the Council in 
that form or format, but the Council need not provide more than one copy 
of any record to a requester.
    (iv) By arrangement with the requester, the Executive Secretary may 
elect to send the responsive records electronically if a substantial 
portion of the records is in electronic format. If the information 
requested is subject to disclosure under the Privacy Act of 1974, 5 
U.S.C. 552a, it will not be sent by electronic means unless reasonable 
security measures can be established.
    (5) Fees for document search, review, and duplication; waiver and 
reduction of fees--(i) Definitions--(A) Direct costs means those 
expenditures which the Council actually incurs in searching for, 
duplicating, and reviewing documents to respond to a FOIA request.
    (B) Search means all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Searches may be done 
manually or by computer using existing programming.
    (C) Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request. Such copies can take the form of 
paper copy, microfilm, audiovisual records, or machine readable records 
(e.g., magnetic tape or computer disk).
    (D) Review means the process of examining documents located in 
response to a request that is for a commercial use (see paragraph 
(b)(5)(i)(E) of this section) to determine whether any portion of any 
document located is permitted to be withheld and processing such 
documents for disclosure.
    (E) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made. In determining whether a request falls 
within this category, the Executive Secretary will determine the use to 
which a requester will put the records requested and seek additional 
information as the Executive Secretary deems necessary.
    (F) Educational institution means a preschool, an elementary or 
secondary school, an institution of undergraduate higher education, an 
institution of graduate higher education, an institution of professional 
education, and an institution of vocational education, which operates a 
program or programs of scholarly research.
    (G) Noncommercial scientific institution means an institution that 
is not operated on a ``commercial'' basis as that term is referenced in 
paragraph (b)(5)(i)(E) of this section, and which is

[[Page 9]]

operated solely for the purposes of conducting scientific research, the 
results of which are not intended to promote any particular product or 
industry.
    (H) Representative of the news media means any person or entity that 
gathers information of potential interest to a segment of the public, 
uses its editorial skills to turn the raw materials into a distinct 
work, and distributes that work to an audience. In this clause, the term 
``news'' means information that is about current events or that would be 
of current interest to the public. Examples of news-media entities are 
television or radio stations broadcasting to the public at large and 
publishers of periodicals (but only if such entities qualify as 
disseminators of ``news'') who make their products available for 
purchase by or subscription by or free distribution to the general 
public. These examples are not all-inclusive. Moreover, as methods of 
news delivery evolve (for example, the adoption of the electronic 
dissemination of newspapers through telecommunications services), such 
alternative media shall be considered to be news-media entities. A 
freelance journalist shall be regarded as working for a news-media 
entity if the journalist can demonstrate a solid basis for expecting 
publication through that entity, whether or not the journalist is 
actually employed by the entity. A publication contract would present a 
solid basis for such an expectation; the Council may also consider the 
past publication record of the requester in making such a determination.
    (ii) Fees to be charged. The Council will charge fees that recoup 
the full allowable direct costs it incurs. The Council may contract with 
the private sector to locate, reproduce, and/or disseminate records. 
Provided, however, that the Council has ensured that the ultimate cost 
to the requester is no greater than it would be if the Council performed 
these tasks. Fees are subject to change as costs change. In no case will 
the Council contract out responsibilities which the FOIA provides that 
it alone may discharge, such as determining the applicability of an 
exemption, or determining whether to waive or reduce fees.
    (A) Manual searches and review. The Council will charge fees at the 
following rates for manual searches for and review of records:
    (1) If search/review is done by clerical staff, the hourly rate for 
GS-7, step 5, plus 16 percent of the rate to cover benefits;
    (2) If search/review is done by professional staff, the hourly rate 
for GS-13, step 5, plus 16 percent of the rate to cover benefits.
    (B) Computer searches. The Council will charge fees at the hourly 
rate for GS-13, step 5, plus 16 percent of the rate to cover benefits, 
plus the hourly cost of operating the computer for computer searches for 
records.
    (C) Duplication of records. (1) The per-page fee for paper copy 
reproduction of a document is $.25;
    (2 ) The fee for documents generated by computer is the hourly rate 
for the computer operator (at GS 7, step 5, plus 16 percent for benefits 
if clerical staff, and GS 13, step 5, plus 16 percent for benefits if 
professional staff) plus the cost of materials (computer paper, tapes, 
disks, labels, etc.).
    (3) If any other method of duplication is used, the Council will 
charge the actual direct cost of duplicating the documents.
    (D) If search, duplication and/or review is provided by personnel of 
member agencies of the Council, fees will reflect their actual hourly 
rates, plus 16 percent for benefits.
    (E) Fees to exceed $25. If the Council estimates that duplication 
and/or search fees are likely to exceed $25, it will notify the 
requester of the estimated amount of fees, unless the requester has 
indicated in advance his/her willingness to pay fees as high as those 
anticipated. In the case of such notification by the Council, the 
requester will then have the opportunity to confer with Council 
personnel with the object of reformulating the request to meet his/her 
needs at a lower cost.
    (F) Other services. Complying with requests for special services 
such as certifying records as true copies or mailing records by express 
mail is entirely at the discretion of the Council. The Council will 
recover the full costs of providing such services to the extent it 
elects to provide them.

[[Page 10]]

    (G) Restriction on assessing fees. The Council will not charge fees 
to any requester, including commercial use requesters, if the cost of 
collecting a fee would be equal to or greater than the fee itself.
    (H) Waiving or reducing fees. As part of the initial request for 
records, a requester may ask that the Council waive or reduce fees if 
disclosure of the records is in the public interest because it is likely 
to contribute significantly to public understanding of the operations or 
activities of the Council and is not primarily in the commercial 
interest of the requester. The initial request for records must also 
state the justification for a waiver or reduction of fees. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Secretary of the Council and the requester will be notified in 
writing of his/her determination. A determination not to grant a request 
for a waiver or reduction of fees under this paragraph may be appealed 
to the Chairman of the Council pursuant to the procedure set forth in 
paragraph (b)(3)(vi) of this section.
    (iii) Categories of requesters. (A) Commercial use requesters. The 
Council will assess fees for commercial use requesters sufficient to 
recover the full direct costs of searching for, reviewing for release, 
the duplicating the records sought.
    (iii) Categories of requesters. (A) Commercial use requesters. The 
Council will assess fees for commercial use requesters which recover the 
full direct costs of searching for, reviewing for release, the 
duplicating the records sought. Commercial use requesters are not 
entitled to two hours of free search time nor 100 free pages of 
reproduction of documents.
    (B) Requesters who are representatives of the news media, 
educational and noncommercial scientific institution requesters. The 
Council shall provide documents to requesters in these categories for 
the cost of reproduction alone, excluding fees for the first 100 pages.
    (C) All other requesters. The Council shall charge requesters who do 
not fit into any of the categories above fees which recover the full 
reasonable direct cost of searching for and reproducing records that are 
responsive to the request, except that the first 100 pages of 
reproduction and the first two hours of search time shall be furnished 
without a fee.
    (D) All requesters must specifically describe records sought.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in 31 U.S.C. 3717 and will accrue from the date of the 
billing.
    (vi) Aggregating requests. A requester(s) may not file multiple 
requests each seeking portions of a document or documents, solely in 
order to avoid payment of fees. If this is done, the Council may 
aggregate any such requests and charge accordingly. In no case will the 
Council aggregate multiple requests on unrelated subjects from the same 
requester.
    (vii) Advance payment of fees. The Council will not require a 
requester to make an assurance of payment or an advance payment unless:
    (A) The Council estimates or determines that allowable charges that 
a requester may be required to pay are likely to exceed $250. The 
Council will notify the requester of the likely cost and obtain 
satisfactory assurance of full payment where the requester has a history 
of prompt payment of FOIA fees, or require an advance payment of an 
amount up to the full estimated charges in the case of requesters with 
no history of payment; or
    (B) A requester has previously failed to pay a fee charged in a 
timely fashion. The Council may require the requester to pay the full 
amount owed plus any applicable interest as provided in paragraph 
(b)(5)(iv) of this section or demonstrate that he/she has, in fact, paid 
the fee, and to make an advance payment of the full amount of the 
estimated fee before the Council begins to

[[Page 11]]

process a new request or a pending request from that requester.
    (C) When the Council acts under paragraph (b)(5)(vii) (A) or (B) of 
this section, the administrative time limits prescribed in subsection 
(a)(6) of the FOIA (i.e., 20 working days from receipt of initial 
requests, plus permissible extensions of these time limits) will begin 
only after the Council has received the fee payments described.
    (6) Records of another agency. If a requested record originated with 
or incorporates the information of another state or federal agency or 
department, upon receipt of a request for the record the Council will 
promptly inform the requester of this circumstance and immediately shall 
forward the request to the originating agency or department either for 
processing in accordance with the latter's regulations or for guidance 
with respect to disposition.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988; 75 
FR 71014, Nov. 22, 2010]



Sec. 1101.5  Testimony and production of documents in response to
subpoena, order, etc.

    No person shall testify, in court or otherwise, as a result of 
activities on behalf of the Council without prior written authorization 
from the Council. This section shall not restrict the authority of a 
Council member to testify before Congress on matters within his or her 
official responsibilities as a Council member. No person shall furnish 
documents reflecting information of the Council in compliance with a 
subpoena, order, or otherwise, without prior written authorization from 
the Council. The Council may authorize testimony or production of 
documents after the litigant (or the litigant's attorney) submits an 
affidavit to the Council setting forth the interest of the litigant and 
the testimony or documents desired. Authorization to testify or produce 
documents is limited to authority expressly granted by the Council. When 
the Council has not authorized testimony or production of documents, the 
individual to whom the subpoena or order has been directed will appear 
in court and respectfully state that he or she is unable to comply 
further with the subpoena or order by reason of this section.



PART 1102_APPRAISER REGULATION--Table of Contents



                   Subpart A_Temporary Waiver Requests

Sec.
1102.1 Authority, purpose, and scope.
1102.2 Requirements for requests.
1102.3 Other requests and information submissions.
1102.4 Notice and comment.
1102.5 Subcommittee determination.
1102.6 Waiver extension.
1102.7 Waiver termination.

               Subpart B_Rules of Practice for Proceedings

1102.20 Authority, purpose, and scope.
1102.21 Definitions.
1102.22 Appearance and practice before the Subcommittee.
1102.23 Formal requirements as to papers filed.
1102.24 Filing requirements.
1102.25 Service.
1102.26 When papers are deemed filed or served.
1102.27 Computing time.
1102.28 Documents and exhibits in proceedings public.
1102.29 Conduct of proceedings.
1102.30 Rules of evidence.
1102.31 Burden of proof.
1102.32 Notice of Intention to Commence a Proceeding.
1102.33 Rebuttal or Notice Not To Contest.
1102.34 Briefs, memoranda and statements.
1102.35 Opportunity for informal settlement.
1102.36 Oral presentations.
1102.37 Decision of the Subcommittee and judicial review.
1102.38 Compliance activities.
1102.39 Duty to cooperate.

Subpart C_Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

1102.100 Authority, purpose and scope.
1102.101 Definitions.
1102.102 Times, places and requirements for requests pertaining to 
          individual records in a record system and for the 
          identification of individuals making requests for access to 
          records pertaining to them.
1102.103 Disclosure of requested records.
1102.104 Special procedure: Medical records.
1102.105 Requests for amendment of records.
1102.106 Review of requests for amendment.

[[Page 12]]

1102.107 Appeal of initial adverse agency determination regarding access 
          or amendment.
1102.108 General provisions.
1102.109 Fees.
1102.110 Penalties.

     Subpart D_Description of Office, Procedures, Public Information

1102.300 Purpose and scope.
1102.301 Definitions.
1102.302 ASC authority and functions.
1102.303 Organization and methods of operation.
1102.304 Federal Register publication.
1102.305 Publicly available records.
1102.306 Procedures for requesting records.
1102.307 Disclosure of exempt records.
1102.308 Right to petition for issuance, amendment and repeal of rules 
          of general application.
1102.309 Confidential treatment procedures.
1102.310 Service of process.



                   Subpart A_Temporary Waiver Requests

    Authority: 12 U.S.C. 3348(b).

    Source: 57 FR 10982, Apr. 1, 1992, unless otherwise noted.



Sec. 1102.1  Authority, purpose and scope.

    (a) Authority. This subpart is issued under section 1119(b) of Title 
XI of the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (``FIRREA'') (12 U.S.C. Sec. 3348(b)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing temporary waiver proceedings under Section 1119(b) 
of Title XI of FIRREA (12 U.S.C. 3348(b)). These procedures apply 
whenever a State appraiser regulatory agency requests the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') for a waiver of any requirement relating to certification or 
licensing of a person to perform appraisals under Title XI of FIRREA. 
They also apply whenever the ASC, based on sufficient, credible 
information or requests received from other persons or entities, 
initiates a temporary waiver proceeding.



Sec. 1102.2  Requirements for requests.

    A request will not be deemed received by the ASC unless it fully and 
accurately sets out:
    (a) If the requester is a State Appraiser Regulatory Agency, a 
written, duly authorized determination by the State Appraiser Regulatory 
Agency that there is a scarcity of State licensed or State certified 
appraisers leading to significant delays in obtaining appraisals in 
federally related transactions. The scarcity can relate to the entire 
State or to particular geographical or political subdivisions. In the 
absence of such a written determination, a State Appraiser Regulatory 
Agency must ask the ASC for such a determination;
    (b) The requirement or requirements of State law from which relief 
is being sought;
    (c) A description of all significant problems currently being 
encountered in efforts to comply with Title XI;
    (d) The nature of the scarcity of certified or licensed appraisers 
(including supporting documentation);
    (e) The extent of the delays anticipated or experienced in obtaining 
the services of certified or licensed appraisers (including supporting 
documentation);
    (f) The reasons why the requester believes that the requirement or 
requirements are causing the scarcity of certified or licensed 
appraisers and the service delays; and
    (g) A specific plan for expeditiously alleviating the scarcity and 
the service delays.



Sec. 1102.3  Other requests and information submissions.

    The federal financial institutions regulatory agencies and the 
Resolution Trust Corporation, their respective regulated financial 
institutions, and other persons or institutions with a demonstrable 
interest in appraiser regulation, may ask the ASC for a determination 
under Sec. 1102.2(a) of this subpart, and may ask that the ASC exercise 
its discretionary authority to initiate a temporary waiver proceeding. 
Such regulated financial institutions and other persons or institutions 
do not need to comply with Sec. 1102.2(g) of this subpart, but are 
strongly encouraged to include meaningful suggestions and 
recommendations for remedying the situation. A copy of the request or

[[Page 13]]

informational submission shall be forwarded promptly to the State 
Appraiser Regulatory Agency. The ASC shall consider these submissions 
and requests in exercising its authority to initiate a temporary waiver 
procedure. When the ASC initiates a temporary waiver proceeding, these 
documents shall correspond to a received request under Sec. 1102.4 of 
this subpart.



Sec. 1102.4  Notice and comment.

    The ASC shall publish promptly in the Federal Register a notice 
respecting:
    (a) The received request; or
    (b) The ASC order initiating a temporary waiver proceeding. The 
notice or initiation order shall contain a concise general statement of 
the nature and basis for the action and shall give interested persons 30 
calendar days from its publication in which to submit written data, 
views and arguments.



Sec. 1102.5  Subcommittee determination.

    Within 45 calendar days of the date of the publication of the notice 
or initiation order in the Federal Register, the ASC, by order, shall 
either grant or deny a waiver in whole, in part, and upon specified 
terms and conditions, including provisions for waiver termination. Such 
order shall respond to comments received from interested members of the 
public and shall provide the reasons for the ASC's finding. The order 
shall be published promptly in the Federal Register, which, in the case 
of an approval order, shall be after Federal Financial Institution 
Examination Council concurrence. Upon the ASC's determination that an 
emergency exists, the ASC may issue an interim approval order 
simultaneously with its action under Sec. 1120.4 of this subpart. Any 
ASC approval order shall be effective only upon Federal Financial 
Institution Examination Council concurrence.



Sec. 1102.6  Waiver extension.

    The ASC may initiate an extension of temporary waiver relief and 
shall follow Sec. Sec. 1102.4, 1102.5 and 1102.7 of this subpart. A 
State Appraiser Regulatory Agency also may request an extension of 
temporary waiver relief by forwarding an additional written request to 
the ASC. A request for an extension from State Appraiser Regulatory 
Agency shall be subject to all the requirements of this subpart.



Sec. 1102.7  Waiver termination.

    The ASC at any time may terminate a waiver order on the finding 
that:
    (a) The significant delays in obtaining the services of certified or 
licensed appraisers no longer exist; or
    (b) The terms and conditions of the waiver order are not being 
satisfied. The ASC shall publish a finding of waiver termination 
promptly in the Federal Register, giving interested persons no less than 
30 calendar days from publication in which to submit written data, views 
and arguments. In the absence of further ASC action to the contrary, the 
finding of waiver termination automatically shall become final 21 
calendar days after the close of the comment period.



               Subpart B_Rules of Practice for Proceedings

    Authority: 12 U.S.C. 3332, 3335, 3347, and 3348(c).

    Source: 57 FR 31650, July 17, 1992, unless otherwise noted.



Sec. 1102.20  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under sections 1103, 1106, 
1118 and 1119(c) of Title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 3332, 3335, 
3347, and 3348(c)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing non-recognition proceedings under section 1118 of 
Title XI (12 U.S.C. 3347); and other proceedings necessary to carry out 
the purposes of Title XI under section 1119(c) of Title XI (12 U.S.C. 
3348(c)).

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.21  Definitions.

    As used in this subpart:
    (a) Subcommittee or ASC means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination

[[Page 14]]

Council, as established under section 1011 of Title XI (12 U.S.C. 3310).
    (b) Party means the ASC or a person, agency or other entity named as 
a party, including, when appropriate, persons appearing in the 
proceeding under Sec. 1102.22 of this subpart.
    (c) Respondent means any party other than the ASC.
    (d) Secretary means the Secretary of the ASC under its Rules of 
Operation.



Sec. 1102.22  Appearance and practice before the Subcommittee.

    (a) By attorneys and notice of appearance. Any person who is a 
member in good standing of the bar of the highest court of any State or 
of the District of Columbia, or of any possession, territory, or 
commonwealth of the United States, may represent parties before the ASC 
upon filing with the Secretary a written notice of appearance stating 
that he or she is currently qualified as provided in this paragraph and 
is authorized to represent the particular party on whose behalf he or 
she acts.
    (b) By non-attorneys. An individual may appear on his or her own 
behalf. A member of a partnership may represent the partnership, and an 
officer, director or employee of any government unit, agency, 
institution, corporation or authority may represent that unit, agency, 
institution, corporation or authority. The partner, officer, director or 
employee must file with the Secretary a written statement that he or she 
has been duly authorized by the partnership, government unit, agency, 
institution, corporation or authority to act on its behalf. The ASC may 
require the representative to attach to the statement appropriate 
supporting documentation, such as a corporate resolution.
    (c) Conduct during proceedings. All participants in a proceeding 
shall conduct themselves with dignity and in an orderly and ethical 
manner. The attorney or other representative of a party shall make every 
effort to restrain a client from improper conduct in connection with a 
proceeding. Improper language or conduct, refusal to comply with 
directions, use of dilatory tactics, or refusal to adhere to reasonable 
standards of orderly and ethical conduct constitute grounds for 
immediate exclusion from the proceeding at the direction of the ASC.



Sec. 1102.23  Formal requirements as to papers filed.

    (a) Form. All papers filed under this subpart must be double-spaced 
and printed or typewritten on 8\1/2\x11 paper. All 
copies shall be clear and legible.
    (b) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the ASC and of the filing party, the title 
and/or docket number of the proceeding and the subject of the particular 
paper.
    (c) Party names, signatures, certificates of service. All papers 
filed must set forth the name, address and telephone number of the 
attorney or party making the filing, must be signed by the attorney or 
party, and must be accompanied by a certification setting forth when and 
how service has been made on all other parties.
    (d) Copies. Unless otherwise specifically provided in the notice of 
proceeding or by the ASC during the proceeding, an original and one copy 
of all documents and papers shall be furnished to the Secretary.



Sec. 1102.24  Filing requirements.

    (a) Filing. All papers filed with the ASC in any proceeding shall be 
filed with the Secretary, Appraisal Subcommittee, 2000 K Street, NW., 
Suite 310, Washington, DC 20006.
    (b) Manner of filing. Unless otherwise specified by the ASC, filing 
may be accomplished by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.

[57 FR 31650, July 17, 1992, as amended at 69 FR 2501, Jan. 16, 2004]



Sec. 1102.25  Service.

    (a) Methods; appearing party. A serving party, who has made an 
appearance under Sec. 1102.22 of this subpart, shall use one or more of 
the following methods of service:
    (1) Personal service;

[[Page 15]]

    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.
    (b) Methods; non-appearing party. If a party has not appeared in the 
proceeding in accordance with Sec. 1102.22 of this subpart, the ASC or 
any other party shall make service by any of the following methods:
    (1) By personal service;
    (2) By delivery to a person of suitable age and discretion at the 
party's last known address;
    (3) By registered or certified mail addressed to the party's last 
known address; or
    (4) By any other manner reasonably calculated to give actual notice.
    (c) By the Subcommittee. All papers required to be served by the ASC 
shall be served by the Secretary unless some other person shall be 
designated for such purpose by the ASC.
    (d) By the respondent. All papers filed in a proceeding under this 
subpart shall be served by a respondent on the Secretary and each 
party's attorney, or, if any party is not so represented, then upon such 
party. Such service may be made by any of the appropriate methods 
specified in paragraphs (a) and (b) of this section.



Sec. 1102.26  When papers are deemed filed or served.

    (a) Effectiveness. Filing and service are deemed effective:
    (1) For personal service or same-day commercial courier delivery, 
upon actual delivery; and
    (2) For overnight commercial delivery service, U.S. Express Mail 
delivery, or first class, registered, or certified mail, upon deposit 
in, or delivery to, an appropriate point of collection.
    (b) Modification. The effective times for filing and service in 
paragraph (a) of this section may be modified by the ASC in the case of 
filing or by agreement of the parties in the case of service.



Sec. 1102.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act, event or default from 
which the designated period of time begins to run is not included. The 
last day so computed is included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the period runs until the end of the 
next day which is not a Saturday, Sunday or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays shall not be 
included in the computation.
    (b) For service and filing responsive papers. Whenever a time limit 
is measured by a prescribed period from the service of any notice or 
paper, the applicable time periods are calculated as follows:
    (1) If service is made by first class, registered or certified mail, 
add three days to the prescribed period; and
    (2) If service is made by express mail or overnight delivery 
service, add one day to the prescribed period.



Sec. 1102.28  Documents and exhibits in proceedings public.

    Unless and until otherwise ordered by the ASC or unless otherwise 
provided by statute or by ASC regulation, all documents, papers and 
exhibits filed in connection with any proceeding, other than those that 
may be withheld from disclosure under applicable law, shall be placed by 
the Secretary in the proceeding's public file and will be available for 
public inspection and copying at the address set out in Sec. 1102.24 of 
this subpart.



Sec. 1102.29  Conduct of proceedings.

    (a) In general. Unless otherwise provided in the notice of 
proceedings, all proceedings under this subpart shall be conducted as 
hereinafter provided.
    (b) Written submissions. All aspects of the proceeding shall be 
conducted by written submissions only, with the exception of oral 
presentations allowed under Sec. 1102.36 of this subpart.
    (c) Disqualification. A Subcommittee member who deems himself or 
herself disqualified may at any time withdraw. Upon receipt of a timely 
and sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record and 
decision in the case.
    (d) User of ASC staff. Appropriate members of the ASC's staff who 
are not

[[Page 16]]

engaged in the performance of investigative or prosecuting functions in 
the proceeding may advise and assist the ASC in the consideration of the 
case and in the preparation of appropriate documents for its 
disposition.
    (e) Authority of Subcommittee Chairperson. The Chairperson of the 
ASC, in consultation with other members of the ASC whenever appropriate, 
shall have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings in accordance 
with this subpart.
    (f) Conferences. (1) The ASC may on its own initiative or at the 
request of any party, direct all parties or counsel to meet with one or 
more duly authorized ASC members or staff at a specified time and place, 
or to submit to the ASC or its designee, suggestions in writing for the 
purpose of considering any or all of the following:
    (i) Scheduling of matters, including a timetable for the 
information-gathering phase of the proceeding;
    (ii) Simplification and clarification of the issues;
    (iii) Stipulations and admissions of fact and of the content and 
authenticity of documents;
    (iv) Matters of which official notice will be taken; and
    (v) Such other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the names of persons submitting 
affidavits or other documents and exhibits which may be introduced into 
the public file of the proceeding.
    (2) Such conferences will not be recorded, but the Secretary shall 
place in the proceeding's public file a memorandum summarizing the 
results of the conference and shall provide a copy of the memorandum to 
each party. The memorandum shall control the subsequent course of the 
proceedings, unless the ASC for good cause shown by one or more parties 
to the conference, modifies those results and instructs the Secretary to 
place an amendatory memorandum to that effect in the public file.
    (g) Changes or extensions of time and changes of place of 
proceeding. The ASC, in connection with initiating a specific 
proceedings under Sec. 1102.32 of this subpart, may instruct the 
Secretary to publish in the Federal Register time limits different from 
those specified in this subpart, and may, on its own initiative or for 
good cause shown, issue an exemption changing the place of the 
proceeding or extending any time limit prescribed by this subpart, 
including the date for ending the information-gathering phase of the 
proceeding.
    (h) Call for further briefs, memoranda, statements; reopening of 
matters. The ASC may call for the production of further information upon 
any issue, the submission of briefs, memoranda and statements (together 
with written responses), and, upon appropriate notice, may reopen any 
aspect of the proceeding at any time prior to a decision on the matter.

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.30  Rules of evidence.

    (a) In general. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted under this subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may be deemed or ruled admissible in a proceeding conducted 
under this subpart if such evidence is relevant, material, reliable and 
not unduly repetitive.
    (b) Stipulations. Any party may stipulate in writing as to any 
relevant matters of fact, law, or the authenticity of any relevant 
documents. The Secretary shall place such stipulations in the public 
file, and they shall be binding on the parties.
    (c) Official notice. Every matter officially noticed by the ASC 
shall appear in the public file, unless the ASC determines that the 
matter must be withheld from public disclosure under applicable Federal 
law.

[[Page 17]]



Sec. 1102.31  Burden of proof.

    The ultimate burden of proof shall be on the respondent. The burden 
of going forward with a prima facie case shall be on the ASC.



Sec. 1102.32  Notice of Intention to Commence a Proceeding.

    The ASC shall instruct the Secretary or other designated officer 
acting for the ASC to publish in the Federal Register a Notice of 
Intention To Commence A Proceeding (Notice of Intention). The Notice of 
Intention shall be served upon the party or parties to the proceeding 
and shall commence at the time of service. The Notice of Intention shall 
state the legal authority and jurisdiction under which the proceeding is 
to be held; shall contain, or incorporate by appropriate reference, a 
specific statement of the matters of fact or law constituting the 
grounds for the proceeding; and shall state a date no sooner than 25 
days after service of the Notice of Intention is made for termination of 
the information-gathering phase of the proceeding. The Notice of 
Intention also must contain a bold-faced warning respecting the effect 
of a failure to file a Rebuttal or Notice Not To Contest under Sec. 
1102.33(d) of this subpart. The ASC may amend a Notice of Intention in 
any manner and to the extent consistent with provisions of applicable 
law.



Sec. 1102.33  Rebuttal or Notice Not To Contest.

    (a) When required. A party to the proceeding may file either a 
Rebuttal or a Notice Not to Contest the statements contained in the 
Notice of Intention or any amendment thereto with the Secretary within 
15 days after being served with the Notice of Intention or an amendment 
to such Notice. The Secretary shall place the Rebuttal or the Notice Not 
To Contest in the public file.
    (b) Requirements of Rebuttal; effect of failure to deny. A Rebuttal 
filed under this section shall specifically admit, deny or state that 
the party does not have sufficient information to admit or deny each 
statement in the Notice of Intention. A statement of lack of information 
shall have the effect of a denial. Any statement not denied shall be 
deemed to be admitted. When a party intends to deny only a part or a 
qualification of a statement, the party shall admit so much of it as is 
true and shall deny only the remainder.
    (c) Notice Not To Contest. A party filing a Notice Not To Contest 
the statement of fact set forth in the Notice of Intention shall 
constitute a waiver of the party's opportunity to rebut the facts 
alleged, and together with the Notice of Intention and any referenced 
documents, will provide a record basis on which the ASC shall decide the 
matter. The filing of a Notice Not To Contest shall not constitute a 
waiver of the right of such party to a judicial review of the ASC's 
decision, findings and conclusions.
    (d) Effect of failure to file Rebuttal or Notice Not To Contest. 
Failure of a party to file a response required by this section within 
the time provided shall constitute a waiver of the party's opportunity 
to rebut and to contest the statements in the Notice of Intention and 
shall constitute authorization for the ASC to find the facts to be as 
presented in the Notice of Intention and to file with the Secretary a 
decision containing such findings and appropriate conclusions. The ASC, 
for good cause shown, will permit the filing of a Rebuttal after the 
prescribed time.



Sec. 1102.34  Briefs, memoranda and statements.

    (a) By the parties. Until the end of the information-gathering phase 
of the proceeding, any party may file with the Secretary a written 
brief, memorandum or other statement providing factual data and policy 
and legal arguments regarding the matters set out in the Notice of 
Intention. The filing party shall simultaneously serve other parties to 
the proceeding with a copy of the document. No later than ten days after 
such service, any party may file with the Secretary a written response 
to the document and must simultaneously serve a copy thereof on the 
other parties to the proceeding. The Secretary will receive documents 
and responses and will place them in the public file.
    (b) By interested persons, in non-recognition proceedings. Until the 
end of the information-gathering phase of a

[[Page 18]]

proceeding under section 1118 of FIRREA (12 U.S.C. 3347), any person 
with a demonstrable, direct interest in the outcome of the proceeding 
may file with the Secretary a written brief, memorandum or other 
statement providing factual data and policy and legal arguments 
regarding the matters set out in the Notice of Intention. The ASC's 
Chairperson or his or her designee may not accept any such written 
brief, memorandum or other statement if the submitting person cannot 
demonstrate a direct interest in the outcome of the proceeding. Upon 
acceptance of the written brief, memorandum or other statement, the 
Secretary shall make copies of the document and forward one copy thereof 
to each party to the proceeding. No later than ten days after such 
service, any party may file with the Secretary a written response to the 
document and must simultaneously serve one copy thereof on the other 
parties to the proceeding. The Secretary will place a copy of such 
briefs, memoranda, statements and responses in the public file.



Sec. 1102.35  Opportunity for informal settlement.

    Any party may at any time submit to the Secretary, for consideration 
by the Subcommittee, written offers or proposals for settlement of a 
proceeding, without prejudice to the rights of the parties. No offer or 
proposal shall be included in the proceeding's public file over the 
objection of any party to such proceeding. This paragraph shall not 
preclude settlement of any proceeding by the filing of a Notice Not To 
Contest as provided in Sec. 1102.33(c) or by the submission of the case 
to the ASC on a stipulation of facts.



Sec. 1102.36  Oral presentations.

    (a) In general. A party does not have a right to an oral 
presentation. Under this section, a party's request to make an oral 
presentation may be denied if such a denial is appropriate and 
reasonable under the circumstances. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding.
    (b) Method and time of request. Between the commencement of the 
proceeding and ten days before the end of the information-gathering 
phase, any party to the proceeding may file with the Secretary a letter 
requesting that the Secretary schedule an opportunity for the party to 
give an oral presentation to the ASC. That letter shall include the 
reasons why an oral presentation is necessary.
    (c) ASC processing. The Secretary must promptly forward the letter 
request to the Chairman of the ASC. The Chairman, after informally 
contacting other ASC members and the ASC's senior staff for their views, 
will instruct the Secretary to forward a letter to the party either: 
Scheduling a date and time for the oral presentation and specifying the 
allowable duration of the presentation; or declining the request and 
providing the reasons therefor. The party's letter request and the ASC's 
response will be included in the proceeding's public file.
    (d) Procedure on presentation day. On the appropriate date and time, 
the party or his or her attorney (if any) will make the oral 
presentation before the ASC. Any ASC member may ask the party or the 
attorney, as the case may be, pertinent questions relating to the 
content of the oral presentation. Oral presentations will not be 
recorded or otherwise transcribed. The Secretary must enter promptly 
into the proceeding's public file a memorandum summarizing the subjects 
discussed during the oral presentation.



Sec. 1102.37  Decision of the Subcommittee and judicial review.

    At a reasonable time after the end of the information-gathering 
phase of the proceeding, but not exceeding 35 days, the ASC shall issue 
a final decision, containing specified terms and conditions as it deems 
appropriate, in the matter and shall cause the decision to be published 
promptly in the Federal Register. The final decision shall be effective 
on issuance. The Secretary shall serve the decision upon the parties 
promptly, shall place it in the proceeding's public file and shall 
furnish it to such other persons as the ASC may direct. Pursuant to the 
provisions of chapter 7 of title 5 of the U.S. Code and section 
1118(c)(3) of title XI of FIRREA (12 U.S.C. 3348(c)(3)), a final 
decision of

[[Page 19]]

the ASC is a prerequisite to seeking judicial review.



Sec. 1102.38  Compliance activities.

    (a) Where, from complaints received from members of the public, 
communications from Federal or State agencies, examination of 
information by the ASC, or otherwise, it appears that a person has 
violated, is violating or is about to violate title XI of FIRREA or the 
rules or regulations thereunder, the ASC staff may commence an informal, 
preliminary inquiry into the matter. If, upon such inquiry, it appears 
that one or more allegations relate to possible violations of 
regulations administered by another agency or instrumentality of the 
Federal Government, then the matter shall be referred to that agency or 
instrumentality for appropriate action. The ASC, pursuant to its 
responsibilities under section 1103(a)(2) of title XI (12 U.S.C. 
3332(a)(2)) and section 1119(c) of title XI (12 U.S.C. 3348)), shall 
monitor the matter. If, upon inquiry, it appears that one or more 
allegations are within the ASC's jurisdiction, then the ASC, in its 
discretion, may determine to commence a formal investigation respecting 
the matter and shall instruct the Secretary to create a public file for 
the formal investigation. The Secretary shall place in that file a 
memorandum naming the person or persons subject to the investigation and 
the statutory basis for the investigation.
    (b) Unless otherwise instructed by the ASC or required by law, the 
Secretary shall ensure that all other papers, documents and materials 
gathered or submitted in connection with the investigation are non-
public and for ASC use only.
    (c) Persons who become involved in preliminary inquiries or formal 
investigations may, on their own initiative, submit a written statement 
to the Secretary setting forth their interests, positions or views 
regarding the subject matter of the investigation. Upon request, the 
staff, in its discretion, may advise such persons of the general nature 
of the investigation, including the indicated violations as they pertain 
to them and the amount of time that may be available for preparing and 
submitting such a statement prior to the presentation of a staff 
recommendation to the ASC. Upon the commencement of a formal 
investigation or a proceeding under this subpart, the Secretary shall 
place any such statement in the appropriate public file.
    (d) In instances where the staff has concluded its inquiry of a 
particular matter and has determined that it will not recommend the 
commencement of a formal investigation or a proceeding under this 
subpart against a person, the staff shall advise the person that its 
inquiry has been terminated. Such advice, if given, must in no way be 
construed as indicating that the person has been exonerated or that no 
action may ultimately result from the staff's inquiry into the 
particular matter.



Sec. 1102.39  Duty to cooperate.

    In the course of the investigations and proceedings, the ASC (and 
its staff, with appropriate authorization) must provide parties or 
persons ample opportunity to work out problems by consent, by 
settlement, or in some other manner.



Subpart C_Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

    Authority: Privacy Act of 1974, Pub. L. 93-579, 88 Stat. 1896; 12 
U.S.C. 552a, as amended.

    Source: 57 FR 36357, Aug. 13, 1992, unless otherwise noted.



Sec. 1102.100  Authority, purpose and scope.

    (a) This subpart is issued under the Privacy Act of 1974, Public Law 
93-579, 88 Stat. 1896; 12 U.S.C. 552a, as amended.
    (b) The Privacy Act of 1974 is based, in part, on the finding by 
Congress that ``in order to protect the privacy of individuals 
identified in information systems maintained by Federal agencies, it is 
necessary and proper for the Congress to regulate the collection, 
maintenance, use, and dissemination of information by such agencies.'' 
To achieve this objective, the Act generally provides that Federal 
agencies must advise an individual upon request

[[Page 20]]

whether records maintained by the agency in a system of records pertain 
to the individual and must grant the individual access to such records. 
The Act further provides that individuals may request amendments to 
records pertaining to them that are maintained by the agency, and that 
the agency shall either grant the requested amendments or set forth 
fully its reasons for refusing to do so.
    (c) The Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC), pursuant to subsection (f) of the Privacy 
Act, adopts the following rules and procedures to implement the 
provisions of the Act summarized above and other provisions of the Act. 
These rules and procedures are applicable to all requests for 
information and access or amendment to records pertaining to an 
individual that are contained in any system of records that is 
maintained by the ASC.



Sec. 1102.101  Definitions.

    The following definitions shall apply for purposes of this subpart:
    (a) The terms individual, maintain, record, system of records, and 
routine use are defined for purposes of these rules as they are defined 
in 5 U.S.C. 552a(a)(2), (a)(3), (a)(4), (a)(5) and (a)(7).
    (b) ASC or Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (c) Privacy Act Officer means the ASC's Associate Director for 
Administration or such other ASC staff officer, other than the Executive 
Director, duly designated by the ASC's Executive Director.



Sec. 1102.102  Times, places and requirements for requests pertaining
to individual records in a record system and for the identification
of individuals making requests for access to records pertaining
to them.

    (a) Place to make request. Any request by an individual to be 
advised whether any system of records maintained by the ASC and named by 
the individual contains a record pertaining to him or her, or any 
request by an individual for access to a record pertaining to him or her 
that is contained in a system of records maintained by the ASC, shall be 
submitted in person at the ASC between 9 a.m. and 4:30 p.m., Monday 
through Friday, which is located at 1401 H Street, NW., Suite 
760,Washington, DC 20005, or by mail addressed to: Privacy Act Officer, 
ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005. All requests 
will be required to be put in writing and signed by the individual 
making the request. In the case of requests for access that are made by 
mail, the envelope should be clearly marked ``Privacy Act Request.''
    (1) Information to be included in requests. Each request by an 
individual concerning whether the ASC maintains in a system of records a 
record that pertains to the individual, or for access to any record 
pertaining to the individual that is maintained by the ASC in a system 
of records, shall include such information as will assist the ASC in 
identifying those records as to which the individual is seeking 
information or access. Where practicable, the individual should identify 
the system of records that is the subject of his or her request by 
reference to the ASC's notices of systems of records, which are 
published in the Federal Register, as required by section (e)(4) of the 
Privacy Act, 5 U.S.C. 552a(e)(4). Where a system of records is compiled 
on the basis of a specific identification scheme, the individual should 
include in his or her request the identification number or other 
identifier assigned to the individual. In the event the individual does 
not know that number or identifier, the individual shall provide other 
information, including his or her full name, address, date of birth and 
subject matter of the record, to aid in processing his or her request. 
If additional information is required before a request can be processed, 
the individual shall be so advised.
    (2) Verification of identity. When the fact of the existence of a 
record is not required to be disclosed under the Freedom of Information 
Act, 5 U.S.C. 552, as amended, or when a record as to which access has 
been requested is not required to be disclosed under that Act, the 
individual seeking the information or requesting access to the record 
shall be required to verify his or her identity

[[Page 21]]

before access will be granted or information given. For this purpose, 
individuals shall appear at the ASC located at 1401 H Street, NW., Suite 
760,Washington, DC 20005, between 9 a.m. to 4:30 p.m., Monday through 
Friday. The ASC's Office is not open on Saturdays, Sundays or Federal 
holidays.
    (3) Methods for verifying identity--appearance in person. For the 
purpose of verifying identity, an individual seeking information 
regarding pertinent records or access to those records shall furnish 
documentation that may reasonably be relied on to establish the 
individual's identity. Such documentation might include a valid birth 
certificate, driver's license, employee or military identification card, 
and medicare card.
    (4) Method for verifying identity--by mail. Where an individual 
cannot appear at the ASC's Office for the purpose of verifying identity, 
the individual shall submit, along with the request for information or 
access, a signed and notarized statement attesting to his or her 
identity. Where access is being sought, the sworn statement shall 
include a representation that the records being sought pertain to the 
individual and a stipulation that the individual is aware that knowingly 
and willfully requesting or obtaining records pertaining to an 
individual from the ASC under false pretenses is a criminal offense.
    (5) Additional procedures for verifying identity. When it appears 
appropriate to the Privacy Act Officer, other arrangements may be made 
for the verification of identity as are reasonable under the 
circumstances and appear to be effective to prevent unauthorized 
disclosure of, or access to, individual records.
    (b) Acknowledgement of requests for information pertaining to 
individual records in a record system or for access to individual 
records. (1) Except where an immediate acknowledgement is given for 
requests made in person, the receipt of a request for information 
pertaining to individual records in a record system will be acknowledged 
within 10 days, excluding Saturdays, Sundays and Federal holidays. 
Requests will be processed as promptly as possible and a response to 
such requests will be given within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) unless, within the 30 day period and for 
cause shown, the individual making the request is notified in writing 
that a longer period is necessary.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.103  Disclosure of requested records.

    (a) Initial review. Requests by individuals for access to records 
pertaining to them will be referred to the ASC's Privacy Act Officer, 
who initially will determine whether access will be granted.
    (b) Grant of request for access. (1) If it is determined that a 
request for access to records pertaining to an individual will be 
granted, the individual will be advised by mail that access will be 
given at the ASC or a copy of the requested record will be provided by 
mail if the individual shall so indicate. Where the individual requests 
that copies of the record be mailed to or her or requests copies of a 
record upon reviewing it at the ASC, the individual shall pay the cost 
of making requested copies, as set forth in Sec. 1102.109 of this 
subpart.
    (2) In granting access to an individual to a record pertaining to 
him or her, the ASC staff shall take steps to prevent the unauthorized 
disclosure of information pertaining to other individuals.
    (c) Denial of request for access. If it is determined that access 
will not be granted, the individual making the request will be notified 
of that fact and given the reasons why access is being denied. The 
individual also will be advised of his or her right to seek review by 
the Executive Director of the initial decision to deny access, in 
accordance with the procedures set forth in Sec. 1102.107 of this 
subpart.
    (d) Time for acting on requests for access. Access to a record 
pertaining to an individual normally will be granted or denied within 30 
days (excluding Saturdays, Sundays, and Federal holidays) after the 
receipt of the request for access, unless the individual making the 
request is notified in writing within the 30 day period that, for good

[[Page 22]]

cause shown, a longer time is required. In such cases, the individual 
making the request shall be informed in writing of the difficulties 
encountered and an indication shall be given as to when it is 
anticipated that access may be granted or denied.
    (e) Authorization to allow designated person to review and discuss 
records pertaining to another individual. An individual, who is granted 
access to records pertaining to him or her and who appears at the ASC 
Office to review the records, may be accompanied by another person of 
his or her choosing. Where the records as to which access has been 
granted are not required to be disclosed under provisions of the Freedom 
of Information Act, 5 U.S.C. 552, as amended, the individual requesting 
the records, before being granted access, shall execute a written 
statement, signed by him or her, specifically authorizing the latter 
individual to review and discuss the records. If such authorization has 
not been given as described, the person who has accompanied the 
individual making the request will be excluded from any review or 
discussion of the records.
    (f) Exclusion for certain records. Nothing contained in these rules 
shall allow an individual access to any information compiled in 
reasonable anticipation of an administrative judicial or civil action or 
proceeding.



Sec. 1102.104  Special procedure: Medical records.

    (a) Statement of physician or mental health professional. When an 
individual requests access to records pertaining to the individual that 
include medical and/or psychological information, the ASC, if it deems 
it necessary under the particular circumstances, may require the 
individual to submit with the request a signed statement by the 
individual's physician or a mental health professional indicating that, 
in his or her opinion, disclosure of the requested records or 
information directly to the individual will not have an adverse effect 
on the individual.
    (b) Designation of physician or mental health professional to 
receive records. If the ASC believes, in good faith, that disclosure of 
medical and/or psychological information, directly to an individual 
could have an adverse effect on that individual, the individual may be 
asked to designate in writing a physician or mental health professional 
to whom the individual would like the records to be disclosed, and 
disclosure that otherwise would be made to the individual will instead 
be made to the designated physician or mental health professional.



Sec. 1102.105  Requests for amendment of records.

    (a) Place to make requests. A request by an individual to amend 
records pertaining to him or her may be made in person during normal 
business hours at the ASC located at 2000 K Street, NW., Suite 310, 
Washington, DC , or by mail addressed to the Privacy Act Officer, ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005.
    (1) Information to be included in requests. Each request to amend an 
ASC record shall reasonably describe the record sought to be amended. 
Such description should include, for example, relevant names, dates and 
subject matter to permit the record to be located among the records 
maintained by the ASC. An individual who has requested that a record 
pertaining to the individual be amended will be advised promptly if the 
record cannot be located on the basis of the description given and that 
further identifying information is necessary before the request can be 
processed. An initial evaluation of a request presented in person will 
be made immediately to ensure that the request is complete and to 
indicate what, if any, additional information will be required. 
Verification of the individual's identity as set forth in Sec. 
1102.102(a) (2), (3), (4) and (5) may also be required.
    (2) Basis for amendment. An individual requesting an amendment to a 
record pertaining to the individual shall specify the substance of the 
amendment and set forth facts and provide such materials that would 
support his or her contention that the record as maintained by the ASC 
is not accurate, timely or complete, or that the record is not necessary 
and relevant to accomplish a statutory purpose of the ASC as authorized 
by law or by Executive Order of the President.

[[Page 23]]

    (b) Acknowledgement of requests for amendment. Receipt of a request 
to amend a record pertaining to an individual normally will be 
acknowledged in writing within 10 days after such request has been 
received, excluding Saturdays, Sundays and Federal holidays. When a 
request to amend is made in person, the individual making the request 
will be given a written acknowledgement when the request is presented. 
The acknowledgement will describe the request received and indicate when 
it is anticipated that action will be taken on the request. No 
acknowledgement will be sent when the request for amendment will be 
reviewed, and an initial decision made, within the 10 day period after 
such request has been received.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.106  Review of requests for amendment.

    (a) Initial review. As in the case of requests for access, requests 
by individuals for amendment to records pertaining to them will be 
referred to the ASC's Privacy Act Officer for an initial determination.
    (b) Standards to be applied in reviewing requests. In reviewing 
requests to amend records, the Privacy Act Officer will be guided by the 
criteria set forth in 5 U.S.C. 552(e) (1) and (5), i.e., that records 
maintained by the ASC shall contain only such information as is 
necessary and relevant to accomplish a statutory purpose of the ASC as 
required by statute or Executive Order of the President and that such 
information also be accurate, timely, relevant and complete. These 
criteria will be applied whether the request is to add material to a 
record or to delete information from a record.
    (c) Time for acting on requests. Initial review of a request by an 
individual to amend a record shall be completed as promptly as is 
reasonably possible and normally within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) from the date the request was received, 
unless unusual circumstances preclude completion of review within that 
time. If the anticipated completion date indicated in the 
acknowledgement cannot be met, the individual requesting the amendment 
will be advised in writing of the delay and the reasons therefor, and 
also advised when action is expected to be completed.
    (d) Grant of requests to amend records. If a request to amend a 
record is granted in whole or in part, the Privacy Act Officer will:
    (1) Advise the individual making the request in writing of the 
extent to which it has been granted;
    (2) Amend the record accordingly; and
    (3) Where an accounting of disclosures of the record has been kept 
pursuant to 5 U.S.C. 552a(c), advise all previous recipients of the 
record of the fact that the record has been amended and the substance of 
the amendment.
    (e) Denial of requests to amend records. If an individual's request 
to amend a record pertaining to him is denied in whole or in part, the 
Privacy Act Officer will:
    (1) Promptly advise the individual making the request in writing of 
the extent to which the request has been denied;
    (2) State the reasons for the denial of the request;
    (3) Describe the procedures established by the ASC to obtain further 
review within the ASC of the request to amend, including the name and 
address of the person to whom the appeal is to be addressed; and
    (4) Inform the individual that the Privacy Act Officer will provide 
information and assistance to the individual in perfecting an appeal of 
the initial decision.



Sec. 1102.107  Appeal of initial adverse agency determination 
regarding access or amendment.

    (a) Administrative review. Any person who has been notified pursuant 
to Sec. 1102.103(c) that a request for access to records pertaining to 
him or her has been denied in whole or in part, or pursuant to Sec. 
1102.106(e) of this subpart that a request for amendment has been denied 
in whole or in part, or who has received no response to a request for

[[Page 24]]

access or to amend within 30 days (excluding Saturdays, Sundays and 
Federal holidays) after the request was received by the ASC's staff (or 
within such extended period as may be permitted in accordance with 
Sec. Sec. 1102.103(d) and 1102.106(c) of this subpart), may appeal the 
adverse determination or failure to respond by applying for an order of 
the Executive Director determining and directing that access to the 
record be granted or that the record be amended in accordance with his 
or her request.
    (1) The application shall be in writing and shall describe the 
record in issue and set forth the proposed amendment and the reasons 
therefor.
    (2) The application shall be delivered to the ASC, 2000 K Street, 
NW., Suite 310, Washington, DC, or by mail addressed to the Privacy Act 
Officer, ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005.
    (3) The applicant may state such facts and cite such legal or other 
authorities in support of the application.
    (4) The Executive Director will make a determination with respect to 
any appeal within 30 days after the receipt of such appeal (excluding 
Saturdays, Sundays, and Federal holidays), unless for good cause shown, 
the Executive Director shall extend that period. If such an extension is 
made, the individual who is appealing shall be advised in writing of the 
extension, the reasons therefor, and the anticipated date when the 
appeal will be decided.
    (5) In considering an appeal from a denial of a request to amend a 
record, the Executive Director shall apply the same standards as set 
forth in Sec. 1102.106(b).
    (6) If the Executive Director concludes that access should be 
granted, the Executive Director shall issue an order granting access and 
instructing the Privacy Act Officer to comply with Sec. 1102.103(b).
    (7) If the Executive Director concludes that the request to amend 
the record should be granted in whole or in part, the Executive Director 
shall issue an order granting the requested amendment in whole or in 
part and instructing the Privacy Act Officer to comply with the 
requirements of Sec. 1102.106(d) of this subpart, to the extent 
applicable.
    (8) If the Executive Director affirms the initial decision denying 
access, the Executive Director shall issue an order denying access and 
advising the individual seeking access of:
    (i) The order;
    (ii) The reasons for denying access; and
    (iii) The individual's right to obtain judicial review of the 
decision pursuant to 5 U.S.C. 552a(g)(1)(B).
    (9) If the Executive Director determines that the decision of the 
Privacy Act Officer denying a request to amend a record should be 
upheld, the Executive Director shall issue an order denying the request 
and the individual shall be advised of:
    (i) The order refusing to amend the record and the reasons therefor;
    (ii) The individual's right to file a concise statement setting 
forth his or her disagreement with the Executive Director's decision not 
to amend the record;
    (iii) The procedures for filing such a statement of disagreement 
with the Executive Director;
    (iv) The fact that any such statement of disagreement will be made 
available to anyone to whom the record is disclosed, together with, if 
the Executive Director deems it appropriate, a brief statement setting 
forth the Executive Director's reasons for refusing to amend;
    (v) The fact that prior recipients of the record in issue will be 
provided with the statement of disagreement and the Executive Director's 
statement, if any, to the extent that an accounting of such disclosures 
has been maintained pursuant to 5 U.S.C. 552a(c); and
    (vi) The individual's right to seek judicial review of the Executive 
Director's refusal to amend, pursuant to 5 U.S.C. 552a(g)(1)(A).
    (b) Statement of disagreement. As noted in paragraph (a)(9)(ii) of 
this section, an individual may file with the Executive Director a 
statement setting forth his or her disagreement with the Executive 
Director's denial of his or her request to amend a record.
    (1) Such statement of disagreement shall be delivered to the ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005, within 30 days after 
receipt by

[[Page 25]]

the individual of the Executive Director's order denying the amendment, 
excluding Saturdays, Sundays and Federal holidays. For good cause shown, 
this period can be extended for a reasonable time.
    (2) Such statement of disagreement shall concisely state the basis 
for the individual's disagreement. Unduly lengthy or irrelevant 
materials will be returned to the individual by the Executive Director 
for appropriate revisions before they become a permanent part of the 
individual's record.
    (3) The record about which a statement of disagreement has been 
filed will clearly note which part of the record is disputed and the 
Executive Director will provide copies of the statement of disagreement 
and, if the Executive Director deems it appropriate, provide a concise 
statement of his or her reasons for refusing to amend the record, to 
persons or other agencies to whom the record has been or will be 
disclosed.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.108  General provisions.

    (a) Extensions of time. Pursuant to Sec. Sec. 1102.103(b), 
1102.104(d), 1102.109(c) and 1102.109(a)(4) of this subpart, the time 
within which a request for information, access or amendment by an 
individual with respect to records maintained by the ASC that pertain to 
him or her normally would be processed may be extended for good cause 
shown or because of unusual circumstances. As used in these rules, good 
cause and unusual circumstances shall include, but only to the extent 
reasonably necessary to the proper processing of a particular request:
    (1) The need to search for and collect the requested records from 
establishments that are separate from the ASC. Some records of the ASC 
may be stored in Federal Records Centers in accordance with law--
including many of the documents that have been on file with the ASC for 
more than 2 years--and cannot be made available promptly. Any person who 
has requested for personal examination a record stored at the Federal 
Records Center will be notified when the record will be made available.
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which may be demanded 
in a single request. While every reasonable effort will be made to 
comply fully with each request as promptly as possible on a first-come, 
first-served basis, work done to search for, collect and appropriately 
examine records in response to a request for a large number of records 
will be contingent upon the availability of processing personnel in 
accordance with an equitable allocation of time to all members of the 
public who have requested or wish to request records.
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or more components within 
the ASC having substantial subject-matter interest herein.
    (b) Effective date of action. Whenever it is provided in this 
subpart that an acknowledgement or response to a request will be given 
by specific times, deposit in the mails of such acknowledgement or 
response by that time, addressed to the person making the request, will 
be deemed full compliance.
    (c) Records in use by a member of the ASC or its staff. Although 
every effort will be made to make a record in use by a member of the ASC 
or its staff available when requested, it may occasionally be necessary 
to delay making such a record available when doing so at the time the 
request is made would seriously interfere with the work of the ASC or 
its staff.
    (d) Missing or lost records. Any person who has requested a record 
or a copy of a record pertaining to him or her will be notified if the 
record sought cannot be found. If the person so requests, he or she will 
be notified if the record subsequently is found.
    (e) Oral requests; misdirected written requests--(1) Telephone and 
other oral requests. Before responding to any request by an individual 
for information concerning whether records maintained by the ASC in a 
system of records pertain to the individual or to any request

[[Page 26]]

for access to records by an individual, such request must be in writing 
and signed by the individual making the request. The Executive Director 
will not entertain any appeal from an alleged denial of failure to 
comply with an oral request. Any person who has made an oral request for 
information or access to records who believes that the request has been 
improperly denied should resubmit the request in appropriate written 
form to obtain proper consideration and, if need be, administrative 
review.
    (2) Misdirected written requests. The ASC cannot assure that a 
timely or satisfactory response will be given to written requests for 
information, access or amendment by an individual with respect to 
records pertaining to him or her that are directed to the ASC other than 
in a manner prescribed in Sec. Sec. 1102.103(a), 1102.106(a), 
1102.108(a)(2), and 1102.110 of this subpart. Any staff member who 
receives a written request for information, access or amendment should 
promptly forward the request to the Privacy Act Officer. Misdirected 
requests for records will be considered to have been received by the ASC 
only when they have been actually received by the Privacy Act Officer in 
cases under Sec. 1102.108(a)(2). The Executive Director will not 
entertain any appeal from an alleged denial or failure to comply with a 
misdirected request, unless it is clearly shown that the request was in 
fact received by the Privacy Act Officer.



Sec. 1102.109  Fees.

    (a) There will be no charge assessed to the individual for the ASC's 
expense involved in searching for or reviewing the record. Copies of the 
ASC's records will be provided by a commercial copier at rates 
established by a contract between the copier and the ASC or by the ASC 
at the rates in Sec. 1101.4(b)(5)(ii) of 12 CFR part 1101.
    (b) Waiver or reduction of fees. Whenever the Executive Director of 
the ASC determines that good cause exists to grant a request for 
reduction or waiver of fees for copying documents, he or she may reduce 
or waive any such fees.



Sec. 1102.110  Penalties.

    Title 18 U.S.C. 1001 makes it a criminal offense, subject to a 
maximum fine of $10,000, or imprisonment for not more than 5 years or 
both, to knowingly and willingly make or cause to be made any false or 
fraudulent statements or representations in any matter within the 
jurisdiction of any agency of the United States. 5 U.S.C. 552a(i) makes 
it a misdemeanor punishable by a fine of not more than $5,000 for any 
person knowingly and willfully to request or obtain any record 
concerning an individual from the ASC under false pretenses. 5 U.S.C. 
552a(i) (1) and (2) provide criminal penalties for certain violations of 
the Privacy Act by officers and employees of the ASC.



     Subpart D_Description of Office, Procedures, Public Information

    Authority: 5 U.S.C. 552, 553(e); and Executive Order 12600, 52 FR 
23781 (3 CFR, 1987 Comp., p. 235).

    Source: 57 FR 60724, Dec. 22, 1992, unless otherwise noted.



Sec. 1102.300  Purpose and scope.

    This part sets forth the basic policies of the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') regarding information it maintains and the procedures for 
obtaining access to such information. This part does not apply to the 
Federal Financial Institutions Examination Council. Section 1102.301 
sets forth definitions applicable to this part 1102, subpart D. Section 
1102.302 describes the ASC's statutory authority and functions. Section 
1102.303 describes the ASC's organization and methods of operation. 
Section 1102.304 describes the types of information and documents 
typically published in the Federal Register. Section 1102.305 explains 
how to access public records maintained on the ASC's World Wide Web site 
and at the ASC's office and describes the categories of records 
generally found there. Section 1102.306 implements the Freedom of 
Information Act (``FOIA'') (5 U.S.C. 552). Section 1102.307 authorizes 
the discretionary disclosure of exempt records under certain limited 
circumstances. Section

[[Page 27]]

1102.308 provides anyone with the right to petition the ASC to issue, 
amend, and repeal rules of general application. Section 1102.309 sets 
out the ASC's confidential treatment procedures. Section 1102.310 
outlines procedures for serving a subpoena or other legal process to 
obtain information maintained by the ASC.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.301  Definitions.

    For purposes of this subpart:
    (a) ASC means the Appraisal Subcommittee of the Federal Financial 
Institutions Examination Council.
    (b) Commercial use request means a request from, or on behalf of, a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the ASC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (c) Direct costs means those expenditures the ASC actually incurs in 
searching for, duplicating, and, in the case of commercial requesters, 
reviewing records in response to a request for records.
    (d) Disclose or disclosure mean to give access to a record, whether 
by producing the written record or by oral discussion of its contents. 
Where the ASC member or employee authorized to release ASC documents 
makes a determination that furnishing copies of the documents is 
necessary, these words include the furnishing of copies of documents or 
records.
    (e) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy, 
microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (f) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (g) Field review includes, but is not limited to, formal and 
informal investigations of potential irregularities occurring at State 
appraiser regulatory agencies involving suspected violations of Federal 
or State civil or criminal laws, as well as such other investigations as 
may conducted pursuant to law.
    (h) Non-commercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (b) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (i) Record includes records, files, documents, reports 
correspondence, books, and accounts, or any portion thereof, in any form 
the ASC regularly maintains them.
    (j) Representative of the news media means any person primarily 
engaged in gathering news for, or a free-lance journalist who can 
demonstrate a reasonable expectation of having his or her work product 
published or broadcast by, an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
general public.
    (k) Review means the process of examining documents located in a 
response to a request that is for a commercial use to determine whether 
any portion of any document located is permitted to be withheld. It also 
includes processing any documents for disclosure, e.g, doing all that is 
necessary to excise them and otherwise prepare them for release. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    (l) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.

[[Page 28]]

    (m) State appraiser regulatory agency includes, but is not limited 
to, any board, commission, individual or other entity that is authorized 
by State law to license, certify, and supervise the activities or 
persons authorized to perform appraisals in connections with federally 
related transactions and real estate related financial transactions that 
require the services of a State licensed or certified appraiser.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.302  ASC authority and functions.

    (a) Authority. The ASC was established on August 9, 1989, pursuant 
to title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (``FIRREA''), 12 U.S.C. 3331 and 
3310 through 3351. Title XI is intended ``to provide that Federal 
financial and public policy interests in real estate related 
transactions will be protected by requiring that real estate appraisals 
utilized in connection with federally related transactions are performed 
in writing, in accordance with uniform standards, by individuals whose 
competency has been demonstrated and whose professional conduct will be 
subject to effective supervision.'' 12 U.S.C. 3331.
    (b) Functions. The ASC's statutory functions are generally set out 
in 12 U.S.C. 3332. In summary, the ASC must:
    (1) Monitor the requirements established by the States for the 
certification and licensing of individuals who are qualified to perform 
appraisals in connection with federally related transactions, including 
a code of professional responsibility;
    (2) Monitor the requirements of the Federal financial institutions 
regulatory agency and Resolution Trust Corporation with respect to 
appraisal standards for federally related transactions and 
determinations as to which federally related transactions require the 
services of a State certified appraiser and which require the services 
of a State licensed appraiser;
    (3) Monitor and review the practices, procedures, activities and 
organizational structure of the Appraisal Foundation; and
    (4) Maintain a national registry of State certified and licensed 
appraisers eligible to perform appraisals in federally related 
transactions.



Sec. 1102.303  Organization and methods of operation.

    (a) Statutory and other guidelines. Statutory requirements relating 
to the ASC's organization are stated in 12 U.S.C. 3310, 3333 and 3334. 
The ASC has adopted and published Rules of Operation guiding its 
administration, meetings and procedures. These Rules of Operation were 
published at 56 FR 28561 (June 21, 1991) and 56 FR 33451 (July 22, 
1991).
    (b) ASC members and staff. The ASC is composed of six members, each 
being designated by the head of their respective agencies: the Board of 
Governors of the Federal Reserve System, Federal Deposit Insurance 
Corporation, Office of the Comptroller of the Currency, National Credit 
Union Administration, Office of Thrift Supervision, and the Department 
of Housing and Urban Development. Administrative support and substantive 
program, policy, and legal guidance for ASC activities are provided by a 
small, full-time, professional staff supervised by an Executive 
Director.
    (c) FFIEC. Title XI placed the ASC within FFIEC as a separate, 
appropriated agency of the United States Government with specific 
statutory responsibilities under Federal law.
    (d) ASD Address ASC offices are located at 2000 K Street, NW., Suite 
310; Washington, DC 20006.

[57 FR 60724, Dec. 22, 1992, as amended at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.304  Federal Register publication.

    The ASC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Description of its organization and the established places at 
which, the officers from whom, and the methods whereby, the public may 
secure information, make submittals or re nests, or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including

[[Page 29]]

the nature and requirements of all formal and informal procedures 
available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the ASC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rulemaking.

[64 FR 72497, Dec. 28, 1999]



Sec. 1102.305  Publicly available records.

    (a) Records available on the ASCs World Wide Web site--(1) 
Discretionary release of documents. The ASC encourages the public to 
explore the wealth of resources available on the ASC's Internet World 
Wide Web site, located at: http://www.asc.gov. The ASC has elected to 
publish a broad range to materials on its Web site.
    (2) Documents required to be made available via computer 
telecommunications. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available through 
computer telecommunications, may be found on the ASC's Internet World 
Wide Web site located at: http://www.asc.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders, made in the adjudication of cases;
    (B) Statements of policy and interpretations adopted by the ASC that 
are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (D) Copies of all records (regardless of form or format), such as 
correspondence relating to field reviews or other regulatory subjects, 
released to any person under Sec. 1102.306 that, because of the nature 
of their subject matter, the ASC has determined are likely to be the 
subject of subsequent requests;
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the ASC may delete identifying 
details when it makes available or publishes any records. If reduction 
is necessary, the ASC will, to the extent technically feasible, indicate 
the amount of material deleted at the place in the record where such 
deletion is made unless that indication in and of itself will jeopardize 
the purpose for the redaction.
    (b) Types of written communications. The following types of written 
communications shall be subject to paragraph (a) of this section:
    (1) The ASC's annual report to Congress;
    (2) All final opinions and orders made in the adjudication of cases;
    (3) All statements of general policy not published in the Federal 
Register.
    (4) Requests for the ASC or its staff to provide interpretive advice 
with respect to the meaning or application of any statute administered 
by the ASC or any rule or regulation adopted thereunder and any ASC 
responses thereto;
    (5) Requests for a statement that, on the basis of the facts 
presented in such a request, the ASC would not take any enforcement 
action pertaining to the facts as represented and any ASC responses 
thereto: and
    (6) Correspondence between the ASC and a State appraiser regulatory 
agency arising out of the ASC's field review of the State agency's 
appraiser regulatory program.
    (c) Applicable fees. (1) If applicable, fees for furnishing records 
under this section are as set forth in Sec. 1102.306(e).
    (2) Information on the ASC's World Wide Web site is available to the 
public without charge. If, however, information available on the ASC's 
World Wide Web site is provided pursuant to a Freedom of Information Act 
request processed under g 1102.306 then fees apply and will be assessed 
pursuant to Sec. 1102.306(e).

[59 FR 1902, Jan. 13, 1994, as amended at 64 FR 72497, Dec. 28, 1999]

[[Page 30]]



Sec. 1102.306  Procedures for requesting records.

    (a) Making a request for records. (1) The request shall be submitted 
in writing to the Executive Director:
    (i) By facsimile clearly marked ``Freedom of Information Act 
Request'' to (202) 293-6251;
    (ii) By letter to the Executive Director marked ``Freedom of 
Information Act Request''; 2000 K Street, NW., Suite 301; Washington, DC 
20006; or
    (iii) By sending Internet e-mail to the Executive Director marked 
``Freedom of Information Act Request'' at his or her e-mail address 
listed on the ASC's World Wide Web site.
    (2) The request shall contain the following information:
    (i) The name and address of the requester, an electronic mail 
address, if available, and the telephone number at which the requester 
may be reached during normal business hours;
    (ii) Whether the requester is an educational institution, non-
commercial scientific institution, or news media representative;
    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying a maximum fee that is acceptable to the requester, 
or a request for a waiver or reduction of fees that satisfies paragraph 
(e)(1)(x) of this section; and
    (iv) The preferred form and format of any responsive information 
requested, if other than paper copies.
    (3) A request for identifiable records shall reasonably describe the 
records in a way that enables the ASC's staff to identify and produce 
the records with reasonable effort and without unduly burdening or 
significantly interfering with any ASC operations.
    (b) Defective requests. The ASC need not accept or process a request 
that does not reasonably describe the records requested or that does not 
otherwise comply with the requirements of this subpart. The ASC may 
return a defective request, specifying the deficiency. The requester may 
submit a corrected request, which will be treated as a new request.
    (c) Processing requests--(1) Receipt of requests. Upon receipt of 
any request that satisfies paragraph (a) of this section, the Executive 
Director shall assign the request to the appropriate processing track 
pursuant to this section. The date of receipt for any request, including 
one that is addressed incorrectly or that is referred by another agency, 
is the date the Executive Director actually receives the request.
    (2) Expedited processing. (i) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the ASC has determined to expedite the response, the ASC shall 
process the request as soon as practicable. To show a compelling need 
for expedited processing, the requester shall provide a statement 
demonstrating that:
    (A) The failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (B) The requester can establish that it is primarily engaged in 
information dissemination as its main professional occupation or 
activity, and there is urgency to inform the public of the government 
activity involved in the re request; and
    (C) The requester's statement must be certified to be true and 
correct to the best of the person's knowledge and belief and explain in 
detail the basis for requesting expedited processing.
    (ii) The formality of the certification required to obtain expedited 
treatment may be waived by the Executive Director as a matter of 
administrative discretion.
    (3) A requester seeking expedited processing will be notified 
whether expedited processing has been granted within ten (10) working 
days of the receipt of the request. If the request for expedited 
processing is denied, the requester may file an appeal pursuant to the 
procedures set forth in paragraph (g) of this section, and the ASC shall 
respond to the appeal within ten (10) working days after receipt of the 
appeal.
    (4) Priority of responses. Consistent with sound administrative 
process, the ASC processes requests in the order they are received. 
However, in the ASC's discretion, or upon a court order in a matter to 
which the ASC is a party, a particular request may be processed out of 
turn.

[[Page 31]]

    (5) Notification. (i) The time for response to requests will be 
twenty (20) working days except:
    (A) In the case of expedited treatment under paragraph (c)(2) of 
this section;
    (B) Where the running of such time is suspended for the calculation 
of a cost estimate for the requester if the ASC determines that the 
processing of the request may exceed the requester's maximum fee 
provision or if the charges are likely to exceed $250 as provided for in 
paragraph (e)(1)(iv) of this section;
    (C) Where the running of such time is suspended for the payment of 
fees pursuant to the paragraph (c)(5)(i)(B) and (e)(1) of this section; 
or
    (D) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B) 
and further described in paragraph (c)(5)(iii) of this section.
    (ii) In unusual circumstances as referred to in paragraph 
(c)(5)(i)(D) of this section, the time limit may be extended for a 
period of:
    (A) Ten (10) working days as provided by written notice to the 
requester, setting forth the reasons for the extension and the date on 
which a determination is expected to be dispatched; or
    (B) Such alternative time period as agreed to by the requester or as 
reasonably determined by the ASC when the ASC notifies the requester 
that the request cannot be processed in the specified time limit.
    (iii) Unusual circumstances may arise when:
    (A) The records are in facilities that are not located at the ASC's 
Washington office;
    (B) The records requested are voluminous or are not in close 
proximity to one another; or
    (C) There is a need to consult with another agency or among two or 
more components of the ASC having a substantial interest in the 
determination.
    (6) Response to request. In response to a request that satisfies the 
requirements of paragraph (a) of this section, a search shall be 
conducted of records maintained by the ASC in existence on the date of 
receipt of the request, and a review made of any responsive information 
located. To the extent permitted by law, the ASC may redact identifying 
details when it makes available or publishes any records. If redaction 
is appropriate, the ASC will, to the extent technically feasible, 
indicate the amount of material deleted at the place in the record where 
such deletion is made unless that indication in and of itself will 
jeopardize the purpose for the redaction. The ASC shall notify the 
requester of:
    (i) The ASC's determination of the request;
    (ii) The reasons for the determination;
    (iii) If the response is a denial of an initial request or if any 
information is withheld, the ASC will advise the requester in writing:
    (A) If the denial is in part or in whole;
    (B) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (C) The exemptions relied on for the denial; and
    (D) The right of the requester to appeal the denial to the Chairman 
of the ASC within 30 business days following receipt of the 
notification, as specified in paragraph (h) of this section.
    (d) Providing responsive records. (1) Copies of requested records 
shall be sent to the requester by regular U.S. mail to the address 
indicated in the request, unless the requester elects to take delivery 
of the documents at the ASC or makes other acceptable arrangements, or 
the ASC deems it appropriate to send the documents by another means.
    (2) The ASC shall provide a copy of the record in any form or format 
requested if the record is readily reproducible by the ASC in that form 
or format, but the ASC need not provide more than one copy of any record 
to a requester.
    (3) By arrangement with the requester, the ASC may elect to send the 
responsive records electronically if a substantial portion of the 
request is in electronic format. If the information requested is made 
pursuant to the Privacy Act of 1974, 5 U.S.C. 552a, it will not be sent 
by electronic means unless reasonable security measures can be provided.

[[Page 32]]

    (e) Fees--(1) General rules. (i) Persons requesting records of the 
ASC shall be charged for the direct costs of search, duplication, and 
review as set forth in paragraphs (e)(2) and (e)(3) of this section, 
unless such costs are less than the ASC's cost of processing the 
requester's remittance.
    (ii) Requesters will be charged for search and review costs even if 
responsive records are not located or, if located, are determined to be 
exempt from disclosure.
    (iii) Multiple requests seeking similar or related records from the 
same requester or group of requesters will be aggregated for the 
purposes of this section.
    (iv) If the ASC determines that the estimated costs of search, 
duplication, or review of requested records will exceed the dollar 
amount specified in the request, or if no dollar amount is specified, 
the ASC will advise the requester of the estimated costs. The requester 
must agree in writing to pay the costs of search, duplication, and 
review prior to the ASC initiating any records search.
    (v) If the ASC estimates that its search, duplication, and review 
costs will exceed $250, the requester must pay an amount equal to 20 
percent of the estimated costs prior to the ASC initiating any records 
search.
    (vi) The ASC ordinarily will collect all applicable fees under the 
final invoice before releasing copies of requested records to the 
requester.
    (vii) The ASC may require any requester who has previously failed to 
pay charges under this section within 30 calendar days of mailing of the 
invoice to pay in advance the total estimated costs of search, 
duplication, and review. The ASC also may require a requester who has 
any charges outstanding in excess of 30 calendar days following mailing 
of the invoice to pay the full amount due, or demonstrate that the fee 
has been paid in full, prior to the ASC initiating any additional 
records search.
    (viii) The ASC may begin assessing interest charges on unpaid bills 
on the 31st day following the day on which the invoice was sent. 
Interest will be at the rate prescribed in Sec. 3717 of title 31 of the 
United States Code and will accrue from the date of the invoice.
    (ix) The time limit for the ASC to respond to a request will not 
begin to run until the ASC has received the requester's written 
agreement under paragraph (e)(1)(iv) of this section, and advance 
payment under paragraph (e)(1)(v) or (vii) of this section, or payment 
of outstanding charges under paragraph (e)(1)(vii) or (viii) of this 
section.
    (x) As part of the initial request, a requester may ask that the ASC 
waive or reduce fees if disclosure of the records is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Director (or designee), and the requester will be notified in 
writing of his or her determination. A determination not to grant a 
request for a waiver or reduction of fees under this paragraph may be 
appealed to the ASC's Chairman pursuant to the procedure set forth in 
paragraph (g) of this section.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication, and review costs.
    (ii) Educational institutions, noncommercial scientific 
institutions, and news media representatives shall be charged 
duplication costs, except for the first 100 pages.
    (iii) Requesters not described in paragraph (e)(2)(i) or (ii) of 
this section shall be charged the full reasonable direct cost of search 
and duplication, except for the first two hours of search time and first 
100 pages of duplication.
    (3) Fee schedule. The dollar amount of fees which the ASC may charge 
to records requesters will be established by the Executive Director. The 
ASC may charge fees that recoup the full allowable direct costs it 
incurs. Fees are subject to change as costs change. The fee schedule 
will be published periodically on the ASC's Internet World Wide Web site 
(http://www.asc.gov) and will be effective on the date of publication.

[[Page 33]]

Copies of the fee schedule may be obtained by request at no charge by 
contacting the Executive Director by letter, Internet email or 
facsimile.
    (i) Manual searches for records. The ASC will charge for manual 
searches for records at the basic rate of pay of the employee making the 
search plus 16 percent to cover employee benefit costs.
    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the search, including 
computer time, computer runs, and the operator's time apportioned to the 
search multiplied by the operator's basic rate of pay plus 16 percent to 
cover employee benefit costs.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is $.25.
    (B) For other methods of reproduction or duplication, the ASC will 
charge the actual direct costs of reproducing or duplicating the 
documents, including each involved employee's basic rate of pay plus 16 
percent to cover employee benefit costs.
    (iv) Review of records. The ASC will charge commercial use 
requesters for the review of records at the time of processing the 
initial request to determine whether they are exempt from mandatory 
disclosure at the basic rate of pay of the employee making the search 
plus 16 percent to cover employee benefit costs. The ASC will not charge 
at the administrative appeal level for review of an exemption already 
applied. When records or portions of records are withheld in full under 
an exemption which is subsequently determined not to apply, the ASC may 
charge for a subsequent review to determine the applicability of other 
exemptions not previously considered.
    (v) Other services. Complying with requests for special services, 
other than a readily produced electronic form or format, is at the ASC's 
discretion. The ASC may recover the full costs of providing such 
services to the requester.
    (4) Use of contractors. The ASC may contact with independent 
contractors to locate, reproduce, and/or disseminate records; provided, 
however, that the ASC has determined that the ultimate cost to the 
requester will be no greater than it would be if the ASC performed these 
tasks itself. In no case will the ASC contract our responsibilities 
which FOIA provides that the ASC alone may discharge, such as 
determining the applicability of an exemption or whether to waive or 
reduce fees.
    (f) Exempt information. A request for records may be denied if the 
requested record contains information that falls into one or more of the 
following categories. \1\ If the requested record contains both exempt 
and nonexempt information, the nonexempt portions, which may reasonable 
be segregated from the exempt portions, will be released to the 
requester. If redaction is necessary, the ASC will, to the extent 
technically feasible, indicate the amount of material deleted at the 
place in the record where such deletion is made unless that indication 
in and of itself will jeopardize the purpose for the redaction. The 
categories of exempt records are as follows:
---------------------------------------------------------------------------

    \1\ Classification of a record as exempt from disclosure under the 
provisions of this paragraph (f) shall not be construed as authority to 
withhold the record if it is otherwise subject to disclosure under the 
Privacy Act of 1974 (5 U.S.C. 552a) or other Federal statute, any 
applicable regulation of ASC or any other Federal agency having 
jurisdiction thereof, or any directive or order of any court of 
competent jurisdiction.
---------------------------------------------------------------------------

    (1) Records that are specifically authorized under criteria 
established by an Executive Order to be kept secret in the interest of 
national defense or foreign policy and are in fact properly classified 
pursuant to such Executive Order;
    (2) Records related solely to the internal personnel rules and 
practices of the ASC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a

[[Page 34]]

person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters that would not 
be available by law to a private party in litigation with the ASC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trail or an 
impartial adjudication;
    (ii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Records that are contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the ASC or any agency responsible for the regulation or 
supervision of financial institutions; or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (g) Appeals. (1) Appeals should be addressed to the Executive 
Director; ASC; 2000 K Street, NW., Suite 310; Washington, DC 20006.
    (2) A person whose initial request for records under this section, 
or whose request for a waiver of fees under paragraph (e)(1)(x) of this 
section, has been denied, either in part or in whole, has the right to 
appeal the denial to the ASC's Chairman (or designee) within 30 business 
days after receipt of notification of the denial. Appeals of denials of 
initial requests or for a waiver of fees must be in writing and include 
any additional information relevant to consideration of the appeal.
    (3) Except in the case of an appeal for expedited treatment under 
paragraph (c)(3) of this section, the ASC will notify the appellant in 
writing within 20 business days after receipt of the appeal and will 
state:
    (i) Whether it is granted or denied in whole or in part;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (4) If a requester is appealing for denial of expedited treatment, 
the ASC will notify the appellant within ten business days after receipt 
of the appeal of the ASC's disposition.
    (5) Complete payment of any outstanding fee invoice will be required 
before an appeal is processed.
    (h) Records of another agency. If a requested record is the property 
of another Federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the ASC will promptly 
inform the requester of this ownership and immediately shall forward the 
request to the proprietary agency or department either for processing in 
accordance with the latter's regulations or for guidance with respect to 
disposition.

[64 FR 72497, Dec. 28, 1999; 65 FR 31960, May 19, 2000, as amended at 69 
FR 2501, Jan. 16, 2004]



Sec. 1102.307  Disclosure of exempt records.

    (a) Disclosure prohibited. Except as provided in paragraph (b) of 
this section or by 12 CFR part 1102, subpart C, no person shall disclose 
or permit the disclosure of any exempt records, or information contained 
therein, to any

[[Page 35]]

persons other than those officers, directors, employees, or agents of 
the ASC or a State appraiser regulatory agency who has a need for such 
records in the performance of their official duties. In any instance in 
which any person has possession, custody or control of ASC exempt 
records or information contained therein, all copies of such records 
shall remain the property of the ASC and under no circumstances shall 
any person, entity or agency disclose or make public in any manner the 
exempt records or information without written authorization from the 
Executive Director, after consultation with the ASC General Counsel.
    (b) Disclosure authorized. Exempt records or information of the ASC 
may be disclosed only in accordance with the conditions and requirements 
set forth in this paragraph (b). Requests for discretionary disclosure 
of exempt records of information pursuant to this paragraph (b) may be 
submitted directly to the Executive Director. Such administrative 
request must clearly state that it seeks discretionary disclosure of 
exempt records, clearly identify the records sought, provide sufficient 
information for the ASC to evaluate whether there is good cause for 
disclosure, and meet all other conditions set forth in paragraph (b)(1) 
through (3) of this section. Authority to disclose or authorize 
disclosure of exempt records of the ASC is delegated to the Executive 
Director, after consultation with the ASC General Counsel.
    (1) Disclosure by Executive Director. (i) The Executive Director, or 
designee, may disclose or authorize the disclosure of any exempt record 
in response to a valid judicial subpoena, court order, or other legal 
process, and authorize any current or former member, officer, employee, 
agent of the ASC, or third party, to appear and testify regarding an 
exempt record or any information obtained in the performance of such 
person's official duties, at any administrative or judicial hearing or 
proceeding where such person has been served with a valid subpoena, 
court order, or other legal process requiring him or her to testify. The 
Executive Director shall consider the relevancy of such exempt records 
or testimony to the ligation, and the interests of justice, in 
determining whether to disclose such records or testimony. Third parties 
seeking disclosure of exempt records or testimony in litigation to which 
the ASC is not a party shall submit a request for discretionary 
disclosure directly to the Executive Director. Such requests shall 
specify the information sought with reasonable particularity and shall 
be accompanied by a statement with supporting documentation showing in 
detail the relevance of such exempt information to the litigation, 
justifying good cause for disclosure, and a commitment to be bound by a 
protective order. Failure to exhaust such administration request prior 
to service of a subpoena or other legal process may, in the Executive 
Director's discretion, serve as a basis for objection to such subpoena 
or legal process.
    (ii) The Executive Director, or designee, may in his or her 
discretion and for good cause, disclose or authorize disclosure of any 
exempt record or testimony by a current or former member, officer, 
employee, agent of the ASC, or third party, sought in connection with 
any civil or criminal hearing, proceeding or investigation without the 
service of a judicial subpoena, or other legal process requiring such 
disclosure or testimony. If he or she determines that the records or 
testimony are relevant to the hearing, proceeding or investigation and 
that disclosure is in the best interests of justice and not otherwise 
prohibited by Federal statute. Where the Executive Director or designee 
authorizes a current or former member, officer, director, empl9oyee or 
agent of the ASC to testify or disclose exempt records pursuant to this 
paragraph (b)(1), he or she may, in his or her discretion, limit the 
authorization to so much of the record or testimony as is relevant to 
the issues at such hearing, proceeding or investigation, and he or she 
shall give authorization only upon fulfillment of such conditions as he 
or she deems necessary and practicable to protect the confidential 
nature of such records or testimony.
    (2) Authorization for disclosure by the Chairman of the ASC. Except 
where expressly prohibited by law, the Chairman of the ASC may, in his 
or her discretion, authorize the disclosure of any

[[Page 36]]

ASC records. Except where disclosure is required by law, the Chairman 
may direct any current or former member, officer, director, employee or 
agent of the ASC to refuse to disclose any record or to give testimony 
if the Chairman determines, in his or her discretion, that refusal to 
permit such disclosure is in the public interest.
    (3) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records and information. Any 
disclosure permitted by paragraph (b) of this section is discretionary 
and nothing in paragraph (b) of this section shall be construed as 
requiring the disclosure of information. Further, nothing in paragrah 
(b) of this section shall be construed as restricting, in any manner, 
the authority of the ASC, the Chairman of the ASC, the Executive 
Director, the ASC General Counsel, or their designees, in their 
discretion and in light of the facts and circumstances attendant in any 
given case, to require conditions upon, and to limit, the form, manner, 
and extent of any disclosure permitted by this section. Wherever 
practicable, disclosure of exempt records shall be made pursuant to a 
protective order and redacted to exclude all irrelevant or non-
responsive exempt information.

[64 FR 72500, Dec. 28, 1999]



Sec. 1102.308  Right to petition for issuance, amendment and repeal
of rules of general application.

    Any person desiring the issuance, amendment or repeal of a rule of 
general application may file a petition for those purposes with the 
Executive Director of the ASC. The petition shall include a statement 
setting forth the text or substance of any proposed rule or amendment 
desired or shall specify the rule for which repeal is desired. The 
petitioner also shall state the nature of his or her interest and the 
reasons for seeking ASC action. The Executive Director shall acknowledge 
receipt of the petition within ten business days of receipt. As soon as 
reasonably practicable, the ASC shall consider the petition and related 
staff recommendations and shall take such action as it deems 
appropriate. The Executive Director shall notify the petitioner in 
writing of the ASC action within ten business days of the action.

[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.309  Confidential treatment procedures.

    (a) In general. Any submitter of written information to the ASC who 
desires that some or all of his or her submission be afforded 
confidential treatment under 5 U.S.C. 552(b)(4) (i.e., trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential) shall file a request for confidential 
treatment with the Executive Director of the ASC at the time the written 
information is submitted to the ASC or within ten business days 
thereafter. Nothing in this section limits the authority of the ASC and 
its staff to make determinations regarding access to documents under 
this subpart.
    (b) Form of request. A request for confidential treatment shall be 
submitted in a separate letter or memorandum conspicuously entitled, 
``Request for Confidential Treatment.'' Each request shall state in 
reasonable detail the facts and arguments supporting the request and its 
legal justification. If the submitter had been required by the ASC to 
provide the particular information, conclusory statements that the 
information would be useful to competitors or would impair sales or 
similar statements generally will not be considered sufficient to 
justify confidential treatment. When the submitter had voluntarily 
provided the particular information to the ASC, the submitter must 
specifically identify the documents or information which are of a kind 
the submitter would not customarily make available to the public.
    (c) Designation and separation of confidential material. Submitters 
shall clearly designate all information considered confidential and 
shall clearly separate such information from other non-confidential 
information, whenever possible.
    (d) ASC action on request. A request for confidential treatment of 
information will be considered only in connection with a request for 
access to the information under FOIA as implemented

[[Page 37]]

by this subpart. Upon the receipt of a request for access, the Executive 
Director or his or her designee (``ASC Officer'') as soon as possible 
shall provide the submitter with a written notice describing the request 
and shall provide the submitter with a reasonable opportunity, no longer 
than ten business days, to submit written objections to disclosure of 
the information. Notice may be given orally, and such notice shall be 
promptly confirmed in writing. The ASC Officer may provide a submitter 
with a notice if the submitter did not request confidential treatment of 
the requested information. If the ASC required the submitter to provide 
the requested information, the ASC Officer would need substantial reason 
to believe that disclosure of the requested information would result in 
substantial competitive harm to the submitter. If the submitter provided 
the information voluntarily to the ASC, the ASC officer would need to 
believe that the information is of a kind the submitter would not 
customarily make available to the public. The ASC Officer similarly 
shall notify the person seeking disclosure of the information under FOIA 
of the existence of a request for confidential treatment. These notice 
requirements need not be followed if the ASC Officer determines under 
this subpart that the information should not be disclosed; the 
information has been published or has been officially made available to 
the public; disclosure of the information is required by law (other than 
FOIA); or the submitter's request for confidential treatment appears 
obviously frivolous, in such instance the submitter shall be given 
written notice of the determination to disclose the information at least 
five business days prior to release. The ASC Officer shall carefully 
consider the issues involved, and if disclosure of the requested 
information is warranted, a written notice, containing a brief 
description of why the submitter's objections were not sustained, must 
be forwarded to the submitter within ten business days. The time for 
response may be extended up to ten additional business days, as provided 
in 5 U.S.C. 552(a)(6)(B), or for other periods by agreement between the 
requester and the ASC Officer. This notice shall be provided to the 
submitter at least five business days prior to release of the requested 
information.
    (e) Notice of lawsuit. The ASC Officer shall notify a submitter of 
any filing of any suit against the ASC pursuant to 5 U.S.C. 552 to 
compel disclosure of documents or information covered by the submitter's 
request for confidential treatment within ten business days of service 
of the suit. The ASC Officer also shall notify the requester of the 
documents or information of any suit filed by the submitter against the 
ASC to enjoin their disclosure within ten business days of service of 
the suit.

[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.310  Service of process.

    (a) Service. Any subpoena or other legal process to obtain 
information maintained by the ASC shall be duly issued by a court having 
jurisdiction over the ASC, and served upon the Chairman ASC; 2000 K 
Street, NW., Suite 310; Washington, DC 20006. Where the ASC is named as 
a party, service of process shall be made pursuant to the Federal Rules 
of Civil Procedure upon the Chairman at the above address. The Chairman 
shall immediately forward any subpoena, court order or legal process to 
the General Counsel. If consistent with the terms of the subpoena, court 
order or legal process, the ASC may require the payment of fees, in 
accordance with the fee schedule referred to in Sec. 1102.306(e) prior 
to the release of any records requested pursuant to any subpoena or 
other legal process.
    (b) Notification by person served. If any current or former member, 
officer, employee or agent of the ASC, or any other person who has 
custody of records belonging to the ASC, is served with a subpoena, 
court order, or other process requiring that person's attendance as a 
witness concerning any matter related to official duties, or the 
production of any exempt record of the ASC, such person shall promptly 
advise the Executive Director of such service, the testimony and records 
described in the subpoena, and all relevant facts that may assist the 
Executive Director, in consultation with the ASC General Counsel, in 
determining whether the individual in question should be authorized to 
testify or the records

[[Page 38]]

should be produced. Such person also should inform the court or tribunal 
that issued the process and the attorney for the party upon whose 
application the process was issued, if known, of the substance of this 
section.
    (c) Appearance by person served. Absent the written authorization of 
the Executive Director or designee to disclose the requested 
information, any current or former member, officer, employee, or agent 
of the ASC, and any other person having custody of records of the ASC, 
who is required to respond to a subpoena or other legal process, shall 
attend at the time and place therein specified and respectfully decline 
to produce any such record or give any testimony with respect thereto, 
basing such refusal on this section.

[64 FR 72501, Dec. 28, 1999]

[[Page 39]]



               CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY




  --------------------------------------------------------------------

                SUBCHAPTER A--ORGANIZATION AND OPERATIONS
Part                                                                Page
1202            Freedom of Information Act..................          41
1203            Equal Access to Justice Act.................          51
1204            Privacy Act implementation..................          57
1206            Assessments.................................          66
1207            Minority and women inclusion................          68
1208            Debt collection.............................          75
1209            Rules of practice and procedure.............          95
1212            Post-employment restriction for senior 
                    examiners...............................         133
1213            Office of the Ombudsman.....................         134
                    SUBCHAPTER B--ENTITY REGULATIONS
1225            Minimum capital--temporary increase.........         137
1229            Capital classifications and prompt 
                    corrective action.......................         139
1231            Golden parachute payments...................         148
1233            Reporting of fraudulent financial 
                    instruments.............................         150
1235            Record retention for regulated entities and 
                    office of finance.......................         152
1237            Conservatorship and receivership............         155
                        SUBCHAPTER C--ENTERPRISES
1249            Book-entry procedures.......................         161
1250            Flood insurance.............................         165
1252            Portfolio holdings..........................         166
1253            Prior approval for enterprise products......         166
                  SUBCHAPTER D--FEDERAL HOME LOAN BANKS
1261            Federal Home Loan Bank directors............         181
1263            Members of the banks........................         194
1264            Federal Home Loan Bank housing associates...         213
1265            Core mission activities.....................         216
1266            Advances....................................         217
1267            Federal Home Loan Bank investments..........         228

[[Page 40]]

1269            Standby letters of credit...................         231
1270            Liabilities.................................         234
1272            New business activities.....................         244
1273            Office of Finance...........................         246
1274            Financial statements of the banks...........         255
1278            Voluntary mergers of Federal Home Loan Banks         256
                 SUBCHAPTER E--HOUSING GOALS AND MISSION
1281            Federal Home Loan Bank housing goals........         261
1282            Enterprise housing goals and mission........         269
1290            Community support requirements..............         286
1291            Federal Home Loan Banks' Affordable Housing 
                    Program.................................         290

[[Page 41]]



                SUBCHAPTER A_ORGANIZATION AND OPERATIONS





PART 1202_FREEDOM OF INFORMATION ACT--Table of Contents



Sec.
1202.1 Why did FHFA issue this regulation?
1202.2 What do the terms in this regulation mean?
1202.3 What information can I obtain through FOIA?
1202.4 What information is exempt from disclosure?
1202.5 How do I request information from FHFA or FHFA-OIG under FOIA?
1202.6 What if my request does not have all the information FHFA or 
          FHFA-OIG requires?
1202.7 How will FHFA or FHFA-OIG respond to my FOIA request?
1202.8 If the requested records contain confidential commercial 
          information, what procedures will FHFA or FHFA-OIG follow?
1202.9 How do I appeal a response denying my FOIA request?
1202.10 Will FHFA or FHFA-OIG expedite my request or appeal?
1202.11 What will it cost to get the records I requested?
1202.12 Is there anything else I need to know about FOIA procedures?

    Authority: Pub. L. 110-289, 122 Stat. 2654; 5 U.S.C. 301, 552; 12 
U.S.C. 4526; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235; E.O. 
13392, 70 FR 75373-75377, 3 CFR, 2006 Comp., p. 216-200.

    Source: 76 FR 29634, May 23, 2011, unless otherwise noted.



Sec. 1202.1  Why did FHFA issue this regulation?

    (a) The Freedom of Information Act (FOIA) (5 U.S.C. 552), is a 
federal law that requires FHFA and other Federal Government agencies to 
disclose certain Federal Government records to the public.
    (b) This regulation explains the rules that FHFA and the FHFA Office 
of Inspector General (FHFA-OIG) both follow when processing and 
responding to requests for records under FOIA. It also explains what you 
must do to request records from FHFA or FHFA-OIG under FOIA. You should 
read this regulation together with FOIA, which explains in more detail 
your rights and the records FHFA or FHFA-OIG may release to you.
    (c) If you want to request information about yourself under the 
Privacy Act (5 U.S.C. 552a), you should file your request using FHFA's 
Privacy Act regulations at part 1204 of this title. If you file a FOIA 
request for information about yourself, FHFA or FHFA-OIG will process it 
as a request under the Privacy Act regulation.
    (d) FHFA and FHFA-OIG may make public information that they 
routinely publish or disclose when performing their activities without 
following these procedures.
    (e) This regulation applies to both FHFA and FHFA-OIG.



Sec. 1202.2  What do the terms in this regulation mean?

    Some of the terms you need to understand while reading this 
regulation are--
    Appeals Officer or FOIA Appeals Officer means a person designated by 
the FHFA Director to process appeals of denials of requests for FHFA 
records under FOIA. For appeals pertaining to FHFA-OIG records, Appeals 
Officer or FOIA Appeals Officer means a person designated by the FHFA 
Inspector General to process appeals of denials of requests for FHFA-OIG 
records under FOIA.
    Confidential commercial information means records provided to the 
Federal Government by a submitter that contain material exempt from 
release under Exemption 4 of FOIA, 5 U.S.C. 552(b)(4), because 
disclosure could reasonably be expected to cause substantial competitive 
harm.
    Days, unless stated as ``calendar days,'' are working days and do 
not include Saturdays, Sundays, and federal holidays. If the last day of 
any period prescribed herein falls on a Saturday, Sunday, or federal 
holiday, the last day of the period will be the next working day that is 
not a Saturday, Sunday, or federal holiday.
    Direct costs means the expenses, including contract services, 
incurred by FHFA or FHFA-OIG, in searching for, reviewing and/or 
duplicating records to respond to a request for information.

[[Page 42]]

In the case of a commercial use request, the term also means those 
expenditures FHFA or FHFA-OIG actually incurs in reviewing records to 
respond to the request. Direct costs include the cost of the time of the 
employee performing the work, the cost of any computer searches, and the 
cost of operating duplication equipment. Direct costs do not include 
overhead expenses such as costs of space, and heating or lighting the 
facility in which the records are stored.
    Employee, for the purposes of this regulation, means any person 
holding an appointment to a position of employment with FHFA or FHFA-
OIG, or any person who formerly held such an appointment; any 
conservator appointed by FHFA; or any agent or independent contractor 
acting on behalf of FHFA or FHFA-OIG, even though the appointment or 
contract has terminated.
    FHFA means the Federal Housing Finance Agency and includes its 
predecessor agencies, the Office of Federal Housing Enterprise Oversight 
(OFHEO) and the Federal Housing Finance Board (FHFB).
    FHFA-OIG means the Office of Inspector General for FHFA.
    FOIA Officer and Chief FOIA Officer are persons designated by the 
FHFA Director to process and respond to requests for FHFA records under 
FOIA.
    FOIA Official is a person designated by the FHFA Inspector General 
to process requests for FHFA-OIG records under FOIA.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System or any successor thereto.
    Readily reproducible means that the requested record or records 
exist in electronic format and can be downloaded or transferred intact 
to a computer disk, tape, or another electronic medium with equipment 
and software currently in use by FHFA or FHFA-OIG.
    Record means information or documentary material FHFA or FHFA-OIG 
maintains in any form or format, including electronic, which FHFA or 
FHFA-OIG--
    (1) Created or received under federal law or in connection with the 
transaction of public business;
    (2) Preserved or determined is appropriate for preservation as 
evidence of operations or activities of FHFA or FHFA-OIG, or because of 
the value of the information it contains; and
    (3) Controls at the time it receives a request for disclosure.
    Regulated entities means the Federal Home Loan Mortgage Corporation 
and any affiliate thereof, the Federal National Mortgage Association and 
any affiliate thereof, and the Federal Home Loan Banks.
    Requester means any person seeking access to FHFA or FHFA-OIG 
records under FOIA.
    Search time means the amount of time spent by or on behalf of FHFA 
or FHFA-OIG in attempting to locate records responsive to a request, 
whether manually or by electronic means, including but not limited to 
page-by-page or line-by-line identification of responsive material 
within a record or extraction of electronic information from electronic 
storage media.
    Submitter means any person or entity providing confidential 
information to the Federal Government. The term ``submitter'' includes, 
but is not limited to corporations, state governments, and foreign 
governments.
    Unusual circumstances means the need to--
    (1) Search for and/or collect records from agencies, offices, 
facilities, or locations that are separate from the office processing 
the request;
    (2) Search, review, and/or duplicate a voluminous amount of separate 
and distinct records in order to process a single request; or
    (3) Consult with another agency or among two or more components of 
FHFA or FHFA-OIG that have a substantial interest in the determination 
of a request.



Sec. 1202.3  What information can I obtain through FOIA?

    (a) General. FHFA and FHFA-OIG prohibit employees from releasing or 
disclosing confidential or otherwise non-public information that FHFA or 
FHFA-OIG possesses, except as authorized by this regulation, by the 
Director of FHFA for FHFA records, or by the FHFA Inspector General for 
FHFA-OIG

[[Page 43]]

records, when the disclosure is necessary for the performance of 
official duties.
    (b) Records. You may request that FHFA or FHFA-OIG disclose to you 
its records on a subject of interest to you. FOIA only requires the 
disclosure of records. It does not require FHFA or FHFA-OIG to create 
compilations of information or to provide narrative responses to 
questions or queries. Some information is exempt from disclosure.
    (c) Reading rooms. (1) FHFA maintains electronic and physical 
reading rooms. FHFA's physical reading room is located at 1700 G Street, 
NW., Fourth Floor, Washington, DC 20552, and is open to the public by 
appointment from 9 a.m. to 3 p.m. each business day. For an appointment, 
contact the FOIA Officer by calling (202) 414-6425 or by e-mail at 
foia@fhfa.gov. The electronic reading room is part of the FHFA Web site 
at http://www.fhfa.gov. FHFA-OIG also maintains electronic and physical 
reading rooms. FHFA-OIG's physical reading room is located at 1625 Eye 
Street, NW., Washington, DC 20006, and is open to the public by 
appointment from 9 a.m. to 3 p.m. each business day. For an appointment, 
contact FHFA-OIG by calling (202) 408-2577 or by e-mail at 
bryan.saddler@fhfa.gov. The electronic reading room is part of the FHFA-
OIG Web site at http://www.fhfaoig.gov.
    (2) Each reading room has the following records created after 
November 1, 1996, by FHFA or its predecessor agencies, or by FHFA-OIG, 
and current indices to the following records created by FHFA or its 
predecessor agencies or FHFA-OIG before or after November 1, 1996:
    (i) Final opinions or orders issued in adjudication;
    (ii) Statements of policy and interpretation that are not published 
in the Federal Register;
    (iii) Administrative staff manuals and instructions to staff that 
affect a member of the public and are not exempt from disclosure under 
FOIA; and
    (iv) Copies of records released under FOIA that FHFA or FHFA-OIG 
determines have become or are likely to become the subject of subsequent 
requests for substantially similar records.



Sec. 1202.4  What information is exempt from disclosure?

    (a) General. Unless the Director of FHFA or his or her designee for 
FHFA records, the FHFA Inspector General or his or her designee for 
FHFA-OIG records, or any regulation or statute specifically authorizes 
disclosure, neither FHFA nor FHFA-OIG will release records that are--
    (1) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy, and in fact is properly classified pursuant to such 
Executive Order;
    (2) Related solely to FHFA's or FHFA-OIG's internal personnel rules 
and practices;
    (3) Specifically exempted from disclosure by statute (other than 5 
U.S.C. 552a), provided that such statute--
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential;
    (5) Contained in inter-agency or intra-agency memoranda or letters 
that would not be available by law to a private party in litigation with 
FHFA or FHFA-OIG;
    (6) Contained in personnel, medical or similar files (including 
financial files) the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy;
    (7) Compiled for law enforcement purposes, but only to the extent 
that the production of such law enforcement records or information--
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to fair trial or an impartial 
adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential

[[Page 44]]

source, including a state, local, or foreign agency or authority or any 
private institution or an entity that is regulated and examined by FHFA 
that furnished information on a confidential basis, and, in the case of 
a record compiled by FHFA-OIG or a criminal law enforcement authority in 
the course of a criminal investigation or by an agency conducting a 
lawful national security intelligence investigation, information 
furnished by a confidential source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (8) Contained in or related to examination, operating, or condition 
reports that are prepared by, on behalf of, or for the use of an agency 
responsible for the regulation or supervision of financial institutions; 
or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (b) Discretion to apply exemptions. Although records or parts of 
them may be exempt from disclosure, FHFA or FHFA-OIG may elect under the 
circumstances of any particular request not to apply an exemption. This 
election does not generally waive the exemption and it does not have 
precedential effect. FHFA or FHFA-OIG may still apply an exemption to 
any other records or portions of records, regardless of when the request 
is received.
    (c) Redacted portion. If a requested record contains exempt 
information and information that can be disclosed and the portions can 
reasonably be segregated from each other, the disclosable portion of the 
record will be released to the requester after FHFA or FHFA-OIG deletes 
the exempt portions. If it is technically feasible, FHFA or FHFA-OIG 
will indicate the amount of the information deleted at the place in the 
record where the deletion is made and include a notation identifying the 
exemption that was applied, unless including that indication would harm 
an interest protected by an exemption.
    (d) Exempt and redacted material. FHFA and FHFA-OIG are not required 
to provide an itemized index correlating each withheld document (or 
redacted portion) with a specific exemption justification.
    (e) Disclosure to Congress. This section does not allow FHFA or 
FHFA-OIG to withhold any information from, or to prohibit the disclosure 
of any information to, Congress or any Congressional committee or 
subcommittee.



Sec. 1202.5  How do I request information from FHFA or FHFA-OIG under FOIA?

    (a) Where to send your request. FOIA requests must be in writing. 
You may make a request for FHFA or FHFA-OIG records by writing directly 
to FHFA's FOIA Office through electronic mail, mail, delivery service, 
or facsimile. The electronic mail address is: foia@fhfa.gov. For mail or 
delivery service, the mailing address is: FOIA Officer, Federal Housing 
Finance Agency, 1700 G Street, NW., Washington, DC 20552. The facsimile 
number is: (202) 414-8917. Requests for FHFA-OIG records will be 
forwarded to FHFA-OIG for processing and direct response. You can help 
FHFA and FHFA-OIG process your request by marking electronic mail, 
letters, or facsimiles and the subject line, envelope, or facsimile 
cover sheet with ``FOIA Request.'' FHFA's ``Freedom of Information Act 
Reference Guide,'' which is available on FHFA's Web site, http://
www.fhfa.gov, provides additional information to assist you in making 
your request.
    (b) Provide your name and address. Your request must include your 
full name, your address and, if different, the address at which FHFA or 
FHFA-OIG is to notify you about your request, a telephone number at 
which you can be reached during normal business hours, and an electronic 
mail address, if any.
    (c) Request is under FOIA. Your request must have a statement 
identifying it as being made under FOIA.
    (d) Your FOIA status. If you are submitting your request as a 
``commercial

[[Page 45]]

use'' requester, an ``educational institution'' requester, a ``non-
commercial scientific institution'' requester, or a ``representative of 
the news media'' for the purposes of the fee provisions of FOIA, your 
request must include a statement specifically identifying your status.
    (e) Describing the records you request. You must describe the 
records that you seek in enough detail to enable FHFA or FHFA-OIG 
personnel to locate them with a reasonable amount of effort. Your 
request should include as much specific information as possible that you 
know about each record you request, such as the date, title, name, 
author, recipient, subject matter, or file designations, or the 
description of the record.
    (f) How you want the records produced to you. Your request must tell 
FHFA or FHFA-OIG whether you will inspect the records before duplication 
or want them duplicated and furnished without inspection.
    (g) Agreement to pay fees. In your FOIA request you must agree to 
pay all applicable fees charged under Sec. 1202.11, up to $100.00, 
unless you seek a fee waiver. When making a request, you may specify a 
higher or lower amount you will pay without consultation. Your inability 
to pay a fee does not justify granting a fee waiver.
    (h) Valid requests. FHFA and FHFA-OIG will only process valid 
requests. A valid request must meet all the requirements of this part.



Sec. 1202.6  What if my request does not have all the information 
FHFA or FHFA-OIG requires?

    If FHFA or FHFA-OIG determines that your request does not reasonably 
describe the records you seek, is overly broad, cannot yet be processed 
for reasons related to fees, or lacks required information, you will be 
informed in writing why your request cannot be processed. You will be 
given 15 calendar days to modify your request to meet all requirements. 
This request for additional information tolls the time period for FHFA 
or FHFA-OIG to respond to your request under Sec. 1202.7.
    (a) If you respond with the necessary information, FHFA or FHFA-OIG 
will process that response as a new request and the time period for FHFA 
or FHFA-OIG to respond to your request will start from the date the 
additional information is actually received by FHFA or FHFA-OIG.
    (b) If you do not respond or provide additional information within 
the time allowed, or if the additional information you provide is still 
incomplete or insufficient, FHFA and FHFA-OIG will consider your request 
withdrawn and will notify you that it will not be processed.



Sec. 1202.7  How will FHFA and FHFA-OIG respond to my FOIA request?

    (a) Authority to grant or deny requests. The FOIA Officer and the 
Chief FOIA Officer are authorized to grant or deny any request for FHFA 
records. For FHFA-OIG records, the designated FHFA-OIG FOIA Official is 
authorized to grant or deny any request for FHFA-OIG records.
    (b) Multi-Track request processing. FHFA and FHFA-OIG use a multi-
track system to process FOIA requests. This means that a FOIA request is 
processed based on its complexity. When FHFA or FHFA-OIG receives your 
request, it is assigned to a Standard Track or Complex Track. FHFA or 
FHFA-OIG will notify you if your request is assigned to the Complex 
Track as described in paragraph (f) of this section.
    (1) Standard Track. FHFA and FHFA-OIG assign FOIA requests that are 
routine and require little or no search time, review, or analysis to the 
Standard Track. FHFA and FHFA-OIG respond to these requests within 20 
days after receipt, in the order in which they are received. If FHFA or 
FHFA-OIG determines while processing your Standard Track request, that 
it is more appropriately a Complex Track request, it will be reassigned 
to the Complex Track and you will be notified as described in paragraph 
(f) of this section.
    (2) Complex Track. (i) FHFA and FHFA-OIG assign requests that are 
non-routine to the Complex Track. Complex Track requests are those to 
which FHFA or FHFA-OIG determines that the request and/or response may--
    (A) Be voluminous;

[[Page 46]]

    (B) Involve two or more FHFA or FHFA-OIG units;
    (C) Require consultation with other agencies or entities;
    (D) Require searches of archived documents;
    (E) Seek confidential commercial information as described in Sec. 
1202.8;
    (F) Require an unusually high level of effort to search for, review 
and/or duplicate records;
    (G) Cause undue disruption to the day-to-day activities of FHFA in 
regulating and supervising the regulated entities; or
    (H) Cause undue disruption to the day-to-day activities of FHFA-OIG 
in carrying out its statutory responsibilities.
    (ii) FHFA or FHFA-OIG will respond to Complex Track requests as soon 
as reasonably possible, regardless of the date of receipt.
    (c) Referrals to other agencies. When FHFA or FHFA-OIG receives a 
request seeking records that originated in another Federal Government 
agency, FHFA or FHFA-OIG will refer the request to the other agency for 
response. You will be notified if your request is referred to another 
agency.
    (d) Responses to FOIA requests. FHFA or FHFA-OIG will respond to 
your request by granting or denying it in full, or by granting and 
denying it in part. The response will be in writing. In determining 
which records are responsive to your request, FHFA and FHFA-OIG will 
conduct searches for records FHFA or FHFA-OIG possesses as of the date 
of your request.
    (1) Requests that FHFA or FHFA-OIG grants. If FHFA or FHFA-OIG 
grants your request, the response will include the requested records or 
details about how FHFA or FHFA-OIG will provide them to you and the 
amount of any fees charged.
    (2) Requests that FHFA or FHFA-OIG denies, or grants and denies in 
part. If FHFA or FHFA-OIG denies your request in whole or in part 
because a requested record does not exist or cannot be located, is not 
readily reproducible in the form or format you sought, is not subject to 
FOIA, or is exempt from disclosure, the written response will include 
the requested releasable records, if any, the amount of any fees 
charged, the reasons for denial, and a notice and description of your 
right to file an administrative appeal under Sec. 1202.9.
    (e) Format and delivery of disclosed records. If FHFA or FHFA-OIG 
grants, in whole or in part, your request for disclosure of records 
under FOIA, the records may be made available to you in the form or 
format you requested, if they are readily reproducible in that form or 
format. The records will be sent to the address you provided by regular 
U.S. Mail or by electronic mail unless alternate arrangements are made 
by mutual agreement, such as your agreement to pay express or expedited 
delivery service fees or to pick up records at FHFA or FHFA-OIG offices.
    (f) Extensions of time. (1) In unusual circumstances, FHFA or FHFA-
OIG may extend the Standard Track time limit in paragraph (b)(1) of this 
section for no more than 10 days and notify you of--
    (i) The reason for the extension; and
    (ii) The date on which the determination is expected.
    (2) For requests in the Complex Track, FHFA or FHFA-OIG will provide 
you with an opportunity to modify or reformulate your request so that it 
may be processed on the Standard Track. If the request cannot be 
modified or reformulated to permit processing on the Standard Track, 
FHFA or FHFA-OIG will notify you regarding an alternative time period 
for processing the request.



Sec. 1202.8  If the requested records contain confidential commercial
information, what procedures will FHFA or FHFA-OIG follow?

    (a) General. FHFA or FHFA-OIG will not disclose confidential 
commercial information in response to your FOIA request except as 
described in this section.
    (b) Designation of confidential commercial information. Submitters 
of commercial information must use good-faith efforts to designate, by 
appropriate markings, either at the time of submission or at a 
reasonable time thereafter, those portions of the information they deem 
to be protected under 5 U.S.C. 552(b)(4) and Sec. 1202.4(a)(4). Any 
such designation will expire 10 years after the records are submitted to 
the Federal

[[Page 47]]

Government, unless the submitter requests, and provides reasonable 
justification for, a designation period of longer duration.
    (c) Pre-disclosure notification. Except as provided in paragraph (e) 
of this section, if your FOIA request encompasses confidential 
commercial information, FHFA or FHFA-OIG will, prior to disclosure of 
the information and to the extent permitted by law, provide prompt 
written notice to a submitter that confidential commercial information 
was requested when--
    (1) The submitter has in good faith designated the information as 
confidential commercial information protected from disclosure under 5 
U.S.C. 552(b)(4) and Sec. 1202.4(a)(4); or
    (2) FHFA or FHFA-OIG has reason to believe that the request seeks 
confidential commercial information, the disclosure of which may result 
in substantial competitive harm to the submitter.
    (d) Content of pre-disclosure notification. When FHFA or FHFA-OIG 
sends a pre-disclosure notification to a submitter, it will contain--
    (1) A description of the confidential commercial information 
requested or copies of the records or portions thereof containing the 
confidential business information; and
    (2) An opportunity to object to disclosure within 10 days or such 
other time period that FHFA or FHFA-OIG may allow, by providing to FHFA 
or FHFA-OIG a detailed written statement demonstrating all reasons the 
submitter opposes disclosure.
    (e) Exceptions to pre-disclosure notification. FHFA or FHFA-OIG is 
not required to send a pre-disclosure notification if--
    (1) FHFA or FHFA-OIG determines that information should not be 
disclosed;
    (2) The information has been published lawfully or has been made 
officially available to the public;
    (3) Disclosure of the information is required by law, other than 
FOIA;
    (4) The information requested is not designated by the submitter as 
confidential commercial information pursuant to this section; or
    (5) The submitter's designation, under paragraph (b) of this 
section, appears on its face to be frivolous; except that FHFA or FHFA-
OIG will provide the submitter with written notice of any final decision 
to disclose the designated confidential commercial information within a 
reasonable number of days prior to a specified disclosure date.
    (f) Submitter's objection to disclosure. A submitter may object to 
disclosure within 10 days after date of the Pre-disclosure Notification, 
or such other time period that FHFA or FHFA-OIG may allow, by delivering 
to FHFA or FHFA-OIG a statement demonstrating all grounds on which it 
opposes disclosure, and all reasons supporting its contention that the 
information should not be disclosed. The submitter's objection must 
contain a certification by the submitter, or an officer or authorized 
representative of the submitter, that the grounds and reasons presented 
are true and correct to the best of the submitter's knowledge. The 
submitter's objection may itself be subject to disclosure under FOIA.
    (g) Notice of intent to disclose information. FHFA or FHFA-OIG will 
carefully consider all grounds and reasons provided by a submitter 
objecting to disclosure. If FHFA or FHFA-OIG decides to disclose the 
information over the submitter's objection, the submitter will be 
provided with a written notice of intent to disclose at least 10 days 
before the date of disclosure. The written notice will contain--
    (1) A statement of the reasons why the information will be 
disclosed;
    (2) A description of the information to be disclosed; and
    (3) A specific disclosure date.
    (h) Notice to requester. FHFA or FHFA-OIG will give a requester 
whose request encompasses confidential commercial information--
    (1) A written notice that the request encompasses confidential 
commercial information that may be exempt from disclosure under 5 U.S.C. 
552(b)(4) and Sec. 1202.4(a)(4) and that the submitter of the 
information has been given a pre-disclosure notification with the 
opportunity to comment on the proposed disclosure of the information; 
and
    (2) A written notice that a notice of intent to disclose has been 
provided to the submitter, and that the submitter

[[Page 48]]

has 10 days, or such other time period that FHFA or FHFA-OIG may allow, 
to respond.
    (i) Notice of FOIA lawsuit. FHFA or FHFA-OIG will promptly notify 
the submitter whenever a requester files suit seeking to compel 
disclosure of the submitter's confidential commercial information. FHFA 
or FHFA-OIG will promptly notify the requester whenever a submitter 
files suit seeking to prevent disclosure of information.



Sec. 1202.9  How do I appeal a response denying my FOIA request?

    (a) Right of appeal. If FHFA or FHFA-OIG denied your request in 
whole or in part, you may appeal the denial by writing directly to the 
FOIA Appeals Officer through electronic mail, mail, delivery service, or 
facsimile. The electronic mail address is: foia@fhfa.gov. For mail or 
delivery service, the mailing address is: FOIA Appeals Officer, Federal 
Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. The 
facsimile number is: (202) 414-8917. You can help FHFA and FHFA-OIG 
process your appeal by marking electronic mail, letters, or facsimiles 
and the subject line, envelope, or facsimile cover sheet with ``FOIA 
Appeal.'' For appeals of denials, whether in whole or in part, made by 
FHFA-OIG, the appeal must be clearly marked by adding ``FHFA-OIG'' after 
``FOIA Appeal.'' All appeals from denials, in whole or in part, made by 
FHFA-OIG will be forwarded to the FHFA-OIG FOIA Appeals Officer for 
processing and direct response. FHFA's ``Freedom of Information Act 
Reference Guide,'' which is available on FHFA's Web site, http://
www.fhfa.gov, provides additional information to assist you in making 
your appeal.
    (b) Timing, form, content, and receipt of an appeal. Your appeal 
must be written and submitted within 30 calendar days of the date of the 
decision by FHFA or FHFA-OIG denying, in whole or in part, your request. 
Your appeal must include a copy of the initial request, a copy of the 
letter denying the request in whole or in part, and a statement of the 
circumstances, reasons, or arguments you believe support disclosure of 
the requested record(s). FHFA and FHFA-OIG will not consider an 
improperly addressed appeal to have been received for the purposes of 
the 20-day time period of paragraph (d) of this section until it is 
actually received by FHFA.
    (c) Extensions of time to appeal. If you need more time to file your 
appeal, you may request, in writing, an extension of time of no more 
than 10 calendar days in which to file your appeal, but only if your 
request is made within the original 30-calendar day time period for 
filing the appeal. Granting such an extension is in the sole discretion 
of the FHFA or FHFA-OIG FOIA Appeals Officer.
    (d) Final action on appeal. FHFA's or FHFA-OIG's determination on 
your appeal will be in writing, signed by the FHFA or FHFA-OIG FOIA 
Appeals Officer, and sent to you within 20 days after the appeal is 
received, or by the last day of the last extension under paragraph (e) 
of this section. The determination of an appeal is the final action of 
FHFA or FHFA-OIG on a FOIA request. A determination may--
    (1) Affirm, in whole or in part, the initial denial of the request 
and may include a brief statement of the reason or reasons for the 
decision, including each FOIA exemption relied upon;
    (2) Reverse, in whole or in part, the denial of a request in whole 
or in part, and require the request to be processed promptly in 
accordance with the decision; or
    (3) Remand a request to FHFA or FHFA-OIG, as appropriate, for re-
processing, stating the time limits for responding to the remanded 
request.
    (e) Notice of delayed determinations on appeal. If FHFA or FHFA-OIG 
cannot send a determination on your appeal within the 20-day time limit, 
the designated Appeals Officer will continue to process the appeal and 
upon expiration of the time limit, will inform you of the reason(s) for 
the delay and the date on which a determination may be expected. In this 
notice of delay, the FHFA or FHFA-OIG FOIA Appeals Officer may request 
that you forebear seeking judicial review until a final determination is 
made.
    (f) Judicial review. If the denial of your request for records is 
upheld in whole or in part, or if a determination on your appeal has not 
been sent at the

[[Page 49]]

end of the 20-day period in paragraph (d) of this section, or the last 
extension thereof, you may seek judicial review under 5 U.S.C. 
552(a)(4).



Sec. 1202.10  Will FHFA or FHFA-OIG expedite my request or appeal?

    (a) Request for expedited processing. You may request, in writing, 
expedited processing of an initial request or of an appeal. FHFA or 
FHFA-OIG may grant expedited processing, and give your request or appeal 
priority if your request for expedited processing demonstrates a 
compelling need by establishing one or more of the following--
    (1) Circumstances in which the lack of expedited treatment could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual;
    (2) An urgency to inform the public about an actual or alleged 
Federal Government activity if you are a person primarily engaged in 
disseminating information;
    (3) The loss of substantial due process or rights;
    (4) A matter of widespread and exceptional media interest in which 
there exists possible questions about the Federal Government's 
integrity, affecting public confidence; or
    (5) Humanitarian need.
    (b) Certification of compelling need. Your request for expedited 
processing must include a statement certifying that the reason(s) you 
present demonstrate a compelling need are true and correct to the best 
of your knowledge.
    (c) Determination on request. FHFA or FHFA-OIG will notify you 
within 10 days of receipt of your request whether expedited processing 
has been granted. If a request for expedited treatment is granted, the 
request will be given priority and will be processed as soon as 
practicable. If a request for expedited processing is denied, any appeal 
under Sec. 1202.9 of that decision will be acted on expeditiously.



Sec. 1202.11  What will it cost to get the records I requested?

    (a) Assessment of fees, generally. FHFA or FHFA-OIG will assess you 
for fees covering the direct costs of responding to your request and 
costs for duplicating records, except as otherwise provided in a statute 
with respect to the determination of fees that may be assessed for 
disclosure, search time, or review of particular records.
    (b) Assessment of fees, categories of requesters. The fees that FHFA 
or FHFA-OIG may assess vary depending on the type of request or the type 
of requester you are--
    (1) Commercial use. If you request records for a commercial use, the 
fees that FHFA or FHFA-OIG may assess are limited to FHFA's or FHFA-
OIG's operating costs incurred for document search, review, and 
duplication.
    (2) Educational institution, noncommercial scientific institution, 
or representative of the news media. If you are not requesting records 
for commercial use and you are an educational institution or a 
noncommercial scientific institution, whose purpose is scholarly or 
scientific research, or a representative of the news media, the fees 
that may be assessed are limited to standard reasonable charges for 
duplication in excess of 100 pages or an electronic equivalent of 100 
pages.
    (3) Other. If neither paragraph (b)(1) nor paragraph (b)(2) of this 
section applies, the fees assessed are limited to the costs for document 
searching in excess of two hours and duplication in excess of 100 pages, 
or an electronic equivalent of 100 pages.
    (c) Fee schedule. The current schedule of fees is maintained on 
FHFA's Web site at: http://www.fhfa.gov.
    (d) Notice of anticipated fees in excess of $100.00. When FHFA or 
FHFA-OIG determines or estimates that the fees chargeable to you will 
exceed $100.00, you will be notified of the actual or estimated amount 
of fees you will incur, unless you earlier indicated your willingness to 
pay fees as high as those anticipated. When you are notified that the 
actual or estimated fees exceed $100.00, your FOIA request will not be 
considered received by FHFA or FHFA-OIG until you agree to pay the 
anticipated total fee.
    (e) Advance payment of fees. FHFA or FHFA-OIG may request that you 
pay estimated fees or a deposit in advance of responding to your 
request. If FHFA or FHFA-OIG requests advance payment or a deposit, your 
request will

[[Page 50]]

not be considered received by FHFA or FHFA-OIG until the advance payment 
or deposit is received. FHFA or FHFA-OIG will request advance payment or 
a deposit if--
    (1) The fees are likely to exceed $500.00. FHFA or FHFA-OIG will 
notify you of the likely cost and obtain from you satisfactory assurance 
of full payment if you have a history of prompt payment of FOIA fees to 
FHFA or FHFA-OIG;
    (2) You do not have a history of payment, or if the estimate of fees 
exceeds $1,000.00, FHFA or FHFA-OIG may require an advance payment of 
fees in an amount up to the full estimated charge that will be incurred;
    (3) You previously failed to pay a fee to FHFA or FHFA-OIG in a 
timely fashion, i.e., within 30 calendar days of the date of a billing, 
FHFA or FHFA-OIG may require you to make advance payment of the full 
amount of the fees anticipated before processing a new request or 
finishing processing of a pending request; or
    (4) You have an outstanding balance due from a prior request. FHFA 
or FHFA-OIG may require you to pay the full amount owed plus any 
applicable interest, as provided in paragraph (f) of this section, or 
demonstrate that the fee owed has been paid, as well as payment of the 
full amount of anticipated fees before processing your request.
    (f) Interest. FHFA or FHFA-OIG may charge you interest on an unpaid 
bill starting on the 31st calendar day following the day on which the 
bill was sent. Once a fee payment has been received by FHFA or FHFA-OIG, 
even if not processed, FHFA or FHFA-OIG will stay the accrual of 
interest. Interest charges will be assessed at the rate prescribed by 31 
U.S.C. 3717 and will accrue from the date of the billing.
    (g) FHFA or FHFA-OIG assistance to reduce costs. If FHFA or FHFA-OIG 
notifies you of estimated fees exceeding $100.00 or requests advance 
payment or a deposit, you will have an opportunity to consult with FHFA 
or FHFA-OIG FOIA staff to modify or reformulate your request to meet 
your needs at a lower cost.
    (h) Fee waiver requests. You may request a fee waiver in accordance 
with FOIA and this regulation. FHFA or FHFA-OIG may grant your fee 
waiver request if disclosure of the information is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the Federal Government 
and is not primarily in the commercial interest of the requester. In 
submitting a fee waiver request, you must address the following six 
factors--
    (1) Whether the subject of the requested records concerns the 
operations or activities of the Federal Government;
    (2) Whether the disclosure is likely to contribute to an 
understanding of Federal Government operations or activities;
    (3) Whether disclosure of the requested information will contribute 
to public understanding;
    (4) Whether the disclosure is likely to contribute significantly to 
public understanding of Federal Government operations or activities;
    (5) Whether the requester has a commercial interest that would be 
furthered by the requested disclosure; and
    (6) Whether the magnitude of the identified commercial interest of 
the requester is sufficiently large, in comparison with the public 
interest in disclosure, that disclosure is primarily in the commercial 
interest of the requester.
    (i) Determination on request. FHFA or FHFA-OIG will notify you 
within 20 days of receipt of your request whether the fee waiver has 
been granted. A request for fee waiver that is denied may only be 
appealed when a final decision has been made on the initial FOIA 
request.



Sec. 1202.12  Is there anything else I need to know about 
FOIA procedures?

    This FOIA regulation does not and shall not be construed to create 
any right or to entitle any person, as of right, to any service or to 
the disclosure of any record to which such person is not entitled under 
FOIA. This regulation only provides procedures for requesting records 
under FOIA.

[[Page 51]]



PART 1203_EQUAL ACCESS TO JUSTICE ACT--Table of Contents



                      Subpart A_General Provisions

Sec.
1203.1 Purpose and scope.
1203.2 Definitions.
1203.3 Eligible parties.
1203.4 Standards for awards.
1203.5 Allowable fees and expenses.
1203.6 Rulemaking on maximum rate for fees.
1203.7 Awards against other agencies.
1203.8-1203.9 [Reserved]

             Subpart B_Information Required From Applicants

1203.10 Contents of the application for award.
1203.11 Confidentiality of net worth exhibit.
1203.12 Documentation for fees and expenses.
1203.13-1203.19 [Reserved]

Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award

1203.20 Filing and service of the application for award and related 
          papers.
1203.21 Response to the application for award.
1203.22 Reply to the response.
1203.23 Comments by other parties.
1203.24 Settlement.
1203.25 Further proceedings on the application for award.
1203.26 Decision of the adjudicative officer.
1203.27 Review by FHFA.
1203.28 Judicial review.
1203.29 Payment of award.

    Authority: 12 U.S.C. 4526, 5 U.S.C. 504.

    Source: 75 FR 65219, Oct. 22, 2010, unless otherwise noted..



                      Subpart A_General Provisions



Sec. 1203.1  Purpose and scope.

    (a) This part implements the Equal Access to Justice Act, 5 U.S.C. 
504, by establishing procedures for the filing and consideration of 
applications for awards of fees and other expenses to eligible 
individuals and entities who are parties to adversary adjudications 
before FHFA.
    (b) This part applies to the award of fees and other expenses in 
connection with adversary adjudications before FHFA. However, if a court 
reviews the underlying decision of the adversary adjudication, an award 
for fees and other expenses may be made only pursuant to 28 U.S.C. 
2412(d)(3).



Sec. 1203.2  Definitions.

    As used in this part:
    Adjudicative officer means the official who presided at the 
underlying adversary adjudication, without regard to whether the 
official is designated as a hearing examiner, administrative law judge, 
administrative judge, or otherwise.
    Adversary adjudication means an administrative proceeding conducted 
by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other 
agency of the United States is represented by counsel or otherwise, 
including but not limited to an adjudication conducted under the Safety 
and Soundness Act, as amended, and any implementing regulations. Any 
issue as to whether an administrative proceeding is an adversary 
adjudication for purposes of this part will be an issue for resolution 
in the proceeding on the application for award.
    Affiliate means an individual, corporation, or other entity that 
directly or indirectly controls or owns a majority of the voting shares 
or other interests of the party, or any corporation or other entity of 
which the party directly or indirectly owns or controls a majority of 
the voting shares or other interest, unless the adjudicative officer 
determines that it would be unjust and contrary to the purpose of the 
Equal Access to Justice Act in light of the actual relationship between 
the affiliated entities to consider them to be affiliates for purposes 
of this part.
    Agency counsel means the attorney or attorneys designated by the 
General Counsel of FHFA to represent FHFA in an adversary adjudication 
covered by this part.
    Demand of FHFA means the express demand of FHFA that led to the 
adversary adjudication, but does not include a recitation by FHFA of the 
maximum statutory penalty when accompanied by an express demand for a 
lesser amount.
    Director means the Director of the Federal Housing Finance Agency.
    Fees and other expenses means reasonable attorney or agent fees, the 
reasonable expenses of expert witnesses, and

[[Page 52]]

the reasonable cost of any study, analysis, engineering report, or test, 
which the agency finds necessary for the preparation of the eligible 
party's case.
    FHFA means the Federal Housing Finance Agency.
    Final disposition date means the date on which a decision or order 
disposing of the merits of the adversary adjudication or any other 
complete resolution of the adversary adjudication, such as a settlement 
or voluntary dismissal, becomes final and unappealable, both within the 
agency and to the courts.
    Party means an individual, partnership, corporation, association, or 
public or private organization that is named or admitted as a party, 
that is admitted as a party for limited purposes, or that is properly 
seeking and entitled as of right to be admitted as a party in an 
adversary adjudication.
    Position of FHFA means the position taken by FHFA in the adversary 
adjudication, including the action or failure to act by FHFA upon which 
the adversary adjudication was based.



Sec. 1203.3  Eligible parties.

    (a) To be eligible for an award of fees and other expenses under the 
Equal Access to Justice Act, the applicant must show that it meets all 
conditions of eligibility set out in this paragraph and has complied 
with all the requirements in Subpart B of this part. The applicant must 
also be a party to the adversary adjudication for which it seeks an 
award.
    (b) To be eligible for an award of fees and other expenses for 
prevailing parties, a party must be one of the following:
    (1) An individual who has a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interest, and not more than 500 employees; however, a party who owns an 
unincorporated business will be considered to be an ``individual'' 
rather than the ``sole owner of an unincorporated business'' if the 
issues on which the party prevails are related primarily to personal 
interests rather than to business interests;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees;
    (5) Any other partnership, corporation, association, unit of local 
government, or organization that has a net worth of not more than $7 
million and not more than 500 employees; or
    (6) For the purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (c) For purposes of eligibility under this section:
    (1) The employees of a party must include all persons who regularly 
perform services for remuneration for the party, under the party's 
direction and control. Part-time employees must be included on a 
proportional basis.
    (2) The net worth and number of employees of the party and its 
affiliates must be aggregated to determine eligibility.
    (3) The net worth and number of employees of a party will be 
determined as of the date the underlying adversary adjudication was 
initiated.
    (4) A party that participates in an adversary adjudication primarily 
on behalf of one or more entities that would be ineligible for an award 
is not itself eligible for an award.



Sec. 1203.4  Standards for awards.

    (a) An eligible party that files an application for award of fees 
and other expenses in accordance with this part will receive an award of 
fees and other expenses related to defending against a demand of FHFA if 
the demand was in excess of the decision in the underlying adversary 
adjudication and was unreasonable when compared with the decision under 
the facts and circumstances of the case, unless the party has committed 
a willful violation of law or otherwise acted in bad faith, or unless 
special circumstances make an award unjust. The burden of proof that the 
demand of FHFA was substantially in excess of the decision and is 
unreasonable when compared with the decision is on the eligible party.

[[Page 53]]

    (b) An eligible party that submits an application for award in 
accordance with this part will receive an award of fees and other 
expenses incurred in connection with an adversary adjudication in which 
it prevailed or in a significant and discrete substantive portion of the 
adversary adjudication in which it prevailed, unless the position of 
FHFA in the adversary adjudication was substantially justified or 
special circumstances make an award unjust. FHFA has the burden of proof 
to show that its position was substantially justified and may do so by 
showing that its position was reasonable in law and in fact.



Sec. 1203.5  Allowable fees and expenses.

    (a) Awards of fees and other expenses will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents, and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the party. However, 
except as provided in Sec. 1203.6, an award for the fee of an attorney 
or agent may not exceed $125 per hour and an award to compensate an 
expert witness may not exceed the highest rate at which FHFA pays expert 
witnesses. However, an award may also include the reasonable expenses of 
the attorney, agent, or expert witness as a separate item if he or she 
ordinarily charges clients separately for such expenses.
    (b) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the adjudicative officer will 
consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fees for similar services; or, if the 
attorney, agent, or expert witness is an employee of the eligible party, 
the fully allocated costs of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the eligible 
party;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the adversary adjudication; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) In determining the reasonable cost of any study, analysis, 
engineering report, test, project, or similar matter prepared on behalf 
of a party, the adjudicative officer will consider the prevailing rate 
for similar services in the community in which the services were 
performed.
    (d) Fees and other expenses incurred before the date on which an 
adversary adjudication was initiated will be awarded only if the 
eligible party can demonstrate that they were reasonably incurred in 
preparation for the adversary adjudication.



Sec. 1203.6  Rulemaking on maximum rate for fees.

    If warranted by an increase in the cost of living or by special 
circumstances, FHFA may adopt regulations providing for an award of 
attorney or agent fees at a rate higher than $125 per hour in adversary 
adjudications covered by this part. Special circumstances include the 
limited availability of attorneys or agents who are qualified to handle 
certain types of adversary adjudications. FHFA will conduct any 
rulemaking proceedings for this purpose under the informal rulemaking 
procedures of the Administrative Procedure Act, 5 U.S.C. 553.



Sec. 1203.7  Awards against other agencies.

    If another agency of the United States participates in an adversary 
adjudication before FHFA and takes a position that was not substantially 
justified, the award or appropriate portion of the award to an eligible 
party that prevailed over that agency will be made against that agency.



Sec. Sec. 1203.8-1203.9  [Reserved]



             Subpart B_Information Required From Applicants



Sec. 1203.10  Contents of the application for award.

    (a) An application for award of fees and other expenses under either 
Sec. 1203.4(a) and Sec. 1203.4(b) must:

[[Page 54]]

    (1) Identify the applicant and the adversary adjudication for which 
an award is sought;
    (2) State the amount of fees and other expenses for which an award 
is sought;
    (3) Provide the statements and documentation required by paragraph 
(b) or (c) of this section and Sec. 1203.12 and any additional 
information required by the adjudicative officer; and
    (4) Be signed by the applicant or an authorized officer or attorney 
of the applicant and contain or be accompanied by a written verification 
under oath or under penalty of perjury that the information provided in 
the application is true and correct.
    (b) An application for award under Sec. 1203.4(a) must show that 
the demand of FHFA was substantially in excess of, and was unreasonable 
when compared to, the decision in the underlying adversary adjudication 
under the facts and circumstances of the case. It must also show that 
the applicant is a small entity as defined in 5 U.S.C. 601.
    (c) An application for award under Sec. 1203.4(b) must:
    (1) Show that the applicant has prevailed in a significant and 
discrete substantive portion of the underlying adversary adjudication 
and identify the position of FHFA in the adversary adjudication that the 
applicant alleges was not substantially justified;
    (2) State the number of employees of the applicant and describe 
briefly the type and purposes of its organization or business (if the 
applicant is not an individual);
    (3) State that the net worth of the applicant does not exceed $2 
million, if the applicant is an individual; or for all other applicants, 
state that the net worth of the applicant and its affiliates, if any, 
does not exceed $7 million; and
    (4) Include one of the following:
    (i) A detailed exhibit showing the net worth (net worth exhibit) of 
the applicant and its affiliates, if any, when the underlying adversary 
adjudication was initiated. The net worth exhibit may be in any form 
convenient to the applicant as long as the net worth exhibit provides 
full disclosure of the assets and liabilities of the applicant and its 
affiliates, if any, and is sufficient to determine whether the applicant 
qualifies as an eligible party;
    (ii) A copy of a ruling by the Internal Revenue Service that shows 
that the applicant qualifies as an organization described in section 
501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the 
case of a tax-exempt organization not required to obtain a ruling from 
the Internal Revenue Service on its exempt status, a statement that 
describes the basis for the belief that the applicant qualifies under 
such section; or
    (iii) A statement that the applicant is a cooperative association as 
defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 
1141j(a).



Sec. 1203.11  Confidentiality of net worth exhibit.

    Unless otherwise ordered by the Director, or required by law, the 
statement of net worth will be for the confidential use of the 
adjudicative officer, the Director, and agency counsel.



Sec. 1203.12  Documentation for fees and expenses.

    (a) The application for award must be accompanied by full and 
itemized documentation of the fees and other expenses for which an award 
is sought. The adjudicative officer may require the applicant to provide 
vouchers, receipts, logs, or other documentation for any fees or 
expenses claimed.
    (b) A separate itemized statement must be submitted for each entity 
or individual whose services are covered by the application. Each 
itemized statement must include:
    (1) The hours spent by each entity or individual;
    (2) A description of the specific services performed and the rates 
at which each fee has been computed; and
    (3) Any expenses for which reimbursement is sought, the total amount 
claimed, and the total amount paid or payable by the applicant or by any 
other person or entity.

[[Page 55]]



Sec. Sec. 1203.13-1203.19  [Reserved]



Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award



Sec. 1203.20  Filing and service of the application for award and
related papers.

    (a) An application for an award of fees and other expenses must be 
filed no later than 30 days after the final disposition of the 
underlying adversary adjudication.
    (b) An application for award and other papers related to the 
proceedings on the application for award must be filed and served on all 
parties in the same manner as papers are filed and served in the 
underlying adversary adjudication, except as otherwise provided in this 
part.
    (c) The computation of time for filing and service of the 
application of award and other papers must be computed in the same 
manner as in the underlying adversary adjudication.



Sec. 1203.21  Response to the application for award.

    (a) Agency counsel must file a response within 30 days after service 
of an application for award of fees and other expenses except as 
provided in paragraphs (b) and (c) of this section. In the response, 
agency counsel must explain any objections to the award requested and 
identify the facts relied upon to support the objections. If any of the 
alleged facts are not already in the record of the underlying adversary 
adjudication, agency counsel must include with the response either 
supporting affidavits or a request for further proceedings under Sec. 
1203.25.
    (b) If agency counsel and the applicant believe that the issues in 
the application for award can be settled, they may jointly file a 
statement of their intent to negotiate a settlement. The filing of this 
statement will extend the time for filing a response for an additional 
30 days. Upon request by agency counsel and the applicant, the 
adjudicative officer may grant for good cause further time extensions.
    (c) Agency counsel may request that the adjudicative officer extend 
the time period for filing a response. If agency counsel does not 
respond or otherwise does not contest or settle the application for 
award within the 30-day period or the extended time period, the 
adjudicative officer may make an award of fees and other expenses upon a 
satisfactory showing of entitlement by the applicant.



Sec. 1203.22  Reply to the response.

    Within 15 days after service of a response, the applicant may file a 
reply. If the reply is based on any alleged facts not already in the 
record of the underlying adversary adjudication, the applicant must 
include with the reply either supporting affidavits or a request for 
further proceedings under Sec. 1203.25.



Sec. 1203.23  Comments by other parties.

    Any party to the underlying adversary adjudication other than the 
applicant and agency counsel may file comments on an application for 
award within 30 calendar days after it is served, or on a response 
within 15 calendar days after it is served. A commenting party may not 
participate further in proceedings on the application unless the 
adjudicative officer determines that the public interest requires such 
participation in order to permit full exploration of matters raised in 
the comments.



Sec. 1203.24  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of an award before the final decision on the application for award is 
made, either in connection with a settlement of the underlying adversary 
adjudication or after the underlying adversary adjudication has been 
concluded. If the eligible party and agency counsel agree on a proposed 
settlement of an award before an application for award has been filed, 
the application must be filed with the proposed settlement.



Sec. 1203.25  Further proceedings on the application for award.

    (a) On request of either the applicant or agency counsel, on the 
adjudicative officer's own initiative, or as requested by the Director 
under Sec. 1203.27, the adjudicative officer may order further

[[Page 56]]

proceedings, such as an informal conference, oral argument, additional 
written submissions, or, as to issues other than substantial 
justification (such as the applicant's eligibility or substantiation of 
fees and expenses), pertinent discovery or an evidential hearing. Such 
further proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application for award and will 
be conducted as promptly as possible. The issue as to whether the 
position of FHFA in the underlying adversary adjudication was 
substantially justified will be determined on the basis of the whole 
administrative record that was made in the underlying adversary 
adjudication.
    (b) A request that the adjudicative officer order further 
proceedings under this section must specifically identify the 
information sought on the disputed issues and must explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 1203.26  Decision of the adjudicative officer.

    (a) The adjudicative officer must make the initial decision on the 
basis of the written record, except if further proceedings are ordered 
under Sec. 1203.25.
    (b) The adjudicative officer must issue a written initial decision 
on the application for award within 30 days after completion of 
proceedings on the application. The initial decision will become the 
final decision of FHFA after 30 days from the day it was issued, unless 
review is ordered under Sec. 1203.27.
    (c) In all initial decisions, the adjudicative officer must include 
findings and conclusions with respect to the applicant's eligibility and 
an explanation of the reasons for any difference between the amount 
requested by the applicant and the amount awarded. If the applicant has 
sought an award against more than one agency, the adjudicative officer 
must also include findings and conclusions with respect to the 
allocation of payment of any award made.
    (d) In initial decisions on applications filed pursuant to Sec. 
1203.4(a), the adjudicative officer must include findings and 
conclusions as to whether FHFA made a demand that was substantially in 
excess of the decision in the underlying adversary adjudication and that 
was unreasonable when compared with that decision; and, if at issue, 
whether the applicant has committed a willful violation of the law or 
otherwise acted in bad faith, or whether special circumstances would 
make the award unjust.
    (e) In decisions on applications filed pursuant to Sec. 1203.4(b), 
the adjudicative officer must include written findings and conclusions 
as to whether the applicant is a prevailing party and whether the 
position of FHFA was substantially justified; and, if at issue, whether 
the applicant unduly protracted or delayed the underlying adversary 
adjudication or whether special circumstance make the award unjust.



Sec. 1203.27  Review by FHFA.

    Within 30 days after the adjudicative officer issues an initial 
decision under Sec. 1203.26, either the applicant or agency counsel may 
request the Director to review the initial decision of the adjudicative 
officer. The Director may also decide, at his or her discretion, to 
review the initial decision. If review is ordered, the Director must 
issue a final decision on the application for award or remand the 
application for award to the adjudicative officer for further 
proceedings under Sec. 1203.25.



Sec. 1203.28  Judicial review.

    Any party, other than the United States, that is dissatisfied with 
the final decision on an application for award of fees and expenses 
under this part may seek judicial review as provided in 5 U.S.C. 
504(c)(2).



Sec. 1203.29  Payment of award.

    To receive payment of an award of fees and other expenses granted 
under this part, the applicant must submit a copy of the final decision 
that grants the award and a certification that the applicant will not 
seek review of the decision in the United States courts to the Director, 
Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 
20552. FHFA must pay the amount awarded to the applicant within 60 days 
of receipt of the submission of the copy of the final decision and the 
certification, unless judicial review of

[[Page 57]]

the award has been sought by any party to the proceedings.



PART 1204_PRIVACY ACT IMPLEMENTATION--Table of Contents



Sec.
1204.1 Why did FHFA issue this part?
1204.2 What do the terms in this part mean?
1204.3 How do I make a Privacy Act request?
1204.4 How will FHFA or FHFA-OIG respond to my Privacy Act request?
1204.5 What if I am dissatisfied with the response to my Privacy Act 
          request?
1204.6 What does it cost to get records under the Privacy Act?
1204.7 Are there any exemptions from the Privacy Act?
1204.8 How are records secured?
1204.9 Does FHFA or FHFA-OIG collect and use Social Security numbers?
1204.10 What are FHFA and FHFA-OIG employee responsibilities under the 
          Privacy Act?
1204.11 May FHFA-OIG obtain Privacy Act records from other Federal 
          agencies for law enforcement purposes?

    Authority: 5 U.S.C. 552a.

    Source: 76 FR 51871, Aug. 19, 2011, unless otherwise noted.



Sec. 1204.1  Why did FHFA issue this part?

    The Federal Housing Finance Agency (FHFA) issued this part to--
    (a) Implement the Privacy Act, a Federal law that helps protect 
private information about individuals that Federal agencies collect or 
maintain. You should read this part together with the Privacy Act, which 
provides additional information about records maintained on individuals;
    (b) Establish rules that apply to all FHFA and FHFA Office of 
Inspector General (FHFA-OIG) maintained systems of records retrievable 
by an individual's name or other personal identifier;
    (c) Describe procedures through which you may request access to 
records, request amendment or correction of those records, or request an 
accounting of disclosures of those records by FHFA or FHFA-OIG;
    (d) Inform you, that when it is appropriate to do so, FHFA or FHFA-
OIG automatically processes a Privacy Act request for access to records 
under both the Privacy Act and FOIA, following the rules contained in 
this part and in FHFA's Freedom of Information Act regulation at part 
1202 of this title so that you will receive the maximum amount of 
information available to you by law;
    (e) Notify you that this part does not entitle you to any service or 
to the disclosure of any record to which you are not entitled under the 
Privacy Act. It also does not, and may not be relied upon, to create any 
substantive or procedural right or benefit enforceable against FHFA or 
FHFA-OIG; and
    (f) Notify you that this part applies to both FHFA and FHFA-OIG.



Sec. 1204.2  What do the terms in this part mean?

    The following definitions apply to the terms used in this part--
    Access means making a record available to a subject individual.
    Amendment means any correction of, addition to, or deletion from a 
record.
    Court means any entity conducting a legal proceeding.
    Days, unless stated as ``calendar days,'' are working days and do 
not include Saturdays, Sundays, and federal holidays. If the last day of 
any period prescribed herein falls on a Saturday, Sunday, or federal 
holiday, the last day of the period will be the next working day that is 
not a Saturday, Sunday, or federal holiday.
    FHFA means the Federal Housing Finance Agency and includes its 
predecessor agencies, the Office of Federal Housing Enterprise Oversight 
(OFHEO) and the Federal Housing Finance Board (FHFB).
    FHFA-OIG means the Office of Inspector General for FHFA.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Individual means a natural person who is either a citizen of the 
United States of America or an alien lawfully admitted for permanent 
residence.
    Maintain includes collect, use, disseminate, or control.
    Privacy Act means the Privacy Act of 1974, as amended (5 U.S.C. 
552a).
    Privacy Act Appeals Officer means a person designated by the FHFA 
Director to process appeals of denials of requests for or seeking 
amendment of records maintained by FHFA under the Privacy Act. For 
appeals pertaining to

[[Page 58]]

records maintained by FHFA-OIG, Privacy Act Appeals Officer means a 
person designated by the FHFA Inspector General to process appeals of 
denials of requests for or seeking amendment of records maintained by 
FHFA-OIG under the Privacy Act.
    Privacy Act Officer means a person designated by the FHFA Director 
who has primary responsibility for privacy and data protection policy 
and is authorized to process requests for or amendment of records 
maintained by FHFA under the Privacy Act. For requests pertaining to 
records maintained by FHFA-OIG, Privacy Act Officer means a person 
designated by the FHFA Inspector General to process requests for or 
amendment of records maintained by FHFA-OIG under the Privacy Act.
    Record means any item, collection, or grouping of information about 
an individual that FHFA or FHFA-OIG maintains within a system of 
records, including, but not limited to, the individual's name, an 
identifying number, symbol, or other identifying particular assigned to 
the individual, such as a finger or voice print, or photograph.
    Routine use means the purposes for which records and information 
contained in a system of records may be disclosed by FHFA or FHFA-OIG 
without the consent of the subject of the record. Routine uses for 
records are identified in each system of records notice. Routine use 
does not include disclosure that subsection (b) of the Privacy Act (5 
U.S.C. 552a(b)) otherwise permits.
    Senior Agency Official for Privacy means a person designated by the 
FHFA Director who has the authority and responsibility to oversee and 
supervise the FHFA privacy program and implementation of the Privacy 
Act.
    System of Records means a group of records FHFA or FHFA-OIG 
maintains or controls from which information is retrieved by the name of 
an individual or by some identifying number, symbol, or other 
identifying particular assigned to the individual. Single records or 
groups of records that are not retrieved by a personal identifier are 
not part of a system of records.
    System of Records Notice means a notice published in the Federal 
Register which announces the creation, deletion, or amendment of one or 
more system of records. System of records notices are also used to 
identify a system of records' routine uses.



Sec. 1204.3  How do I make a Privacy Act request?

    (a) What is a valid request? In general, a Privacy Act request can 
be made on your own behalf for records or information about you. You can 
make a Privacy Act request on behalf of another individual as the parent 
or guardian of a minor, or as the guardian of someone determined by a 
court to be incompetent. You also may request access to another 
individual's record or information if you have that individual's written 
consent, unless other conditions of disclosure apply.
    (b) How and where do I make a request? Your request must be in 
writing. Regardless of whether your request seeks records from FHFA, 
FHFA-OIG, or both, you may appear in person to submit your written 
request to the FHFA Privacy Act Officer, or send your written request to 
the FHFA Privacy Act Officer by electronic mail, mail, delivery service, 
or facsimile. The electronic mail address is: privacy@fhfa.gov. For mail 
or delivery service, the address is: FHFA Privacy Act Officer, Federal 
Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. The 
facsimile number is (202) 414-6425. Requests for FHFA-OIG maintained 
records will be forwarded to FHFA-OIG for processing and direct 
response. You can help FHFA and FHFA-OIG process your request by marking 
electronic mail, letters, or facsimiles and the subject line, envelope, 
or facsimile cover sheet with ``Privacy Act Request.'' FHFA's ``Privacy 
Act Reference Guide,'' which is available on FHFA's Web site, http://
www.fhfa.gov, provides additional information to assist you in making 
your request.
    (c) What must the request include? You must describe the record that 
you want in enough detail to enable either the FHFA or FHFA-OIG Privacy 
Act Officer to locate the system of records containing it with a 
reasonable amount of effort. Include specific information about each 
record sought, such as the

[[Page 59]]

time period in which you believe it was compiled, the name or 
identifying number of each system of records in which you believe it is 
kept, and the date, title or name, author, recipient, or subject matter 
of the record. As a general rule, the more specific you are about the 
record that you want, the more likely FHFA or FHFA-OIG will be able to 
locate it in response to your request.
    (d) How do I request amendment or correction of a record? If you are 
requesting an amendment or correction of any FHFA or FHFA-OIG record, 
identify each particular record in question and the system of records in 
which the record is located, describe the amendment or correction that 
you want, and state why you believe that the record is not accurate, 
relevant, timely, or complete. You may submit any documentation that you 
think would be helpful, including an annotated copy of the record.
    (e) How do I request for an accounting of disclosures? If you are 
requesting an accounting of disclosures by FHFA or FHFA-OIG of a record 
to another person, organization, or Federal agency, you must identify 
each particular record in question. An accounting generally includes the 
date, nature, and purpose of each disclosure, as well as the name and 
address of the person, organization, or Federal agency to which the 
disclosure was made, subject to Sec. 1204.7.
    (f) Must I verify my identity? Yes. When making requests under the 
Privacy Act, your request must verify your identity to protect your 
privacy or the privacy of the individual on whose behalf you are acting. 
If you make a Privacy Act request and you do not follow these identity 
verification procedures, FHFA or FHFA-OIG cannot and will not process 
your request.
    (1) How do I verify my identity? To verify your identity, you must 
state your full name, current address, and date and place of birth. In 
order to help identify and locate the records you request, you also may, 
at your option, include your Social Security number. If you make your 
request in person and your identity is not known to either the FHFA or 
FHFA-OIG Privacy Act Officer, you must provide either two forms of 
unexpired identification with photographs issued by a federal, state, or 
local government agency or entity (i.e. passport, passport card, 
driver's license, ID card, etc.), or one form of unexpired 
identification with a photograph issued by a federal, state, or local 
government agency or entity (i.e. passport, passport card, driver's 
license, ID card, etc.) and a properly authenticated birth certificate. 
If you make your request by mail, your signature either must be 
notarized or submitted under 28 U.S.C. 1746, a law that permits 
statements to be made under penalty of perjury as a substitute for 
notarization. You may fulfill this requirement by having your signature 
on your request letter witnessed by a notary or by including the 
following statement just before the signature on your request letter: 
``I declare (or certify, verify, or state) under penalty of perjury that 
the foregoing is true and correct. Executed on [date]. [Signature].''
    (2) How do I verify parentage or guardianship? If you make a Privacy 
Act request as the parent or guardian of a minor, or as the guardian of 
someone determined by a court to be incompetent, with respect to records 
or information about that individual, you must establish--
    (i) The identity of the individual who is the subject of the record, 
by stating the individual's name, current address, date and place of 
birth, and, at your option, the Social Security number of the 
individual;
    (ii) Your own identity, as required in paragraph (f)(1) of this 
section;
    (iii) That you are the parent or guardian of the individual, which 
you may prove by providing a properly authenticated copy of the 
individual's birth certificate showing your parentage or a properly 
authenticated court order establishing your guardianship; and
    (iv) That you are acting on behalf of the individual in making the 
request.



Sec. 1204.4  How will FHFA or FHFA-OIG respond to my Privacy Act request?

    (a) How will FHFA or FHFA-OIG locate the requested records? FHFA or 
FHFA-OIG will search to determine if requested records exist in the 
system

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of records it owns or controls. You can find FHFA and FHFA-OIG system of 
records notices on our Web site at http://www.fhfa.gov. You can also 
find descriptions of OFHEO and FHFB system of records that have not yet 
been superseded on the FHFA Web site. A description of the system of 
records also is available in the ``Privacy Act Issuances'' compilation 
published by the Office of the Federal Register of the National Archives 
and Records Administration. You can access the ``Privacy Act Issuances'' 
compilation in most large reference and university libraries or 
electronically at the Government Printing Office Web site at: http://
www.gpoaccess.gov/privacyact/index.html. You also can request a copy of 
FHFA or FHFA-OIG system of records from the Privacy Act Officer.
    (b) How long does FHFA or FHFA-OIG have to respond? Either the FHFA 
or FHFA-OIG Privacy Act Officer generally will respond to your request 
in writing within 20 days after receiving it, if it meets the Sec. 
1204.3 requirements. For requests to amend a record, either the FHFA or 
FHFA-OIG Privacy Act Officer will respond within 10 days after receipt 
of the request to amend. FHFA or FHFA-OIG may extend the response time 
in unusual circumstances, such as when consultation is needed with 
another Federal agency (if that agency is subject to the Privacy Act) 
about a record or to retrieve a record shipped offsite for storage. If 
you submit your written request in person, either the FHFA or FHFA-OIG 
Privacy Act Officer may disclose records or information to you directly 
and create a written record of the grant of the request. If you are to 
be accompanied by another person when accessing your record or any 
information pertaining to you, FHFA or FHFA-OIG may require your written 
authorization before permitting access or discussing the record in the 
presence of the other person.
    (c) What will the FHFA or FHFA-OIG response include? The written 
response will include a determination to grant or deny your request in 
whole or in part, a brief explanation of the reasons for the 
determination, and the amount of the fee charged, if any, under Sec. 
1204.6. If you are granted a request to access a record, FHFA or FHFA-
OIG will make the record available to you. If you are granted a request 
to amend or correct a record, the response will describe any amendments 
or corrections made and advise you of your right to obtain a copy of the 
amended or corrected record.
    (d) What is an adverse determination? An adverse determination is a 
determination on a Privacy Act request that--
    (1) Withholds any requested record in whole or in part;
    (2) Denies a request for an amendment or correction of a record in 
whole or in part;
    (3) Declines to provide a requested accounting of disclosures;
    (4) Advises that a requested record does not exist or cannot be 
located; or
    (5) Finds what has been requested is not a record subject to the 
Privacy Act.
    (e) What will be stated in a response that includes an adverse 
determination? If an adverse determination is made with respect to your 
request, either the FHFA or FHFA-OIG Privacy Act Officer's written 
response under this section will identify the person responsible for the 
adverse determination, state that the adverse determination is not a 
final action of FHFA or FHFA-OIG, and state that you may appeal the 
adverse determination under Sec. 1204.5.



Sec. 1204.5  What if I am dissatisfied with the response to my 
Privacy Act request?

    (a) May I appeal the response? You may appeal any adverse 
determination made in response to your Privacy Act request. If you wish 
to seek review by a court of any adverse determination or denial of a 
request, you must first appeal it under this section.
    (b) How do I appeal the response?--(1) You may appeal by submitting 
in writing, a statement of the reasons you believe the adverse 
determination should be overturned. FHFA or FHFA-OIG must receive your 
written appeal within 30 calendar days of the date of the adverse 
determination under Sec. 1204.4. Your written appeal may include as 
much or as little related information as you wish, as long as it clearly 
identifies the determination (including the

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request number, if known) that you are appealing.
    (2) If FHFA or FHFA-OIG denied your request in whole or in part, you 
may appeal the denial by writing directly to the FHFA Privacy Act 
Appeals Officer through electronic mail, mail, delivery service, or 
facsimile. The electronic mail address is: privacy@fhfa.gov. For mail or 
express mail, the address is: FHFA Privacy Act Appeals Officer, Federal 
Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. The 
facsimile number is: (202) 414-8917. For appeals of FHFA-OIG denials, 
whether in whole or in part, the appeal must be clearly marked by adding 
``FHFA-OIG'' after ``Privacy Act Appeal.'' All appeals from denials, in 
whole or part, made by FHFA-OIG will be forwarded to the FHFA-OIG 
Privacy Act Appeals Officer for processing and direct response. You can 
help FHFA and FHFA-OIG process your appeal by marking electronic mail, 
letters, or facsimiles and the subject line, envelope, or facsimile 
cover sheet with ``Privacy Act Appeal.'' FHFA's ``Privacy Act Reference 
Guide,'' which is available on FHFA's Web site, http://www.fhfa.gov, 
provides additional information to assist you in making your appeal. 
FHFA or FHFA-OIG ordinarily will not act on an appeal if the Privacy Act 
request becomes a matter of litigation.
    (3) If you need more time to file your appeal, you may request an 
extension of time of no more than ten (10) calendar days in which to 
file your appeal, but only if your request is made within the original 
30-calendar day time period for filing the appeal. Granting an extension 
is in the sole discretion of either the FHFA or FHFA-OIG Privacy Act 
Appeals Officer.
    (c) Who has the authority to grant or deny appeals? For appeals from 
the FHFA Privacy Act Officer, the FHFA Privacy Act Appeals Officer is 
authorized to act on your appeal. For appeals from the FHFA-OIG Privacy 
Act Officer, the FHFA-OIG Privacy Act Appeals Officer is authorized to 
act on your appeal.
    (d) When will FHFA or FHFA-OIG respond to my appeal? FHFA or FHFA-
OIG generally will respond to you in writing within 30 days of receipt 
of an appeal that meets the requirements of paragraph (b) of this 
section, unless for good cause shown, the FHFA or FHFA-OIG Privacy Act 
Appeals Officer extends the response time.
    (e) What will the FHFA or FHFA-OIG response include? The written 
response will include the determination of either the FHFA or FHFA-OIG 
Privacy Act Appeals Officer, whether to grant or deny your appeal in 
whole or in part, a brief explanation of the reasons for the 
determination, and information about the Privacy Act provisions for 
court review of the determination.
    (1) If your appeal concerns a request for access to records or 
information and the appeal determination grants your access, the records 
or information, if any, will be made available to you.
    (2)(i) If your appeal concerns an amendment or correction of a 
record and the appeal determination grants your request for an amendment 
or correction, the response will describe any amendment or correction 
made to the record and advise you of your right to obtain a copy of the 
amended or corrected record under this part. FHFA or FHFA-OIG will 
notify all persons, organizations, or Federal agencies to which it 
previously disclosed the record, if an accounting of that disclosure was 
made, that the record has been amended or corrected. Whenever the record 
is subsequently disclosed, the record will be disclosed as amended or 
corrected.
    (ii) If the response to your appeal denies your request for an 
amendment or correction to a record, the response will advise you of 
your right to file a Statement of Disagreement under paragraph (f) of 
this section.
    (f) What is a Statement of Disagreement?--(1) A Statement of 
Disagreement is a concise written statement in which you clearly 
identify each part of any record that you dispute and explain your 
reason(s) for disagreeing with either the FHFA or FHFA-OIG Privacy Act 
Appeals Officer's denial, in whole or in part, of your appeal requesting 
amendment or correction. Your Statement of Disagreement must be received 
by either the FHFA or FHFA-OIG Privacy Act Officer within 30 calendar 
days of either the FHFA or

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FHFA-OIG Privacy Act Appeals Officer's denial, in whole or in part, of 
your appeal concerning amendment or correction of a record. FHFA and 
FHFA-OIG will place your Statement of Disagreement in the system of 
records in which the disputed record is maintained. FHFA and FHFA-OIG 
may also append a concise statement of its reason(s) for denying the 
request for an amendment or correction of the record.
    (2) FHFA and FHFA-OIG will notify all persons, organizations, and 
Federal agencies to which it previously disclosed the disputed record, 
if an accounting of that disclosure was made, that the record is 
disputed and provide your Statement of Disagreement and the FHFA or 
FHFA-OIG concise statement, if any. Whenever the disputed record is 
subsequently disclosed, a copy of your Statement of Disagreement and the 
FHFA or FHFA-OIG concise statement, if any, will also be disclosed.



Sec. 1204.6  What does it cost to get records under the Privacy Act?

    (a) Must I agree to pay fees? Your Privacy Act request is your 
agreement to pay all applicable fees, unless you specify a limit on the 
amount of fees you agree to pay. FHFA or FHFA-OIG will not exceed the 
specified limit without your written agreement.
    (b) How does FHFA or FHFA-OIG calculate fees? FHFA and FHFA-OIG will 
charge a fee for duplication of a record under the Privacy Act in the 
same way it charges for duplication of records under FOIA in 12 CFR 
1202.11. There are no fees to search for or review records.



Sec. 1204.7  Are there any exemptions from the Privacy Act?

    (a) What is a Privacy Act exemption? The Privacy Act authorizes the 
Director and the FHFA Inspector General to exempt records or information 
in a system of records from some of the Privacy Act requirements, if the 
Director or the FHFA Inspector General, as appropriate, determines that 
the exemption is necessary.
    (b) How do I know if the records or information I want are exempt?--
(1) Each system of records notice will advise you if the Director or the 
FHFA Inspector General has determined records or information in records 
are exempt from Privacy Act requirements. If the Director or the FHFA 
Inspector General has claimed an exemption for a system of records, the 
system of records notice will identify the exemption and the provisions 
of the Privacy Act from which the system is exempt.
    (2) Until superseded by FHFA or FHFA-OIG systems of records, the 
following OFHEO and FHFB systems of records are, under 5 U.S.C. 
552a(k)(2) or (k)(5), exempt from the Privacy Act requirements of 5 
U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I), and 
(f)--
    (i) OFHEO-11 Litigation and Enforcement Information System; and
    (ii) FHFB-5 Agency Personnel Investigative Records.
    (c) What exemptions potentially apply to FHFA-OIG records? Unless 
the FHFA Inspector General, his or her designee, or a statute 
specifically authorizes disclosure, FHFA-OIG will not release records of 
matters that are subject to the following exemptions--
    (1) To the extent that the systems of records entitled ``FHFA-OIG 
Audit Files Database,'' ``FHFA-OIG Investigative & Evaluative Files 
Database,'' ``FHFA-OIG Investigative & Evaluative MIS Database,'' 
``FHFA-OIG Hotline Database,'' and ``FHFA-OIG Correspondence Database'' 
contain any information compiled by FHFA-OIG for the purpose of criminal 
law enforcement investigations, such information falls within the scope 
of exemption (j)(2) of the Privacy Act, 5 U.S.C. 552a(j)(2), and 
therefore these systems of records are exempt from the requirements of 
the following subsections of the Privacy Act to that extent, for the 
reasons stated in paragraphs (1)(i) through (vi) of this section.
    (i) From 5 U.S.C. 552a(c)(3), because release of an accounting of 
disclosures to an individual who is the subject of an investigation or 
evaluation could reveal the nature and scope of the investigation or 
evaluation and could result in the altering or destruction of evidence, 
improper influencing of witnesses, and other evasive actions that could 
impede or compromise the investigation or evaluation.
    (ii) From 5 U.S.C. 552a(d)(1), because release of investigative or 
evaluative

[[Page 63]]

records to an individual who is the subject of an investigation or 
evaluation could interfere with pending or prospective law enforcement 
proceedings, constitute an unwarranted invasion of the personal privacy 
of third parties, reveal the identity of confidential sources, or reveal 
sensitive investigative or evaluative techniques and procedures.
    (iii) From 5 U.S.C. 552a(d)(2), because amendment or correction of 
investigative or evaluative records could interfere with pending or 
prospective law enforcement proceedings, or could impose an impossible 
administrative and investigative or evaluative burden by requiring FHFA-
OIG to continuously retrograde its investigations or evaluations 
attempting to resolve questions of accuracy, relevance, timeliness, and 
completeness.
    (iv) From 5 U.S.C. 552a(e)(1), because it is often impossible to 
determine relevance or necessity of information in the early stages of 
an investigation or evaluation. The value of such information is a 
question of judgment and timing; what appears relevant and necessary 
when collected may ultimately be evaluated and viewed as irrelevant and 
unnecessary to an investigation or evaluation. In addition, FHFA-OIG may 
obtain information concerning the violation of laws other than those 
within the scope of its jurisdiction. In the interest of effective law 
enforcement, FHFA-OIG should retain this information because it may aid 
in establishing patterns of unlawful activity and provide leads for 
other law enforcement agencies. Further, in obtaining evidence during an 
investigation or evaluation, information may be provided to FHFA-OIG 
that relates to matters incidental to the main purpose of the 
investigation or evaluation, but which may be pertinent to the 
investigative or evaluative jurisdiction of another agency. Such 
information cannot readily be identified.
    (v) From 5 U.S.C. 552a(e)(2), because in a law enforcement 
investigation or an evaluation it is usually counterproductive to 
collect information to the greatest extent practicable directly from the 
subject thereof. It is not always feasible to rely upon the subject of 
an investigation or evaluation as a source for information which may 
implicate him or her in illegal activities. In addition, collecting 
information directly from the subject could seriously compromise an 
investigation or evaluation by prematurely revealing its nature and 
scope, or could provide the subject with an opportunity to conceal 
criminal activities, or intimidate potential sources, in order to avoid 
apprehension.
    (vi) From 5 U.S.C. 552a(e)(3), because providing such notice to the 
subject of an investigation or evaluation, or to other individual 
sources, could seriously compromise the investigation or evaluation by 
prematurely revealing its nature and scope, or could inhibit 
cooperation, permit the subject to evade apprehension, or cause 
interference with undercover activities.
    (2) To the extent that the systems of records entitled ``FHFA-OIG 
Audit Files Database,'' ``FHFA-OIG Investigative & Evaluative Files 
Database,'' ``FHFA-OIG Investigative & Evaluative MIS Database,'' 
``FHFA-OIG Hotline Database,'' and ``FHFA-OIG Correspondence Database,'' 
contain information compiled by FHFA-OIG for the purpose of criminal law 
enforcement investigations, such information falls within the scope of 
exemption (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), and therefore 
these systems of records are exempt from the requirements of the 
following subsections of the Privacy Act to that extent, for the reasons 
stated in paragraphs (c)(2)(i) through (iv) of this section.
    (i) From 5 U.S.C. 552a(c)(3), because release of an accounting of 
disclosures to an individual who is the subject of an investigation or 
evaluation could reveal the nature and scope of the investigation or 
evaluation and could result in the altering or destruction of evidence, 
improper influencing of witnesses, and other evasive actions that could 
impede or compromise the investigation or evaluation.
    (ii) From 5 U.S.C. 552a(d)(1), because release of investigative or 
evaluative records to an individual who is the subject of an 
investigation or evaluation could interfere with pending or prospective 
law enforcement proceedings, constitute an unwarranted invasion of the 
personal privacy of third parties,

[[Page 64]]

reveal the identity of confidential sources, or reveal sensitive 
investigative or evaluative techniques and procedures.
    (iii) From 5 U.S.C. 552a(d)(2), because amendment or correction of 
investigative or evaluative records could interfere with pending or 
prospective law enforcement proceedings, or could impose an impossible 
administrative and investigative or evaluative burden by requiring FHFA-
OIG to continuously retrograde its investigations or evaluations 
attempting to resolve questions of accuracy, relevance, timeliness, and 
completeness.
    (iv) From 5 U.S.C. 552a(e)(1), because it is often impossible to 
determine relevance or necessity of information in the early stages of 
an investigation or evaluation. The value of such information is a 
question of judgment and timing; what appears relevant and necessary 
when collected may ultimately be evaluated and viewed as irrelevant and 
unnecessary to an investigation or evaluation. In addition, FHFA-OIG may 
obtain information concerning the violation of laws other than those 
within the scope of its jurisdiction. In the interest of effective law 
enforcement, FHFA-OIG should retain this information because it may aid 
in establishing patterns of unlawful activity and provide leads for 
other law enforcement agencies. Further, in obtaining evidence during an 
investigation or evaluation, information may be provided to FHFA-OIG 
that relates to matters incidental to the main purpose of the 
investigation or evaluation but which may be pertinent to the 
investigative or evaluative jurisdiction of another agency. Such 
information cannot readily be identified.
    (3) To the extent that the systems of records entitled ``FHFA-OIG 
Audit Files Database,'' ``FHFA-OIG Investigative & Evaluative Files 
Database,'' ``FHFA-OIG Investigative & Evaluative MIS Database,'' 
``FHFA-OIG Hotline Database,'' and ``FHFA-OIG Correspondence Database'' 
contain any investigatory material compiled by FHFA-OIG for the purpose 
of determining suitability, eligibility, or qualifications for Federal 
civilian employment or Federal contracts, the release of which would 
reveal the identity of a source who furnished information to the 
Government under an express promise that the identity of the source 
would be held in confidence, such information falls within the scope of 
exemption (k)(5) of the Privacy Act, 5 U.S.C. 552a(k)(5), and therefore 
these systems of records are exempt from the requirements of subsection 
(d)(1) of the Privacy Act to that extent, because release would reveal 
the identity of a source who furnished information to the Government 
under an express promise of confidentiality. Revealing the identity of a 
confidential source could impede future cooperation by sources, and 
could result in harassment or harm to such sources.



Sec. 1204.8  How are records secured?

    (a) What controls must FHFA and FHFA-OIG have in place? FHFA and 
FHFA-OIG must establish administrative and physical controls to prevent 
unauthorized access to their systems of records, unauthorized or 
inadvertent disclosure of records, and physical damage to or destruction 
of records. The stringency of these controls corresponds to the 
sensitivity of the records that the controls protect. At a minimum, the 
administrative and physical controls must ensure that--
    (1) Records are protected from public view;
    (2) The area in which records are kept is supervised during business 
hours to prevent unauthorized persons from having access to them;
    (3) Records are inaccessible to unauthorized persons outside of 
business hours; and
    (4) Records are not disclosed to unauthorized persons or under 
unauthorized circumstances in either oral or written form.
    (b) Is access to records restricted? Access to records is restricted 
to authorized employees who require access in order to perform their 
official duties.



Sec. 1204.9  Does FHFA or FHFA-OIG collect and use Social Security numbers?

    FHFA and FHFA-OIG collect Social Security numbers only when it is 
necessary and authorized. At least annually, the FHFA Privacy Act 
Officer or the Senior Agency Official for Privacy

[[Page 65]]

will inform employees who are authorized to collect information that--
    (a) Individuals may not be denied any right, benefit, or privilege 
as a result of refusing to provide their Social Security numbers, unless 
the collection is authorized either by a statute or by a regulation 
issued prior to 1975; and
    (b) They must inform individuals who are asked to provide their 
Social Security numbers--
    (1) If providing a Social Security number is mandatory or voluntary;
    (2) If any statutory or regulatory authority authorizes collection 
of a Social Security number; and
    (3) The uses that will be made of the Social Security number.



Sec. 1204.10  What are FHFA and FHFA-OIG employee responsibilities 
under the Privacy Act?

    At least annually, the FHFA Privacy Act Officer or the Senior Agency 
Official for Privacy will inform employees about the provisions of the 
Privacy Act, including the Privacy Act's civil liability and criminal 
penalty provisions. Unless otherwise permitted by law, an authorized 
FHFA or FHFA-OIG employee shall--
    (a) Collect from individuals only information that is relevant and 
necessary to discharge FHFA or FHFA-OIG responsibilities;
    (b) Collect information about an individual directly from that 
individual whenever practicable;
    (c) Inform each individual from whom information is collected of--
    (1) The legal authority to collect the information and whether 
providing it is mandatory or voluntary;
    (2) The principal purpose for which FHFA or FHFA-OIG intends to use 
the information;
    (3) The routine uses FHFA or FHFA-OIG may make of the information; 
and
    (4) The effects on the individual, if any, of not providing the 
information.
    (d) Ensure that the employee's office does not maintain a system of 
records without public notice and notify appropriate officials of the 
existence or development of any system of records that is not the 
subject of a current or planned public notice;
    (e) Maintain all records that are used in making any determination 
about an individual with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to ensure fairness to the 
individual in the determination;
    (f) Except for disclosures made under FOIA, make reasonable efforts, 
prior to disseminating any record about an individual, to ensure that 
the record is accurate, relevant, timely, and complete;
    (g) When required by the Privacy Act, maintain an accounting in the 
specified form of all disclosures of records by FHFA or FHFA-OIG to 
persons, organizations, or Federal agencies;
    (h) Maintain and use records with care to prevent the unauthorized 
or inadvertent disclosure of a record to anyone; and
    (i) Notify the appropriate official of any record that contains 
information that the Privacy Act does not permit FHFA or FHFA-OIG to 
maintain.



Sec. 1204.11  May FHFA-OIG obtain Privacy Act records from other 
Federal agencies for law enforcement purposes?

    (a) The FHFA Inspector General is authorized under the Inspector 
General Act of 1978, as amended, to make written requests under 5 U.S.C. 
552a(b)(7) for transfer of records maintained by other Federal agencies 
which are necessary to carry out an authorized law enforcement activity 
under the Inspector General Act of 1978, as amended.
    (b) The FHFA Inspector General delegates the authority under 
paragraph (a) of this section to the following FHFA-OIG officials--
    (1) Principal Deputy Inspector General;
    (2) Deputy Inspector General for Audits;
    (3) Deputy Inspector General for Investigations;
    (4) Deputy Inspector General for Evaluations; and
    (5) Deputy Inspector General for Administration.
    (c) The officials listed in paragraph (b) of this section may not 
further delegate or re-delegate the authority described in paragraph (a) 
of this section.

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PART 1206_ASSESSMENTS--Table of Contents



Sec.
1206.1 Purpose.
1206.2 Definitions.
1206.3 Annual assessments.
1206.4 Increased costs of regulation.
1206.5 Working capital fund.
1206.6 Notice and review.
1206.7 Delinquent payment.
1206.8 Enforcement of payment.

    Authority: 12 U.S.C. 4516.

    Source: 73 FR 56713, Sept. 30, 2008, unless otherwise noted.



Sec. 1206.1  Purpose.

    This part sets forth the policy and procedures of the FHFA with 
respect to the establishment and collection of the assessments of the 
Regulated Entities under 12 U.S.C. 4516.



Sec. 1206.2  Definitions.

    As used in this part:
    Act means the Federal Housing Finance Regulatory Reform Act of 2008.
    Adequately capitalized means the adequately capitalized capital 
classification under 12 U.S.C. 1364 and related regulations.
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Enterprise means the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation; and ``Enterprises'' means, 
collectively, the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation.
    Federal Home Loan Bank, or Bank, means a Federal Home Loan Bank 
established under section 12 of the Federal Home Loan Bank Act (12 
U.S.C. 1432).
    FHFA means the Federal Housing Finance Agency.
    Minimum required regulatory capital means the highest amount of 
capital necessary for a Bank to comply with any of the capital 
requirements established by the Director and applicable to it.
    Regulated Entity means the Federal National Mortgage Association, 
the Federal Home Loan Mortgage Corporation, or any of the Federal Home 
Loan Banks.
    Surplus funds means any amounts that are not obligated as of 
September 30 of the fiscal year for which the assessment was made.
    Total exposure means the sum, as of the most recent June quarterly 
minimum capital report of the Enterprise, of the amounts of the 
following assets and off-balance sheet obligations that are used to 
calculate the quarterly minimum capital requirement of the Enterprise 
under 12 CFR part 1750:
    (1) On-balance sheet assets;
    (2) Guaranteed mortgage-backed securities; and
    (3) Other off-balance sheet obligations as determined by the 
Director.
    Working capital fund means an account for amounts collected from the 
Regulated Entities to establish an operating reserve that is intended to 
provide for the payment of large or multiyear capital and operating 
expenditures, as well as unanticipated expenses.



Sec. 1206.3  Annual assessments.

    (a) Establishing assessments. The Director shall establish annual 
assessments on the Regulated Entities in an amount sufficient to 
maintain a working capital fund and provide for the payment of the 
FHFA's costs and expenses, including, but not limited to:
    (1) Expenses of any examinations under 12 U.S.C. 4517 and section 20 
of the Federal Home Loan Bank Act (12 U.S.C. 1440);
    (2) Expenses of obtaining any reviews and credit assessments under 
12 U.S.C. 4519;
    (3) Expenses of any enforcement activities under 12 U.S.C. 3645;
    (4) Expenses of other FHFA litigation under 12 U.S.C. 4513;
    (5) Expenses relating to the maintenance of the FHFA records 
relating to examinations and other reviews of the Regulated Entities;
    (6) Such amounts in excess of actual expenses for any given year 
deemed necessary to maintain a working capital fund;
    (7) Expenses relating to monitoring and ensuring compliance with 
housing goals;
    (8) Expenses relating to conducting reviews of new products;

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    (9) Expenses related to affordable housing and community programs;
    (10) Other administrative expenses of the FHFA;
    (11) Expenses related to preparing reports and studies;
    (12) Expenses relating to the collection of data and development of 
systems to calculate the House Price Index (HPI) and the conforming loan 
limit;
    (13) Amounts deemed necessary by the Director to wind up the affairs 
of the Office of Federal Housing Enterprise Oversight and the Federal 
Housing Finance Board; and
    (14) Expenses relating to other responsibilities of the FHFA under 
the Safety and Soundness Act, the Federal Home Loan Bank Act and the 
Act.
    (b) Allocating assessments. The Director shall allocate the annual 
assessments as follows:
    (1) Enterprises. Assessments collected from the Enterprises shall 
not exceed amounts sufficient to provide for payment of the costs and 
expenses relating to the Enterprises as determined by the Director. Each 
Enterprise shall pay a proportional share that bears the same ratio to 
the total portion of the annual assessment allocated to the Enterprises 
that the total exposure of each Enterprise bears to the total exposure 
of both Enterprises.
    (2) Federal Home Loan Banks. Assessments collected from the Banks 
shall not exceed amounts sufficient to provide for payment of the costs 
and expenses relating to the Banks as determined by the Director. Each 
Bank shall pay a pro rata share of the annual assessments based on the 
ratio between its minimum required regulatory capital and the aggregate 
minimum required regulatory capital of every Bank.
    (c) Timing and amount of semiannual payment. Each Regulated Entity 
shall pay on or before October 1 and April 1 an amount equal to one-half 
of its annual assessment.
    (d) Surplus funds. Surplus funds shall be credited to the annual 
assessment by reducing the amount collected in the following semiannual 
period by the amount of the surplus funds. Surplus funds shall be 
allocated to all Regulated Entities in the same proportion in which they 
were collected, except as determined by the Director.



Sec. 1206.4  Increased costs of regulation.

    (a) Increase for inadequate capitalization. The Director may, at his 
or her discretion, increase the amount of a semiannual payment allocated 
to a Regulated Entity that is not classified as adequately capitalized 
to pay additional estimated costs of regulation of that Regulated 
Entity.
    (b) Increase for enforcement activities. The Director may, at his or 
her discretion, adjust the amount of a semiannual payment allocated to a 
Regulated Entity to ensure that the Regulated Entity bears the estimated 
costs of enforcement activities under the Act related to that Regulated 
Entity.
    (c) Additional assessment for deficiencies. At any time, the 
Director may make and collect from any Regulated Entity an assessment, 
payable immediately or through increased semiannual payments, to cover 
the estimated amount of any deficiency for the semiannual period as a 
result of increased costs of regulation of a Regulated Entity due to its 
classification as other than adequately capitalized, or as a result of 
enforcement activities related to that Regulated Entity. Any amount 
remaining from such additional assessment and the semiannual payments at 
the end of any semiannual period during which such an additional 
assessment is made shall be deducted pro rata (based upon the amount of 
the additional assessments) from the assessment for the following 
semiannual period for that Regulated Entity.



Sec. 1206.5  Working capital fund.

    (a) Assessments. The Director shall establish and collect from the 
Regulated Entities such assessments he or she deems necessary to 
maintain a working capital fund.
    (b) Purposes. Assessments collected to maintain the working capital 
fund shall be used to establish an operating reserve and to provide for 
the payment of large or multiyear capital and operating expenditures as 
well as unanticipated expenses.
    (c) Remittance of excess assessed funds. At the end of each year for 
which an assessment under this section is made,

[[Page 68]]

the Director shall remit to each Regulated Entity any amount of assessed 
and collected funds in excess of the amount the Director deems necessary 
to maintain a working capital fund in the same proportions as paid under 
the most recent annual assessment.



Sec. 1206.6  Notice and review.

    (a) Written notice of budget. The Director shall provide to each 
Regulated Entity written notice of the projected budget for the Agency 
for the upcoming fiscal year. Such notice shall be provided at least 30 
days before the beginning of the applicable fiscal year.
    (b) Written notice of assessments. The Director shall provide each 
Regulated Entity with written notice of assessments as follows:
    (1) Annual assessments. The Director shall provide each Regulated 
Entity with written notice of the annual assessment and the semiannual 
payments to be collected under this part. Notice of the annual 
assessment and semiannual payments shall be provided before the start of 
the new fiscal year.
    (2) Immediate assessments. The Director shall provide each Regulated 
Entity with written notice of any immediate assessments to be collected 
under Sec. 1206.4 of this chapter. Notice of any immediate assessment 
and the required payments shall be provided at such reasonable time as 
determined by the Director.
    (3) Changes to assessments. The Director shall provide each 
Regulated Entity with written notice of any changes in the assessment 
procedures that the Director, in his or her sole discretion, deems 
necessary under the circumstances.
    (c) Request for review. At the written request of a Regulated 
Entity, the Director, in his or her discretion, may review the 
calculation of the proportional share of the annual assessment, the 
semiannual payments, and any partial payments to be collected under this 
part. The determination of the Director upon such review is final. 
Except as provided by the Director, review by the Director does not 
suspend the requirement that the Regulated Entity make the semiannual 
payment or partial payment on or before the date it is due. Any 
adjustments determined appropriate shall be credited or otherwise 
addressed by the following year's assessment for that entity.



Sec. 1206.7  Delinquent payment.

    The Director may assess interest and penalties on any delinquent 
semiannual payment or other payment assessed under this part in 
accordance with 31 U.S.C. 3717 (interest and penalty on claims) and part 
1704 of this title (debt collection).



Sec. 1206.8  Enforcement of payment.

    The Director may enforce the payment of any assessment under 12 
U.S.C. 4631 (cease-and-desist proceedings), 12 U.S.C. 4632 (temporary 
cease-and-desist orders), and 12 U.S.C. 4626 (civil money penalties).



PART 1207_MINORITY AND WOMEN INCLUSION--Table of Contents



                            Subpart A_General

Sec.
1207.1 Definitions.
1207.2 Policy, purpose, and scope.
1207.3 Limitations.
1207.4-1207.9 [Reserved]

  Subpart B_Minority and Women Inclusion and Diversity at the Federal 
                         Housing Finance Agency

1207.10-1207.19 [Reserved]

   Subpart C_Minority and Women Inclusion and Diversity at Regulated 
                   Entities and the Office of Finance

1207.20 Office of Minority and Women Inclusion.
1207.21 Equal opportunity in employment and contracting.
1207.22 Regulated entity and Office of Finance Reports.
1207.23 Annual reports--format and contents.
1207.24 Enforcement.

    Authority: 12 U.S.C. 4520 and 4526; 12 U.S.C. 1833e; E.O. 11478.

    Source: 75 FR 81402, Dec. 28, 2010, unless otherwise noted.



                            Subpart A_General



Sec. 1207.1  Definitions.

    The following definitions apply to the terms used in this part:

[[Page 69]]

    Business and activities means operational, commercial, and economic 
endeavors of any kind, whether for profit or not for profit and whether 
regularly or irregularly engaged in by a regulated entity or the Office 
of Finance, and includes, but is not limited to, management of the 
regulated entity or the Office of Finance, employment, procurement, 
insurance, and all types of contracts, including contracts for the 
issuance or guarantee of any debt, equity, or mortgage-related 
securities, the management of mortgage and securities portfolios, the 
making of equity investments, the purchase, sale and servicing of 
single- and multi-family mortgage loans, and the implementation of 
affordable housing or community investment programs and initiatives.
    Director means the Director of FHFA or his or her designee.
    Disability has the same meaning as defined in 29 CFR 1630.2(g) and 
1630.3 and Appendix to Part 1630--Interpretive Guidance on Title I of 
the Americans with Disabilities Act.
    Disabled-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-
dealers, and providers of legal services--
    (1) Qualified as a Service-Disabled Veteran-Owned Small Business 
Concern as defined in 13 CFR 125.8 through 125.13; or
    (2) More than fifty percent (50%) of the ownership or control of 
which is held by one or more persons with a disability; and
    (3) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more persons with a disability.
    FHFA means the Federal Housing Finance Agency.
    Minority means any Black (or African) American, Native American (or 
American Indian), Hispanic (or Latino) American, or Asian American.
    Minority-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is held by one or more minority individuals; and
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more minority individuals.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Reasonable accommodation has the same meaning as defined in 29 CFR 
1630.2(o) and Appendix to Part 1630--Interpretive Guidance on Title I of 
the Americans with Disabilities Act.
    Regulated entity means the Federal Home Loan Mortgage Corporation, 
the Federal National Mortgage Association, any Federal Home Loan Bank 
and/or any affiliate thereof that is subject to the regulatory authority 
of FHFA. The term ``regulated entities'' means (collectively) the 
Federal Home Loan Mortgage Corporation, the Federal National Mortgage 
Association, and/or any affiliate Federal Home Loan Bank and/or any 
affiliate thereof that is subject to the regulatory authority of FHFA.
    Women-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is held by one or more women;
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more women; and
    (3) A significant percentage of senior management positions of which 
are held by women.



Sec. 1207.2  Policy, purpose, and scope.

    (a) General policy. FHFA's policy is to promote non-discrimination, 
diversity and, at a minimum, the inclusion of women, minorities, and 
individuals with disabilities in its own activities

[[Page 70]]

and in the business and activities of the regulated entities and the 
Office of Finance.
    (b) Purpose. This part establishes minimum standards and 
requirements for the regulated entities and the Office of Finance to 
promote diversity and ensure, to the maximum extent possible in balance 
with financially safe and sound business practices, the inclusion and 
utilization of minorities, women, individuals with disabilities, and 
minority-, women-, and disabled-owned businesses at all levels, in 
management and employment, in all business and activities, and in all 
contracts for services of any kind, including services that require the 
services of investment banking, asset management entities, broker-
dealers, financial services entities, underwriters, accountants, 
investment consultants, and providers of legal services.
    (c) Scope. This part applies to each regulated entity's and the 
Office of Finance's implementation of and adherence to diversity, 
inclusion and non-discrimination policies, practices and principles.



Sec. 1207.3  Limitations.

    (a) Except as expressly provided herein for enforcement by FHFA, the 
regulations in this part do not, are not intended to, and should not be 
construed to create any right or benefit, substantive or procedural, 
enforceable at law, in equity, or through administrative proceeding, by 
any party against the United States, its departments, agencies, or 
entities, its officers, employees, or agents, a regulated entity or the 
Office of Finance, their officers, employees or agents, or any other 
person.
    (b) The contract clause required by section 1207.21(b)(6) and the 
itemized data reporting on numbers of contracts and amounts involved 
required under Sec. Sec. 1207.22 and 1207.23(b)(11) through Sec. 
1207.23(b)(13) apply only to contracts for services in any amount and to 
contracts for goods that equal or exceed $10,000 in annual value, 
whether in a single contract, multiple contracts, a series of contracts 
or renewals of contracts, with a single vendor.



Sec. Sec. 1207.4 through 1207.9  [Reserved]



  Subpart B_Minority and Women Inclusion and Diversity at the Federal 
                         Housing Finance Agency



Sec. 1207.10  through 1207.19 [Reserved]



   Subpart C_Minority and Women Inclusion and Diversity at Regulated 
                   Entities and the Office of Finance



Sec. 1207.20  Office of Minority and Women Inclusion.

    (a) Establishment. Each regulated entity and the Office of Finance 
shall establish and maintain an Office of Minority and Women Inclusion, 
or designate and maintain an office to perform the responsibilities of 
this part, under the direction of an officer of the regulated entity or 
the Office of Finance who reports directly to either the Chief Executive 
Officer or the Chief Operating Officer, or the equivalent. Each 
regulated entity and the Office of Finance shall notify the Director 
within thirty (30) days after any change in the designation of the 
office performing the responsibilities of this part.
    (b) Adequate resources. Each regulated entity and the Office of 
Finance will ensure that its Office of Minority and Women Inclusion, or 
the office designated to perform the responsibilities of this part, is 
provided human, technological, and financial resources sufficient to 
fulfill the requirements of this part.
    (c) Responsibilities. Each Office of Minority and Women Inclusion, 
or the office designated to perform the responsibilities of this part, 
is responsible for fulfilling the requirements of this part, 12 U.S.C. 
1833e(b) and 4520, and such standards and requirements as the Director 
may issue hereunder.



Sec. 1207.21  Equal opportunity in employment and contracting.

    (a) Equal opportunity notice. Each regulated entity and the Office 
of Finance shall publish a statement, endorsed by

[[Page 71]]

its Chief Executive Officer and approved by its Board of Directors, 
confirming its commitment to the principles of equal opportunity in 
employment and in contracting, at a minimum regardless of color, 
national origin, sex, religion, age, disability status, or genetic 
information. The notice also shall confirm commitment against 
retaliation or reprisal. Publication shall include, at a minimum, 
conspicuous posting in all regulated entity and Office of Finance 
physical facilities, including through alternative media formats, as 
necessary, and accessible posting on the regulated entity's and the 
Office of Finance's Web site. The notice shall be updated and re-
published, re-endorsed by the Chief Executive Officer and re-approved by 
the Board of Directors annually.
    (b) Policies and procedures. Each regulated entity and the Office of 
Finance shall develop, implement, and maintain policies and procedures 
to ensure, to the maximum extent possible in balance with financially 
safe and sound business practices, the inclusion and utilization of 
minorities, women, individuals with disabilities, and minority-, women-, 
and disabled-owned businesses in all business and activities and at all 
levels of the regulated entity and the Office of Finance, including in 
management, employment, procurement, insurance, and all types of 
contracts. The policies and procedures of each regulated entity and the 
Office of Finance at a minimum shall:
    (1) Confirm its adherence to the principles of equal opportunity and 
non-discrimination in employment and in contracting;
    (2) Describe its policy against discrimination in employment and 
contracting;
    (3) Establish internal procedures to receive and attempt to resolve 
complaints of discrimination in employment and in contracting. 
Publication will include at a minimum making the procedure conspicuously 
accessible to employees and applicants through print, electronic, or 
alternative media formats, as necessary, and through the regulated 
entity's or the Office of Finance's Web site;
    (4) Establish an effective procedure for accepting, reviewing and 
granting or denying requests for reasonable accommodations of 
disabilities from employees or applicants for employment;
    (5) Encourage the consideration of diversity in nominating or 
soliciting nominees for positions on boards of directors and engage in 
recruiting and outreach directed at encouraging individuals who are 
minorities, women and individuals with disabilities to seek or apply for 
employment with the regulated entity or the Office of Finance;
    (6) Except as limited by Sec. 1207.3(b), require that each contract 
it enters contains a material clause committing the contractor to 
practice the principles of equal employment opportunity and non-
discrimination in all its business activities and requiring each such 
contractor to include the clause in each subcontract it enters for 
services or goods provided to the regulated entity or the Office of 
Finance;
    (7) Identify the types of contracts the regulated entity considers 
exempt under Sec. 1207.3(b) and any commercially reasonable thresholds, 
exceptions, and limitations the regulated entity establishes for the 
implementation of Sec. 1207.21(c)(2). The policies and procedures must 
address the rationale and need for implementing the thresholds, 
exceptions, or limitations;
    (8) Be published and accessible to employees, applicants for 
employment, contractors, potential contractors, and members of the 
public through print, electronic, or alternative media formats, as 
necessary, and through the regulated entity's or the Office of Finance's 
Web site; and
    (9) Be reviewed at the direction of the officer immediately 
responsible for directing the Office of Minority and Women Inclusion, or 
other office designated to perform the responsibilities of this part, at 
least annually to assess their effectiveness and to incorporate 
appropriate changes.
    (c) Outreach for contracting. Each regulated entity and the Office 
of Finance shall establish a program for outreach designed to ensure to 
the maximum extent possible the inclusion in contracting opportunities 
of minorities, women, individuals with disabilities, and minority-, 
women-, and disabled-owned businesses. The program at a minimum shall:

[[Page 72]]

    (1) Apply to all contracts entered into by the regulated entity or 
the Office of Finance, including contracts with financial institutions, 
investment banking firms, investment consultants or advisors, financial 
services entities, mortgage banking firms, asset management entities, 
underwriters, accountants, brokers, brokers-dealers, and providers of 
legal services;
    (2) Establish policies, procedures and standards requiring the 
publication of contracting opportunities designed to encourage 
contractors that are minorities, women, individuals with disabilities, 
and minority-, women-, and disabled-owned businesses to submit offers or 
bid for the award of such contracts; and
    (3) Ensure the consideration of the diversity of a contractor when 
the regulated entity or the Office of Finance reviews and evaluates 
offers from contractors.



Sec. 1207.22  Regulated entity and Office of Finance reports.

    (a) General. Each regulated entity and the Office of Finance, 
through its Office of Minority and Women Inclusion, or other office 
designated to perform the responsibilities of this part, shall report in 
writing, in such format as the Director may require, to the Director 
describing its efforts to promote diversity and ensure the inclusion and 
utilization of minorities, women, individuals with disabilities, and 
minority-, women-, and disabled-owned businesses at all levels, in 
management and employment, in all business and activities, and in all 
contracts for services and the results of such efforts.
    (1) Within 180 days after the effective date of this regulation each 
regulated entity and the Office of Finance shall submit to the Director 
or his or her designee a preliminary status report describing actions 
taken, plans for and progress toward implementing the provisions of 12 
U.S.C. 4520 and this part; and including to the extent available the 
data and information required by this part to be included in an annual 
report.
    (2) FHFA intends to use the preliminary status report solely for the 
purpose of examining the submitting regulated entity or the Office of 
Finance and reporting to the institution on its operations and the 
condition of its program.
    (b) FHFA use of reports. The data and information reported to FHFA 
under this part (except for the initial report under paragraph (a)(1) of 
this section) are intended to be used for any permissible supervisory 
and regulatory purpose, including examinations, enforcement actions, 
identification of matters requiring attention, and production of FHFA 
examination, operating and condition reports related to one or more of 
the regulated entities and the Office of Finance. FHFA may use the 
information and data submitted to issue aggregate reports and data 
summaries that each regulated entity and the Office of Finance may use 
to assess its own progress and accomplishments, or to the public as it 
deems necessary. FHFA is not requiring, and does not desire, that 
reports under this part contain personally identifiable information.
    (c) Frequency of reports. Each regulated entity and the Office of 
Finance shall submit an annual report on or before March 1 of each year, 
beginning in 2012, reporting on the period of January 1 through December 
31 of the preceding year, and such other reports as the Director may 
require. If the date for submission falls on a Saturday, Sunday, or 
Federal holiday, the report is due no later than the next day that is 
not a Saturday, Sunday, or Federal holiday.
    (d) Annual summary. Each regulated entity and the Office of Finance 
shall include in its annual report to the Director (pursuant to 12 
U.S.C. 1723a(k), 1456(c), or 1440, with respect to the regulated 
entities) a summary of its activities under this part during the 
previous year, including at a minimum, detailed information describing 
the actions taken by the regulated entity or the Office of Finance 
pursuant to 12 U.S.C. 4520 and a statement of the total amounts paid by 
the regulated entity or the Office of Finance to contractors during the 
previous year and the percentage of such amounts paid to contractors 
that are minorities or minority-owned businesses, women or women-owned 
businesses, and individuals with disabilities and disabled-

[[Page 73]]

owned businesses respectively, as limited by Sec. 1207.3(b).



Sec. 1207.23  Annual reports--format and contents.

    (a) Format. Each annual report shall consist of a detailed summary 
of the regulated entity's or the Office of Finance's activities during 
the reporting year to carry out the requirements of this part, which 
report may also be made a part of the regulated entity's or the Office 
of Finance's annual report to the Director. The report shall contain a 
table of contents and conclude with a certification by the regulated 
entity's or the Office of Finance's officer responsible for the annual 
report that the data and information presented in the report are 
accurate, and are approved for submission.
    (b) Contents. The annual report shall contain the information 
provided in the regulated entity's or the Office of Finance's annual 
summary pursuant to Sec. 1207.22(d) and, in addition to any other 
information or data the Director may require, shall include:
    (1) The EEO-1 Employer Information Report (Form EEO-1 used by the 
Equal Employment Opportunity Commission (EEOC) and the Office of Federal 
Contract Compliance Programs (OFCCP) to collect certain demographic 
information) or similar reports filed by the regulated entity or the 
Office of Finance during the reporting year. If the regulated entity or 
the Office of Finance does not file Form EEO-1 or similar reports, the 
regulated entity or the Office of Finance shall submit to FHFA a 
completed Form EEO-1;
    (2) All other reports or plans the regulated entity or the Office of 
Finance submitted to the EEOC, the Department of Labor, OFCCP or 
Congress (``reports or plans'' is not intended to include separate 
complaints or charges of discrimination or responses thereto) during the 
reporting year;
    (3) Data showing by minority and gender the number of individuals 
applying for employment with the regulated entity or the Office of 
Finance in each occupational or job category identified on the Form EEO-
1 during the reporting year;
    (4) Data showing by minority and gender the number of individuals 
hired for employment with the regulated entity or the Office of Finance 
in each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (5) Data showing by minority, gender and disability classification, 
and categorized as voluntary or involuntary, the number of separations 
from employment with the regulated entity or the Office of Finance in 
each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (6) Data showing the number of requests for reasonable accommodation 
received from employees and applicants for employment, the number of 
requests granted, and the disabilities accommodated and the types of 
accommodation granted during the reporting year;
    (7) Data showing for the reporting year by minority, gender, and 
disability classification the number of individuals applying for 
promotion at the regulated entity or the Office of Finance--
    (i) Within each occupational or job category identified on the Form 
EEO-1; and
    (ii) From one such occupational or job category to another;
    (8) Data showing by minority, gender, and disability classification 
the number of individuals--
    (i) Promoted at the regulated entity or the Office of Finance within 
each occupational or job category identified on the Form EEO-1, after 
applying for such a promotion;
    (ii) Promoted at the regulated entity or the Office of Finance 
within each occupational or job category identified on the Form EEO-1, 
without applying for such a promotion; and
    (iii) Promoted at the regulated entity or the Office of Finance from 
one occupational or job category identified on the Form EEO-1 to another 
such category, after applying for such a promotion;
    (9) A comparison of the data reported under paragraphs (b)(1) 
through (b)(8) of this section to such data as reported in the previous 
year together with a narrative analysis;

[[Page 74]]

    (10) Descriptions of all regulated entity or Office of Finance 
outreach activity during the reporting year to recruit individuals who 
are minorities, women, or persons with disabilities for employment, to 
solicit or advertise for minority or minority-owned, women or women-
owned, and disabled-owned contractors or contractors who are individuals 
with disabilities to offer proposals or bids to enter into business with 
the regulated entity or Office of Finance, or to inform such contractors 
of the regulated entity's or Office of Finance's contracting process, 
including the identification of any partners, organizations, or 
government offices with which the regulated entity or the Office of 
Finance participated in such outreach activity;
    (11) Cumulative data separately showing the number of contracts 
entered with minorities or minority-owned businesses, women or women-
owned businesses and individuals with disabilities or disabled-owned 
businesses during the reporting year;
    (12) Cumulative data separately showing for the reporting year the 
total amount the regulated entity or the Office of Finance paid to 
contractors that are minorities or minority-owned businesses, women or 
women-owned and individuals with disabilities or disabled-owned 
businesses;
    (13) The annual total of amounts paid to contractors and the 
percentage of which was paid separately to minorities or minority-owned 
businesses, women or women-owned businesses and individuals with 
disabilities or disabled-owned businesses during the reporting year;
    (14) Certification of compliance with Sec. Sec. 1207.20 and 
1207.21, together with sufficient documentation to verify compliance;
    (15) Data for the reporting year showing, separately, the number of 
equal opportunity complaints (including administrative agency charges or 
complaints, arbitral or judicial claims) against the regulated entity or 
the Office of Finance that--
    (i) Claim employment discrimination, by basis or kind of the alleged 
discrimination (race, sex, disability, etc.) and by result (settlement, 
favorable, or unfavorable outcome);
    (ii) Claim discrimination in any aspect of the contracting process 
or administration of contracts, by basis of the alleged discrimination 
and by result; and
    (iii) Were resolved through the regulated entity's or the Office of 
Finance's internal processes;
    (16) Data showing for the reporting year amounts paid to claimants 
by the regulated entity or the Office of Finance for settlements or 
judgments on discrimination complaints--
    (i) In employment, by basis of the alleged discrimination; and
    (ii) In any aspect of the contracting process or in the 
administration of contracts, by basis of the alleged discrimination;
    (17) A comparison of the data reported under paragraphs (b)(12) and 
(b)(13) of this section with the same information reported for the 
previous year;
    (18) A narrative identification and analysis of the reporting year's 
activities the regulated entity or the Office of Finance considers 
successful and unsuccessful in achieving the purpose and policy of 
regulations in this part and a description of progress made from the 
previous year; and
    (19) A narrative identification and analysis of business activities, 
levels, and areas in which the regulated entity's or the Office of 
Finance's efforts need to improve with respect to achieving the purpose 
and policy of regulations in this part, together with a description of 
anticipated efforts and results the regulated entity or the Office of 
Finance expects in the succeeding year.



Sec. 1207.24  Enforcement.

    The Director may enforce this regulation and standards issued under 
it in any manner and through any means within his or her authority, 
including through identifying matters requiring attention, corrective 
action orders, directives, or enforcement actions under 12 U.S.C. 4513b 
and 4514. The Director may conduct examinations of a regulated entity's 
or the Office of Finance's activities under and in compliance with this 
part pursuant to 12 U.S.C. 4517.

[[Page 75]]



PART 1208_DEBT COLLECTION--Table of Contents



                            Subpart A_General

Sec.
1208.1 Authority and scope.
1208.2 Definitions.
1208.3 Referrals to the Department of the Treasury, collection services, 
          and use of credit bureaus.
1208.4 Reporting delinquent debts to credit bureaus.
1208.5-1208.19 [Reserved]

                         Subpart B_Salary Offset

1208.20 Authority and scope.
1208.21 Notice requirements before salary offset where FHFA is the 
          creditor agency.
1208.22 Review of FHFA records related to the debt.
1208.23 Opportunity for a hearing where FHFA is the creditor agency.
1208.24 Certification where FHFA is the creditor agency.
1208.25 Voluntary repayment agreements as alternative to salary offset 
          where FHFA is the creditor agency.
1208.26 Special review where FHFA is the creditor agency.
1208.27 Notice of salary offset where FHFA is the paying agency.
1208.28 Procedures for salary offset where FHFA is the paying agency.
1208.29 Coordinating salary offset with other agencies.
1208.30 Interest, penalties, and administrative costs.
1208.31 Refunds.
1208.32 Request from a creditor agency for the services of a hearing 
          official.
1208.33 Non-waiver of rights by payments.

                     Subpart C_Administrative Offset

1208.40 Authority and scope.
1208.41 Collection.
1208.42 Administrative offset prior to completion of procedures.
1208.43 Procedures.
1208.44 Interest, penalties, and administrative costs.
1208.45 Refunds.
1208.46 No requirement for duplicate notice.
1208.47 Requests for administrative offset to other Federal agencies.
1208.48 Requests for administrative offset from other Federal agencies.
1208.49 Administrative offset against amounts payable from Civil Service 
          Retirement and Disability Fund.

                       Subpart D_Tax Refund Offset

1208.50 Authority and scope.
1208.51 Definitions.
1208.52 Procedures.
1208.53 No requirement for duplicate notice.
1208.54-1208.59 [Reserved]

                Subpart E_Administrative Wage Garnishment

1208.60 Scope and purpose.
1208.61 Notice.
1208.62 Debtor's rights.
1208.63 Form of hearing.
1208.64 Effect of timely request.
1208.65 Failure to timely request a hearing.
1208.66 Hearing official.
1208.67 Procedure.
1208.68 Format of hearing.
1208.69 Date of decision.
1208.70 Content of decision.
1208.71 Finality of agency action.
1208.72 Failure to appear.
1208.73 Wage garnishment order.
1208.74 Certification by employer.
1208.75 Amounts withheld.
1208.76 Exclusions from garnishment.
1208.77 Financial hardship.
1208.78 Ending garnishment.
1208.79 Prohibited actions by employer.
1208.80 Refunds.
1208.81 Right of action.

    Authority: 5 U.S.C. 5514; 12 U.S.C. 4526; 26 U.S.C. 6402(d); 31 
U.S.C. 3701-3720D; 31 CFR 285.2; 31 CFR Chapter IX.



                            Subpart A_General

    Source: 75 FR 68958, Nov. 10, 2010, unless otherwise noted.



Sec. 1208.1  Authority and scope.

    (a) Authority. FHFA issues this part 1208 under the authority of 5 
U.S.C. 5514 and 31 U.S.C. 3701-3720D, and in conformity with the Federal 
Claims Collection Standards (FCCS) at 31 CFR chapter IX; the regulations 
on salary offset issued by the Office of Personnel Management (OPM) at 5 
CFR part 550, subpart K; the regulations on tax refund offset issued by 
the United States Department of the Treasury (Treasury) at 31 CFR 285.2; 
and the regulations on administrative wage garnishment issued by 
Treasury at 31 CFR 285.11.
    (b) Scope.--(1) This part applies to debts that are owed to the 
Federal Government by Federal employees; other persons, organizations, 
or entities that are indebted to FHFA; and by Federal employees of FHFA 
who are indebted to other agencies, except for those debts listed in 
paragraph (b)(2) of this section.

[[Page 76]]

    (2) Subparts B and C of this part 1208 do not apply to--
    (i) Debts or claims arising under the Internal Revenue Code (26 
U.S.C. 1 et seq.), the Social Security Act (42 U.S.C. 301 et seq.) or 
the tariff laws of the United States;
    (ii) Any case to which the Contract Disputes Act (41 U.S.C. 601 et 
seq.) applies;
    (iii) Any case where collection of a debt is explicitly provided for 
or provided by another statute, e.g. travel advances under 5 U.S.C. 5705 
and employee training expenses under 5 U.S.C. 4108, or, as provided for 
by title 11 of the United States Code, when the claims involve 
bankruptcy;
    (iv) Any debt based in whole or in part on conduct in violation of 
the antitrust laws or involving fraud, the presentation of a false 
claim, or misrepresentation on the part of the debtor or any party 
having an interest in the claim, unless the Department of Justice 
authorizes FHFA to handle the collection; or
    (v) Claims between agencies.
    (3) Nothing in this part precludes the compromise, suspension, or 
termination of collection actions, where appropriate, under standards 
implementing the Debt Collection Improvement Act (DCIA) (31 U.S.C. 3701 
et seq.), the FCCS (31 CFR chapter IX) or the use of alternative dispute 
resolution methods if they are not inconsistent with applicable law and 
regulations.
    (4) Nothing in this part precludes an employee from requesting 
waiver of an erroneous payment under 5 U.S.C. 5584, 10 U.S.C. 2774, or 
32 U.S.C. 716, or from questioning the amount or validity of a debt, in 
the manner set forth in this part.



Sec. 1208.2  Definitions.

    The following terms apply to this part, unless defined otherwise 
elsewhere-
    Administrative offset means an action, pursuant to 31 U.S.C. 3716, 
in which the Federal Government withholds funds payable to, or held by 
the Federal Government for a person, organization, or other entity in 
order to collect a debt from that person, organization, or other entity. 
Such funds include funds payable by the Federal Government on behalf of 
a State Government.
    Agency means an executive department or agency; a military 
department; the United States Postal Service; the Postal Regulatory 
Commission; any nonappropriated fund instrumentality described in 5 
U.S.C. 2105(c); the United States Senate; the United States House of 
Representatives; any court, court administrative office, or 
instrumentality in the judicial or legislative branches of the 
Government; or a Government corporation. If an agency under this 
definition is a component of an agency, the broader definition of agency 
may be used in applying the provisions of 5 U.S.C. 5514(b) (concerning 
the authority to prescribe regulations).
    Centralized administrative offset means the mandatory referral to 
the Secretary of the Treasury by a creditor agency of a past due debt 
which is more than 180 days delinquent, for the purpose of collection 
under the Treasury's centralized offset program.
    Certification means a written statement received by a paying agency 
from a creditor agency that requests the paying agency to institute 
salary offset of an employee, to the Financial Management Service (FMS) 
for offset or to the Secretary of the Treasury for centralized 
administrative offset, and specifies that required procedural 
protections have been afforded the debtor. Where the debtor requests a 
hearing on a claimed debt, the decision by a hearing official or 
administrative law judge constitutes a certification.
    Claim or debt (used interchangeably in this part) means any amount 
of funds or property that has been determined by an agency official to 
be due the Federal Government by a person, organization, or entity, 
except another agency. It also means any amount of money, funds, or 
property owed by a person to a State, the District of Columbia, American 
Samoa, Guam, the United States Virgin Islands, the Commonwealth of the 
Northern Mariana Islands, or the Commonwealth of Puerto Rico. For 
purposes of this part, a debt owed to FHFA constitutes a debt owed to 
the Federal Government. A claim or debt includes:

[[Page 77]]

    (1) Funds owed on account of loans made, insured, or guaranteed by 
the Federal Government, including any deficiency or any difference 
between the price obtained by the Federal Government in the sale of a 
property and the amount owed to the Federal Government on a mortgage on 
the property;
    (2) Unauthorized expenditures of agency funds;
    (3) Overpayments, including payments disallowed by audits performed 
by the Inspector General of the agency administering the program;
    (4) Any amount the Federal Government is authorized by statute to 
collect for the benefit of any person;
    (5) The unpaid share of any non-Federal partner in a program 
involving a Federal payment, and a matching or cost-sharing payment by 
the non-Federal partner;
    (6) Any fine or penalty assessed by an agency; and
    (7) Other amounts of money or property owed to the Federal 
Government.
    Compromise means the settlement or forgiveness of a debt under 31 
U.S.C. 3711, in accordance with standards set forth in the FCCS and 
applicable Federal law.
    Creditor agency means the agency to which the debt is owed, 
including a debt collection center when acting on behalf of a creditor 
agency in matters pertaining to the collection of a debt.
    Debt See the definition of the terms ``Claim or debt'' of this 
section.
    Debt collection center means the Department of the Treasury or any 
other agency or division designated by the Secretary of the Treasury 
with authority to collect debts on behalf of creditor agencies in 
accordance with 31 U.S.C. 3711(g).
    Debtor means the person, organization, or entity owing money to the 
Federal Government.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement) unless other satisfactory payment arrangements have been 
made.
    Director means the Director of FHFA or Director's designee.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, or retainer pay (or in the case of an 
employee not entitled to basic pay, other authorized pay) remaining 
after the deduction of any amount required by law to be withheld (other 
than deductions to execute garnishment orders in accordance with 5 CFR 
parts 581 and 582). FHFA will apply the order of precedence contained in 
OPM guidance (PPM-2008-01; Order Of Precedence When Gross Pay Is Not 
Sufficient To Permit All Deductions), as follows--
    (1) Retirement deductions for defined benefit plan (including Civil 
Service Retirement System, Federal Employees Retirement System, or other 
similar defined benefit plan);
    (2) Social security (OASDI) tax;
    (3) Medicare tax;
    (4) Federal income tax;
    (5) Basic health insurance premium (including Federal Employees 
Health Benefits premium, pre-tax or post-tax, or premium for similar 
benefit under another authority but not including amounts deducted for 
supplementary coverage);
    (6) Basic life insurance premium (including Federal Employees' Group 
Life Insurance--FEGLI--Basic premium or premium for similar benefit 
under another authority);
    (7) State income tax;
    (8) Local income tax;
    (9) Collection of debts owed to the U.S. Government (e.g., tax debt, 
salary overpayment, failure to withhold proper amount of deductions, 
advance of salary or travel expenses, etc.; debts which may or may not 
be delinquent; debts which may be collected through the Treasury's 
Financial Management Services Treasury Offset Program, an automated 
centralized debt collection program for collecting Federal debt from 
Federal payments):
    (i) Continuous levy under the Federal Payment Levy Program (tax 
debt); and
    (ii) Salary offsets (whether involuntary under 5 U.S.C. 5514 or 
similar authority or required by a voluntarily signed written agreement; 
if multiple debts are subject to salary offset, the order is based on 
when each offset commenced--with earliest commencing offset at the top 
of the order--unless

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there are special circumstances, as determined by the paying agency).
    (10) Court-Ordered collection/debt:
    (i) Child support (may include attorney and other fees as provided 
for in 5 CFR 581.102(d)). If there are multiple child support orders, 
the priority of orders is governed by 42 U.S.C. 666(b) and implementing 
regulations, as required by 42 U.S.C. 659(d)(2);
    (ii) Alimony (may include attorney and other fees as provided for in 
5 CFR 581.102(d)). If there are multiple alimony orders, they are 
prioritized on a first-come, first-served basis, as required by 42 
U.S.C. 659(d)(3);
    (iii) Bankruptcy; and
    (iv) Commercial garnishments.
    (11) Optional benefits:
    (i) Health care/limited-expense health care flexible spending 
accounts (pre-tax benefit under FedFlex or equivalent cafeteria plan);
    (ii) Dental (pre-tax benefit under FedFlex or equivalent cafeteria 
plan);
    (iii) Vision (pre-tax benefit under FedFlex or equivalent cafeteria 
plan);
    (iv) Health Savings Account (pre-tax benefit under FedFlex or 
equivalent cafeteria plan);
    (v) Optional life insurance premiums (FEGLI optional benefits or 
similar benefits under other authority);
    (vi) Long-term care insurance premiums;
    (vii) Dependent-care flexible spending accounts (pre-tax benefit 
under FedFlex or equivalent cafeteria plan);
    (viii) Thrift Savings Plan (TSP):
    (A) Loan payments;
    (B) Basic contributions; and
    (C) Catch-up contributions; and
    (ix) Other optional benefits.
    (12) Other voluntary deductions/allotments:
    (i) Military service deposits;
    (ii) Professional associations;
    (iii) Union dues;
    (iv) Charities;
    (v) Bonds;
    (vi) Personal account allotments (e.g., to savings or checking 
account); and
    (vii) Additional voluntary deductions (on first-come, first-served 
basis); and
    (13) IRS paper levies.
    Employee means a current employee of FHFA or other agency, including 
a current member of the Armed Forces or a Reserve of the Armed Forces of 
the United States.
    Federal Claims Collection Standards (FCCS) means standards published 
at 31 CFR chapter IX.
    FHFA means the Federal Housing Finance Agency.
    Garnishment means the process of withholding amounts from the 
disposable pay of a person employed outside the Federal Government, and 
the paying of those amounts to a creditor in satisfaction of a 
withholding order.
    Hearing official means an individual who is responsible for 
conducting any hearing with respect to the existence or amount of a debt 
claimed and for rendering a final decision on the basis of such hearing. 
A hearing official may not be under the supervision or control of the 
Director of FHFA when FHFA is the creditor agency but may be an 
administrative law judge.
    Notice of intent means a written notice of a creditor agency to a 
debtor that states that the debtor owes a debt to the creditor agency 
and apprises the debtor of the applicable procedural rights.
    Notice of salary offset means a written notice from the paying 
agency to an employee after a certification has been issued by a 
creditor agency that informs the employee that salary offset will begin 
at the next officially established pay interval.
    Paying agency means an agency of the Federal Government that employs 
the individual who owes a debt to an agency of the Federal Government 
and transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The same agency may be both the creditor agency and the 
paying agency.
    Salary offset means an administrative offset to collect a debt under 
5 U.S.C. 5514 by deductions at one or more officially established pay 
intervals from the current pay account of an employee without his or her 
consent.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee to FHFA or another 
agency as permitted or required by 5 U.S.C. 5584 or 8346(b), 10 U.S.C. 
2774, 32 U.S.C. 716, or any other law.

[[Page 79]]

    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial, or administrative body. For 
purposes of administrative wage garnishment, the terms ``wage 
garnishment order'' and ``garnishment order'' have the same meaning as 
``withholding order.''



Sec. 1208.3  Referrals to the Department of the Treasury, collection
services, and use of credit bureaus.

    (a) Referral of delinquent debts.--(1) FHFA shall transfer to the 
Secretary of the Department of the Treasury any past due, legally 
enforceable nontax debt that has been delinquent for a period of 180 
days or more so that the Secretary may take appropriate action to 
collect the debt or terminate collection action in accordance with 31 
U.S.C. 3716, 5 U.S.C. 5514, 5 CFR 550.1108, 31 CFR part 285, and the 
FCCS.
    (2) FHFA may transfer any past due, legally enforceable nontax debt 
that has been delinquent for less than a period of 180 days to a debt 
collection center for collection in accordance with 31 U.S.C. 3716, 5 
U.S.C. 5514, 5 CFR 550.1108, 31 CFR part 285, and the FCCS.
    (b) Collection Services. Section 13 of the Debt Collection Act (31 
U.S.C. 3718) authorizes agencies to enter into contracts for collection 
services to recover debts owed the Federal Government. The Debt 
Collection Act requires that certain provisions be contained in such 
contracts, including:
    (1) The agency retains the authority to resolve a dispute, including 
the authority to terminate a collection action or refer the matter to 
the Attorney General for civil remedies; and
    (2) The contractor is subject to the Privacy Act of 1974, as it 
applies to private contractors, as well as subject to State and Federal 
laws governing debt collection practices.
    (c) Referrals to collection agencies.--(1) FHFA has authority to 
contract for collection services to recover delinquent debts in 
accordance with 31 U.S.C. 3718(a) and the FCCS (31 CFR 901.5).
    (2) FHFA may use private collection agencies where it determines 
that their use is in the best interest of the Federal Government. Where 
FHFA determines that there is a need to contract for collection 
services, the contract will provide that:
    (i) The authority to resolve disputes, compromise claims, suspend or 
terminate collection action, or refer the matter to the Department of 
Justice for litigation or to take any other action under this part will 
be retained by FHFA;
    (ii) Contractors are subject to the Privacy Act of 1974, as amended, 
to the extent specified in 5 U.S.C. 552a(m) and to applicable Federal 
and State laws and regulations pertaining to debt collection practices, 
such as the Fair Debt Collection Practices Act, 15 U.S.C. 1692;
    (iii) The contractor is required to strictly account for all amounts 
collected;
    (iv) The contractor must agree that uncollectible accounts shall be 
returned with appropriate documentation to enable FHFA to determine 
whether to pursue collection through litigation or to terminate 
collection; and
    (v) The contractor must agree to provide any data in its files 
requested by FHFA upon returning the account to FHFA for subsequent 
referral to the Department of Justice for litigation.



Sec. 1208.4  Reporting delinquent debts to credit bureaus.

    (a) FHFA may report delinquent debts to consumer reporting agencies 
(31 U.S.C. 3701(a)(3), 3711). Sixty calendar days prior to release of 
information to a consumer reporting agency, the debtor shall be 
notified, in writing, of the intent to disclose the existence of the 
debt to a consumer reporting agency. Such notice of intent may be a 
separate correspondence or included in correspondence demanding direct 
payment. The notice shall be in conformance with 31 U.S.C. 3711(e) and 
the FCCS. In the notice, FHFA shall provide the debtor with:
    (1) An opportunity to inspect and copy agency records pertaining to 
the debt;
    (2) An opportunity for an administrative review of the legal 
enforceability or past due status of the debt;
    (3) An opportunity to enter into a repayment agreement on terms 
satisfactory to FHFA to prevent FHFA from

[[Page 80]]

reporting the debt as overdue to consumer reporting agencies, and 
provide deadlines and method for requesting this relief;
    (4) An explanation of the rate of interest that will accrue on the 
debt, that all costs incurred to collect the debt will be charged to the 
debtor, the authority for assessing these costs, and the manner in which 
FHFA will calculate the amount of these costs;
    (5) An explanation that FHFA will report the debt to the consumer 
reporting agencies to the detriment of the debtor's credit rating; and
    (6) A description of the collection actions that the agency may take 
in the future if those presently proposed actions do not result in 
repayment of the debt, including the filing of a lawsuit against the 
borrower by the agency and assignment of the debt for collection by 
offset against Federal income tax refunds or the filing of a lawsuit 
against the debtor by the Federal Government.
    (b) The information that may be disclosed to the consumer reporting 
agency is limited to:
    (1) The debtor's name, address, social security number or taxpayer 
identification number, and any other information necessary to establish 
the identity of the individual;
    (2) The amount, status, and history of the claim; and
    (3) FHFA program or activity under which the claim arose.
    (c) Subsequent reports. FHFA may update its report to the credit 
bureau whenever it has knowledge of events that substantially change the 
status of the amount of liability.
    (d) Subsequent reports of delinquent debts. Pursuant to 31 CFR 
901.4, FHFA will report delinquent debt to the Department of Housing and 
Urban Development's Credit Alert Interactive Voice Response System 
(CAIVRS).
    (e) Privacy Act considerations. A delinquent debt may not be 
reported under this section unless a notice issued pursuant to the 
Privacy Act, 5 U.S.C. 552a(e)(4), authorizes the disclosure of 
information about the debtor to a credit bureau or CAIVRS.



Sec. Sec. 1208.5-1208.19  [Reserved]



                         Subpart B_Salary Offset



Sec. 1208.20  Authority and scope.

    (a) Authority. FHFA may collect debts owed by employees to the 
Federal Government by means of salary offset under the authority of 5 
U.S.C. 5514; 5 CFR part 550, subpart K; and this subpart B.
    (b) Scope.--(1) The procedures set forth in this subpart B apply to 
situations where FHFA is attempting to collect a debt by salary offset 
that is owed to it by an individual employed by FHFA or by another 
agency; or where FHFA employs an individual who owes a debt to another 
agency.
    (2) The procedures set forth in this subpart B do not apply to:
    (i) Any routine intra-agency adjustment of pay that is attributable 
to clerical or administrative error or delay in processing pay documents 
that have occurred within the four pay periods preceding the adjustment, 
or any adjustment to collect a debt amounting to $50 or less. However, 
at the time of any such adjustment, or as soon thereafter as possible, 
FHFA or its designated payroll agent shall provide the employee with a 
written notice of the nature and the amount of the adjustment and a 
point of contact for contesting such adjustment.
    (ii) Any negative adjustment to pay that arises from an employee's 
election of coverage or a change in coverage under a Federal benefits 
program that requires periodic deductions from pay, if the amount to be 
recovered was accumulated over four pay periods or less. However, at the 
time such adjustment is made, FHFA or its payroll agent shall provide in 
the employee's earnings statement a clear and concise statement that 
informs the employee of the previous overpayment.



Sec. 1208.21  Notice requirements before salary offset where FHFA is 
the creditor agency.

    (a) Notice of Intent. Deductions from an employee's salary may not 
be made unless FHFA provides the employee with a Notice of Intent at 
least 30 calendar days before the salary offset is initiated.

[[Page 81]]

    (b) Contents of Notice of Intent. The Notice of Intent shall advise 
the employee of the following:
    (1) That FHFA has reviewed the records relating to the claim and has 
determined that the employee owes the debt;
    (2) That FHFA intends to collect the debt by deductions from the 
employee's current disposable pay account;
    (3) The amount of the debt and the facts giving rise to the debt;
    (4) The frequency and amount of the intended deduction (stated as a 
fixed dollar amount or as a percentage of pay not to exceed 15 percent 
of disposable pay), and the intention to continue the deductions until 
the debt and all accumulated interest are paid in full or otherwise 
resolved;
    (5) The name, address, and telephone number of the person to whom 
the employee may propose a written alternative schedule for voluntary 
repayment, in lieu of salary offset. The employee shall include a 
justification for the alternative schedule in his or her proposal. If 
the terms of the alternative schedule are agreed upon by the employee 
and FHFA, the alternative written schedule shall be signed by both the 
employee and FHFA;
    (6) An explanation of FHFA's policy concerning interest, penalties, 
and administrative costs, the date by which payment should be made to 
avoid such costs, and a statement that such assessments must be made 
unless excused in accordance with the FCCS;
    (7) The employee's right to inspect and copy all records of FHFA 
pertaining to his or her debt that are not exempt from disclosure or to 
receive copies of such records if he or she is unable personally to 
inspect the records as the result of geographical or other constraints;
    (8) The name, address, and telephone number of the FHFA employee to 
whom requests for access to records relating to the debt must be sent;
    (9) The employee's right to a hearing conducted by an impartial 
hearing official with respect to the existence and amount of the debt 
claimed or the repayment schedule i.e., the percentage of disposable pay 
to be deducted each pay period, so long as a request is filed by the 
employee as prescribed in Sec. 1208.23; the name and address of the 
office to which the request for a hearing should be sent; and the name, 
address, and telephone number of a person whom the employee may contact 
concerning procedures for requesting a hearing;
    (10) The filing of a request for a hearing on or before the 30th 
calendar day following receipt of the Notice of Intent will stay the 
commencement of collection proceedings and a final decision on whether a 
hearing will be held (if a hearing is requested) or will be issued at 
the earliest practical date, but not later than 60 calendar days after 
the request for the hearing;
    (11) FHFA shall initiate certification procedures to implement a 
salary offset unless the employee files a request for a hearing on or 
before the 30th calendar day following receipt of the Notice of Intent;
    (12) Any knowingly false or frivolous statement, representations, or 
evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (ii) Penalties under the False Claims Act, 31 U.S.C. 3729 through 
3731, or under any other applicable statutory authority; or
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, 
or under any other applicable statutory authority;
    (13) That the employee also has the right to request waiver of 
overpayment pursuant to 5 U.S.C. 5584 and may exercise any other rights 
and remedies available to the employee under statutes or regulations 
governing the program for which the collection is being made;
    (14) Unless there are applicable contractual or statutory provisions 
to the contrary, amounts paid on or deducted from debts that are later 
waived or found not to be owed to the Federal Government shall be 
promptly refunded to the employee; and
    (15) Proceedings with respect to the debt are governed by 5 U.S.C. 
5514.

[[Page 82]]



Sec. 1208.22  Review of FHFA records related to the debt.

    (a) Request for review. An employee who desires to inspect or copy 
FHFA records related to a debt owed by the employee to FHFA must send a 
letter to the individual designated in the Notice of Intent requesting 
access to the relevant records. The letter must be received in the 
office of that individual within 15 calendar days after the employee's 
receipt of the Notice of Intent.
    (b) Review location and time. In response to a timely request 
submitted by the employee, the employee shall be notified of the 
location and time when the employee may inspect and copy records related 
to his or her debt that are not exempt from disclosure. If the employee 
is unable personally to inspect such records as the result of 
geographical or other constraints, FHFA shall arrange to send copies of 
such records to the employee. The debtor shall pay copying costs unless 
they are waived by FHFA. Copying costs shall be assessed pursuant to 
FHFA's Freedom of Information Act Regulation, 12 CFR part 1202.



Sec. 1208.23  Opportunity for a hearing where FHFA is the creditor agency.

    (a) Request for a hearing.--(1) Time-period for submission. An 
employee who requests a hearing on the existence or amount of the debt 
held by FHFA or on the salary-offset schedule proposed by FHFA, must 
send a written request to FHFA. The request for a hearing must be 
received by FHFA on or before the 30th calendar day following receipt by 
the employee of the Notice of Intent.
    (2) Failure to submit timely. If the employee files a request for a 
hearing after the expiration of the 30th calendar day, the employee 
shall not be entitled to a hearing. However, FHFA may accept the request 
if the employee can show that the delay was the result of circumstances 
beyond his or her control or that he or she failed to receive actual 
notice of the filing deadline.
    (3) Contents of request. The request for a hearing must be signed by 
the employee and must fully identify and explain with reasonable 
specificity all the facts, evidence, and witnesses, if any, that the 
employee believes support his or her position. The employee must also 
specify whether he or she requests an oral hearing. If an oral hearing 
is requested, the employee should explain why a hearing by examination 
of the documents without an oral hearing would not resolve the matter.
    (4) Failure to request a hearing. The failure of an employee to 
request a hearing will be considered an admission by the employee that 
the debt exists in the amount specified in the Notice of Intent that was 
provided to the employee under Sec. 1208.21(b).
    (b) Obtaining the services of a hearing official.--(1) Debtor is not 
an FHFA employee. When the debtor is not an FHFA employee and FHFA 
cannot provide a prompt and appropriate hearing before an administrative 
law judge or other hearing official, FHFA may request a hearing official 
from an agent of the paying agency, as designated in 5 CFR part 581, 
appendix A, or as otherwise designated by the paying agency. The paying 
agency must cooperate with FHFA to provide a hearing official, as 
required by the FCCS.
    (2) Debtor is an FHFA employee. When the debtor is an FHFA employee, 
FHFA may contact any agent of another agency, as designated in 5 CFR 
part 581, appendix A, or as otherwise designated by the agency, to 
request a hearing official.
    (c) Procedure.--(1) Notice of hearing. After the employee requests a 
hearing, the hearing official shall notify the employee of the form of 
the hearing to be provided. If the hearing will be oral, the notice 
shall set forth the date, time, and location of the hearing, which must 
occur no more than 30 calendar days after the request is received, 
unless the employee requests that the hearing be delayed. If the hearing 
will be conducted by an examination of documents, the employee shall be 
notified within 30 calendar days that he or she should submit evidence 
and arguments in writing to the hearing official within 30 calendar 
days.
    (2) Oral hearing.--(i) An employee who requests an oral hearing 
shall be provided an oral hearing if the hearing official determines 
that the matter cannot be resolved by an examination of the documents 
alone, as for example, when an issue of credibility or veracity

[[Page 83]]

is involved. The oral hearing need not be an adversarial adjudication; 
and rules of evidence need not apply. Witnesses who testify in an oral 
hearing shall do so under oath or affirmation.
    (ii) Oral hearings may take the form of, but are not limited to:
    (A) Informal conferences with the hearing official in which the 
employee and agency representative are given full opportunity to present 
evidence, witnesses, and argument;
    (B) Informal meetings in which the hearing examiner interviews the 
employee; or
    (C) Formal written submissions followed by an opportunity for oral 
presentation.
    (3) Hearing by examination of documents. If the hearing official 
determines that an oral hearing is not necessary, he or she shall make 
the determination based upon an examination of the documents.
    (d) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this section.
    (e) Decision.--(1) The hearing official shall issue a written 
opinion stating his or her decision, based upon all evidence and 
information developed during the hearing, as soon as practicable after 
the hearing, but not later than 60 calendar days after the date on which 
the request was received by FHFA, unless the hearing was delayed at the 
request of the employee, in which case the 60-day decision period shall 
be extended by the number of days by which the hearing was postponed.
    (2) The decision of the hearing official shall be final and is 
considered to be an official certification regarding the existence and 
the amount of the debt for purposes of executing salary offset under 5 
U.S.C. 5514. If the hearing official determines that a debt may not be 
collected by salary offset, but FHFA finds that the debt is still valid, 
FHFA may seek collection of the debt through other means in accordance 
with applicable law and regulations.
    (f) Content of decision. The written decision shall include:
    (1) A summary of the facts concerning the origin, nature, and amount 
of the debt;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedules, if applicable.
    (g) Failure to appear. If, in the absence of good cause shown, such 
as illness, the employee or the representative of FHFA fails to appear, 
the hearing official shall proceed with the hearing as scheduled, and 
make his or her decision based upon the oral testimony presented and the 
documentation submitted by both parties. At the request of both parties, 
the hearing official may schedule a new hearing date. Both parties shall 
be given reasonable notice of the time and place of the new hearing.



Sec. 1208.24  Certification where FHFA is the creditor agency.

    (a) Issuance. FHFA shall issue a certification in all cases where 
the hearing official determines that a debt exists or the employee 
admits the existence and amount of the debt, as for example, by failing 
to request a hearing.
    (b) Contents. The certification must be in writing and state:
    (1) That the employee owes the debt;
    (2) The amount and basis of the debt;
    (3) The date the Federal Government's right to collect the debt 
first accrued;
    (4) The date the employee was notified of the debt, the action(s) 
taken pursuant to FHFA's regulations, and the dates such actions were 
taken;
    (5) If the collection is to be made by lump-sum payment, the amount 
and date such payment will be collected;
    (6) If the collection is to be made in installments through salary 
offset, the amount or percentage of disposable pay to be collected in 
each installment and, if FHFA wishes, the desired commencing date of the 
first installment, if a date other than the next officially established 
pay period; and
    (7) A statement that FHFA's regulation on salary offset has been 
approved by OPM pursuant to 5 CFR part 550, subpart K.



Sec. 1208.25  Voluntary repayment agreements as alternative to salary
offset where FHFA is the creditor agency.

    (a) Proposed repayment schedule. In response to a Notice of Intent, 
an employee may propose to repay the debt voluntarily in lieu of salary 
offset by

[[Page 84]]

submitting a written proposed repayment schedule to FHFA. Any proposal 
under this section must be received by FHFA within 30 calendar days 
after receipt of the Notice of Intent.
    (b) Notification of decision. In response to a timely proposal by 
the employee, FHFA shall notify the employee whether the employee's 
proposed repayment schedule is acceptable. FHFA has the discretion to 
accept, reject, or propose to the employee a modification of the 
proposed repayment schedule.
    (1) If FHFA decides that the proposed repayment schedule is 
unacceptable, the employee shall have 30 calendar days from the date he 
or she received notice of the decision in which to file a request for a 
hearing.
    (2) If FHFA decides that the proposed repayment schedule is 
acceptable or the employee agrees to a modification proposed by FHFA, an 
agreement shall be put in writing and signed by both the employee and 
FHFA.



Sec. 1208.26  Special review where FHFA is the creditor agency.

    (a) Request for review.--(1) An employee subject to salary offset or 
a voluntary repayment agreement may, at any time, request a special 
review by FHFA of the amount of the salary offset or voluntary 
repayment, based on materially changed circumstances, including, but not 
limited to, catastrophic illness, divorce, death, or disability.
    (2) The request for special review must include an alternative 
proposed offset or payment schedule and a detailed statement, with 
supporting documents, that shows why the current salary offset or 
payments result in extreme financial hardship to the employee and his or 
her spouse and dependents. The detailed statement must indicate:
    (i) Income from all sources;
    (ii) Assets;
    (iii) Liabilities;
    (iv) Number of dependents;
    (v) Expenses for food, housing, clothing, and transportation;
    (vi) Medical expenses; and
    (vii) Exceptional expenses, if any.
    (b) Evaluation of request. FHFA shall evaluate the statement and 
supporting documents and determine whether the original offset or 
repayment schedule imposes extreme financial hardship on the employee, 
for example, by preventing the employee from meeting essential 
subsistence expenses such as food, housing, clothing, transportation, 
and medical care. FHFA shall notify the employee in writing within 30 
calendar days of such determination, including, if appropriate, a 
revised offset or payment schedule. If the special review results in a 
revised offset or repayment schedule, FHFA shall provide a new 
certification to the paying agency.



Sec. 1208.27  Notice of salary offset where FHFA is the paying agency.

    (a) Notice. Upon issuance of a proper certification by FHFA (for 
debts owed to FHFA) or upon receipt of a proper certification from 
another creditor agency, FHFA shall send the employee a written notice 
of salary offset.
    (b) Content of notice. Such written notice of salary offset shall 
advise the employee of the:
    (1) Certification that has been issued by FHFA or received from 
another creditor agency;
    (2) Amount of the debt and of the deductions to be made; and
    (3) Date and pay period when the salary offset will begin.
    (c) If FHFA is not the creditor agency, FHFA shall provide a copy of 
the notice of salary offset to the creditor agency and advise the 
creditor agency of the dollar amount to be offset and the pay period 
when the offset will begin.



Sec. 1208.28  Procedures for salary offset where FHFA is the paying
agency.

    (a) Generally. FHFA shall coordinate salary deductions under this 
section and shall determine the amount of an employee's disposable pay 
and the amount of the salary offset subject to the requirements in this 
section. Deductions shall begin the pay period following the issuance of 
the certification by FHFA or the receipt by FHFA of the certification 
from another agency, or as soon thereafter as possible.
    (b) Upon issuance of a proper certification by FHFA for debts owed 
to FHFA, or upon receipt of a proper certification from a creditor 
agency,

[[Page 85]]

FHFA shall send the employee a written notice of salary offset. Such 
notice shall advise the employee:
    (1) That certification has been issued by FHFA or received from 
another creditor agency;
    (2) Of the amount of the debt and of the deductions to be made; and 
provided for in the certification, and
    (3) Of the initiation of salary offset at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (c) Where appropriate, FHFA shall provide a copy of the notice to 
the creditor agency and advise such agency of the dollar amount to be 
offset and the pay period when the offset will begin.
    (d) Types of collection.--(1) Lump-sum payment. If the amount of the 
debt is equal to or less than 15 percent of the employee's disposable 
pay, such debt ordinarily will be collected in one lump-sum payment.
    (2) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted for any pay period will not exceed 15 percent of the 
disposable pay from which the deduction is made unless the employee has 
agreed in writing to the deduction of a greater amount. The installment 
payment should normally be sufficient in size and frequency to liquidate 
the debt in no more than three years. Installment payments of less than 
$50 should be accepted only in the most unusual circumstances.
    (3) Lump-sum deductions from final check. In order to liquidate a 
debt, a lump-sum deduction exceeding 15 percent of disposable pay may be 
made pursuant to 31 U.S.C. 3716 from any final salary payment due a 
former employee, whether the former employee was separated voluntarily 
or involuntarily.
    (4) Lump-sum deductions from other sources. Whenever an employee 
subject to salary offset is separated from FHFA, and the balance of the 
debt cannot be liquidated by offset of the final salary check, FHFA may 
offset any later payments of any kind to the former employee to collect 
the balance of the debt pursuant to 31 U.S.C. 3716.
    (e) Multiple debts.--(1) Where two or more creditor agencies are 
seeking salary offset, or where two or more debts are owed to a single 
creditor agency, FHFA may, at its discretion, determine whether one or 
more debts should be offset simultaneously within the 15 percent 
limitation.
    (2) In the event that a debt owed FHFA is certified while an 
employee is subject to salary offset to repay another agency, FHFA may, 
at its discretion, determine whether the debt to FHFA should be repaid 
before the debt to the other agency is repaid, repaid simultaneously 
with the other debt, or repaid after the debt to the other agency.
    (3) A levy pursuant to the Internal Revenue Code of 1986 shall take 
precedence over other deductions under this section, as provided in 5 
U.S.C. 5514(d).



Sec. 1208.29  Coordinating salary offset with other agencies.

    (a) Responsibility of FHFA as the creditor agency.--(1) FHFA shall 
be responsible for:
    (i) Arranging for a hearing upon proper request by a Federal 
employee;
    (ii) Preparing the Notice of Intent consistent with the requirements 
of Sec. 1208.21;
    (iii) Obtaining hearing officials from other agencies pursuant to 
Sec. 1208.23(b); and
    (iv) Ensuring that each certification of debt pursuant to Sec. 
1208.24(b) is sent to a paying agency.
    (2) Upon completion of the procedures set forth in Sec. Sec. 
1208.24 through 1208.26, FHFA shall submit to the employee's paying 
agency, if applicable, a certified debt claim and an installment 
agreement or other instruction on the payment schedule.
    (i) If the employee is in the process of separating from the Federal 
Government, FHFA shall submit its debt claim to the employee's paying 
agency for collection by lump-sum deduction from the employee's final 
check. The paying agency shall certify the total amount of its 
collection and furnish a copy of the certification to FHFA and to the 
employee.

[[Page 86]]

    (ii) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, FHFA may, unless 
otherwise prohibited, request that money due and payable to the employee 
from the Federal Government, including payments from the Civil Service 
Retirement and Disability Fund (5 CFR 831.1801) or other similar funds, 
be administratively offset to collect the debt.
    (iii) When an employee transfers to another paying agency, FHFA 
shall not repeat the procedures described in Sec. Sec. 1208.24 through 
1208.26. Upon receiving notice of the employee's transfer, FHFA shall 
review the debt to ensure that collection is resumed by the new paying 
agency.
    (b) Responsibility of FHFA as the paying agency.--(1) Complete 
claim. When FHFA receives a certified claim from a creditor agency, the 
employee shall be given written notice of the certification, the date 
salary offset will begin, and the amount of the periodic deductions. 
Deductions shall be scheduled to begin at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (2) Incomplete claim. When FHFA receives an incomplete certification 
of debt from a creditor agency, FHFA shall return the claim with notice 
that procedures under 5 U.S.C. 5514 and 5 CFR 550.1104 must be followed, 
and that a properly certified claim must be received before FHFA will 
take action to collect the debt from the employee's current pay account.
    (3) Review. FHFA is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (4) Employees who transfer from one paying agency to another agency. 
If, after the creditor agency has submitted the debt claim to FHFA, the 
employee transfers to another agency before the debt is collected in 
full, FHFA must certify the total amount collected on the debt as 
required by 5 CFR 550.1109. One copy of the certification shall be 
furnished to the employee and one copy shall be sent to the creditor 
agency along with notice of the employee's transfer. If FHFA is aware 
that the employee is entitled to payments from the Civil Service 
Retirement and Disability Fund or other similar payments, it must 
provide written notification to the agency responsible for making such 
payments that the debtor owes a debt (including the amount) and that the 
requirements set forth herein and in 5 CFR part 550, subpart K, have 
been met. FHFA must submit a properly certified claim to the new payment 
agency before a collection can be made.



Sec. 1208.30  Interest, penalties, and administrative costs.

    Where FHFA is the creditor agency, FHFA shall assess interest, 
penalties, and administrative costs pursuant to 31 U.S.C. 3717 and the 
FCCS, 31 CFR chapter IX.



Sec. 1208.31  Refunds.

    (a) Where FHFA is the creditor agency, FHFA shall promptly refund 
any amount deducted under the authority of 5 U.S.C. 5514 when:
    (1) FHFA receives notice that the debt has been waived or otherwise 
found not to be owing to the Federal Government; or
    (2) An administrative or judicial order directs FHFA to make a 
refund.
    (b) Unless required by law or contract, refunds under this section 
shall not bear interest.



Sec. 1208.32  Request from a creditor agency for the services of a 
hearing official.

    (a) FHFA may provide qualified personnel to serve as hearing 
officials upon request of a creditor agency when:
    (1) The debtor is employed by FHFA and the creditor agency cannot 
provide a prompt and appropriate hearing before a hearing official 
furnished pursuant to another lawful arrangement; or
    (2) The debtor is employed by the creditor agency and that agency 
cannot arrange for a hearing official.
    (b) Services provided by FHFA to creditor agencies under this 
section shall be provided on a fully reimbursable basis pursuant to 31 
U.S.C. 1535, or other applicable authority.

[[Page 87]]



Sec. 1208.33  Non-waiver of rights by payments.

    A debtor's payment, whether voluntary or involuntary, of all or any 
portion of a debt being collected pursuant to this subpart B shall not 
be construed as a waiver of any rights that the debtor may have under 
any statute, regulation, or contract, except as otherwise provided by 
law or contract.



                     Subpart C_Administrative Offset



Sec. 1208.40  Authority and scope.

    (a) The provisions of this subpart C apply to the collection of 
debts owed to the Federal Government arising from transactions with 
FHFA. Administrative offset is authorized under the Debt Collection 
Improvement Act of 1996 (DCIA). This subpart C is consistent with the 
Federal Claims Collection Standards (FCCS) on administrative offset 
issued by the Department of Justice.
    (b) FHFA may collect a debt owed to the Federal Government from a 
person, organization, or other entity by administrative offset, pursuant 
to 31 U.S.C. 3716, where:
    (1) The debt is certain in amount;
    (2) Administrative offset is feasible, desirable, and not otherwise 
prohibited;
    (3) The applicable statute of limitations has not expired; and
    (4) Administrative offset is in the best interest of the Federal 
Government.



Sec. 1208.41  Collection.

    (a) FHFA may collect a claim from a person, organization, or other 
entity by administrative offset of monies payable by the Federal 
Government only after:
    (1) Providing the debtor with due process required under this part; 
and
    (2) Providing the paying agency with written certification that the 
debtor owes the debt in the amount stated and that FHFA, as creditor 
agency, has complied with this part.
    (b) Prior to initiating collection by administrative offset, FHFA 
should determine that the proposed offset is within the scope of this 
remedy, as set forth in 31 CFR 901.3(a). Administrative offset under 31 
U.S.C. 3716 may not be used to collect debts more than 10 years after 
the Federal Government's right to collect the debt first accrued, except 
as otherwise provided by law. In addition, administrative offset may not 
be used when a statute explicitly prohibits its use to collect the claim 
or type of claim involved.
    (c) Unless otherwise provided, debts or payments not subject to 
administrative offset under 31 U.S.C. 3716 may be collected by 
administrative offset under common law, or any other applicable 
statutory authority.



Sec. 1208.42  Administrative offset prior to completion of procedures.

    FHFA shall not be required to follow the procedures described in 
Sec. 1208.43 where:
    (a) Prior to the completion of the procedures described in Sec. 
1208.43, FHFA may effect administrative offset if failure to offset 
would substantially prejudice its ability to collect the debt, and if 
the time before the payment is to be made does not reasonably permit 
completion of the procedures described in Sec. 1208.43. Such prior 
administrative offset shall be followed promptly by the completion of 
the procedures described in Sec. 1208.43. Amounts recovered by 
administrative offset but later found not to be owed to FHFA shall be 
promptly refunded. This section applies only to administrative offset 
pursuant to 31 CFR 901.3(c), and does not apply when debts are referred 
to the Department of the Treasury for mandatory centralized 
administrative offset under 31 CFR 901.3(b)(1).
    (b) The administrative offset is in the nature of a recoupment 
(i.e., FHFA may offset a payment due to the debtor when both the payment 
due to the debtor and the debt owed to FHFA arose from the same 
transaction); or
    (c) In the case of non-centralized administrative offsets, FHFA 
first learns of the existence of a debt due when there would be 
insufficient time to afford the debtor due process under these 
procedures before the paying agency makes payment to the debtor; in such 
cases, the Director shall give the debtor notice and an opportunity for 
review as soon as practical and shall refund

[[Page 88]]

any money ultimately found not to be due to the Federal Government.



Sec. 1208.43  Procedures.

    Unless the procedures described in Sec. 1208.42 are used, prior to 
collecting any debt by administrative offset or referring such claim to 
another agency for collection through administrative offset, FHFA shall 
provide the debtor with the following:
    (a) Written notification of the nature and amount of the debt, the 
intention of FHFA to collect the debt through administrative offset, and 
a statement of the rights of the debtor under this section;
    (b) An opportunity to inspect and copy the records of FHFA related 
to the debt that are not exempt from disclosure;
    (c) An opportunity for review within FHFA of the determination of 
indebtedness. Any request for review by the debtor shall be in writing 
and shall be submitted to FHFA within 30 calendar days of the date of 
the notice of the offset. FHFA may waive the time limits for requesting 
review for good cause shown by the debtor. FHFA shall provide the debtor 
with a reasonable opportunity for an oral hearing when:
    (1) An applicable statute authorizes or requires FHFA to consider 
waiver of the indebtedness involved, the debtor requests waiver of the 
indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (2) The debtor requests reconsideration of the debt and FHFA 
determines that the question of the indebtedness cannot be resolved by 
review of the documentary evidence, as for example, when the validity of 
the debt turns on an issue of credibility or veracity. Unless otherwise 
required by law, an oral hearing under this subpart C is not required to 
be a formal evidentiary hearing, although FHFA shall document all 
significant matters discussed at the hearing. In those cases where an 
oral hearing is not required by this subpart C, FHFA shall make its 
determination on the request for waiver or reconsideration based upon a 
review of the written record; and
    (d) An opportunity to enter into a written agreement for the 
voluntary repayment of the amount of the claim at the discretion of 
FHFA.



Sec. 1208.44  Interest, penalties, and administrative costs.

    FHFA shall assess interest, penalties, and administrative costs on 
debts owed to the Federal Government, in accordance with 31 U.S.C. 3717 
and the FCCS. FHFA may also assess interest and related charges on debts 
that are not subject to 31 U.S.C. 3717 and the FCCS to the extent 
authorized under the common law or other applicable statutory authority.



Sec. 1208.45  Refunds.

    FHFA shall refund promptly those amounts recovered by administrative 
offset but later found not to be owed to the Federal Government. Unless 
required by law or contract, such refunds shall not bear interest.



Sec. 1208.46  No requirement for duplicate notice.

    Where FHFA has previously given a debtor any of the required notice 
and review opportunities with respect to a particular debt, FHFA is not 
required to duplicate such notice and review opportunities prior to 
initiating administrative offset.



Sec. 1208.47  Requests for administrative offset to other Federal
agencies.

    (a) FHFA may request that a debt owed to FHFA be collected by 
administrative offset against funds due and payable to a debtor by 
another agency.
    (b) In requesting administrative offset, FHFA, as creditor, shall 
certify in writing to the agency holding funds of the debtor:
    (1) That the debtor owes the debt;
    (2) The amount and basis of the debt; and
    (3) That FHFA has complied with the requirements of its own 
administrative offset regulations and the applicable provisions of the 
FCCS with respect to providing the debtor with due process, unless 
otherwise provided.



Sec. 1208.48  Requests for administrative offset from other Federal
agencies.

    (a) Any agency may request that funds due and payable to a debtor by 
FHFA be administratively offset in

[[Page 89]]

order to collect a debt owed to such agency by the debtor.
    (b) FHFA shall initiate the requested administrative offset only 
upon:
    (1) Receipt of written certification from the creditor agency that:
    (i) The debtor owes the debt, including the amount and basis of the 
debt;
    (ii) The agency has prescribed regulations for the exercise of 
administrative offset; and
    (iii) The agency has complied with its own administrative offset 
regulations and with the applicable provisions of the FCCS, including 
providing any required hearing or review.
    (2) A determination by FHFA that collection by administrative offset 
against funds payable by FHFA would be in the best interest of the 
Federal Government as determined by the facts and circumstances of the 
particular case and that such administrative offset would not otherwise 
be contrary to law.



Sec. 1208.49  Administrative offset against amounts payable from 
Civil Service Retirement and Disability Fund.

    (a) Request for administrative offset. Unless otherwise prohibited 
by law, FHFA may request that monies that are due and payable to a 
debtor from the Civil Service Retirement and Disability Fund (Fund) be 
offset administratively in reasonable amounts in order to collect in one 
full payment or in a minimal number of payments debt owed to FHFA by the 
debtor. Such requests shall be made to the appropriate officials of OPM 
in accordance with such regulations as may be prescribed by FHFA or OPM.
    (b) Contents of certification. When making a request for 
administrative offset under paragraph (a) of this section, FHFA shall 
provide OPM with a written certification that:
    (1) The debtor owes FHFA a debt, including the amount of the debt;
    (2) FHFA has complied with the applicable statutes, regulations, and 
procedures of OPM; and
    (3) FHFA has complied with the requirements of the FCCS, including 
any required hearing or review.
    (c) If FHFA decides to request administrative offset under paragraph 
(a) of this section, it shall make the request as soon as practicable 
after completion of the applicable procedures. This will satisfy any 
requirement that administrative offset be initiated prior to the 
expiration of the applicable statute of limitations. At such time as the 
debtor makes a claim for payments from the Fund, if at least one year 
has elapsed since the administrative offset request was originally made, 
the debtor shall be permitted to offer a satisfactory repayment plan in 
lieu of administrative offset if he or she establishes that changed 
financial circumstances would render the administrative offset unjust.
    (d) If FHFA collects part or all of the debt by other means before 
deductions are made or completed pursuant to paragraph (a) of this 
section, FHFA shall act promptly to modify or terminate its request for 
administrative offset under paragraph (a) of this section.



                       Subpart D_Tax Refund Offset



Sec. 1208.50  Authority and scope.

    The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize 
the Secretary of the Treasury to offset a delinquent debt owed the 
Federal Government from the tax refund due a taxpayer when other 
collection efforts have failed to recover the amount due. In addition, 
FHFA is authorized to collect debts by means of administrative offset 
under 31 U.S.C. 3716 and, as part of the debt collection process, to 
notify the United States Department of Treasury's Financial Management 
Service of the amount of such debt for collection by tax refund offset.



Sec. 1208.51  Definitions.

    The following terms apply to this subpart D--
    Debt or claim means an amount of money, funds or property which has 
been determined by FHFA to be due to the Federal Government from any 
person, organization, or entity, except another Federal agency.
    (1) A debt becomes eligible for tax refund offset procedures if:
    (i) It cannot currently be collected pursuant to the salary offset 
procedures of 5 U.S.C. 5514(a)(1);

[[Page 90]]

    (ii) The debt is ineligible for administrative offset or cannot be 
collected currently by administrative offset; and
    (iii) The requirements of this section are otherwise satisfied.
    (2) All judgment debts are past due for purposes of this subpart D. 
Judgment debts remain past due until paid in full.
    Debtor means a person who owes a debt or a claim. The term 
``person'' includes any individual, organization or entity, except 
another Federal agency.
    Dispute means a written statement supported by documentation or 
other evidence that all or part of an alleged debt is not past due or 
legally enforceable, that the amount is not the amount currently owed, 
that the outstanding debt has been satisfied, or in the case of a debt 
reduced to judgment, that the judgment has been satisfied or stayed.
    Notice means the information sent to the debtor pursuant to Sec. 
1208.53. The date of the notice is that date shown on the notice letter 
as its date of issuance.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the Internal Revenue 
Service (IRS) makes the appropriate credits.



Sec. 1208.52  Procedures.

    (a) Referral to the Department of the Treasury.--(1) FHFA may refer 
any past due, legally enforceable nonjudgment debt of an individual, 
organization, or entity to the Department of the Treasury for tax refund 
offset if FHFA's or the referring agency's rights of action accrued more 
than three months but less than 10 years before the offset is made.
    (2) Debts reduced to judgment may be referred at any time.
    (3) Debts in amounts lower than $25 are not subject to referral.
    (4) In the event that more than one debt is owed, the tax refund 
offset procedures shall be applied in the order in which the debts 
became past due.
    (5) FHFA shall notify the Department of the Treasury of any change 
in the amount due promptly after receipt of payment or notice of other 
reductions.
    (b) Notice. FHFA shall provide the debtor with written notice of its 
intent to offset before initiating the offset. Notice shall be mailed to 
the debtor at the current address of the debtor, as determined from 
information obtained from the Internal Revenue Service pursuant to 26 
U.S.C. 6103(m)(2), (4), (5) or maintained by FHFA. The notice sent to 
the debtor shall state the amount of the debt and inform the debtor 
that:
    (1) The debt is past due;
    (2) FHFA intends to refer the debt to the Department of the Treasury 
for offset from tax refunds that may be due to the taxpayer;
    (3) FHFA intends to provide information concerning the delinquent 
debt exceeding $100 to a consumer reporting bureau unless such debt has 
already been disclosed; and
    (4) Before the debt is reported to a consumer reporting agency, if 
applicable, and referred to the Department of the Treasury for offset 
from tax refunds, the debtor has 65 calendar days from the date of 
notice to request a review under paragraph (d) of this section.
    (c) Report to consumer reporting agency. If the debtor neither pays 
the amount due nor presents evidence that the amount is not past due or 
is satisfied or stayed, FHFA will report the debt to a consumer 
reporting agency at the end of the notice period, if applicable, and 
refer the debt to the Department of the Treasury for offset from the 
taxpayer's Federal tax refund. FHFA shall certify to the Department of 
the Treasury that reasonable efforts have been made by FHFA to obtain 
payment of such debt.
    (d) Request for review. A debtor may request a review by FHFA if he 
or she believes that all or part of the debt is not past due or is not 
legally enforceable, or in the case of a judgment debt, that the debt 
has been stayed or the amount satisfied, as follows:
    (1) The debtor must send a written request for review to FHFA at the 
address provided in the notice.

[[Page 91]]

    (2) The request must state the amount disputed and reasons why the 
debtor believes that the debt is not past due, is not legally 
enforceable, has been satisfied, or if a judgment debt, has been 
satisfied or stayed.
    (3) The request must include any documents that the debtor wishes to 
be considered or state that additional information will be submitted 
within the time permitted.
    (4) If the debtor wishes to inspect records establishing the nature 
and amount of the debt, the debtor must make a written request to FHFA 
for an opportunity for such an inspection. The office holding the 
relevant records not exempt from disclosure shall make them available 
for inspection during normal business hours within one week from the 
date of receipt of the request.
    (5) The request for review and any additional information submitted 
pursuant to the request must be received by FHFA at the address stated 
in the notice within 65 calendar days of the date of issuance of the 
notice.
    (6) In reaching its decision, FHFA shall review the dispute and 
shall consider its records and any documentation and arguments submitted 
by the debtor. FHFA shall send a written notice of its decision to the 
debtor. There is no administrative appeal of this decision.
    (7) If the evidence presented by the debtor is considered by a non-
FHFA agent or other entities or persons acting on behalf of FHFA, the 
debtor shall be accorded at least 30 calendar days from the date the 
agent or other entity or person determines that all or part of the debt 
is past due and legally enforceable to request review by FHFA of any 
unresolved dispute.
    (8) Any debt that previously has been reviewed pursuant to this 
section or any other section of this part, or that has been reduced to a 
judgment, may not be disputed except on the grounds of payments made or 
events occurring subsequent to the previous review or judgment.
    (9) To the extent that a debt owed has not been established by 
judicial or administrative order, a debtor may dispute the existence or 
amount of the debt or the terms of repayment. With respect to debts 
established by a judicial or administrative order, FHFA review will be 
limited to issues concerning the payment or other discharge of the debt.



Sec. 1208.53  No requirement for duplicate notice.

    Where FHFA has previously given a debtor any of the required notice 
and review opportunities with respect to a particular debt, FHFA is not 
required to duplicate such notice and review opportunities prior to 
initiating tax refund offset.



Sec. 1208.54-1208.59  [Reserved]



                Subpart E_Administrative Wage Garnishment



Sec. 1208.60  Scope and purpose.

    These administrative wage garnishment procedures are issued in 
compliance with 31 U.S.C. 3720D and 31 CFR 285.11(f). This subpart E 
provides procedures for FHFA to collect money from a debtor's disposable 
pay by means of administrative wage garnishment. The receipt of payments 
pursuant to this subpart E does not preclude FHFA from pursuing other 
debt collection remedies, including the offset of Federal payments. FHFA 
may pursue such debt collection remedies separately or in conjunction 
with administrative wage garnishment. This subpart E does not apply to 
the collection of delinquent debts from the wages of Federal employees 
from their Federal employment. Federal pay is subject to the Federal 
salary offset procedures set forth in 5 U.S.C. 5514 and other applicable 
laws.



Sec. 1208.61  Notice.

    At least 30 days before the initiation of garnishment proceedings, 
FHFA will send, by first class mail to the debtor's last known address, 
a written notice informing the debtor of:
    (a) The nature and amount of the debt;
    (b) FHFA's intention to initiate proceedings to collect the debt 
through deductions from the debtor's pay until the debt and all 
accumulated interest penalties and administrative costs are paid in 
full;

[[Page 92]]

    (c) An explanation of the debtor's rights as set forth in Sec. 
1208.62(c); and
    (d) The time frame within which the debtor may exercise these 
rights. FHFA shall retain a stamped copy of the notice indicating the 
date the notice was mailed.



Sec. 1208.62  Debtor's rights.

    FHFA shall afford the debtor the opportunity:
    (a) To inspect and copy records related to the debt;
    (b) To enter into a written repayment agreement with FHFA, under 
terms agreeable to FHFA; and
    (c) To the extent that a debt owed has not been established by 
judicial or administrative order, to request a hearing concerning the 
existence or amount of the debt or the terms of the repayment schedule. 
With respect to debts established by a judicial or administrative order, 
a debtor may request a hearing concerning the payment or other discharge 
of the debt. The debtor is not entitled to a hearing concerning the 
terms of the proposed repayment schedule if these terms have been 
established by written agreement.



Sec. 1208.63  Form of hearing.

    (a) If the debtor submits a timely written request for a hearing as 
provided in Sec. 1208.62(c), FHFA will afford the debtor a hearing, 
which at FHFA's option may be oral or written. FHFA will provide the 
debtor with a reasonable opportunity for an oral hearing when FHFA 
determines that the issues in dispute cannot be resolved by review of 
the documentary evidence, for example, when the validity of the claim 
turns on the issue of credibility or veracity.
    (b) If FHFA determines that an oral hearing is appropriate, the time 
and location of the hearing shall be established by FHFA. An oral 
hearing may, at the debtor's option, be conducted either in person or by 
telephone conference. All travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor. All 
telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (c) In cases when it is determined that an oral hearing is not 
required by this section, FHFA will accord the debtor a ``paper 
hearing,'' that is, FHFA will decide the issues in dispute based upon a 
review of the written record.



Sec. 1208.64  Effect of timely request.

    If FHFA receives a debtor's written request for a hearing within 15 
business days of the date FHFA mailed its notice of intent to seek 
garnishment, FHFA shall not issue a withholding order until the debtor 
has been provided the requested hearing, and a decision in accordance 
with Sec. 1208.68 and Sec. 1208.69 has been rendered.



Sec. 1208.65  Failure to timely request a hearing.

    If FHFA receives a debtor's written request for a hearing after 15 
business days of the date FHFA mailed its notice of intent to seek 
garnishment, FHFA shall provide a hearing to the debtor. However, FHFA 
will not delay issuance of a withholding order unless it determines that 
the untimely filing of the request was caused by factors over which the 
debtor had no control, or FHFA receives information that FHFA believes 
justifies a delay or cancellation of the withholding order.



Sec. 1208.66  Hearing official.

    A hearing official may be any qualified individual, as determined by 
FHFA, including an administrative law judge.



Sec. 1208.67  Procedure.

    After the debtor requests a hearing, the hearing official shall 
notify the debtor of:
    (a) The date and time of a telephonic hearing;
    (b) The date, time, and location of an in-person oral hearing; or
    (c) The deadline for the submission of evidence for a written 
hearing.



Sec. 1208.68  Format of hearing.

    FHFA will have the burden of proof to establish the existence or 
amount of the debt. Thereafter, if the debtor disputes the existence or 
amount of the debt, the debtor must prove by a preponderance of the 
evidence that no debt exists, or that the amount of the

[[Page 93]]

debt is incorrect. In addition, the debtor may present evidence that the 
terms of the repayment schedule are unlawful, would cause a financial 
hardship to the debtor, or that collection of the debt may not be 
pursued due to operation of law. The hearing official shall maintain a 
record of any hearing held under this section. Hearings are not required 
to be formal, and evidence may be offered without regard to formal rules 
of evidence. Witnesses who testify in oral hearings shall do so under 
oath or affirmation.



Sec. 1208.69  Date of decision.

    The hearing official shall issue a written opinion stating his or 
her decision as soon as practicable, but not later than 60 days after 
the date on which the request for such hearing was received by FHFA. If 
FHFA is unable to provide the debtor with a hearing and decision within 
60 days after the receipt of the request for such hearing:
    (a) FHFA may not issue a withholding order until the hearing is held 
and a decision rendered; or
    (b) If FHFA had previously issued a withholding order to the 
debtor's employer, the withholding order will be suspended beginning on 
the 61st day after the date FHFA received the hearing request and 
continuing until a hearing is held and a decision is rendered.



Sec. 1208.70  Content of decision.

    The written decision shall include:
    (a) A summary of the facts presented;
    (b) The hearing official's findings, analysis and conclusions; and
    (c) The terms of any repayment schedule, if applicable.



Sec. 1208.71  Finality of agency action.

    A decision by a hearing official shall become the final decision of 
FHFA for the purpose of judicial review under the Administrative 
Procedure Act.



Sec. 1208.72  Failure to appear.

    In the absence of good cause shown, a debtor who fails to appear at 
a scheduled hearing will be deemed as not having timely filed a request 
for a hearing.



Sec. 1208.73  Wage garnishment order.

    (a) Unless FHFA receives information that it believes justifies a 
delay or cancellation of the withholding order, FHFA will send by first 
class mail a withholding order to the debtor's employer within 30 
calendar days after the debtor fails to make a timely request for a 
hearing (i.e., within 15 business days after the mailing of the notice 
of FHFA's intent to seek garnishment) or, if a timely request for a 
hearing is made by the debtor, within 30 calendar days after a decision 
to issue a withholding order becomes final.
    (b) The withholding order sent to the employer will be in the form 
prescribed by the Secretary of the Treasury, on FHFA's letterhead, and 
signed by the head of the agency or delegate. The order will contain all 
information necessary for the employer to comply with the withholding 
order, including the debtor's name, address, and social security number, 
as well as instructions for withholding and information as to where 
payments should be sent.
    (c) FHFA will keep a stamped copy of the order indicating the date 
it was mailed.



Sec. 1208.74  Certification by employer.

    Along with the withholding order, FHFA will send to the employer a 
certification in a form prescribed by the Secretary of the Treasury. The 
employer shall complete and return the certification to FHFA within the 
time frame prescribed in the instructions to the form. The certification 
will address matters such as information about the debtor's employment 
status and disposable pay available for withholding.



Sec. 1208.75  Amounts withheld.

    (a) Upon receipt of the garnishment order issued under this section, 
the employer shall deduct from all disposable pay paid to the debtor 
during each pay period the amount of garnishment described in paragraphs 
(b) through (d) of this section.
    (b) Subject to the provisions of paragraphs (c) and (d) of this 
section, the amount of garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15 percent 
of the debtor's disposable pay; or

[[Page 94]]

    (2) The amount set forth in 15 U.S.C. 1673(a)(2). The amount set 
forth at 15 U.S.C. 1673(a)(2) is the amount by which the debtor's 
disposable pay exceeds an amount equivalent to thirty times the minimum 
wage.
    (c) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (1) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (b) of this section and shall have priority over other 
withholding orders which are served later in time. However, withholding 
orders for family support shall have priority over withholding orders 
issued under this section.
    (2) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section; or
    (ii) An amount equal to 25 percent of the debtor's disposable pay 
less the amount(s) withheld under the withholding order(s) with 
priority.
    (3) If a debtor owes more than one debt to FHFA, FHFA may issue 
multiple withholding orders. The total amount garnished from the 
debtor's pay for such orders will not exceed the amount set forth in 
paragraph (b) of this section.
    (d) An amount greater than that set forth in paragraphs (b) and (c) 
of this section may be withheld upon the written consent of the debtor.
    (e) The employer shall promptly pay to FHFA all amounts withheld in 
accordance with the withholding order issued pursuant to this section.
    (f) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (g) Any assignment or allotment by the employee of the employee's 
earnings shall be void to the extent it interferes with or prohibits 
execution of the withholding order under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.
    (h) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from FHFA to discontinue wage withholding. The garnishment 
order shall indicate a reasonable period of time within which the 
employer is required to commence wage withholding.



Sec. 1208.76  Exclusions from garnishment.

    FHFA will not garnish the wages of a debtor it knows has been 
involuntarily separated from employment until the debtor has been re-
employed continuously for at least 12 months. The debtor has the burden 
of informing FHFA of the circumstances surrounding an involuntary 
separation from employment.



Sec. 1208.77  Financial hardship.

    (a) A debtor whose wages are subject to a wage withholding order 
under this section, may, at any time, request a review by FHFA of the 
amount garnished, based on materially changed circumstances such as 
disability, divorce, or catastrophic illness which result in financial 
hardship.
    (b) A debtor requesting a review under this section shall submit the 
basis for claiming that the current amount of garnishment results in a 
financial hardship to the debtor, along with supporting documentation.
    (c) If a financial hardship is found, FHFA will downwardly adjust, 
by an amount and for a period of time agreeable to FHFA, the amount 
garnished to reflect the debtor's financial condition. FHFA will notify 
the employer of any adjustments to the amounts to be withheld.



Sec. 1208.78  Ending garnishment.

    (a) Once FHFA has fully recovered the amounts owed by the debtor, 
including interest, penalties, and administrative costs consistent with 
the Federal Claims Collection Standards, FHFA will send the debtor's 
employer notification to discontinue wage withholding.

[[Page 95]]

    (b) At least annually, FHFA will review its debtors' accounts to 
ensure that garnishment has been terminated for accounts that have been 
paid in full.



Sec. 1208.79  Prohibited actions by employer.

    The Debt Collection Improvement Act of 1996 prohibits an employer 
from discharging, refusing to employ, or taking disciplinary action 
against the debtor due to the issuance of a withholding order under this 
subpart E.



Sec. 1208.80  Refunds.

    (a) If a hearing official determines that a debt is not legally due 
and owing to the United States, FHFA shall promptly refund any amount 
collected by means of administrative wage garnishment.
    (b) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.



Sec. 1208.81  Right of action.

    FHFA may sue any employer for any amount that the employer fails to 
withhold from wages owed and payable to its employee in accordance with 
this subpart E. However, a suit will not be filed before the termination 
of the collection action involving a particular debtor, unless earlier 
filing is necessary to avoid expiration of any applicable statute of 
limitations. For purposes of this subpart E, ``termination of the 
collection action'' occurs when the agency has terminated collection 
action in accordance with the FCCS or other applicable standards. In any 
event, termination of the collection action will have been deemed to 
occur if FHFA has not received any payments to satisfy the debt from the 
particular debtor whose wages were subject to garnishment, in whole or 
in part, for a period of one (1) year.



PART 1209_RULES OF PRACTICE AND PROCEDURE--Table of Contents



                      Subpart A_Scope and Authority

Sec.
1209.1 Scope.
1209.2 Rules of construction.
1209.3 Definitions.

 Subpart B_Enforcement Proceedings Under Sections 1371 Through 1379D of 
                      the Safety and Soundness Act

1209.4 Scope and authority.
1209.5 Cease and desist proceedings.
1209.6 Temporary cease and desist orders.
1209.7 Civil money penalties.
1209.8 Removal and prohibition proceedings.
1209.9 Supervisory actions not affected.

                Subpart C_Rules of Practice and Procedure

1209.10 Authority of the Director.
1209.11 Authority of the Presiding Officer.
1209.12 Public hearings; closed hearings.
1209.13 Good faith certification.
1209.14 Ex parte communications.
1209.15 Filing of papers.
1209.16 Service of papers.
1209.17 Time computations.
1209.18 Change of time limits.
1209.19 Witness fees and expenses.
1209.20 Opportunity for informal settlement.
1209.21 Conduct of examination.
1209.22 Collateral attacks on adjudicatory proceeding.
1209.23 Commencement of proceeding and contents of notice of charges.
1209.24 Answer.
1209.25 Amended pleadings.
1209.26 Failure to appear.
1209.27 Consolidation and severance of actions.
1209.28 Motions.
1209.29 Discovery.
1209.30 Request for document discovery from parties.
1209.31 Document discovery subpoenas to non-parties.
1209.32 Deposition of witness unavailable for hearing.
1209.33 Interlocutory review.
1209.34 Summary disposition.
1209.35 Partial summary disposition.
1209.36 Scheduling and pre-hearing conferences.
1209.37 Pre-hearing submissions.
1209.38 Hearing subpoenas.
1209.39-1209.49 [Reserved]
1209.50 Conduct of hearings.
1209.51 Evidence.
1209.52 Post-hearing filings.
1209.53 Recommended decision and filing of record.
1209.54 Exceptions to recommended decision.
1209.55 Review by Director.
1209.56 Exhaustion of administrative remedies.
1209.57 Judicial review; no automatic stay.

[[Page 96]]

1209.58-1209.69 [Reserved]

   Subpart D_Parties and Representational Practice Before the Federal 
              Housing Finance Agency; Standards of Conduct

1209.70 Scope.
1209.71 Definitions.
1209.72 Appearance and practice in adjudicatory proceedings.
1209.73 Conflicts of interest.
1209.74 Sanctions.
1209.75 Censure, suspension, disbarment, and reinstatement.
1209.76-1209.79 [Reserved]

           Subpart E_Civil Money Penalty Inflation Adjustments

1209.80 Inflation adjustments.
1209.81 Applicability.
1209.82-1209.99 [Reserved]

 Subpart F_Suspension or Removal of an Entity-Affiliated Party Charged 
                               With Felony

1209.100 Scope.
1209.101 Suspension, removal, or prohibition.
1209.102 Hearing on removal or suspension.
1209.103 Recommended and final decisions.

    Authority: 5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C. 4501, 
4503, 4511, 4513, 4513b, 4517, 4526, 4531, 4535, 4536, 4581, 4585, 4631-
4641; and 28 U.S.C. 2461 note.

    Source: 76 FR 53607, Aug. 26, 2011, unless otherwise noted.



                      Subpart A_Scope and Authority



Sec. 1209.1  Scope.

    (a) Authority. This part sets forth the Rules of Practice and 
Procedure for hearings on the record in administrative enforcement 
proceedings in accordance with the Federal Housing Enterprises Financial 
Safety and Soundness Act of 1992, Title XIII of the Housing and 
Community Development Act of 1992, Public Law 102-550, sections 1301 et 
seq., codified at 12 U.S.C. 4501 et seq., as amended (the ``Safety and 
Soundness Act''), as stated in Sec. 1209.4 of this part.\1\
---------------------------------------------------------------------------

    \1\ As used in this part, the ``Safety and Soundness Act'' means the 
Federal Housing Enterprise Financial Safety and Soundness Act of 1992, 
as amended. See Sec. 1209.3. The Safety and Soundness Act was amended 
by the Housing and Economic Recovery Act of 2008, Public Law No. 110-
289, sections 1101 et seq., 122 Stat. 2654 (July 30, 2008) (HERA). 
Specifically, sections 1151 through 1158 of HERA amended sections 1371 
through 1379D of the Safety and Soundness Act, (codified at 12 U.S.C. 
4631 through 4641) (hereafter, ``Enforcement Proceedings'').
---------------------------------------------------------------------------

    (b) Enforcement Proceedings. Subpart B of this part (Enforcement 
Proceedings Under sections 1371 through 1379D of the Safety and 
Soundness Act) sets forth the statutory authority for enforcement 
proceedings under sections 1371 through 1379D of the Safety and 
Soundness Act (12 U.S.C. 4631 through 4641) (Enforcement Proceedings).
    (c) Rules of Practice and Procedure. Subpart C of this part (Rules 
of Practice and Procedure) prescribes the general rules of practice and 
procedure applicable to adjudicatory proceedings that the Director is 
required by statute to conduct on the record after opportunity for a 
hearing under the Administrative Procedure Act, 5 U.S.C. 554, 556, and 
557, under the following statutory provisions:
    (1) Enforcement proceedings under sections 1371 through 1379D of the 
Safety and Soundness Act, as amended (12 U.S.C. 4631 through 4641);
    (2) Removal, prohibition, and civil money penalty proceedings for 
violations of post-employment restrictions imposed by applicable law; 
and
    (3) Proceedings under section 102 of the Flood Disaster Protection 
Act of 1973, as amended (42 U.S.C. 4012a) to assess civil money 
penalties.
    (d) Representation and conduct. Subpart D of this part (Parties and 
Representational Practice before the Federal Housing Finance Agency; 
Standards of Conduct) sets out the rules of representation and conduct 
that shall govern any appearance by any person, party, or representative 
of any person or party, before a presiding officer, the Director of 
FHFA, or a designated representative of the Director or FHFA staff, in 
any proceeding or matter pending before the Director.
    (e) Civil money penalty inflation adjustments. Subpart E of this 
part (Civil Money Penalty Inflation Adjustments) sets out the 
requirements for the periodic adjustment of maximum civil money penalty 
amounts under the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended (Inflation

[[Page 97]]

Adjustment Act) on a recurring four-year cycle.\2\
---------------------------------------------------------------------------

    \2\ Public Law 101-410, 104 Stat. 890, as amended by the Debt 
Collection Improvement Act of 1996, Public Law 104-134, Title III, sec. 
31001(s)(1), Apr. 26, 1996, 110 Stat. 1321-373; Public Law 105-362, 
Title XIII, sec. 1301(a), Nov. 10, 1998, 112 Stat. 3293 (28 U.S.C. 2461 
note).
---------------------------------------------------------------------------

    (f) Informal proceedings. Subpart F of this part (Suspension or 
Removal of an Entity-Affiliated Party Charged with Felony) sets out the 
scope and procedures for the suspension or removal of an entity-
affiliated party charged with a felony under section 1377(h) of the 
Safety and Soundness Act (12 U.S.C. 4636a(h)), which provides for an 
informal hearing before the Director.



Sec. 1209.2  Rules of construction.

    For purposes of this part:
    (a) Any term in the singular includes the plural and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate; and
    (c) Unless the context requires otherwise, a party's representative 
of record, if any, on behalf of that party, may take any action required 
to be taken by the party.



Sec. 1209.3  Definitions.

    For purposes of this part, unless explicitly stated to the contrary:
    Adjudicatory proceeding means a proceeding conducted pursuant to 
these rules, on the record, and leading to the formulation of a final 
order other than a regulation.
    Agency has the meaning defined in section 1303(2) of the Safety and 
Soundness Act (12 U.S.C. 4502(2)).
    Associated with the regulated entity means, for purposes of section 
1379 of the Safety and Soundness Act (12 U.S.C. 4637), any direct or 
indirect involvement or participation in the conduct of operations or 
business affairs of a regulated entity, including engaging in activities 
related to the operations or management of, providing advice or services 
to, consulting or contracting with, serving as agent for, or in any 
other way affecting the operations or business affairs of a regulated 
entity--with or without regard to--any direct or indirect payment, 
promise to make payment, or receipt of any compensation or thing of 
value, such as money, notes, stock, stock options, or other securities, 
or other benefit or remuneration of any kind, by or on behalf of the 
regulated entity, except any payment made pursuant to a retirement plan 
or deferred compensation plan, which is determined by the Director to be 
permissible under section 1318(e) of the Safety and Soundness Act (12 
U.S.C. 4518(e)), or by reason of the death or disability of the party, 
in the form and manner commonly paid or provided to retirees of the 
regulated entity, unless such payment, compensation, or such benefit is 
promised or provided to or for the benefit of said party for the 
provision of services or other benefit to the regulated entity.
    Authorizing statutes has the meaning defined in section 1303(3) of 
the Safety and Soundness Act (12 U.S.C. 4502(3)).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 et seq.).
    Board or Board of Directors means the board of directors of any 
Enterprise or Federal Home Loan Bank (Bank), as provided for in the 
respective authorizing statutes.
    Decisional employee means any member of the Director's or the 
presiding officer's staff who has not engaged in an investigative or 
prosecutorial role in a proceeding and who may assist the Director or 
the presiding officer, respectively, in preparing orders, recommended 
decisions, decisions, and other documents under subpart C of this part.
    Director has the meaning defined in section 1303(9) of the Safety 
and Soundness Act (12 U.S.C. 4502(9)); except, as the context requires 
in this part, ``director'' may refer to a member of the Board of 
Directors or any Board committee of an Enterprise, a Federal Home Loan 
Bank, or the Office of Finance.
    Enterprise has the meaning defined in section 1303(10) of the Safety 
and Soundness Act (12 U.S.C. 4502(10)).
    Entity-affiliated party has the meaning defined in section 1303(11) 
of the Safety and Soundness Act (12 U.S.C. 4502(11)), and may include an 
executive

[[Page 98]]

officer, any director, or management of the Office of Finance, as 
applicable under relevant provisions of the Safety and Soundness Act or 
FHFA regulations.
    Executive officer has the meaning defined in section 1303(12) of the 
Safety and Soundness Act (12 U.S.C. 4502(12)), and may include an 
executive officer of the Office of Finance, as applicable under relevant 
provisions of the Safety and Soundness Act or FHFA regulations.
    FHFA means the Federal Housing Finance Agency as defined in section 
1303(2) of the Safety and Soundness Act (12 U.S.C. 4502(2)).
    Notice of charges means the charging document served by FHFA to 
commence an enforcement proceeding under this part for the issuance of a 
cease and desist order; removal, suspension, or prohibition order; or an 
order to assess a civil money penalty, under 12 U.S.C. 4631 through 4641 
and Sec. 1209.23. A ``notice of charges,'' as used or referred to as 
such in this part, is not an ``effective notice'' under section 1375(a) 
of the Safety and Soundness Act (12 U.S.C. 4635(a)).
    Office of Finance has the meaning defined in section 1303(19) of the 
Safety and Soundness Act (12 U.S.C. 4502(19)).
    Party means any person named as a respondent in any notice of 
charges, or FHFA, as the context requires in this part.
    Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, organization, regulated entity, entity-affiliated party, or 
other entity.
    Presiding officer means an administrative law judge or any other 
person appointed by or at the request of the Director under applicable 
law to conduct an adjudicatory proceeding under this part.
    Regulated entity has the meaning defined in section 1303(20) of the 
Safety and Soundness Act (12 U.S.C. 4502(20)).
    Representative of record means an individual who is authorized to 
represent a person or is representing himself and who has filed a notice 
of appearance and otherwise has complied with the requirements under 
Sec. 1209.72. FHFA's representative of record may be referred to as 
FHFA counsel of record, agency counsel or enforcement counsel.
    Respondent means any party that is the subject of a notice of 
charges under this part.
    Safety and Soundness Act means Title XIII of the Housing and 
Community Development Act of 1992, Public Law 102-550, known as the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended (12 U.S.C. 4501 et seq.)
    Violation has the meaning defined in section 1303(25) of the Safety 
and Soundness Act (12 U.S.C. 4502(25)).



 Subpart B_Enforcement Proceedings Under Sections 1371 Through 1379D of 
                      the Safety and Soundness Act



Sec. 1209.4  Scope and authority.

    The rules of practice and procedure set forth in Subpart C (Rules of 
Practice and Procedure) of this part shall be applicable to any hearing 
on the record conducted by FHFA in accordance with sections 1371 through 
1379D of the Safety and Soundness Act (12 U.S.C. 4631 through 4641), as 
follows:
    (a) Cease-and-desist proceedings under sections 1371 and 1373 of the 
Safety and Soundness Act, (12 U.S.C. 4631, 4633);
    (b) Civil money penalty assessment proceedings under sections 1373 
and 1376 of the Safety and Soundness Act, (12 U.S.C. 4633, 4636); and
    (c) Removal and prohibition proceedings under sections 1373 and 1377 
of the Safety and Soundness Act, (12 U.S.C. 4633, 4636a), except removal 
proceedings under section 1377(h) of the Safety and Soundness Act, (12 
U.S.C. 4636a(h)).



Sec. 1209.5  Cease and desist proceedings.

    (a) Cease and desist proceedings--(1) Authority--(i) In general. As 
prescribed by section 1371(a) of the Safety and Soundness Act (12 U.S.C. 
4631(a)), if in the opinion of the Director, a regulated entity or any 
entity-affiliated party is engaging or has engaged, or the Director has 
reasonable cause to believe that the regulated entity or any entity-
affiliated party is about to engage,

[[Page 99]]

in an unsafe or unsound practice in conducting the business of the 
regulated entity or the Office of Finance, or is violating or has 
violated, or the Director has reasonable cause to believe is about to 
violate, a law, rule, regulation, or order, or any condition imposed in 
writing by the Director in connection with the granting of any 
application or other request by the regulated entity or the Office of 
Finance or any written agreement entered into with the Director, the 
Director may issue and serve upon the regulated entity or entity-
affiliated party a notice of charges (as described in Sec. 1209.23) to 
institute cease and desist proceedings, except with regard to the 
enforcement of any housing goal that must be addressed under sections 
1341 and 1345 of the Safety and Soundness Act (12 U.S.C. 4581, 4585).
    (ii) Hearing on the record. In accordance with section 1373 of the 
Safety and Soundness Act (12 U.S.C. 4633), a hearing on the record shall 
be held in the District of Columbia. Subpart C of this part shall govern 
the hearing procedures.
    (iii) Consent to order. Unless the party served with a notice of 
charges shall appear at the hearing personally or through an authorized 
representative of record, the party shall be deemed to have consented to 
the issuance of the cease and desist order.
    (2) Unsatisfactory rating. In accordance with section 1371(b) of the 
Safety and Soundness Act (12 U.S.C. 4631(b)), if a regulated entity 
receives, in its most recent report of examination, a less-than-
satisfactory rating for asset quality, management, earnings, or 
liquidity, the Director may deem the regulated entity to be engaging in 
an unsafe or unsound practice within the meaning of section 1371(a) of 
the Safety and Soundness Act (12 U.S.C. 4631(a)), if any such deficiency 
has not been corrected.
    (3) Order. As provided by section 1371(c)(2) of the Safety and 
Soundness Act (12 U.S.C. 4631(c)(2)), if the Director finds on the 
record made at a hearing in accordance with section 1373 of the Safety 
and Soundness Act (12 U.S.C. 4633) that any practice or violation 
specified in the notice of charges has been established (or the 
regulated entity or entity-affiliated party consents pursuant to section 
1373(a)(4) of the Safety and Soundness Act (12 U.S.C. 4633(a)(4)), the 
Director may issue and serve upon the regulated entity, executive 
officer, director, or entity-affiliated party, an order (as set forth in 
Sec. 1209.55) requiring such party to cease and desist from any such 
practice or violation and to take affirmative action to correct or 
remedy the conditions resulting from any such practice or violation.
    (b) Affirmative action to correct conditions resulting from 
violations or activities. The authority to issue a cease and desist 
order or a temporary cease and desist order requiring a regulated 
entity, executive officer, director, or entity-affiliated party to take 
affirmative action to correct or remedy any condition resulting from any 
practice or violation with respect to which such cease and desist order 
or temporary cease and desist order is set forth in section 1371(a), 
(c)(2), and (d) of the Safety and Soundness Act (12 U.S.C. 4631(a), 
(c)(2), and (d)), and includes the authority to:
    (1) Require the regulated entity or entity-affiliated party to make 
restitution, or to provide reimbursement, indemnification, or guarantee 
against loss, if--
    (i) Such entity or party or finance facility was unjustly enriched 
in connection with such practice or violation, or
    (ii) The violation or practice involved a reckless disregard for the 
law or any applicable regulations, or prior order of the Director;
    (2) Require the regulated entity to seek restitution, or to obtain 
reimbursement, indemnification, or guarantee against loss; as
    (3) Restrict asset or liability growth of the regulated entity;
    (4) Require the regulated entity to obtain new capital;
    (5) Require the regulated entity to dispose of any loan or asset 
involved;
    (6) Require the regulated entity to rescind agreements or contracts;
    (7) Require the regulated entity to employ qualified officers or 
employees (who may be subject to approval by the Director at the 
direction of the Director); and
    (8) Require the regulated entity to take such other action, as the 
Director

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determines appropriate, including limiting activities.
    (c) Authority to limit activities. As provided by section 1371(e) of 
the Safety and Soundness Act (12 U.S.C. 4631(e)), the authority of the 
Director to issue a cease and desist order under section 1371 of the 
Safety and Soundness Act (12 U.S.C. 4631) or a temporary cease and 
desist order under section 1372 of the Safety and Soundness Act (12 
U.S.C. 4632), includes the authority to place limitations on the 
activities or functions of the regulated entity or entity-affiliated 
party or any executive officer or director of the regulated entity or 
entity-affiliated party.
    (d) Effective date of order; judicial review--(1) Effective date. 
The effective date of an order is as set forth in section 1371(f) of the 
Safety and Soundness Act (12 U.S.C. 4631(f)).
    (2) Judicial review. Judicial review is governed by section 1374 of 
the Safety and Soundness Act (12 U.S.C. 4634).



Sec. 1209.6  Temporary cease and desist orders.

    (a) Temporary cease and desist orders--(1) Grounds for issuance. The 
grounds for issuance of a temporary cease and desist order are set forth 
in section 1372(a) of the Safety and Soundness Act (12 U.S.C. 4632(a)). 
In accordance with section 1372(a) of the Safety and Soundness Act (12 
U.S.C. 4632(a)), the Director may:
    (i) Issue a temporary order requiring that regulated entity or 
entity-affiliated party to cease and desist from any violation or 
practice specified in the notice of charges; and
    (ii) Require that regulated entity or entity-affiliated party to 
take affirmative action to prevent or remedy any insolvency, 
dissipation, condition, or prejudice, pending completion of the 
proceedings.
    (2) Additional requirements. As provided by section 1372(a)(2) of 
the Safety and Soundness Act (12 U.S.C. 4632(a)(2)), an order issued 
under section 1372(a)(1) of the Safety and Soundness Act (12 U.S.C. 
4632(a)(1)) may include any requirement authorized under section 1371(d) 
of the Safety and Soundness Act (12 U.S.C. 4631(d)).
    (b) Effective date of temporary order. The effective date of a 
temporary order is as provided by section 1372(b) of the Safety and 
Soundness Act (12 U.S.C. 4632(b)). And, unless set aside, limited, or 
suspended by a court in proceedings pursuant to the judicial review 
provisions of section 1372(d) of the Safety and Soundness Act (12 U.S.C. 
4632(d)), shall remain in effect and enforceable pending the completion 
of the proceedings pursuant to such notice of charges, and shall remain 
effective until the Director dismisses the charges specified in the 
notice or until superseded by a cease-and-desist order issued pursuant 
to section 1371 of the Safety and Soundness Act (12 U.S.C. 4631).
    (c) Incomplete or inaccurate records--(1) Temporary order. As 
provided by section 1372(c) of the Safety and Soundness Act (12 U.S.C. 
4632(c)), if a notice of charges served under section 1371(a) or (b) of 
the Safety and Soundness Act (12 U.S.C. 4631(a), (b)), specifies on the 
basis of particular facts and circumstances that the books and records 
of the regulated entity served are so incomplete or inaccurate that the 
Director is unable, through the normal supervisory process, to determine 
the financial condition of the regulated entity or the details or the 
purpose of any transaction or transactions that may have a material 
effect on the financial condition of that regulated entity, the Director 
may issue a temporary order requiring:
    (i) The cessation of any activity or practice that gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (ii) Affirmative action to restore the books or records to a 
complete and accurate state.
    (2) Effective period. Any temporary order issued under section 
1372(c)(1) of the Safety and Soundness Act (12 U.S.C. 4632(c)(1)) shall 
become effective upon service, and remain in effect and enforceable 
unless set aside, limited, or suspended in accordance with section 
1372(d) of the Safety and Soundness Act (12 U.S.C. 4632(d)), as provided 
by section 1372(c)(2) of the Safety and Soundness Act (12 U.S.C. 
4632(c)(2)).
    (d) Judicial review. Section 1372(d) of the Safety and Soundness Act 
(12 U.S.C. 4632(d)), authorizes a regulated

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entity, executive officer, director, or entity-affiliated party that has 
been served with a temporary order pursuant to section 1372(a) or (b) of 
the Safety and Soundness Act (12 U.S.C. 4632(a), (b)) to apply to the 
United States District Court for the District of Columbia within 10 days 
after service of the temporary order for an injunction setting aside, 
limiting, or suspending the enforcement, operation, or effectiveness of 
the temporary order, pending the completion of the administrative 
enforcement proceeding. The district court has jurisdiction to issue 
such injunction.
    (e) Enforcement of temporary order. As provided by section 1372(e) 
of the Safety and Soundness Act (12 U.S.C. 4632(e)), in the case of any 
violation, threatened violation, or failure to obey a temporary order 
issued pursuant to this section, the Director may bring an action in the 
United States District Court for the District of Columbia for an 
injunction to enforce a temporary order, and the district court is to 
issue such injunction upon a finding made in accordance with section 
1372(e) of the Safety and Soundness Act (12 U.S.C. 4632(e)).



Sec. 1209.7  Civil money penalties.

    (a) Civil money penalty proceedings--(1) In general. Section 1376 of 
the Safety and Soundness Act (12 U.S.C. 4636) governs the imposition of 
civil money penalties. Upon written notice, which shall conform to the 
requirements of Sec. 1209.23 of this part, and a hearing on the record 
to be conducted in accordance with subpart C of this part, the Director 
may impose a civil money penalty on any regulated entity or any entity-
affiliated party as provided by section 1376 of the Safety and Soundness 
Act for any violation, practice, or breach addressed under sections 
1371, 1372, or 1376 of the Safety and Soundness Act (12 U.S.C. 4631, 
4632, 4636), except with regard to the enforcement of housing goals that 
are addressed separately under sections 1341 and 1345 of the Safety and 
Soundness Act (12 U.S.C. 4581, 4585).
    (2) Amount of penalty--(i) First Tier. Section 1376(b)(1) of the 
Safety and Soundness Act (12 U.S.C. 4636(b)(1)) prescribes the civil 
penalty for violations as stated therein, in the amount of $10,000 for 
each day during which a violation continues.
    (ii) Second Tier. Section 1376(b)(2) of the Safety and Soundness Act 
(12 U.S.C. 4636(b)(2)) provides that notwithstanding paragraph (b)(1) 
thereof, a regulated entity or entity-affiliated party shall forfeit and 
pay a civil penalty of not more than $50,000 for each day during which a 
violation, practice, or breach continues, if the regulated entity or 
entity-affiliated party commits any violation described in (b)(1) 
thereof, recklessly engages in an unsafe or unsound practice, or 
breaches any fiduciary duty, and the violation, practice, or breach is 
part of a pattern of misconduct; causes or is likely to cause more than 
a minimal loss to the regulated entity; or results in pecuniary gain or 
other benefit to such party.
    (iii) Third Tier. Section 1376(b)(3) of the Safety and Soundness Act 
(12 U.S.C. 4636(b)(3)) provides that, notwithstanding paragraphs (b)(1) 
and (b)(2) thereof, any regulated entity or entity-affiliated party 
shall forfeit and pay a civil penalty, in accordance with section 
1376(b)(4) of the Safety and Soundness Act (12 U.S.C. 4636(b)(4)), for 
each day during which such violation, practice, or breach continues, if 
such regulated entity or entity-affiliated party:
    (A) Knowingly--
    (1) Commits any violation described in any subparagraph of section 
1376(b)(1) of the Safety and Soundness Act;
    (2) Engages in any unsafe or unsound practice in conducting the 
affairs of the regulated entity; or
    (3) Breaches any fiduciary duty; and
    (B) Knowingly or recklessly causes a substantial loss to the 
regulated entity or a substantial pecuniary gain or other benefit to 
such party by reason of such violation, practice, or breach.
    (b) Maximum amounts--(1) Maximum daily penalty. Section 1376(b)(4) 
of the Safety and Soundness Act (12 U.S.C. 4636(b)(4)), prescribes the 
maximum daily amount of a civil penalty that may be assessed for any 
violation, practice, or breach pursuant to section 1376(b)(3) of the 
Safety and Soundness Act (12 U.S.C. 4636(b)(3)), in the case of

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any entity-affiliated party (not to exceed $2,000,000.00), and in the 
case of any regulated entity ($2,000,000.00).
    (2) Inflation Adjustment Act. The maximum civil penalty amounts are 
subject to periodic adjustment under the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note), as 
provided in subpart E of this part.
    (c) Factors in determining amount of penalty. In accordance with 
section 1376(c)(2) of the Safety and Soundness Act (12 U.S.C. 
4636(c)(2)), in assessing civil money penalties on a regulated entity or 
an entity-affiliated party in amounts as provided in section 1376(b) of 
the Safety and Soundness Act (12 U.S.C. 4636(b)), the Director shall 
give consideration to such factors as:
    (1) The gravity of the violation, practice, or breach;
    (2) Any history of prior violations or supervisory actions, or any 
attempts at concealment;
    (3) The effect of the penalty on the safety and soundness of the 
regulated entity or the Office of Finance;
    (4) Any loss or risk of loss to the regulated entity or to the 
Office of Finance;
    (5) Any benefits received or derived, whether directly or 
indirectly, by the respondent(s);
    (6) Any injury to the public;
    (7) Any deterrent effect on future violations, practices, or 
breaches;
    (8) The financial capacity of the respondent(s), or any unusual 
circumstance(s) of hardship upon an executive officer, director, or 
other individual;
    (9) The promptness, cost, and effectiveness of any effort to remedy 
or ameliorate the consequences of the violation, practice, or breach;
    (10) The candor and cooperation, if any, of the respondent(s); and
    (11) Any other factors the Director may determine by regulation to 
be appropriate.
    (d) Review of imposition of penalty. Section 1376(c)(3) of the 
Safety and Soundness Act (12 U.S.C. 4636(c)(3)) governs judicial review 
of a penalty order under section 1374 of the Safety and Soundness Act 
(12 U.S.C. 4634).



Sec. 1209.8  Removal and prohibition proceedings.

    (a) Removal and prohibition proceedings--(1) Authority to issue 
order. As provided by section 1377(a)(1) of the Safety and Soundness Act 
(12 U.S.C. 4636a(a)(1)), the Director may serve upon a party described 
in paragraph (a)(2) of this section, or any officer, director, or 
management of the Office of Finance, a notice of the intention of the 
Director to suspend or remove such party from office, or to prohibit any 
further participation by such party in any manner in the conduct of the 
affairs of the regulated entity or the Office of Finance.
    (2) Applicability. As provided by section 1377(a)(2) of the Safety 
and Soundness Act (12 U.S.C. 4636a(a)(2)), a party described in this 
paragraph is an entity-affiliated party or any officer, director, or 
management of the Office of Finance, if the Director determines that:
    (i) That party, officer, or director has, directly or indirectly--
    (A) Violated--
    (1) Any law or regulation;
    (2) Any cease and desist order that has become final;
    (3) Any condition imposed in writing by the Director in connection 
with an application, notice, or other request by a regulated entity; or
    (4) Any written agreement between such regulated entity and the 
Director;
    (B) Engaged or participated in any unsafe or unsound practice in 
connection with any regulated entity or business institution; or
    (C) Committed or engaged in any act, omission, or practice which 
constitutes a breach of such party's fiduciary duty;
    (ii) By reason of such violation, practice, or breach--
    (A) Such regulated entity or business institution has suffered or 
likely will suffer financial loss or other damage; or
    (B) Such party directly or indirectly received financial gain or 
other benefit; and
    (iii) The violation, practice, or breach described in subparagraph 
(i) of this section--
    (A) Involves personal dishonesty on the part of such party; or
    (B) Demonstrates willful or continuing disregard by such party for 
the

[[Page 103]]

safety or soundness of such regulated entity or business institution.
    (3) Applicability to business entities. Under section 1377(f) of the 
Safety and Soundness Act (12 U.S.C. 4636a(f)), this remedy applies only 
to a person who is an individual, unless the Director specifically finds 
that it should apply to a corporation, firm, or other business entity.
    (b) Suspension order--(1) Suspension or prohibition authorized. If 
the Director serves written notice under section 1377(a) of the Safety 
and Soundness Act (12 U.S.C. 4636a(a)) upon a party subject to that 
section, the Director may, by order, suspend or remove such party from 
office, or prohibit such party from further participation in any manner 
in the conduct of the affairs of the regulated entity or the Office of 
Finance, if the Director:
    (i) Determines that such action is necessary for the protection of 
the regulated entity or the Office of Finance; and
    (ii) Serves such party with written notice of the order.
    (2) Effective period. The effective period of any order under 
section 1377(b)(1) of the Safety and Soundness Act (12 U.S.C. 
4636a(b)(1)) is specified in section 1377(b)(2) of the Safety and 
Soundness Act (12 U.S.C. 4636a(b)(2)). An order of suspension shall 
become effective upon service and, absent a court-ordered stay, remains 
effective and enforceable until the date the Director dismisses the 
charges or the effective date of an order issued by the Director under 
section 1377(c)(4) of the Safety and Soundness Act (12 U.S.C. 
4636a(c)(4),(5)).
    (3) Copy of order to be served on regulated entity. In accordance 
with section 1377(b)(3) of the Safety and Soundness Act (12 U.S.C. 
4636a(b)(3)), the Director will serve a copy of any order to suspend, 
remove, or prohibit participation in the conduct of the affairs on the 
Office of Finance or any regulated entity with which such party is 
affiliated at the time such order is issued.
    (c) Notice; hearing and order--(1) Written notice. A notice of the 
intention of the Director to issue an order under sections 1377(a) and 
(c) of the Safety and Soundness Act, (12 U.S.C. 4636a(a), (c)), shall 
conform with Sec. 1209.23, and may include any such additional 
information as the Director may require.
    (2) Hearing. A hearing on the record shall be held in the District 
of Columbia in accordance with sections 1373(a)(1) and 1377(c)(2) of the 
Safety and Soundness Act. See 12 U.S.C. 4633(a)(1), 4636a(c)(2).
    (3) Consent. As provided by section 1377(c)(3) of the Safety and 
Soundness Act (12 U.S.C. 4636a(c)(3)), unless the party that is the 
subject of a notice delivered under paragraph (a) of this section 
appears in person or by a duly authorized representative of record, in 
the adjudicatory proceeding, such party shall be deemed to have 
consented to the issuance of an order under this section.
    (4) Issuance of order of suspension or removal. As provided by 
section 1377(c)(4) of the Safety and Soundness Act (12 U.S.C. 
4636a(c)(4)), the Director may issue an order under this part, as the 
Director may deem appropriate, if:
    (i) A party is deemed to have consented to the issuance of an order 
under paragraph (d); or
    (ii) Upon the record made at the hearing, the Director finds that 
any of the grounds specified in the notice have been established.
    (5) Effectiveness of order. As provided by section 1377(c)(5) of the 
Safety and Soundness Act (12 U.S.C. 4636a(c)(5)), any order issued and 
served upon a party in accordance with this section shall become 
effective at the expiration of 30 days after the date of service upon 
such party and any regulated entity or entity-affiliated party. An order 
issued upon consent under paragraph (c)(3) of this section, however, 
shall become effective at the time specified therein. Any such order 
shall remain effective and enforceable except to such extent as it is 
stayed, modified, terminated, or set aside by action of the Director or 
a reviewing court.
    (d) Prohibition of certain activities and industry-wide 
prohibition--(1) Prohibition of certain activities. As provided by 
section 1377(d) of the Safety and Soundness Act (12 U.S.C. 4636a(d)), 
any person subject to an order issued under subpart B of this part shall 
not--
    (i) Participate in any manner in the conduct of the affairs of any 
regulated entity or the Office of Finance;

[[Page 104]]

    (ii) Solicit, procure, transfer, attempt to transfer, vote, or 
attempt to vote any proxy, consent, or authorization with respect to any 
voting rights in any regulated entity;
    (iii) Violate any voting agreement previously approved by the 
Director; or
    (iv) Vote for a director, or serve or act as an entity-affiliated 
party of a regulated entity or as an officer or director of the Office 
of Finance.
    (2) Industry-wide prohibition. As provided by section 1377(e)(1) of 
the Safety and Soundness Act (12 U.S.C. 4636a(e)(1)), except as provided 
in section 1377(e)(2) of the Safety and Soundness Act (12 U.S.C. 
4636a(e)(2)), any person who, pursuant to an order issued under section 
1377 of the Safety and Soundness Act (12 U.S.C. 4636a), has been removed 
or suspended from office in a regulated entity or the Office of Finance, 
or prohibited from participating in the conduct of the affairs of a 
regulated entity or the Office of Finance, may not, while such order is 
in effect, continue or commence to hold any office in, or participate in 
any manner in the conduct of the affairs of, any regulated entity or the 
Office of Finance.
    (3) Relief from industry-wide prohibition at the discretion of the 
Director--(i) Relief from order. As provided by section 1377(e)(2) of 
the Safety and Soundness Act (12 U.S.C. 4636a(e)(2)), if, on or after 
the date on which an order has been issued under section 1377 of the 
Safety and Soundness Act (12 U.S.C. 4636a) that removes or suspends from 
office any party, or prohibits such party from participating in the 
conduct of the affairs of a regulated entity or the Office of Finance, 
such party receives the written consent of the Director, the order shall 
cease to apply to such party with respect to the regulated entity or the 
Office of Finance to the extent described in the written consent. Such 
written consent shall be on such terms and conditions as the Director 
therein may specify in his discretion. Any such consent shall be 
publicly disclosed.
    (ii) No private right of action; no final agency action. Nothing in 
this paragraph shall be construed to require the Director to entertain 
or to provide such written consent, or to confer any rights to such 
consideration or consent upon any party, regulated entity, entity-
affiliated party, or the Office of Finance. Additionally, whether the 
Director consents to relief from an outstanding order under this part is 
committed wholly to the discretion of the Director, and such 
determination shall not be a final agency action for purposes of seeking 
judicial review.
    (4) Violation of industry-wide prohibition. As provided by section 
1377(e)(3) of the Safety and Soundness Act (12 U.S.C. 4636a(e)(3)), any 
violation of section 1377(e)(1) of the Safety and Soundness Act (12 
U.S.C. 4636a(e)(1)) by any person who is subject to an order issued 
under section 1377(h) of the Safety and Soundness Act (12 U.S.C. 
4636a(h)) (suspension or removal of entity-affiliated party charged with 
felony) shall be treated as a violation of the order.
    (e) Stay of suspension or prohibition of entity-affiliated party. As 
provided by section 1377(g) of the Safety and Soundness Act (12 U.S.C. 
4636a(g)), not later than 10 days after the date on which any entity-
affiliated party has been suspended from office or prohibited from 
participation in the conduct of the affairs of a regulated entity, such 
party may apply to the United States District Court for the District of 
Columbia, or the United States district court for the judicial district 
in which the headquarters of the regulated entity is located, for a stay 
of such suspension or prohibition pending the completion of the 
administrative enforcement proceeding pursuant to section 1377(c) of the 
Safety and Soundness Act (12 U.S.C. 4636a(c)). The court shall have 
jurisdiction to stay such suspension or prohibition, but such 
jurisdiction does not extend to the administrative enforcement 
proceeding.



Sec. 1209.9  Supervisory actions not affected.

    As provided by section 1311(c) of the Safety and Soundness Act (12 
U.S.C. 4511(c)), the authority of the Director to take action under 
subtitle A of the Safety and Soundness Act (12 U.S.C. 4611 et seq.) 
(e.g., the appointment of a conservator or receiver for a regulated

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entity; entering into a written agreement or pursuing an informal 
agreement with a regulated entity as the Director deems appropriate; and 
undertaking other such actions as may be applicable to undercapitalized, 
significantly undercapitalized or critically undercapitalized regulated 
entities), or to initiate enforcement proceedings under subtitle C of 
the Safety and Soundness Act (12 U.S.C. 4631 et seq.), shall not in any 
way limit the general supervisory or regulatory authority granted the 
Director under section 1311(b) of the Safety and Soundness Act (12 
U.S.C. 4511(b)). The selection and form of regulatory or supervisory 
action under the Safety and Soundness Act is committed to the discretion 
of the Director, and the selection of one form of action or a 
combination of actions does not foreclose the Director from pursuing any 
other supervisory action authorized by law.



                Subpart C_Rules of Practice and Procedure



Sec. 1209.10  Authority of the Director.

    The Director may, at any time during the pendency of a proceeding, 
perform, direct the performance of, or waive performance of any act that 
could be done or ordered by the presiding officer.



Sec. 1209.11  Authority of the Presiding Officer.

    (a) General rule. All proceedings governed by subpart C of this part 
shall be conducted consistent with the provisions of chapter 5 of Title 
5 of the United States Code. The presiding officer shall have complete 
charge of the adjudicative proceeding, conduct a fair and impartial 
hearing, avoid unnecessary delay, and assure that a complete record of 
the proceeding is made.
    (b) Powers. The presiding officer shall have all powers necessary to 
conduct the proceeding in accordance with paragraph (a) of this section 
and 5 U.S.C. 556(c). The presiding officer is authorized to:
    (1) Control the proceedings. (i) Upon reasonable notice to the 
parties, not earlier than 30 days or later than 60 days after service of 
a notice of charges under the Safety and Soundness Act, set a date, 
time, and place for an evidentiary hearing on the record, within the 
District of Columbia, as provided in section 1373 of the Safety and 
Soundness Act (12 U.S.C. 4633), in a scheduling order that may be issued 
in conjunction with the initial scheduling conference set under Sec. 
1209.36, or otherwise as the presiding officer finds in the best 
interest of justice, in accordance with this part; and
    (ii) Upon reasonable notice to the parties, reset or change the 
date, time, or place (within the District of Columbia) of an evidentiary 
hearing;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to address legal or factual issues, or 
evidentiary matters materially relevant to the charges or allowable 
defenses; to regulate the timing and scope of discovery and rule on 
discovery plans; or otherwise to consider matters that may facilitate an 
effective, fair, and expeditious disposition of the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue and enforce subpoenas, subpoenas duces tecum, discovery 
and protective orders, as authorized by this part, and to revoke, quash, 
or modify such subpoenas issued by the presiding officer;
    (6) Take and preserve testimony under oath;
    (7) Rule on motions and other procedural matters appropriate in an 
adjudicatory proceeding, except that only the Director shall have the 
power to grant summary disposition or any motion to dismiss the 
proceeding or to make a final determination of the merits of the 
proceeding;
    (8) Take all actions authorized under this part to regulate the 
scope, timing, and completion of discovery of any non-privileged 
documents that are materially relevant to the charges or allowable 
defenses;
    (9) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (10) Examine witnesses;
    (11) Receive materially relevant evidence, and rule upon the 
admissibility of evidence or exclude, limit, or otherwise rule on offers 
of proof;

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    (12) Upon motion of a party, take official notice of facts;
    (13) Recuse himself upon his own motion or upon motion made by a 
party;
    (14) Prepare and present to the Director a recommended decision as 
provided in this part;
    (15) Establish time, place, and manner limitations on the attendance 
of the public and the media for any public hearing; and
    (16) Do all other things necessary or appropriate to discharge the 
duties of a presiding officer.



Sec. 1209.12  Public hearings; closed hearings.

    (a) General rule. As provided in section 1379B(b) of the Safety and 
Soundness Act (12 U.S.C. 4639(b)), all hearings shall be open to the 
public, except that the Director, in his discretion, may determine that 
holding an open hearing would be contrary to the public interest. The 
Director may make such determination sua sponte at any time by written 
notice to all parties, or as provided in paragraphs (b) and (c) of this 
section.
    (b) Motion for closed hearing. Within 20 days of service of the 
notice of charges, any party may file with the presiding officer a 
motion for a private hearing and any party may file a pleading in reply 
to the motion. The presiding officer shall forward the motion and any 
reply, together with a recommended decision on the motion, to the 
Director, who shall make a final determination. Such motions and replies 
are governed by Sec. 1209.28 of this part. A determination under this 
section is committed to the discretion of the Director and is not a 
reviewable final agency action.
    (c) Filing documents under seal. FHFA counsel of record, in his 
discretion, may file or require the filing of any document or part of a 
document under seal, if such counsel makes a written determination that 
disclosure of the document would be contrary to the public interest. The 
presiding officer shall issue an order to govern confidential 
information, and take all appropriate steps to preserve the 
confidentiality of such documents in whole or in part, including closing 
any portion of a hearing to the public or issuing a protective order 
under such terms as may be acceptable to FHFA counsel of record.
    (d) Procedures for closed hearing. An evidentiary hearing, or any 
part thereof, that is closed for the purpose of offering into evidence 
testimony or documents filed under seal as provided in paragraph (c) of 
this section shall be conducted under procedures that may include: prior 
notification to the submitter of confidential information; provisions 
for sealing portions of the record, briefs, and decisions; in camera 
arguments, offers of proof, and testimony; and limitations on 
representatives of record or other participants, as the presiding 
officer may designate. Additionally, at such proceedings the presiding 
officer may make an opening statement as to the confidentiality and 
limitations and deliver an oath to the parties, representatives of 
record, or other approved participants as to the confidentiality of the 
proceedings.



Sec. 1209.13  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice of charges by the Director shall be 
signed by at least one representative of record in his individual name 
and shall state that representative's business contact information, 
which shall include his address, electronic mail address, and telephone 
number; and the names, addresses and telephone numbers of all other 
representatives of record for the person making the filing or 
submission.
    (b) Effect of signature. (1) By signing a document, a representative 
of record or party appearing pro se certifies that:
    (i) The representative of record or party has read the filing or 
submission of record;
    (ii) To the best of his knowledge, information and belief formed 
after reasonable inquiry, the filing or submission of record is well-
grounded in fact and is warranted by existing law or a good faith, non-
frivolous argument for the extension, modification, or reversal of 
existing law, regulation, or FHFA order or policy; and
    (iii) The filing or submission of record is not made for any 
improper purpose, such as to harass or to cause

[[Page 107]]

unnecessary delay or needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the presiding 
officer shall strike the filing or submission of record, unless it is 
signed promptly after the omission is called to the attention of the 
pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any representative or party shall 
constitute a certification that to the best of his knowledge, 
information, and belief, formed after reasonable inquiry, his statements 
are well-grounded in fact and are warranted by existing law or a good 
faith, non-frivolous argument for the extension, modification, or 
reversal of existing law, regulation, or FHFA order or policy, and are 
not made for any improper purpose, such as to harass or to cause 
unnecessary delay or to needlessly increase litigation-related costs.



Sec. 1209.14  Ex parte communications.

    (a) Definition. (1) Ex parte communication means any material oral 
or written communication relevant to an adjudication of the merits of 
any proceeding under this subpart that was neither on the record nor on 
reasonable prior notice to all parties that takes place between:
    (i) An interested person outside FHFA (including the person's 
representative of record); and
    (ii) The presiding officer handling that proceeding, the Director, a 
decisional employee assigned to that proceeding, or any other person who 
is or may be reasonably expected to be involved in the decisional 
process.
    (2) A communication that is procedural in that it does not concern 
the merits of an adjudicatory proceeding, such as a request for status 
of the proceeding, does not constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time a notice 
of charges commencing a proceeding under this part is issued by the 
Director until the date that the Director issues his final decision 
pursuant to Sec. 1209.55 of this part, no person referred to in 
paragraph (a)(1)(i) of this section shall knowingly make or cause to be 
made an ex parte communication with the Director or the presiding 
officer. The Director, presiding officer, or a decisional employee shall 
not knowingly make or cause to be made an ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by any person identified in paragraph 
(a) of this section, that person shall cause all such written 
communications (or, if the communication is oral, a memorandum stating 
the substance of the communication) to be placed on the record of the 
proceeding and served on all parties. All parties to the proceeding 
shall have an opportunity within 10 days of receipt of service of the ex 
parte communication to file responses thereto, and to recommend 
sanctions that they believe to be appropriate under the circumstances, 
in accordance with paragraph (d) of this section.
    (d) Sanctions. Any party or representative for a party who makes an 
ex parte communication, or who encourages or solicits another to make an 
ex parte communication, may be subject to any appropriate sanction or 
sanctions imposed by the Director or the presiding officer, including, 
but not limited to, exclusion from the proceedings, an adverse ruling on 
the issue that is the subject of the prohibited communication, or other 
appropriate and commensurate action(s).
    (e) Consultations by presiding officer. Except to the extent 
required for the disposition of ex parte matters as authorized by law, 
the presiding officer may not consult a person or party on any matter 
relevant to the merits of the adjudication, unless upon notice to and 
opportunity for all parties to participate.
    (f) Separation of functions. An employee or agent engaged in the 
performance of any investigative or prosecuting function for FHFA in a 
case may not, in that or in a factually related case, participate or 
advise in the recommended decision, the Director's review under Sec. 
1209.55 of the recommended decision, or the Director's final 
determination on the merits

[[Page 108]]

based upon his review of the recommended decision, except as a witness 
or counsel in the adjudicatory proceedings. This section shall not 
prohibit FHFA counsel of record from providing necessary and appropriate 
legal advice to the Director on supervisory (including information or 
legal advice as to settlement issues) or regulatory matters.



Sec. 1209.15  Filing of papers.

    (a) Filing. All pleadings, motions, memoranda, and any other 
submissions or papers required to be filed in the proceeding shall be 
addressed to the presiding officer and filed with FHFA, 1700 G Street, 
NW., Fourth Floor, Washington, DC 20552, in accordance with paragraphs 
(b) and (c) of this section.
    (b) Manner of filing. Unless otherwise specified by the Director or 
the presiding officer, filing shall be accomplished by:
    (1) Overnight delivery. Overnight U.S. Postal Service delivery or 
delivery by a reliable commercial delivery service for same day or 
overnight delivery to the address stated above; or
    (2) U.S. Mail. First class, registered, or certified mail via the 
U.S. Postal Service; and
    (3) Electronic media. Transmission by electronic media shall be 
required by and upon any conditions specified by the Director or the 
presiding officer. FHFA shall provide a designated site for the 
electronic filing of all papers in a proceeding in accordance with any 
conditions specified by the presiding officer. All papers filed by 
electronic media shall be filed concurrently in a manner set out above 
and in accordance with paragraph (c) of this section.
    (c) Formal requirements as to papers filed--(1) Form. To be filed, 
all papers must set forth the name, address, telephone number, and 
electronic mail address of the representative or party seeking to make 
the filing. Additionally, all such papers must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced on 8\1/2\ x 11-
inch paper and must be clear, legible, and formatted as required by 
paragraph (c)(5) of this section.
    (2) Signature. All papers filed must be dated and signed as provided 
in Sec. 1209.13.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the FHFA caption, title and docket number of the 
proceeding, the name of the filing party, and the subject of the 
particular paper.
    (4) Number of copies. Unless otherwise specified by the Director or 
the presiding officer, an original and one copy of all pleadings, 
motions and memoranda, or other such papers shall be filed, except that 
only one copy of transcripts of testimony and exhibits shall be filed.
    (5) Content format. All papers filed shall be formatted in such 
program(s) (e.g., MS WORD(copyright), MS Excel(copyright), or 
WordPerfect(copyright)) as the presiding officer or Director shall 
specify.



Sec. 1209.16  Service of papers.

    (a) Except as otherwise provided, a party filing papers or serving a 
subpoena shall serve a copy upon the representative of record for each 
party to the proceeding so represented, and upon any party who is not so 
represented, in accordance with the requirements of this section.
    (b) Except as provided in paragraphs (c)(2) and (d) of this section, 
a serving party shall use one or more of the following methods of 
service:
    (1) Personal service;
    (2) Overnight U.S. Postal Service delivery or delivery by a reliable 
commercial delivery service for same day or overnight delivery to the 
parties' respective street addresses; or
    (3) First class, registered, or certified mail via the U.S. Postal 
Service; and
    (4) For transmission by electronic media, each party shall promptly 
provide the presiding officer and all parties, in writing, an active 
electronic mail address where service will be accepted on behalf of such 
party. Any document transmitted via electronic mail for service on a 
party shall comply in all respects with the requirements of Sec. 
1209.15(c).
    (5) Service of pleadings or other papers made by facsimile may not 
exceed a total page count of 30 pages. Any paper served by facsimile 
transmission

[[Page 109]]

shall meet the requirements of Sec. 1209.15(c).
    (6) Any party serving a pleading or other paper by electronic media 
under paragraph (4) of this section also shall concurrently serve that 
pleading or paper by one of the methods specified in paragraphs (1) 
through (5) of this section.
    (c) By the Director or the presiding officer. (1) All papers 
required to be served by the Director or the presiding officer upon a 
party who has appeared in the proceeding in accordance with Sec. 
1209.72 shall be served by the means specified in paragraph (b) of this 
section.
    (2) If a notice of appearance has not been filed in the proceeding 
for a party in accordance with Sec. 1209.72, the Director or the 
presiding officer shall make service upon the party by any of the 
following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the person's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.
    (d) Subpoenas. Service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) By any other method reasonably calculated to give actual notice.
    (e) Area of service. Service in any State or the District of 
Columbia, or any commonwealth, possession, territory or other place 
subject to the jurisdiction of the United States, or on any person doing 
business in any State or the District of Columbia, or any commonwealth, 
possession, territory or other place subject to the jurisdiction of the 
United States, or on any person as otherwise permitted by law, is 
effective without regard to the place where the hearing is held.
    (f) Proof of service. Proof of service of papers filed by a party 
shall be filed before action is taken thereon. The proof of service, 
which shall serve as prima facie evidence of the fact and date of 
service, shall show the date and manner of service and may be by written 
acknowledgment of service, by declaration of the person making service, 
or by certificate of a representative of record. However, failure to 
file proof of service contemporaneously with the papers shall not affect 
the validity of actual service. The presiding officer may allow the 
proof to be amended or supplied, unless to do so would result in 
material prejudice to a party.



Sec. 1209.17  Time computations.

    (a) General rule. In computing any period of time prescribed or 
allowed under this part, the date of the act or event that commences the 
designated period of time is not included. Computations shall include 
the last day of the time period, unless the day falls on a Saturday, 
Sunday, or Federal holiday. When the last day is a Saturday, Sunday or 
Federal holiday, the period of time shall run until the end of the next 
day that is not a Saturday, Sunday, or Federal holiday. Intermediate 
Saturdays, Sundays and Federal holidays are included in the computation 
of time. However, when the time period within which an act is to be 
performed is 10 days or less, not including any additional time allowed 
for in paragraph (c) of this section, intermediate Saturdays, Sundays 
and Federal holidays are not included.

[[Page 110]]

    (b) When papers are deemed to be filed or served. (1) Filing or 
service are deemed to be effective:
    (i) In the case of personal service or same day reliable commercial 
delivery service, upon actual service;
    (ii) In the case of U.S. Postal Service or reliable commercial 
overnight delivery service, or first class, registered, or certified 
mail, upon deposit in or delivery to an appropriate point of collection;
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing, in the case of filing; or
    (iv) In the case of transmission by electronic media or facsimile, 
when the device through which the document was sent provides a reliable 
indicator that the document has been received by the opposing party, in 
the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Director or the presiding 
officer, or by agreement of the parties in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice, pleading or paper, the applicable time limits 
shall be calculated as follows:
    (1) If service was made by delivery to the U.S. Postal Service for 
longer than overnight delivery service by first class, registered, or 
certified mail, add three calendar days to the prescribed period for the 
responsive pleading or other filing.
    (2) If service was personal, or was made by delivery to the U.S. 
Postal Service or any reliable commercial delivery service for overnight 
delivery, add one calendar-day to the prescribed period for the 
responsive pleading or other filing.
    (3) If service was made by electronic media transmission or 
facsimile, add one calendar-day to the prescribed period for the 
responsive pleading or other filing--unless otherwise determined by the 
Director or the presiding officer sua sponte, or upon motion of a party 
in the case of filing or by prior agreement among the parties in the 
case of service.



Sec. 1209.18  Change of time limits.

    Except as otherwise by law required, the presiding officer may 
extend any time limit that is prescribed above or in any notice or order 
issued in the proceedings. After the referral of the case to the 
Director pursuant to Sec. 1209.53, the Director may grant extensions of 
the time limits for good cause shown. Extensions may be granted on the 
motion of a party after notice and opportunity to respond is afforded 
all nonmoving parties, or on the Director's or the presiding officer's 
own motion.



Sec. 1209.19  Witness fees and expenses.

    Witnesses (other than parties) subpoenaed for testimony (or for a 
deposition in lieu of personal appearance at a hearing) shall be paid 
the same fees for attendance and mileage as are paid in the United 
States district courts in proceedings in which the United States is a 
party, provided that, in the case of a discovery subpoena addressed to a 
party, no witness fees or mileage shall be paid. Fees for witnesses 
shall be tendered in advance by the party requesting the subpoena, 
except that fees and mileage need not be tendered in advance where FHFA 
is the party requesting the subpoena. FHFA shall not be required to pay 
any fees to or expenses of any witness who was not subpoenaed by FHFA.



Sec. 1209.20  Opportunity for informal settlement.

    Any respondent may, at any time in the proceeding, unilaterally 
submit to FHFA's counsel of record written offers or proposals for 
settlement of a proceeding without prejudice to the rights of any of the 
parties. No such offer or proposal shall be made to any FHFA 
representative other than FHFA counsel of record. Submission of a 
written settlement offer does not provide a basis for adjourning, 
deferring or otherwise delaying all or any portion of a proceeding under 
this part. No settlement offer or proposal, or any subsequent 
negotiation or resolution, is admissible as evidence in any proceeding.



Sec. 1209.21  Conduct of examination.

    Nothing in this part limits or constrains in any manner any duty, 
authority, or right of FHFA to conduct or

[[Page 111]]

to continue any examination, investigation, inspection, or visitation of 
any regulated entity or entity-affiliated party.



Sec. 1209.22  Collateral attacks on adjudicatory proceeding.

    If an interlocutory appeal or collateral attack is brought in any 
court concerning all or any part of an adjudicatory proceeding, the 
challenged adjudicatory proceeding shall continue without regard to the 
pendency of that court proceeding. No default or other failure to act as 
directed in the adjudicatory proceeding within the times prescribed in 
subpart C of this part shall be excused based on the pendency before any 
court of any interlocutory appeal or collateral attack.



Sec. 1209.23  Commencement of proceeding and contents of notice of charges.

    Proceedings under subpart C of this part are commenced by the 
Director by the issuance of a notice of charges, as defined in Sec. 
1209.3(p), that must be served upon a respondent. A notice of charges 
shall state all of the following:
    (a) The legal authority for the proceeding and for FHFA's 
jurisdiction over the proceeding;
    (b) A statement of the matters of fact or law showing that FHFA is 
entitled to relief;
    (c) A proposed order or prayer for an order granting the requested 
relief;
    (d) Information concerning the nature of the proceeding and 
pertinent procedural matters, including: the requirement that the 
hearing shall be held in the District of Columbia; the presiding officer 
will set the date and location for an evidentiary hearing in a 
scheduling order to be issued not less than 30 days or more than 60 days 
after service of the notice of charges; contact information for FHFA 
enforcement counsel and the presiding officer, if known; submission 
information for filings and appearances, the time within which to 
request a hearing, and citation to FHFA Rules of Practice and Procedure; 
and
    (e) Information concerning proper filing of the answer, including 
the time within which to file the answer as required by law or 
regulation, a statement that the answer shall be filed with the 
presiding officer or with FHFA as specified therein, and the address for 
filing the answer (and request for a hearing, if applicable).



Sec. 1209.24  Answer.

    (a) Filing deadline. Unless otherwise specified by the Director in 
the notice, respondent shall file an answer within 20 days of service of 
the notice of charges initiating the enforcement action.
    (b) Content of answer. An answer must respond specifically to each 
paragraph or allegation of fact contained in the notice of charges and 
must admit, deny, or state that the party lacks sufficient information 
to admit or deny each allegation of fact. A statement of lack of 
information has the effect of a denial. Denials must fairly meet the 
substance of each allegation of fact denied; general denials are not 
permitted. When a respondent denies part of an allegation, that part 
must be denied and the remainder specifically admitted. Any allegation 
of fact in the notice that is not denied in the answer is deemed 
admitted for purposes of the proceeding. A respondent is not required to 
respond to the portion of a notice that constitutes the prayer for 
relief or proposed order. The answer must set forth affirmative 
defenses, if any, asserted by the respondent.
    (c) Default. Failure of a respondent to file an answer required by 
this section within the time provided constitutes a waiver of such 
respondent's right to appear and contest the allegations in the notice. 
If no timely answer is filed, FHFA counsel of record may file a motion 
for entry of an order of default. Upon a finding that no good cause has 
been shown for the failure to file a timely answer, the presiding 
officer shall file with the Director a recommended decision containing 
the findings and the relief sought in the notice. Any final order issued 
by the Director based upon a respondent's failure to answer is deemed to 
be an order issued upon consent.



Sec. 1209.25  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
at

[[Page 112]]

any stage of the proceeding. The respondent must answer an amended 
notice within the time remaining for the respondent's answer to the 
original notice, or within 10 days after service of the amended notice, 
whichever period is longer, unless the Director or presiding officer 
orders otherwise for good cause shown.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing by express or implied 
consent of the parties, or as the presiding officer may allow for good 
cause shown, such issues will be treated in all respects as if they had 
been raised in the notice or answer, and no formal amendments are 
required. If evidence is objected to at the hearing on the ground that 
it is not within the issues raised by the notice or answer, the 
presiding officer may admit the evidence when admission is likely to 
assist in adjudicating the merits of the action. The presiding officer 
will do so freely when the determination of the merits of the action is 
served thereby and the objecting party fails to satisfy the presiding 
officer that the admission of such evidence would unfairly prejudice 
that party's action or defense upon the merits. The presiding officer 
may grant a continuance to enable the objecting party to meet such 
evidence.



Sec. 1209.26  Failure to appear.

    Failure of a respondent to appear in person at the hearing or by a 
duly authorized representative of record constitutes a waiver of 
respondent's right to a hearing and is deemed an admission of the facts 
as alleged and consent to the relief sought in the notice. Without 
further proceedings or notice to the respondent, the presiding officer 
shall file with the Director a recommended decision containing the 
Agency's findings and the relief sought in the notice.



Sec. 1209.27  Consolidation and severance of actions.

    (a) Consolidation. On the motion of any party, or on the presiding 
officer's own motion, the presiding officer may consolidate, for some or 
all purposes, any two or more proceedings, if each such proceeding 
involves or arises out of the same transaction, occurrence or series of 
transactions or occurrences, or involves at least one common respondent 
or a material common question of law or fact, unless such consolidation 
would cause unreasonable delay or injustice. In the event of 
consolidation under this section, appropriate adjustment to the pre-
hearing schedule must be made to avoid unnecessary expense, 
inconvenience, or delay.
    (b) Severance. The presiding officer may, upon the motion of any 
party, sever the proceeding for separate resolution of the matter as to 
any respondent only if the presiding officer finds that undue prejudice 
or injustice to the moving party would result from not severing the 
proceeding and such undue prejudice or injustice would outweigh the 
interests of judicial economy and expedition in the complete and final 
resolution of the proceeding.



Sec. 1209.28  Motions.

    (a) In writing. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the presiding officer. Written memoranda, briefs, 
affidavits, or other relevant material or documents may be filed in 
support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally on the record, unless 
the presiding officer directs that such motion be reduced to writing, in 
which case the motion will be subject to the requirements of this 
section.
    (c) Filing of motions. Motions must be filed with the presiding 
officer and served on all parties; except that following the filing of a 
recommended decision, motions must be filed with the Director. Motions 
for pre-trial relief such as motions in limine or objections to offers 
of proof or experts shall be filed not less than 10 days prior to the 
date of the evidentiary hearing, except as provided with the consent of 
the presiding officer for good cause shown.

[[Page 113]]

    (d) Responses and replies. (1) Except as otherwise provided herein, 
any party may file a written response to a non-dispositive motion within 
10 days after service of any written motion, or within such other period 
of time as may be established by the presiding officer or the Director; 
and the moving party may file a written reply to a written response to a 
non-dispositive motion within five days after the service of the 
response, unless some other period is ordered by the presiding officer 
or the Director. The presiding officer shall not rule on any oral or 
written motion before each party with an interest in the motion has had 
an opportunity to respond as provided in this section.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed as consent by that party to the 
entry of an order substantially in the form of the order accompanying 
the motion.
    (e) Dilatory motions. Frivolous, dilatory, or substantively 
repetitive motions are prohibited. The filing of such motions may form 
the basis for sanctions.
    (f) Dispositive motions. Dispositive motions are governed by 
Sec. Sec. 1209.34 and 1209.35 of this part.



Sec. 1209.29  Discovery.

    (a) General rule--(1) Limits on discovery. Subject to the 
limitations set out in paragraphs (a)(2), (b), (d), and (e) of this 
section, a party to a proceeding under this part may obtain document 
discovery by serving upon any other party in the proceeding a written 
request to produce documents. For purposes of such requests, the term 
``documents'' may be defined to include records, drawings, graphs, 
charts, photographs, recordings, or data stored in electronic form or 
other data compilations from which information can be obtained or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form (e.g., electronically stored information), as 
well as written material of all kinds.
    (2) Discovery plan. (i) In the initial scheduling conference held in 
accordance with Sec. 1209.36, or otherwise at the earliest practicable 
time, the presiding officer shall require the parties to confer in good 
faith to develop and submit a joint discovery plan for the timely, cost-
effective management of document discovery (including, if applicable, 
electronically stored information). The discovery plan should provide 
for the coordination of similar discovery requests by multiple parties, 
if any, and specify how costs are to be apportioned among those parties. 
The discovery plan shall specify the form of electronic productions, if 
any. Documents are to be produced in accordance with the technical 
specifications described in the discovery plan.
    (ii) Discovery in the proceeding may commence upon the approval of 
the discovery plan by the presiding officer. Thereafter, the presiding 
officer may interpret or modify the discovery plan for good cause shown 
or in his or her discretion due to changed circumstances.
    (iii) Nothing in paragraph (a)(2) of this section shall be 
interpreted or deemed to require the production of documents that are 
privileged or not reasonably accessible because of undue burden or cost, 
or to require any document production otherwise inconsistent with the 
limitations on discovery set forth in this part.
    (b) Relevance and scope. (1) A party may obtain document discovery 
regarding any matter not privileged that is materially relevant to the 
charges or allowable defenses raised in the pending proceeding.
    (2) The scope of available discovery shall be limited in accordance 
with subpart C of this part. Any request for the production of documents 
that seeks to obtain privileged information or documents not materially 
relevant under paragraph (b)(1) of this section, or that is 
unreasonable, oppressive, excessive in scope, unduly burdensome, 
cumulative, or repetitive of any prior discovery requests, shall be 
denied or modified.
    (3) A request for document discovery is unreasonable, oppressive, 
excessive in scope, or unduly burdensome--and shall be denied or 
modified--if, among other things, the request:
    (i) Fails to specify justifiable limitations on the relevant subject 
matter, time period covered, search parameters, or the geographic 
location(s) or data repositories to be searched;

[[Page 114]]

    (ii) Fails to identify documents with sufficient specificity;
    (iii) Seeks material that is duplicative, cumulative, or obtainable 
from another source that is more accessible, cost-effective, or less 
burdensome;
    (iv) Calls for the production of documents to be delivered to the 
requesting party or his or her designee and fails to provide a written 
agreement by the requestor to pay in advance for the costs of production 
in accordance with Sec. 1209.30, or otherwise fails to take into 
account costs associated with processing electronically stored 
information or any cost-sharing agreements between the parties;
    (v) Fails to afford the responding party adequate time to respond; 
or
    (vi) Fails to take into account retention policies or security 
protocols with respect to Federal information systems.
    (c) Forms of discovery. Discovery shall be limited to requests for 
production of documents for inspection and copying. No other form of 
discovery shall be allowed. Discovery by use of interrogatories is not 
permitted. This paragraph shall not be interpreted to require the 
creation of a document.
    (d) Privileged matter--(1) Privileged documents are not 
discoverable. (i) Privileges include the attorney-client privilege, 
work-product privilege, any government's or government agency's 
deliberative process privilege, and any other privileges provided by the 
Constitution, any applicable act of Congress, or the principles of 
common law.
    (ii) The parties may enter into a written agreement to permit a 
producing party to assert applicable privileges of a document even after 
its production and to request the return or destruction of privileged 
matter (claw back agreement). The parties shall file the claw back 
agreement with the presiding officer. To ensure the enforceability of 
the terms of any such claw back agreement, the presiding officer shall 
enter an order. Any party may petition the presiding officer for an 
order specifying claw back procedures for good cause shown.
    (2) No effect on examination authority. The limitations on 
discoverable matter provided for in this part are not intended and shall 
not be construed to limit or otherwise affect the examination, 
regulatory or supervisory authority of FHFA.
    (e) Time limits. All discovery matters, including all responses to 
discovery requests, shall be completed at least 20 days prior to the 
date scheduled for the commencement of the testimonial phase of the 
hearing. No exception to this discovery time limit shall be permitted, 
unless the presiding officer finds on the record that good cause exists 
for waiving the 20-day requirement of this paragraph.
    (f) Production. Documents must be produced as they are kept in the 
usual course of business, or labeled and organized to correspond with 
the categories in the request, or otherwise produced in a manner 
determined by mutual agreement between the requesting party and the 
party or non-party to whom the request is directed in accordance with 
this part.



Sec. 1209.30  Request for document discovery from parties.

    (a) General rule. Each request for the production of documents must 
conform to the requirements of this part.
    (1) Limitations. Subject to applicable limitations on discovery in 
this part, a party may serve (requesting party) a request on another 
party (responding party) for the production of any non-privileged, 
discoverable documents in the possession, custody, or control of the 
responding party. A requesting party shall serve a copy of any such 
document request on all other parties. Each request for the production 
of documents must, with reasonable particularity, identify or describe 
the documents to be produced, either by individual item or by category, 
with sufficient specificity to enable the responding party to respond 
consistent with the requirements of this part.
    (2) Discovery plan. Document discovery under subpart C of this part 
shall be consistent with any discovery plan approved by the presiding 
officer under Sec. 1209.29.
    (b) Production and costs--(1) General rule. Subject to the 
applicable limitations on discovery in this part and the discovery plan, 
the requesting party shall specify a reasonable time, place,

[[Page 115]]

and manner for the production of documents and the performance of any 
related acts. The responding party shall produce documents to the 
requesting party in a manner consistent with the discovery plan.
    (2) Costs. All costs associated with document productions--
including, without limitation, photocopying (as specified in paragraph 
(b)(4) of this section) or electronic processing (as specified in 
paragraph (b)(5) of this section)--shall be born by the requesting 
party, or otherwise in accordance with any discovery plan approved by 
the presiding officer that may require such costs be apportioned between 
parties, or as otherwise ordered by the presiding officer. If consistent 
with the discovery plan approved by the presiding officer, the 
responding party may require receipt of payment of any such document 
production costs in advance before any such production of responsive 
documents.
    (3) Organization. Unless otherwise provided for in any discovery 
plan approved by the presiding officer under Sec. 1209.29 of this part, 
or by order of the presiding officer, documents must be produced as they 
are kept in the usual course of business or they shall be labeled and 
organized to correspond with the categories in the document request.
    (4) Photocopying charges. Photocopying charges are to be set at the 
current rate per page imposed by FHFA under the fee schedule pursuant to 
Sec. 1202.11(c) of this part for requests for documents filed under the 
Freedom of Information Act, 5 U.S.C. 552.
    (5) Electronic processing. In the event that any party seeks the 
production of electronically stored information (i.e., information 
created, stored, communicated, or used in digital format requiring the 
use of computer hardware and software), the parties shall confer in good 
faith to resolve common discovery issues related to electronically 
stored information, such as preservation, search methodology, 
collection, and need for such information; the suitability of 
alternative means to obtain it; and the format of production. Consistent 
with the discovery plan approved by the presiding officer under Sec. 
1209.29, costs associated with the processing of such electronic 
information (i.e., imaging; scanning; conversion of ``native'' files to 
images that are viewable and searchable; indexing; coding; database or 
Web-based hosting; searches; branding of endorsements, such as 
``confidential'' or document control numbering; privilege reviews; and 
copies of production discs) and delivery of any such document 
production, shall be born by the requesting party, apportioned among the 
parties, or as otherwise ordered by the presiding officer. Nothing in 
this part shall be deemed to require FHFA to produce privileged 
documents or any electronic records in violation of applicable Federal 
law or security protocols.
    (c) Obligation to update responses. A party who has responded to a 
discovery request is not required to supplement the response, unless:
    (1) The responding party learns that in some material respect the 
information disclosed is incomplete or incorrect, and
    (2) The additional or corrective information has not otherwise been 
made known to the other parties during the discovery process or in 
writing.
    (d) Motions to strike or limit discovery requests. (1) Any party 
served with a document discovery request may object within 30 days of 
service of the request by filing a motion to strike or limit the request 
in accordance with the provisions of Sec. 1209.28 of this part. No 
other party may file an objection. If an objection is made only to a 
portion of an item or category in a request, the objection shall specify 
that portion. Any objections not made in accordance with this paragraph 
and Sec. 1209.28 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike or limit may file a written response in accordance with the 
provisions of Sec. 1209.28. A reply by the moving party, if any, shall 
be governed by Sec. 1209.28. No other party may file a response.
    (e) Privilege. At the time other documents are produced, all 
documents withheld on a claim of privilege must be reasonably 
identified, together with a statement of the basis for the assertion of 
privilege on a privilege log.

[[Page 116]]

When similar documents that are protected by the government's 
deliberative process, investigative or examination privilege, the 
attorney work-product doctrine, or the attorney-client privilege are 
voluminous, such documents may be identified on the log by category 
instead of by individual document. The presiding officer has discretion 
to permit submission of a privilege log subsequent to the document 
production(s), which may occur on a rolling basis if agreed to by the 
parties in the discovery plan, and to determine whether an 
identification by category is sufficient to provide notice of withheld 
documents.
    (f) Motions to compel production. (1) If a party withholds any 
document as privileged or fails to comply fully with a document 
discovery request, the requesting party may, within 10 days of the 
assertion of privilege or of the time the failure to comply becomes 
known to the requesting party, file a motion in accordance with the 
provisions of Sec. 1209.28 for the issuance of a subpoena compelling 
the production of any such document.
    (2) The party who asserted the privilege or failed to comply with 
the request may, within five days of service of a motion for the 
issuance of a subpoena compelling production, file a written response to 
the motion. No other party may file a response.
    (g) Ruling on motions--(1) Appropriate protective orders. After the 
time for filing a response to a motion to compel pursuant to this 
section has expired, the presiding officer shall rule promptly on any 
such motion. The presiding officer may deny, grant in part, or otherwise 
modify any request for the production of documents, if he determines 
that a discovery request, or any one or more of its terms, seeks to 
obtain the production of documents that are privileged or otherwise not 
within the scope of permissible discovery under Sec. 1209.29(b), and 
may issue appropriate protective orders, upon such conditions as justice 
may require.
    (2) No stay. The pendency of a motion to strike or limit discovery, 
or to compel the production of any document, shall not stay or continue 
the proceeding, unless otherwise ordered by the presiding officer. 
Notwithstanding any other provision in this part, the presiding officer 
may not release, or order any party to produce, any document withheld on 
the basis of privilege, if the withholding party has stated to the 
presiding officer its intention to file with the Director a timely 
motion for interlocutory review of the presiding officer's privilege 
determination or order to produce the documents, until the Director has 
rendered a decision on the motion for interlocutory review.
    (3) Interlocutory review by the Director. Interlocutory review of a 
privilege determination or document discovery subpoena of the presiding 
officer shall be in accordance with Sec. 1209.33. To the extent 
necessary to rule promptly on such matters, the Director may request 
that the presiding officer provide additional information from the 
record. As provided by Sec. 1209.33 of this part, a pending 
interlocutory review of a privilege determination or document discovery 
subpoena shall not stay the proceedings, unless otherwise ordered by the 
presiding officer or the Director.
    (h) Enforcement of document discovery subpoenas--(1) Authority. If 
the presiding officer or Director issues a subpoena compelling 
production of documents by a party in a proceeding under this part, in 
the event of noncompliance with the subpoena and to the extent 
authorized by section 1379D(c)(1) of the Safety and Soundness Act (12 
U.S.C. 4641(c)(1)), the Director or the subpoenaing party may apply to 
the appropriate United States district court for an order requiring 
compliance with the subpoena.
    (2) United States district court jurisdiction. As provided by 
section 1379D(c)(2) of the Safety and Soundness Act (12 U.S.C. 
4641(c)(2)), the appropriate United States district court has the 
jurisdiction and power to order and to require compliance with any 
discovery subpoena issued under this part.
    (3) No stay; sanctions. The judicial enforcement of a discovery 
subpoena shall not operate as a stay of the proceedings, unless the 
presiding officer or the Director orders a stay of such duration as the 
presiding officer or Director may find reasonable and in the best 
interest of the parties or as justice may require. A party's right to 
seek judicial

[[Page 117]]

enforcement of a subpoena shall not in any manner limit the sanctions 
that may be imposed by the presiding officer or Director against a party 
who fails to produce or induces another to fail to produce subpoenaed 
documents.



Sec. 1209.31  Document discovery subpoenas to non-parties.

    (a) General rules--(1) Application for subpoena. As provided under 
this part, any party may apply to the presiding officer for the issuance 
of a document discovery subpoena addressed to any person who is not a 
party to the proceeding. The application must contain the proposed 
document subpoena, and a brief statement of facts demonstrating that the 
documents are materially relevant to the charges and issues presented in 
the proceeding and the reasonableness of the scope of the document 
request. The subpoenaing party shall specify a reasonable time, place, 
and manner for production in response to the subpoena, and state its 
unequivocal intention to pay for the production of the documents as 
provided in this part.
    (2) Service of subpoena. A party shall apply for a document subpoena 
under this section only within the time period during which such party 
could serve a discovery request under Sec. 1209.30 of this part. The 
party obtaining the document subpoena is responsible for serving it on 
the subpoenaed person and for serving copies on all other parties. 
Document subpoenas may be served in the District of Columbia, or any 
State, Territory, possession, or other place subject to the jurisdiction 
of the United States, or as otherwise provided by law.
    (3) Presiding officer's discretion. The presiding officer shall 
issue promptly any document subpoena applied for under this section 
subject to the application conditions set forth in this section and his 
or her discretion. If the presiding officer determines that the 
application does not set forth a valid basis for the issuance of the 
requested document subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, unduly burdensome, or otherwise 
objectionable under Sec. 1209.29(b), he may refuse to issue the 
requested document subpoena or may issue it in a modified form upon such 
additional conditions as may be determined by the presiding officer.
    (b) Motion to quash or modify--(1) Limited appearance. Any non-party 
to a pending proceeding to whom a document subpoena is directed may 
enter a limited appearance, through a representative or on his or her 
own behalf, before the presiding officer to file with the presiding 
officer a motion to quash or modify such subpoena, accompanied by a 
statement of the basis for quashing or modifying the subpoena.
    (2) Objections. Any motion to quash or modify a document subpoena 
must be filed on the same basis, including the assertion of any 
privileges, upon which a party could object to a discovery document 
request under Sec. 1209.30 and during the same time limits during which 
such an objection could be filed.
    (3) Responses and replies. The party who obtained the subpoena may 
respond to such motion within 10 days of service of the motion; the 
response shall be served on the non-party in accordance with this part. 
Absent express leave of the presiding officer, no other party may 
respond to the non-party's motion. The non-party may file a reply within 
five days of service of a response.
    (4) No stay. A non-party's right to seek to quash or modify a 
document subpoena shall not stay the proceeding, or limit in any manner 
the sanctions that may be imposed by the presiding officer against a 
party who induces another to fail to produce any such subpoenaed 
documents. No party may rely upon the pendency of a non-party's motion 
to quash or modify a document subpoena to excuse performance of any 
action required of that party under this part.
    (c) Enforcing document subpoenas to non-parties--(1) Application for 
enforcement of subpoena. If a non-party fails to comply with any 
subpoena issued pursuant to this section or with any order of the 
presiding officer that directs compliance with all or any portion of a 
document subpoena issued pursuant to this section, the subpoenaing party 
or any other aggrieved party to the proceeding may, to the extent 
authorized by section 1379D(c) of the Safety and Soundness Act (12 
U.S.C. 4641(c)), apply

[[Page 118]]

to an appropriate United States district court for an order requiring 
compliance with the subpoena.
    (2) No stay. A party's right to seek district court enforcement of a 
non-party document production subpoena under this section shall not 
automatically stay an enforcement proceeding under of the Safety and 
Soundness Act.
    (3) Sanctions. A party's right to seek district court enforcement of 
a non-party document subpoena shall in no way limit the sanctions that 
may be imposed by the presiding officer on a party who induces another 
to fail to comply with any subpoena issued under this section.



Sec. 1209.32  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party desiring to preserve that witness's testimony for the 
record may apply to the presiding officer in accordance with the 
procedures set forth in paragraph (a)(2) of this section for the 
issuance of a subpoena or subpoena duces tecum requiring attendance of 
the witness at a deposition for the purpose of preserving that witness's 
testimony. The presiding officer may issue a deposition subpoena under 
this section upon a showing that:
    (i) The witness will be unable to attend or may be prevented from 
attending the testimonial phase of the hearing because of age, sickness, 
or infirmity, or will be otherwise unavailable;
    (ii) The subpoenaing party did not cause or contribute to the 
unavailability of the witness for the hearing;
    (iii) The witness has personal knowledge and the testimony is 
reasonably expected to be materially relevant to claims, defenses, or 
matters determined to be at issue in the proceeding; and
    (iv) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed anywhere within the 
United States, or its Territories and possessions, in which that witness 
resides or has a regular place of employment or such other convenient 
place as the presiding officer shall fix.
    (3) Subpoenas must be issued promptly upon request, unless the 
presiding officer determines that the request fails to set forth a valid 
basis under this section for its issuance. Before making a determination 
that there is no valid basis for issuing the subpoena, the presiding 
officer shall require a written response from the party requesting the 
subpoena or require attendance at a conference to determine whether 
there is a valid basis upon which to issue the requested subpoena.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the presiding officer orders otherwise, no deposition under this section 
shall be taken on fewer than 10 days' notice to the witness and all 
parties. Deposition subpoenas may be served anywhere within the United 
States or its Territories and possessions, or on any person doing 
business anywhere within the United States or its Territories and 
possessions, or as otherwise permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion with the presiding officer 
under Sec. 1209.28 of this part to quash or modify the subpoena prior 
to the time for compliance specified in the subpoena, but not more than 
10 days after service of the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section must accompany the motion. The motion 
must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena must be duly sworn and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or

[[Page 119]]

documents is not deemed a waiver except where the ground for objection 
might have been avoided if the objection had been presented timely. All 
questions, answers, and objections must be recorded and transcribed. 
Videotaped depositions must be transcribed for the record; copies and 
transcriptions must be supplied to each party.
    (2) Any party may move before the presiding officer for an order 
compelling the witness to answer any questions the witness has refused 
to answer or submit any evidence that, during the deposition, the 
witness has refused to submit.
    (3) The deposition transcript must be subscribed by the witness, 
unless the parties and the witness, by stipulation, have waived the 
signing, or the witness is ill, cannot be found, or has refused to sign. 
If the deposition is not subscribed by the witness, the court reporter 
taking the deposition shall certify that the transcript is a true and 
complete transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or with any order of the 
presiding officer made upon motion under paragraph (c)(2) of this 
section, the subpoenaing party or other aggrieved party may, to the 
extent authorized by section 1379D(c) of the Safety and Soundness Act 
(12 U.S.C. 4641(c)), apply to an appropriate United States district 
court for an order requiring compliance with the portions of the 
subpoena that the presiding officer has ordered enforced. A party's 
right to seek court enforcement of a deposition subpoena in no way 
limits the sanctions that may be imposed by the presiding officer on a 
party who fails to comply with or induces a failure to comply with a 
subpoena issued under this section.



Sec. 1209.33  Interlocutory review.

    (a) General rule. The Director may review a ruling of the presiding 
officer prior to the certification of the record to the Director only in 
accordance with the procedures set forth in this section.
    (b) Scope of review. The Director may exercise interlocutory review 
of a ruling of the presiding officer if the Director finds that:
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (c) Procedure. Any motion for interlocutory review shall be filed by 
a party with the presiding officer within 10 days of his or her ruling. 
Upon the expiration of the time for filing all responses, the presiding 
officer shall refer the matter to the Director for final disposition. In 
referring the matter to the Director, the presiding officer may indicate 
agreement or disagreement with the asserted grounds for interlocutory 
review of the ruling in question.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Director under this 
section suspends or stays the proceeding unless otherwise ordered by the 
presiding officer or the Director.



Sec. 1209.34  Summary disposition.

    (a) In general. The presiding officer shall recommend that the 
Director issue a final order granting a motion for summary disposition 
if the undisputed pleaded facts, admissions, affidavits, stipulations, 
documentary evidence, matters as to which official notice may be taken, 
and any other evidentiary materials properly submitted in connection 
with a motion for summary disposition show that:
    (1) There is no genuine issue as to any material fact; and
    (2) The movant is entitled to a decision in its favor as a matter of 
law.
    (b) Filing of motions and responses. (1) Any party who believes 
there is no genuine issue of material fact to be determined and that 
such party is entitled to a decision as a matter of law may

[[Page 120]]

move at any time for summary disposition in its favor of all or any part 
of the proceeding. Any party, within 30 days after service of such 
motion or within such time period as allowed by the presiding officer, 
may file a response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of material facts as to which the movant contends there is no 
genuine issue. Such motion must be supported by documentary evidence, 
which may take the form of admissions in pleadings, stipulations, 
depositions, investigatory depositions, transcripts, affidavits, and any 
other evidentiary materials that the movant contends support its 
position. The motion must also be accompanied by a brief containing the 
points and authorities in support of the contention of the movant. Any 
party opposing a motion for summary disposition must file a statement 
setting forth those material facts as to which the party contends a 
genuine dispute exists. Such opposition must be supported by evidence of 
the same type as that submitted with the motion for summary disposition 
and a brief containing the points and authorities in support of the 
contention that summary disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his or her 
own motion, the presiding officer may hear oral argument on the motion 
for summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the presiding officer shall 
determine whether the movant is entitled to summary disposition. If the 
presiding officer determines that summary disposition is warranted, the 
presiding officer shall submit a recommended decision to that effect to 
the Director, under Sec. 1209.53. If the presiding officer finds that 
the moving party is not entitled to summary disposition, the presiding 
officer shall make a ruling denying the motion.



Sec. 1209.35  Partial summary disposition.

    If the presiding officer determines that a party is entitled to 
summary disposition as to certain claims only, he shall defer submitting 
a recommended decision to the Director as to those claims. A hearing on 
the remaining issues must be ordered. Those claims for which the 
presiding officer has determined that summary disposition is warranted 
will be addressed in the recommended decision filed at the conclusion of 
the hearing.



Sec. 1209.36  Scheduling and pre-hearing conferences.

    (a) Scheduling conference. After service of a notice of charges 
commencing a proceeding under this part, the presiding officer shall 
order the representative(s) of record for each party, and any party not 
so represented who is appearing pro se, to meet in person or to confer 
by telephone at a specified time within 30 days of service of such 
notice for the purpose of setting the time and place of the testimonial 
hearing on the record to be held within the District of Columbia and 
scheduling the course and conduct of the proceeding (the ``scheduling 
conference''). The identification of potential witnesses, the time for 
and manner of discovery, and the exchange of any pre-hearing materials 
including witness lists, statements of issues, stipulations, exhibits, 
and any other materials also may be determined at the scheduling 
conference.
    (b) Pre-hearing conferences. The presiding officer may, in addition 
to the scheduling conference, on his or her own motion or at the request 
of any party, direct representatives for the parties to meet with (in 
person or by telephone) at a pre-hearing conference to address any or 
all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and

[[Page 121]]

    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The presiding officer, in his or her discretion, may 
require that a scheduling or pre-hearing conference be recorded by a 
court reporter. Any transcript of the conference and any materials 
filed, including orders, become part of the record of the proceeding. A 
party may obtain a copy of a transcript at such party's expense.
    (d) Scheduling or pre-hearing orders. Within a reasonable time 
following the conclusion of the scheduling conference or any pre-hearing 
conference, the presiding officer shall serve on each party an order 
setting forth any agreements reached and any procedural determinations 
made.



Sec. 1209.37  Pre-hearing submissions.

    (a) General. Within the time set by the presiding officer, but in no 
case later than 10 days before the start of the hearing, each party 
shall serve on every other party the serving party's:
    (1) Pre-hearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness, and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibit may be introduced at the hearing that is not listed in the pre-
hearing submissions pursuant to paragraph (a) of this section, except 
for good cause shown.



Sec. 1209.38  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party to the presiding 
officer showing relevance and reasonableness of scope of the testimony 
or other evidence sought, the presiding officer may issue a subpoena or 
a subpoena duces tecum requiring the attendance of a witness at the 
hearing or the production of documentary or physical evidence at such 
hearing. The application for a hearing subpoena must also contain a 
proposed subpoena specifying the attendance of a witness or the 
production of evidence from any place within the United States or its 
territories and possessions, or as otherwise provided by law, at the 
designated place where the hearing is being conducted. The party making 
the application shall serve a copy of the application and the proposed 
subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of or during a hearing. During a hearing, a party may make 
an application for a subpoena orally on the record before the presiding 
officer.
    (3) The presiding officer shall promptly issue any hearing subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for the 
issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he may refuse to 
issue the subpoena or may issue the subpoena in a modified form upon any 
conditions consistent with subpart C of this part. Upon issuance by the 
presiding officer, the party making the application shall serve the 
subpoena on the person named in the subpoena and on each party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
such subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within 10 days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but no more 
than 10 days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
presiding officer that directs compliance with all or any portion of a 
hearing subpoena, the subpoenaing party or any other aggrieved party may 
seek enforcement of the subpoena pursuant to Sec. 1209.31. A party's 
right to seek court enforcement of a hearing subpoena shall in no way

[[Page 122]]

limit the sanctions that may be imposed by the presiding officer on a 
party who induces a failure to comply with subpoenas issued under this 
section.



Sec. Sec. 1209.39--1209.49  [Reserved]



Sec. 1209.50  Conduct of hearings.

    (a) General rules--(1) Conduct. Hearings shall be conducted in 
accordance with chapter 5 of Title 5 and other applicable law and so as 
to provide a fair and expeditious presentation of the relevant disputed 
issues. Except as limited by this subpart, each party has the right to 
present its case or defense by oral and documentary evidence and to 
conduct such cross examination as may be required for full disclosure of 
the facts.
    (2) Order of hearing. FHFA counsel of record shall present its case-
in-chief first, unless otherwise ordered by the presiding officer or 
unless otherwise expressly specified by law or regulation. FHFA counsel 
of record shall be the first party to present an opening statement and a 
closing statement and may make a rebuttal statement after the 
respondent's closing statement. If there are multiple respondents, 
respondents may agree among themselves as to the order of presentation 
of their cases, but if they do not agree, the presiding officer shall 
fix the order.
    (3) Examination of witnesses. Only one representative for each party 
may conduct an examination of a witness, except that in the case of 
extensive direct examination, the presiding officer may permit more than 
one representative for the party presenting the witness to conduct the 
examination. A party may have one representative conduct the direct 
examination and another representative conduct re-direct examination of 
a witness, or may have one representative conduct the cross examination 
of a witness and another representative conduct the re-cross examination 
of a witness.
    (4) Stipulations. Unless the presiding officer directs otherwise, 
all documents that the parties have stipulated as admissible shall be 
admitted into evidence upon commencement of the hearing.
    (b) Transcript. The hearing shall be recorded and transcribed. The 
transcript shall be made available to any party upon payment of the cost 
thereof. The presiding officer shall have authority to order the record 
corrected, either upon motion to correct, upon stipulation of the 
parties, or following notice to the parties upon the presiding officer's 
own motion.



Sec. 1209.51  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material, and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 552 et seq.) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted pursuant to subpart C 
of this part.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may not be deemed or ruled to be inadmissible in a proceeding 
conducted pursuant to subpart C of this part if such evidence is 
relevant, material, probative and reliable, and not unduly repetitive.
    (b) Official notice. (1) Official notice may be taken of any 
material fact that may be judicially noticed by a United States district 
court and of any materially relevant information in the official public 
records of any Federal or State government agency.
    (2) All matters officially noticed by the presiding officer or the 
Director shall appear on the record.
    (3) If official notice is requested of any material fact, the 
parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a)(1) of this section, 
any document, including a report of examination, oversight activity, 
inspection, or visitation prepared by FHFA or by

[[Page 123]]

another Federal or State financial institution's regulatory agency, is 
admissible either with or without a sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines, or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the presiding officer's discretion, be used 
with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear in the record.
    (2) When an objection to a question or line of questioning is 
sustained, the examining representative of record may make a specific 
proffer on the record of what he or she expected to prove by the 
expected testimony of the witness. The proffer may be by representation 
of the representative or by direct interrogation of the witness.
    (3) The presiding officer shall retain rejected exhibits, adequately 
marked for identification, for the record and transmit such exhibits to 
the Director.
    (4) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any document to be admitted 
into evidence. Such stipulations must be received in evidence at a 
hearing, are binding on the parties with respect to the matters 
stipulated, and shall be made part of the record.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing and that witness has testified in a 
deposition in accordance with Sec. 1209.32, a party may offer as 
evidence all or any part of the transcript of the deposition, including 
deposition exhibits, if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the deposition the presiding officer may, on that basis, limit 
the admissibility of the deposition in any manner that justice requires.
    (3) Only those portions of a deposition or related exhibits received 
in evidence at the hearing in accordance with this section shall 
constitute a part of the record.



Sec. 1209.52  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the presiding officer 
shall serve notice upon each party that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed with the presiding 
officer. Any party may file with the presiding officer proposed findings 
of fact, proposed conclusions of law, and a proposed order within 30 
days after the parties have received notice that the transcript has been 
filed with the presiding officer, unless otherwise ordered by the 
presiding officer.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page and line references to any 
relevant portions of the record. A post-hearing brief may be filed in 
support of proposed findings and conclusions, either as part of the same 
document or in a separate document.
    (3) A party is deemed to have waived any issue not raised in 
proposed findings or conclusions timely filed by that party.
    (b) Reply briefs. Reply briefs may be filed within 15 days after the 
date on which the parties' proposed findings and conclusions and 
proposed order are due. Reply briefs shall be limited strictly to 
responding to new matters, issues, or arguments raised by another party 
in papers filed in the proceeding. A party who has not filed proposed 
findings of fact and conclusions of law or a post-hearing brief may not 
file a reply brief.
    (c) Simultaneous filing required. The presiding officer shall not 
order the filing by any party of any brief or reply brief supporting 
proposed findings and conclusions in advance of the other party's filing 
of its brief.

[[Page 124]]



Sec. 1209.53  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within 45 days after 
expiration of the time allowed for filing reply briefs under Sec. 
1209.52(b), the presiding officer shall file with and certify to the 
Director, for decision, the record of the proceeding. The record must 
include the presiding officer's recommended decision, recommended 
findings of fact and conclusions of law, and proposed order; all pre-
hearing and hearing transcripts, exhibits and rulings; and the motions, 
briefs, memoranda, and other supporting papers filed in connection with 
the hearing. The presiding officer shall serve upon each party the 
recommended decision, recommended findings and conclusions, and proposed 
order.
    (b) Filing of index. At the same time the presiding officer files 
with and certifies to the Director, for final determination, the record 
of the proceeding, the presiding officer shall furnish to the Director a 
certified index of the entire record of the proceeding. The certified 
index shall include, at a minimum, an entry for each paper, document or 
motion filed with the presiding officer in the proceeding, the date of 
the filing, and the identity of the filer. The certified index shall 
also include an exhibit index containing, at a minimum, an entry 
consisting of exhibit number and title or description for: each exhibit 
introduced and admitted into evidence at the hearing; each exhibit 
introduced but not admitted into evidence at the hearing; each exhibit 
introduced and admitted into evidence after the completion of the 
hearing; and each exhibit introduced but not admitted into evidence 
after the completion of the hearing.



Sec. 1209.54  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, recommended findings and conclusions, and proposed 
order under Sec. 1209.53, a party may file with the Director written 
exceptions to the presiding officer's recommended decision, recommended 
findings and conclusions, and proposed order; to the admission or 
exclusion of evidence; or to the failure of the presiding officer to 
make a ruling proposed by a party. A supporting brief may be filed at 
the time the exceptions are filed, either as part of the same document 
or in a separate document.
    (b) Effect of failure to file or raise exceptions. (1) Failure of a 
party to file exceptions to those matters specified in paragraph (a) of 
this section within the time prescribed is deemed a waiver of objection 
thereto.
    (2) No exception need be considered by the Director if the party 
taking exception had an opportunity to raise the same objection, issue, 
or argument before the presiding officer and failed to do so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular matters in or omissions 
from the presiding officer's recommendations to which that party takes 
exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
presiding officer's recommendations to which exception is taken, the 
page or paragraph references to those portions of the record relied upon 
to support each exception, and the legal authority relied upon to 
support each exception. Exceptions and briefs in support shall not 
exceed a total of 30 pages, except by leave of the Director on motion.
    (3) One reply brief may be submitted by each party opposing the 
exceptions within 10 days of service of exceptions and briefs in support 
of exceptions. Reply briefs shall not exceed 15 pages, except by leave 
of the Director on motion.



Sec. 1209.55  Review by Director.

    (a) Notice of submission to the Director. When the Director 
determines that the record in the proceeding is complete, the Director 
shall serve notice upon the parties that the case has been submitted to 
the Director for final decision.
    (b) Oral argument before the Director. Upon the initiative of the 
Director or on the written request of any party filed with the Director 
within the time for filing exceptions, the Director may order and hear 
oral argument on the

[[Page 125]]

recommended findings, conclusions, decision and order of the presiding 
officer. A written request by a party must show good cause for oral 
argument and state reasons why arguments cannot be presented adequately 
in writing. A denial of a request for oral argument may be set forth in 
the Director's final decision. Oral argument before the Director must be 
transcribed.
    (c) Director's final decision and order. (1) Decisional employees 
may advise and assist the Director in the consideration and disposition 
of the case. The final decision of the Director will be based upon 
review of the entire record of the proceeding, except that the Director 
may limit the issues to be reviewed to those findings and conclusions to 
which opposing arguments or exceptions have been filed by the parties.
    (2) The Director shall render a final decision and issue an 
appropriate order within 90 days after notification to the parties that 
the case has been submitted for final decision, unless the Director 
orders that the action or any aspect thereof be remanded to the 
presiding officer for further proceedings. Copies of the final decision 
including findings of fact and an appropriate order of the Director 
shall be served upon each party to the proceeding and as otherwise 
required by statute.
    (3) The Director may modify, terminate, or set aside an order in 
accordance with section 1373(b)(2) of the Safety and Soundness Act (12 
U.S.C. 4633(b)(2)).



Sec. 1209.56  Exhaustion of administrative remedies.

    To exhaust administrative remedies as to any issue on which a party 
disagrees with the presiding officer's recommendations, a party must 
file exceptions with the Director under Sec. 1209.54 of this part. A 
party must exhaust administrative remedies as a precondition to seeking 
judicial review of any final decision and order issued under this part.



Sec. 1209.57  Judicial review; no automatic stay.

    (a) Judicial review. Judicial review of any final order of the 
Director shall be exclusively as provided by section 1374 of the Safety 
and Soundness Act (12 U.S.C. 4634).
    (b) No automatic stay. Commencement of proceedings for judicial 
review of a final decision and order of the Director may not, unless 
specifically ordered by the Director or a reviewing court, operate as a 
stay of any order issued by the Director. The Director may, in his or 
her discretion and on such terms as he finds just, stay the 
effectiveness of all or any part of an order of the Director pending a 
final decision on a petition for review of that order.



Sec. Sec. 1209.58--1209.69  [Reserved]



   Subpart D_Parties and Representational Practice Before the Federal 
              Housing Finance Agency; Standards of Conduct



Sec. 1209.70  Scope.

    Subpart D of this part contains rules governing practice by parties 
or their representatives before FHFA. This subpart addresses the 
imposition of sanctions by the presiding officer or the Director against 
parties or their representatives in an adjudicatory proceeding under 
this part. This subpart also covers other disciplinary sanctions--
censure, suspension, or disbarment--against individuals who appear 
before FHFA in a representational capacity either in an adjudicatory 
proceeding under this part or in any other matters connected with 
presentations to FHFA relating to a client's or other principal's 
rights, privileges, or liabilities. This representation includes, but is 
not limited to, the practice of attorneys and accountants. Employees of 
FHFA are not subject to disciplinary proceedings under this subpart.



Sec. 1209.71  Definitions.

    Practice before FHFA for the purposes of subpart D of this part, 
includes, but is not limited to, transacting any business with FHFA as 
counsel of record, representative, or agent for any other person, unless 
the Director orders otherwise. Practice before FHFA also includes the 
preparation of any statement, opinion, or other paper by a counsel, 
representative or agent that is filed with FHFA in any certification,

[[Page 126]]

notification, application, report, or other document, with the consent 
of such counsel, representative, or agent. Practice before FHFA does not 
include work prepared for a regulated entity or entity-affiliated party 
solely at the request of such party for use in the ordinary course of 
its business.



Sec. 1209.72  Appearance and practice in adjudicatory proceedings.

    (a) Appearance before FHFA or a presiding officer--(1) By attorneys. 
A party may be represented by an attorney who is a member in good 
standing of the bar of the highest court of any State, commonwealth, 
possession or territory of the United States, or the District of 
Columbia, and who is not currently suspended or disbarred from practice 
before FHFA.
    (2) By non-attorneys. An individual may appear on his or her own 
behalf, pro se. A member of a partnership may represent the partnership 
and a duly authorized officer, director, employee, or other agent of any 
corporation or other entity not specifically listed herein may represent 
such corporation or other entity; provided that such officer, director, 
employee, or other agent is not currently suspended or disbarred from 
practice before FHFA. A duly authorized officer or employee of any 
Government unit, agency, or authority may represent that unit, agency, 
or authority.
    (b) Notice of appearance. Any person appearing in a representative 
capacity on behalf of a party, including FHFA, shall execute and file a 
notice of appearance with the presiding officer at or before the time 
such person submits papers or otherwise appears on behalf of a party in 
the adjudicatory proceeding. Such notice of appearance shall include a 
written declaration that the individual is currently qualified as 
provided in paragraph (a)(1) or (a)(2) of this section and is authorized 
to represent the particular party. By filing a notice of appearance on 
behalf of a party in an adjudicatory proceeding, the representative 
thereby agrees and represents that he is authorized to accept service on 
behalf of the represented party and that, in the event of withdrawal 
from representation, he or she will, if required by the presiding 
officer, continue to accept service until a new representative has filed 
a notice of appearance or until the represented party indicates that he 
or she will proceed on a pro se basis. Unless the representative filing 
the notice is an attorney, the notice of appearance shall also be 
executed by the person represented or, if the person is not an 
individual, by the chief executive officer, or duly authorized officer 
of that person.



Sec. 1209.73  Conflicts of interest.

    (a) Conflict of interest in representation. No representative shall 
represent another person in an adjudicatory proceeding if it reasonably 
appears that such representation may be limited materially by that 
representative's responsibilities to a third person or by that 
representative's own interests. The presiding officer may take 
corrective measures at any stage of a proceeding to cure a conflict of 
interest in representation, including the issuance of an order limiting 
the scope of representation or disqualifying an individual from 
appearing in a representative capacity for the duration of the 
proceeding.
    (b) Certification and waiver. If any person appearing as counsel or 
other representative represents two or more parties to an adjudicatory 
proceeding, or also represents a non-party on a matter relevant to an 
issue in the proceeding, that representative must certify in writing at 
the time of filing the notice of appearance required by Sec. 1209.72 of 
this part as follows:
    (1) That the representative has personally and fully discussed the 
possibility of conflicts of interest with each affected party and non-
party; and
    (2) That each affected party and non-party waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.



Sec. 1209.74  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed during the 
course of any proceeding when any party or representative of record has

[[Page 127]]

acted or failed to act in a manner required by applicable statute, 
regulation, or order, and that act or failure to act:
    (1) Constitutes contemptuous conduct, which includes dilatory, 
obstructionist, egregious, contumacious, unethical, or other improper 
conduct at any phase of any proceeding, hearing, or appearance before a 
presiding officer or the Director;
    (2) Has caused some other party material and substantive injury, 
including, but not limited to, incurring expenses including attorney's 
fees or experiencing prejudicial delay;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has delayed the proceeding unduly.
    (b) Sanctions. Sanctions that may be imposed include, but are not 
limited to, any one or more of the following:
    (1) Issuing an order against a party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that may be just; or
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Procedure for imposition of sanctions. (1) The presiding 
officer, on the motion of any party, or on his or her own motion, and 
after such notice and responses as may be directed by the presiding 
officer, may impose any sanction authorized by this section. The 
presiding officer shall submit to the Director for final ruling any 
sanction that would result in a final order that terminates the case on 
the merits or is otherwise dispositive of the case.
    (2) Except as provided in paragraph (d) of this section, no sanction 
authorized by this section, other than refusing to accept late papers, 
shall be imposed without prior notice to all parties and an opportunity 
for any representative or party against whom sanctions may be imposed to 
be heard. The presiding officer shall determine and direct the 
appropriate notice and form for such opportunity to be heard. The 
opportunity to be heard may be limited to an opportunity to respond 
verbally immediately after the act or inaction in question is noted by 
the presiding officer.
    (3) For purposes of interlocutory review, motions for the imposition 
of sanctions by any party and the imposition of sanctions shall be 
treated the same as motions for any other ruling by the presiding 
officer.
    (4) Nothing in this section shall be read to preclude the presiding 
officer or the Director from taking any other action or imposing any 
other restriction or sanction authorized by any applicable statute or 
regulation.
    (d) Sanctions for contemptuous conduct. If, during the course of any 
proceeding, a presiding officer finds any representative or any 
individual representing themself to have engaged in contemptuous 
conduct, the presiding officer may summarily suspend that individual 
from participating in that or any related proceeding or impose any other 
appropriate sanction.



Sec. 1209.75  Censure, suspension, disbarment, and reinstatement.

    (a) Discretionary censure, suspension, and disbarment. (1) The 
Director may censure any individual who practices or attempts to 
practice before FHFA or suspend or revoke the privilege to appear or 
practice before FHFA of such individual if, after notice of and 
opportunity for hearing in the matter, that individual is found by the 
Director--
    (i) Not to possess the requisite qualifications or competence to 
represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have caused unfair and material injury or prejudice to 
another party, such as prejudicial delay or unnecessary expenses 
including attorney's fees;
    (iv) To have engaged in, or aided and abetted, a material and 
knowing violation of the Safety and Soundness Act,

[[Page 128]]

the Federal Home Loan Mortgage Corporation Act, the Federal National 
Mortgage Association Charter Act, or the rules or regulations issued 
under those statutes, or any other applicable law or regulation;
    (v) To have engaged in contemptuous conduct before FHFA;
    (vi) With intent to defraud in any manner, to have willfully and 
knowingly deceived, misled, or threatened any client or prospective 
client; or
    (vii) Within the last 10 years, to have been convicted of an offense 
involving moral turpitude, dishonesty, or breach of trust, if the 
conviction has not been reversed on appeal. A conviction within the 
meaning of this paragraph shall be deemed to have occurred when the 
convicting court enters its judgment or order, regardless of whether an 
appeal is pending or could be taken and includes a judgment or an order 
on a plea of nolo contendere or on consent, regardless of whether a 
violation is admitted in the consent.
    (2) Suspension or revocation on the grounds set forth in paragraphs 
(a)(1)(ii) through (vii) of this section shall only be ordered upon a 
further finding that the individual's conduct or character was 
sufficiently egregious as to justify suspension or revocation. 
Suspension or disbarment under this paragraph shall continue until the 
applicant has been reinstated by the Director for good cause shown or 
until, in the case of a suspension, the suspension period has expired.
    (3) If the final order against the respondent is for censure, the 
individual may be permitted to practice before FHFA, but such 
individual's future representations may be subject to conditions 
designed to promote high standards of conduct. If a written letter of 
censure is issued, a copy will be maintained in FHFA's files.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any State, commonwealth, possession or territory of the United 
States, or the District of Columbia; any accountant or other licensed 
expert whose license to practice has been revoked in any State, 
commonwealth, possession or territory of the United States, or the 
District of Columbia; any person who has been and remains suspended or 
barred from practice by or before the Department of Housing and Urban 
Development, the Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, the Office of Thrift 
Supervision, the Federal Deposit Insurance Corporation, the National 
Credit Union Administration, the Federal Housing Finance Board, the Farm 
Credit Administration, the Securities and Exchange Commission, or the 
Commodity Futures Trading Commission is also suspended automatically 
from appearing or practicing before FHFA. A disbarment or suspension 
within the meaning of this paragraph shall be deemed to have occurred 
when the disbarring or suspending agency or tribunal enters its judgment 
or order, regardless of whether an appeal is pending or could be taken 
and regardless of whether a violation is admitted in the consent.
    (2) A suspension or disbarment from practice before FHFA under 
paragraph (b)(1) of this section shall continue until the person 
suspended or disbarred is reinstated under paragraph (d)(2) of this 
section.
    (c) Notices to be filed. (1) Any individual appearing or practicing 
before FHFA who is the subject of an order, judgment, decree, or finding 
of the types set forth in paragraph (b)(1) of this section shall file 
promptly with the Director a copy thereof, together with any related 
opinion or statement of the agency or tribunal involved.
    (2) Any individual appearing or practicing before FHFA who is or 
within the last 10 years has been convicted of a felony or of a 
misdemeanor that resulted in a sentence of prison term or in a fine or 
restitution order totaling more than $5,000 promptly shall file a notice 
with the Director. The notice shall include a copy of the order imposing 
the sentence or fine, together with any related opinion or statement of 
the court involved.
    (d) Reinstatement. (1) Unless otherwise ordered by the Director, an 
application for reinstatement for good cause may be made in writing by a 
person suspended or disbarred under paragraph (a)(1) of this section at 
any time more than three years after the effective

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date of the suspension or disbarment and, thereafter, at any time more 
than one year after the person's most recent application for 
reinstatement. An applicant for reinstatement hereunder may, in the 
Director's sole discretion, be afforded a hearing.
    (2) An application for reinstatement for good cause by any person 
suspended or disbarred under paragraph (b)(1) of this section may be 
filed at any time, but not less than one year after the applicant's most 
recent application. An applicant for reinstatement for good cause 
hereunder may, in the Director's sole discretion, be afforded a hearing. 
If, however, all the grounds for suspension or disbarment under 
paragraph (b)(1) of this section have been removed by a reversal of the 
order of suspension or disbarment or by termination of the underlying 
suspension or disbarment, any person suspended or disbarred under 
paragraph (b)(1) of this section may apply immediately for reinstatement 
and shall be reinstated by FHFA upon written application notifying FHFA 
that the grounds have been removed.
    (e) Conferences--(1) General rule. The FHFA counsel of record may 
confer with a proposed respondent concerning allegations of misconduct 
or other grounds for censure, disbarment, or suspension, regardless of 
whether a proceeding for censure, disbarment or suspension has been 
commenced. If a conference results in a stipulation in connection with a 
proceeding in which the individual is the respondent, the stipulation 
may be entered in the record at the request of either party to the 
proceeding.
    (2) Resignation or voluntary suspension. In order to avoid the 
institution of or a decision in a disbarment or suspension proceeding, a 
person who practices before FHFA may consent to censure, suspension, or 
disbarment from practice. At the discretion of the Director, the 
individual may be censured, suspended, or disbarred in accordance with 
the consent offered.
    (f) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under this part, except that in proceedings to terminate an 
existing FHFA suspension or disbarment order, the person seeking the 
termination of the order shall bear the burden of going forward with an 
application and with proof and that the Director may, in the Director's 
sole discretion, direct that any proceeding to terminate an existing 
suspension or disbarment by FHFA be limited to written submissions. All 
hearings held under this section shall be closed to the public unless 
the Director, on the Director's own motion or upon the request of a 
party, otherwise directs.



Sec. Sec. 1209.76--1209.79  [Reserved]



           Subpart E_Civil Money Penalty Inflation Adjustments



Sec. 1209.80  Inflation adjustments.

    The maximum amount of each civil money penalty within FHFA's 
jurisdiction, as set by the Safety and Soundness Act and thereafter 
adjusted in accordance with the Inflation Adjustment Act, on a recurring 
four-year cycle, is as follows:

------------------------------------------------------------------------
                                                            Adjusted
      U.S. Code citation              Description       maximum  penalty
                                                             amount
------------------------------------------------------------------------
12 U.S.C. 4636(b)(1)..........  First Tier............           $10,000
12 U.S.C. 4636(b)(2)..........  Second Tier...........            50,000
12 U.S.C. 4636(b)(4)..........  Third Tier (Entity-            2,000,000
                                 Affiliated party).
12 U.S.C. 4636(b)(4)..........  Third Tier (Regulated          2,000,000
                                 entity).
------------------------------------------------------------------------



Sec. 1209.81  Applicability.

    The inflation adjustments set out in Sec. 1209.80 shall apply to 
civil money penalties assessed in accordance with the provisions of the 
Safety and Soundness Act, 12 U.S.C. 4636, and subparts B and C of this 
part, for violations occurring after the effective date of July 30, 
2008.

[[Page 130]]



Sec. Sec. 1209.82--1209.99  [Reserved]



 Subpart F_Suspension or Removal of an Entity-Affiliated Party Charged 
                               With Felony



Sec. 1209.100  Scope.

    Subpart F of this part applies to informal hearings afforded to any 
entity-affiliated party who has been suspended, removed, or prohibited 
from further participation in the business affairs of a regulated entity 
by a notice or order issued by the Director under section 1377(h) of the 
Safety and Soundness Act (12 U.S.C. 4636a(h)).



Sec. 1209.101  Suspension, removal, or prohibition.

    (a) Notice of suspension or prohibition. (1) As provided by section 
1377(h)(1) of the Safety and Soundness Act (12 U.S.C. 4636a(h)(1)), if 
an entity-affiliated party is charged in any information, indictment, or 
complaint, with the commission of or participation in a crime that 
involves dishonesty or breach of trust that is punishable by 
imprisonment for more than one year under State or Federal law, the 
Director may, if continued service or participation by such party may 
pose a threat to the regulated entity or impair public confidence in the 
regulated entity, by written notice served upon such party, suspend such 
party from office or prohibit such party from further participation in 
any manner in the conduct of the affairs of any regulated entity.
    (2) In accordance with section 1377(h)(1) of the Safety and 
Soundness Act (12 U.S.C. 4636a(h)(1)), the notice of suspension or 
prohibition is effective upon service. A copy of such notice will be 
served on the relevant regulated entity. The notice will state the basis 
for the suspension and the right of the party to request an informal 
hearing as provided in Sec. 1209.102. The suspension or prohibition is 
to remain in effect until the information, indictment, or complaint is 
finally disposed of, or until terminated by the Director, or otherwise 
as provided in paragraph (c) of this section.
    (b) Order of removal or prohibition. As provided by section 
1377(h)(2) of the Safety and Soundness Act (12 U.S.C. 4636a(h)(2)), at 
such time as a judgment of conviction is entered (or pretrial diversion 
or other plea bargain is agreed to) in connection with a crime as 
referred to above in paragraph (a) (the ``conviction''), and the 
conviction is no longer subject to appellate review, the Director may, 
if continued service or participation by such party may pose a threat to 
the regulated entity or impair public confidence in the regulated 
entity, issue an order removing such party from office or prohibiting 
such party from further participation in any manner in the conduct of 
the affairs of the regulated entity without the prior written consent of 
the Director. A copy of such order will be served on the relevant 
regulated entity, at which time the entity-affiliated party shall 
immediately cease to be a director or officer of the regulated entity. 
The notice will state the basis for the removal or prohibition and the 
right of the party to request a hearing as provided in Sec. 1209.102.
    (c) Effective period. Unless terminated by the Director, a notice of 
suspension or order of removal issued under section 1377(h)(1) or (2) of 
the Safety and Soundness Act (12 U.S.C. 4636a(h)(1), (2)) shall remain 
effective and outstanding until the completion of any informal hearing 
or appeal provided under section 1377(h)(4) of the Safety and Soundness 
Act (12 U.S.C. 4636a(h)(4)). The pendency of an informal hearing, if 
any, does not stay any notice of suspension or prohibition or order of 
removal or prohibition under subpart F of this part.
    (d) Effect of acquittal. As provided by section 1377(h)(2)(B)(ii) of 
the Safety and Soundness Act (12 U.S.C. 4636a(h)(2)(B)(ii)), a finding 
of not guilty or other disposition of the charge does not preclude the 
Director from instituting removal, suspension, or prohibition 
proceedings under section 1377(a) or (b) of the Safety and Soundness Act 
(12 U.S.C. 4636a(a), (b)).
    (e) Preservation of authority. Action by the Director under section 
1377(h) of the Safety and Soundness Act (12 U.S.C. 4636a(h)), shall not 
be deemed as a predicate or a bar to any other regulatory, supervisory, 
or enforcement action under the Safety and Soundness Act.

[[Page 131]]



Sec. 1209.102  Hearing on removal or suspension.

    (a) Hearing requests--(1) Deadline. An entity-affiliated party 
served with a notice of suspension or prohibition or an order of removal 
or prohibition, within 30 days of service of such notice or order, may 
submit to the Director a written request to appear before the Director 
to show that his or her continued service or participation in the 
affairs of the regulated entity will not pose a threat to the interests 
of, or threaten to impair public confidence in, the Enterprises or the 
Banks. The request must be addressed to the Director and sent to the 
Federal Housing Finance Agency at 1700 G Street, NW., Washington, DC 
20552, by:
    (i) Overnight U.S. Postal Service delivery or delivery by a reliable 
commercial delivery service for same day or overnight delivery to the 
address stated above; or
    (ii) First class, registered, or certified mail via the U.S. Postal 
Service.
    (2) Waiver of appearance. An entity-affiliated party may elect in 
writing to waive his or her right to appear to make a statement in 
person or through counsel and have the matter determined solely on the 
basis of his or her written submission.
    (b) Form and timing of hearing--(1) Informal hearing. Hearings under 
subpart F of this part are not subject to the formal adjudication 
provisions of the Administrative Procedure Act (5 U.S.C. 554 through 
557), and are not conducted under subpart C of this part.
    (2) Setting of the hearing. Upon receipt of a timely request for a 
hearing, the Director will give written notice and set a date within 30 
days for the entity-affiliated party to appear, personally, or through 
counsel, before the Director or his or her designee(s) to submit written 
materials (or, at the discretion of the Director, oral testimony and 
oral argument) to make the necessary showing under paragraph (a) of this 
section. The entity-affiliated party may submit a written request for 
additional time for the hearing to commence, without undue delay, and 
the Director may extend the hearing date for a specified time.
    (3) Oral testimony. The Director or his or her designee, in his or 
her discretion, may deny, permit, or limit oral testimony in the 
hearing.
    (c) Conduct of the hearing--(1) Hearing officer. A hearing under 
this section may be presided over by the Director or one or more 
designated FHFA employees, except that an officer designated by the 
Director (hearing officer) to conduct the hearing may not have been 
involved in an underlying criminal proceeding, a factually related 
proceeding, or an enforcement proceeding in a prosecutorial or 
investigative role. This provision does not preclude the Director 
otherwise from seeking information on the matters at issue from 
appropriate FHFA staff on an as needed basis consistent with Sec. 
1209.101(d)(2).
    (2) Submissions. All submissions of the requestor and FHFA's counsel 
of record must be received by the Director or his or her designee no 
later than 10 days prior to the date set for the hearing. FHFA may 
respond in writing to the requestor's submission and serve the requestor 
(and any other interested party such as the regulated entity) not later 
than the date fixed by the hearing officer for submissions or other time 
period as the hearing officer may require.
    (3) Procedures--(i) Fact finding authority of the hearing officer. 
The hearing officer shall determine all procedural matters under subpart 
F of this part, permit or limit the appearance of witnesses in 
accordance with paragraph (b)(3) of this section, and impose time limits 
as he or she deems reasonable. All oral statements, witness testimony, 
if permitted, and documents submitted that are found by the hearing 
officer to be materially relevant to the proceeding and not unduly 
repetitious may be considered. The hearing officer may question any 
person appearing in the proceeding, and may make any ruling reasonably 
necessary to ensure the full and fair presentation of evidence and to 
facilitate the efficient and effective operation of the proceeding.
    (ii) Statements to an officer. Any oral or written statement made to 
the Director, a hearing officer, or any FHFA employee under subpart F of 
this part is deemed to be a statement made to a

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Federal officer or agency within the meaning of 18 U.S.C. 1006.
    (iii) Oral testimony. If either the requestor or FHFA counsel of 
record desires to present oral testimony to supplement the party's 
written submission he or she must make a request in writing to the 
hearing officer not later than 10 days prior to the hearing, as provided 
in paragraph (c)(2) of this section, or within a shorter time period as 
permitted by the hearing officer for good cause shown. The request 
should include the name of the individual(s), a statement generally 
descriptive of the expected testimony, and the reasons why such oral 
testimony is warranted. The hearing officer generally will not admit 
witnesses, absent a strong showing of specific and compelling need. 
Witnesses, if admitted, shall be sworn.
    (iv) Written materials. Each party must file a copy of any 
affidavit, memorandum, or other written material to be presented at the 
hearing with the hearing officer and serve copies on any other 
interested party (such as the affected regulated entity) not later than 
10 days prior to commencement of the informal hearing, as provided in 
paragraph (c)(2), or within a shorter time period as permitted by the 
hearing officer for good cause shown.
    (v) Relief. The purpose of the hearing is to determine whether the 
suspension or prohibition from participation in any manner in the 
conduct of the affairs of the regulated entity will be continued, 
terminated, or otherwise modified, or whether the order removing such 
party from office or prohibiting the party from further participation in 
any manner in the conduct of the affairs of the regulated entity will be 
rescinded or otherwise modified.
    (vi) Ultimate question. In deciding on any request for relief from a 
notice of suspension or prohibition, the hearing officer shall not 
consider the ultimate question of guilt or innocence with respect to the 
outstanding criminal charge(s). In deciding on a request for relief from 
a removal order, the hearing officer shall not consider challenges to or 
efforts to impeach the validity of the conviction. In either case, the 
hearing officer may consider facts that show the nature of the events on 
which the conviction or charges were based.
    (4) Record. If warranted under the circumstances of the matter, the 
hearing officer may require that a transcript of the proceedings be 
prepared at the expense of the requesting party. The hearing officer may 
order the record be kept open for a reasonable time following the 
hearing, not to exceed five business days, to permit the filing of 
additional pertinent submissions for the record. Thereafter, no further 
submissions are to be admitted to the record, absent good cause shown.



Sec. 1209.103  Recommended and final decisions.

    (a) Recommended decision--(1) Written recommended decision of the 
hearing officer. Not later than 20 days following the close of the 
hearing (or if the requestor waived a hearing, from the deadline for 
submission of the written materials), the hearing officer will serve a 
copy of the recommended decision on the parties to the proceeding. The 
recommended decision must include a summary of the findings, the 
parties' respective arguments, and support for the determination.
    (2) Five-day comment period. Not later than five business days after 
receipt of the recommended decision, the parties shall submit written 
comments in response to the recommended decision, if any, to the hearing 
officer. The hearing officer shall not grant any extension of the stated 
time for responses to a recommended decision.
    (3) Recommended decision to be transmitted to the Director. The 
hearing officer shall promptly forward the recommended decision, and 
written comments, if any, and the record to the Director for final 
determination.
    (b) Decision of the Director. Within 60 days of the date of the 
hearing, or if the requestor waived a hearing the date fixed for the 
hearing, the Director will notify the entity-affiliated party in writing 
by registered mail of the disposition of his or her request for relief 
from the notice of suspension or prohibition or the order of removal or 
prohibition. The decision will state whether the suspension or 
prohibition will be continued, terminated, or otherwise

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modified, or whether the order removing such party from any 
participation in the affairs of the regulated entity will be rescinded 
or otherwise modified. The decision will contain a brief statement of 
the basis for an adverse determination. The Director's decision is a 
final and non-appealable order.
    (c) Effect of notice or order. A removal or prohibition by order 
shall remain in effect until terminated by the Director. A suspension or 
prohibition by notice remains in effect until the criminal charge is 
disposed of or until terminated by the Director.
    (d) Reconsideration. A suspended or removed entity-affiliated party 
subsequently may petition the Director to reconsider the final decision 
any time after the expiration of a 12-month period from the date of the 
decision, but no such request may be made within 12 months of a previous 
petition for reconsideration. An entity-affiliated party must submit a 
petition for reconsideration in writing; the petition shall state the 
specific grounds for relief from the notice of suspension or order or 
removal and be supported by a memorandum and any other documentation 
materially relevant to the request for reconsideration. No hearing will 
be held on a petition for reconsideration, and the Director will inform 
the requestor of the disposition of the reconsideration request in a 
timely manner. A decision on a request for reconsideration shall not 
constitute an appealable order.



PART 1212_POST	EMPLOYMENT RESTRICTION FOR SENIOR EXAMINERS--
Table of Contents



Subpart A [Reserved]

       Subpart B_Post	Employment Restriction for Senior Examiners

Sec.
1212.1 Purpose and scope.
1212.2 Definitions.
1212.3 Post-employment restriction for senior examiners.
1212.4 Waiver.
1212.5 Penalties.

    Authority: 12 U.S.C. 4526, 12 U.S.C. 4517(e).

    Source: 74 FR 51075, Oct. 5, 2009, unless otherwise noted.

Subpart A [Reserved]



       Subpart B_Post	Employment Restriction for Senior Examiners



Sec. 1212.1  Purpose and scope.

    This subpart sets forth a one-year post-employment restriction 
applicable to senior examiners of the Federal Housing Finance Agency 
(FHFA). This restriction is in addition to the post-employment 
restriction applicable to employees of FHFA under 12 U.S.C. 4523.



Sec. 1212.2  Definitions.

    For purposes of subpart B of this part, the term:
    Consultant means a person who works directly on matters for, or on 
behalf of, a regulated entity or the Office of Finance.
    Director means the Director of FHFA or his or her designee.
    Employee means an officer or employee of FHFA, including a special 
Government employee.
    Federal Home Loan Bank or Bank means a Bank established under the 
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System, or any successor thereto.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, any Federal Home Loan Bank; the term ``regulated 
entities'' means, collectively, the Federal National Mortgage 
Association and any affiliate thereof, the Federal Home Loan Mortgage 
Corporation and any affiliate thereof, and the Federal Home Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Federal 
Housing Finance Regulatory Reform Act of 2008, Division A of the Housing 
and Economic Recovery Act of 2008, Public Law No. 110-289, 122 Stat. 
2654 (2008).

[[Page 134]]

    Senior examiner means an employee of FHFA who has been:
    (1) Authorized by FHFA to conduct examinations or inspections on 
behalf of FHFA;
    (2) Assigned continuing, broad and lead responsibility for examining 
a regulated entity or the Office of Finance; and
    (3) Assigned responsibilities for examining, inspecting and 
supervising the regulated entity or the Office of Finance that--
    (i) Represents a substantial portion of the employee's assigned 
responsibilities; and
    (ii) Requires the employee to interact routinely with officers or 
employees of the regulated entity or the Office of Finance.



Sec. 1212.3  Post-employment restriction for senior examiners.

    (a) Prohibition. An employee of FHFA who serves as the senior 
examiner of a regulated entity or the Office of Finance for two or more 
months during the last 12 months of his or her employment with FHFA may 
not, within one year after leaving the employment of FHFA, knowingly 
accept compensation as an employee, officer, director, or consultant 
from a regulated entity or the Office of Finance unless the Director 
grants a waiver pursuant to Sec. 1212.4.
    (b) Effective date. The post-employment restriction in paragraph (a) 
of this section shall not apply to any officer or employee of FHFA or 
any former officer or employee of FHFA who ceased to be an officer or 
employee of FHFA before November 4, 2009.



Sec. 1212.4  Waiver.

    At the written request of a senior examiner or former senior 
examiner, the Director may waive the post-employment restriction in 
Sec. 1212.3 if he or she certifies, in writing, and on a case-by-case 
basis, that granting a waiver of such restriction does not affect the 
integrity of the supervisory program of FHFA.



Sec. 1212.5  Penalties.

    (a) General. A senior examiner who, after leaving the employment of 
FHFA, violates the restriction set forth in Sec. 1212.3 shall be 
subject to one or both of the following penalties--
    (1) An order:
    (i) Removing the individual from office at the regulated entity or 
the Office of Finance or prohibiting the individual from further 
participation in the affairs of the relevant regulated entity or the 
Office of Finance for a period of up to five years; and
    (ii) Prohibiting the individual from participating in the affairs of 
any regulated entity or the Office of Finance for a period of up to five 
years; and/or
    (2) A civil money penalty of not more than $250,000.
    (b) Other penalties. The penalties set forth in paragraph (a) of 
this section are not exclusive, and a senior examiner who violates the 
restrictions in Sec. 1212.3 also may be subject to other 
administrative, civil, or criminal remedies or penalties as provided in 
law.
    (c) Procedural rights. The procedures applicable to actions under 
paragraph (a) of this section are those provided in the Safety and 
Soundness Act under section 1376, in connection with the imposition of a 
civil money penalty; under section 1377, in connection with a removal 
and prohibition order (12 U.S.C. 4636 and 4636a, respectively); and 
under any regulations issued by FHFA implementing such procedures.



PART 1213_OFFICE OF THE OMBUDSMAN--Table of Contents



Sec.
1213.1 Purpose and scope.
1213.2 Definitions.
1213.3 Authorities and duties of the Ombudsman.
1213.4 Complaints and appeals from a regulated entity or the Office of 
          Finance.
1213.5 Complaints from a person.
1213.6 No retaliation.
1213.7 Confidentiality.

    Authority: 12 U.S.C. 4511(b)(2), 4517(i), and 4526.

    Source: 76 FR 7481, Feb. 10, 2011, unless otherwise noted.



Sec. 1213.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish within FHFA 
the Office

[[Page 135]]

of the Ombudsman (Office) under section 1317(i) of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4517(i)), as amended, and to set forth the authorities and duties of the 
Ombudsman.
    (b) Scope. (1) This part applies to complaints and appeals from any 
regulated entity and any person that has a business relationship with a 
regulated entity regarding any matter relating to the regulation and 
supervision of such regulated entity or the Office of Finance by FHFA.
    (2) The establishment of the Office does not alter or limit any 
other right or procedure associated with appeals, complaints, or 
administrative matters submitted by a person regarding any matter 
relating to the regulation and supervision of a regulated entity or the 
Office of Finance under any other law or regulation.



Sec. 1213.2  Definitions.

    For purposes of this part, the term:
    Business relationship means any existing or potential interaction 
between a person and a regulated entity or the Office of Finance for the 
provision of goods or services. The term business relationship does not 
include any interaction between a mortgagor and a regulated entity that 
directly or indirectly owns, purchased, guarantees, or sold the 
mortgage.
    Director means the Director of FHFA or his or her designee.
    FHFA means the Federal Housing Finance Agency.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Person means an organization, business entity, or individual that 
has a business relationship with a regulated entity or the Office of 
Finance, or that represents the interests of a person that has a 
business relationship with a regulated entity or the Office of Finance. 
The term person does not include an individual borrower.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate, the Federal Home Loan Mortgage Corporation and any 
affiliate, and any Federal Home Loan Bank.



Sec. 1213.3  Authorities and duties of the Ombudsman.

    (a) General. The Office shall be headed by an Ombudsman, who shall 
consider complaints and appeals from any regulated entity, the Office of 
Finance, and any person that has a business relationship with a 
regulated entity or the Office of Finance regarding any matter relating 
to the regulation and supervision of such regulated entity or the Office 
of Finance by FHFA. In considering any complaint or appeal under this 
part, the Ombudsman shall:
    (1) Conduct inquiries and submit findings of fact and 
recommendations to the Director concerning resolution of the complaint 
or appeal, and
    (2) Act as a facilitator or mediator to advance the resolution of 
the complaint or appeal.
    (b) Other duties. The Ombudsman shall:
    (1) Establish procedures for carrying out the functions of the 
Office,
    (2) Establish and publish procedures for receiving and considering 
complaints and appeals, and
    (3) Report annually to the Director on the activities of the Office, 
or more frequently, as determined by the Director.



Sec. 1213.4  Complaints and appeals from a regulated entity or the 
Office of Finance.

    (a) Complaints--(1) General. Any regulated entity or the Office of 
Finance may submit a complaint in accordance with procedures established 
by the Ombudsman.
    (2) Matters subject to complaint. A regulated entity or the Office 
of Finance may submit a complaint regarding any matter relating to the 
regulation and supervision of a regulated entity or the Office of 
Finance by FHFA that is not subject to appeal or in litigation, 
arbitration, or mediation. The Ombudsman may further define what matters 
are subject to complaint.
    (b) Appeals--(1) General. Any regulated entity or the Office of 
Finance may submit an appeal in accordance with procedures established 
by the Ombudsman.
    (2) Matters subject to appeal. A regulated entity or the Office of 
Finance may submit an appeal regarding any

[[Page 136]]

final, written regulatory or supervisory conclusion, decision, or 
examination rating by FHFA. The Ombudsman may further define what 
matters are subject to appeal.
    (3) Matters not subject to appeal. Matters for which there is an 
existing avenue of appeal or for which there is another forum for 
appeal; non-final decisions or conclusions; and matters in ongoing 
litigation, arbitration, or mediation, unless there has been a breakdown 
in the process, may not be appealed. Matters not subject to appeal 
include, but are not limited to, appointments of conservators or 
receivers, preliminary examination conclusions, formal enforcement 
decisions, formal and informal rulemakings, Freedom of Information Act 
appeals, final FHFA decisions subject to judicial review, and matters 
within the jurisdiction of the FHFA Inspector General. The Ombudsman may 
further define what matters are not subject to appeal.
    (4) Effect of filing an appeal. An appeal under this section does 
not excuse a regulated entity or the Office of Finance from complying 
with any regulatory or supervisory decision while the appeal is pending. 
However, the Director, upon consideration of a written request, may 
waive compliance with a regulatory or supervisory decision during the 
pendency of the appeal.



Sec. 1213.5  Complaints from a person.

    (a) General. Any person that has a business relationship with a 
regulated entity or the Office of Finance may submit a complaint in 
accordance with procedures established by the Ombudsman.
    (b) Matters subject to complaint. A person may submit a complaint 
regarding any matter relating to the regulation and supervision of a 
regulated entity or the Office of Finance by FHFA that is not a matter 
in litigation, arbitration, or mediation. The Ombudsman may further 
define what matters are subject to complaints.



Sec. 1213.6  No retaliation.

    Neither FHFA nor any FHFA employee may retaliate against a regulated 
entity, the Office of Finance, or a person for submitting a complaint or 
appeal under this part. The Ombudsman shall receive and address claims 
of retaliation. Upon receiving a complaint, the Ombudsman, in 
coordination with the Inspector General, shall examine the basis of the 
alleged retaliation. Upon completion of the examination, the Ombudsman 
shall report the findings to the Director with recommendations, 
including a recommendation to take disciplinary action against any FHFA 
employee found to have retaliated.



Sec. 1213.7  Confidentiality.

    The Ombudsman shall ensure that safeguards exist to preserve 
confidentiality. If a party requests that information and materials 
remain confidential, the Ombudsman shall not disclose the information or 
materials, without approval of the party, except to appropriate 
reviewing or investigating officials, such as the Inspector General, or 
as required by law. However, the resolution of certain complaints (such 
as complaints of retaliation against a regulated entity or the Office of 
Finance) may not be possible if the identity of the party remains 
confidential. In such cases, the Ombudsman shall discuss with the party 
the circumstances limiting confidentiality.

[[Page 137]]



                     SUBCHAPTER B_ENTITY REGULATIONS





PART 1225_MINIMUM CAPITAL_TEMPORARY INCREASE--Table of Contents



Sec.
1225.1 Purpose.
1225.2 Definitions.
1225.3 Procedures.
1225.4 Standards and factors.
1225.5 Guidances.

    Authority: 12 U.S.C. 4513, 4526 and 4612.

    Source: 76 FR 11674, Mar. 3, 2011, unless otherwise noted.



Sec. 1225.1  Purpose.

    FHFA is responsible for ensuring the safe and sound operation of 
regulated entities. In furtherance of that responsibility, this part 
sets forth standards and procedures FHFA will employ to determine 
whether to require or rescind a temporary increase in the minimum 
capital levels for a regulated entity or entities pursuant to 12 U.S.C. 
4612(d).



Sec. 1225.2  Definitions.

    For purposes of this part, the term:
    Enterprise means the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation; and the term Enterprises means, 
collectively, the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation.
    Minimum capital level means the lowest amount of capital meeting any 
regulation or orders issued pursuant to 12 U.S.C. 1426(a)(2) and 12 
U.S.C. 4612, or any similar requirement established for a Federal Home 
Loan Bank by regulation, order or other action.
    Regulated entity means--
    (1) The Federal National Mortgage Association and any affiliate 
thereof;
    (2) The Federal Home Loan Mortgage Corporation and any affiliate 
thereof; and
    (3) Any Federal Home Loan Bank.
    Rescission means a removal in whole or in part of an increase in the 
temporary minimum capital level.



Sec. 1225.3  Procedures.

    (a) Information--(1) Information to the regulated entity or 
entities. If the Director determines, based on standards enunciated in 
this part, that a temporary increase in the minimum capital level is 
necessary, the Director will provide notice to the affected regulated 
entity or entities 30 days in advance of the date that the temporary 
minimum capital requirement becomes effective, unless the Director 
determines that an exigency exists that does not permit such notice or 
the Director determines a longer time period would be appropriate.
    (2) Information to the Government. The Director shall inform the 
Secretary of the Treasury, the Secretary of Housing and Urban 
Development, and the Chairman of the Securities and Exchange Commission 
of a temporary increase in the minimum capital level contemporaneously 
with informing the affected regulated entity or entities.
    (b) Comments. The affected regulated entity or entities may provide 
comments regarding or objections to the temporary increase to FHFA 
within 15 days or such other period as the Director determines 
appropriate under the circumstances. The Director may determine to 
modify, delay, or rescind the announced temporary increase in response 
to such comments or objection, but no further notice is required for the 
temporary increase to become effective upon the date originally 
determined by the Director.
    (c) Communication. The Director shall transmit notice of a temporary 
increase or rescission of a temporary increase in the minimum capital 
level in writing, using electronic or such other means as appropriate. 
Such communication shall set forth, at a minimum, the bases for the 
Director's determination, the amount of increase or decrease in the 
minimum capital level, the anticipated duration of such increase, and a 
description of the procedures for requesting a rescission of the 
temporary increase in the minimum capital level.
    (d) Written plan. In making a finding under this part, the Director 
may require a written plan to augment capital to be submitted on a 
timely basis to address the methods by which such

[[Page 138]]

temporary increase may be attained and the time period for reaching the 
new temporary minimum capital level.
    (e) Time frame for review of temporary increase for purpose of 
rescission. (1) Absent an earlier determination to rescind in whole or 
in part a temporary increase in the minimum capital level for a 
regulated entity or entities, the Director shall no less than every 12 
months, consider the need to maintain, modify, or rescind such increase.
    (2) A regulated entity or regulated entities may at any time request 
in writing such review by the Director.



Sec. 1225.4  Standards and factors.

    (a) Standard for imposing a temporary increase. In making a 
determination to increase temporarily a minimum capital requirement for 
a regulated entity or entities, the Director will consider the necessity 
and consistency of such an increase with the prudential regulation and 
the safe and sound operations of a regulated entity. The Director may 
impose a temporary minimum-capital increase if consideration of one or 
more of the following factors leads the Director to the judgment that 
the current minimum capital requirement for a regulated entity is 
insufficient to address the entity's risks:
    (1) Current or anticipated declines in the value of assets held by a 
regulated entity; the amounts of mortgage-backed securities issued or 
guaranteed by the regulated entity; and, its ability to access liquidity 
and funding;
    (2) Credit (including counterparty), market, operational and other 
risks facing a regulated entity, especially where an increase in risks 
is foreseeable and consequential;
    (3) Current or projected declines in the capital held by a regulated 
entity;
    (4) A regulated entity's material non-compliance with regulations, 
written orders, or agreements;
    (5) Housing finance market conditions;
    (6) Level of reserves or retained earnings;
    (7) Initiatives, operations, products, or practices that entail 
heightened risk;
    (8) With respect to a Bank, the ratio of the market value of its 
equity to par value of its capital stock where the market value of 
equity is the value calculated and reported by the Bank as ``market 
value of total capital'' under 12 CFR 932.5(a)(1)(ii)(A); or
    (9) Other conditions as detailed by the Director in the notice 
provided under Sec. 1225.3.
    (b) Standard for rescission of a temporary increase. In making a 
determination to rescind a temporary increase in the minimum capital 
level for a regulated entity or entities, whether in full or in part, 
the Director will consider the consistency of such a rescission with the 
prudential regulation and safe and sound operations of a regulated 
entity. The Director will rescind, in full or in part, a temporary 
minimum capital increase if consideration of one or more of the 
following factors leads the Director to the judgment that rescission of 
a temporary minimum-capital increase for a regulated entity is 
appropriate considering the entity's risks:
    (1) Changes to the circumstances or facts that led to the imposition 
of a temporary increase in the minimum capital levels;
    (2) The meeting of targets set for a regulated entity in advance of 
any capital or capital-related plan agreed to by the Director;
    (3) Changed circumstances or facts based on new developments 
occurring since the imposition of the temporary increase in the minimum 
capital level, particularly where the original problems or concerns have 
been successfully addressed or alleviated in whole or in part; or
    (4) Such other standard as the Director may consider as detailed by 
the Director in the notice provided under Sec. 1225.3.



Sec. 1225.5  Guidances.

    The Director may determine, from time to time, issue guidance to 
elaborate, to refine or to provide new information regarding standards 
or procedures contained herein.

[[Page 139]]



PART 1229_CAPITAL CLASSIFICATIONS AND PROMPT CORRECTIVE ACTION--
Table of Contents



                    Subpart A_Federal Home Loan Banks

Sec.
1229.1 Definitions.
1229.2 Determination of a Bank's capital classification.
1229.3 Criteria for a Bank's capital classification.
1229.4 Reclassification by the Director.
1229.5 Capital distributions for adequately capitalized Banks.
1229.6 Mandatory actions applicable to undercapitalized Banks.
1229.7 Discretionary actions applicable to undercapitalized Banks.
1229.8 Mandatory actions applicable to significantly undercapitalized 
          Banks.
1229.9 Discretionary actions applicable to significantly 
          undercapitalized Banks.
1229.10 Actions applicable to critically undercapitalized Banks.
1229.11 Capital restoration plans.
1229.12 Procedures related to capital classification and other actions.

                          Subpart B_Enterprises

1229.13 Definitions.

    Authority: 12 U.S.C. 1426, 4513, 4526, 4613, 4614, 4615, 4616, 4617, 
4618, 4622, 4623.

    Source: 74 FR 5604, Jan. 30, 2009, unless otherwise noted.



                    Subpart A_Federal Home Loan Banks



Sec. 1229.1  Definitions.

    For purposes of this subpart:
    Bank written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Capital distribution means any payment by the Bank, whether in cash 
or stock, of a dividend, any return of capital or retained earnings by 
the Bank to its shareholders, any transaction in which the Bank redeems 
or repurchases capital stock, or any transaction in which the Bank 
redeems, repurchases or retires any other instrument which is included 
in the calculation of its total capital.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(i) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(i)) and related 
regulations.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(ii) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(ii)) and related 
regulations.
    Consolidated obligations means any bond, debenture or note on which 
the Banks are jointly and severally liable and which was issued under 
section 11 of the Bank Act (12 U.S.C. 1431) and any implementing 
regulations, whether or not such instrument was originally issued 
jointly by the Banks or by the Federal Housing Finance Board on behalf 
of the Banks.
    Critical capital level for a Bank means an amount equal to 2 percent 
of the Bank's total assets.
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Executive officer means for a Bank any of the following persons, 
provided that the Director may from time to time add or remove persons, 
positions, or functions to or from the list (individually for one or 
more Banks or jointly for all the Banks) by communication to the 
affected Banks:
    (1) Executive officers about whom the Banks must publicly disclose 
detailed compensation information under Regulation S-K, 17 CFR part 229, 
issued by the Securities and Exchange Commission;
    (2) Any other executive who occupies one of the following positions 
or is in charge of one of the following subject areas:
    (i) Overall Bank operations, such as the Chief Operating Officer or 
an equivalent employee;
    (ii) Chief Financial Officer or an equivalent employee;
    (iii) Chief Administrative Officer or an equivalent employee;
    (iv) Chief Risk Officer or an equivalent employee;
    (v) Asset and Liability Management officer, or an equivalent 
employee;
    (vi) Chief Accounting Officer or an equivalent employee;
    (vii) General Counsel or an equivalent employee;

[[Page 140]]

    (viii) Strategic Planning officer or an equivalent employee;
    (ix) Internal Audit officer or an equivalent employee; or
    (x) Chief Information Officer or an equivalent employee; or
    (3) Any other individual, without regard to title:
    (i) Who is in charge of a principal business unit, division or 
function; or
    (ii) Who reports directly to the Bank's chairman of the board of 
directors, vice chairman of the board of directors, president or chief 
operating officer.
    FHFA means the Federal Housing Finance Agency.
    Minimum capital requirement means the leverage and total capital 
requirements established for a Bank under section 6(a)(2) of the Bank 
Act (12 U.S.C. 1426(a)(2)) and related regulations, as such requirements 
may be revised by the Director, or any similar requirement established 
for a Bank by regulation, order, written agreement or other action.
    New business activity means any activity undertaken by a Bank that 
requires approval from the FHFA under part 980 of this title.
    Permanent capital means the retained earnings of a Bank, determined 
in accordance with generally accepted accounting principles in the 
United States (GAAP), plus the amount paid-in for the Bank's Class B 
stock.
    Risk-based capital requirement means any capital requirement 
established for a Bank under section 6(a)(3) of the Bank Act (12 U.S.C. 
1426(a)(3)) and related regulations that ensures a Bank will hold 
sufficient permanent capital and reserves to support the risks that 
arise from its operations.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) as 
amended.
    Tangible equity means, for a Bank, the paid-in value of its 
outstanding capital stock plus its retained earnings calculated in 
accordance with generally accepted accounting principles in the United 
States (GAAP) less the amount of any assets that would be intangible 
assets under GAAP.
    Total capital means the sum of the Bank's permanent capital, the 
amount paid-in for its Class A stock, the amount of any general 
allowances for losses, and the amount of any other instruments 
indentified in a Bank's capital plan that the Director has determined to 
be available to absorb losses incurred by such Bank. For a Bank that has 
issued neither Class A nor Class B stock, the Bank's total capital shall 
be the measure of capital used to determine compliance with its minimum 
capital requirement.



Sec. 1229.2  Determination of a Bank's capital classification.

    (a) Quarterly determination. The Director shall determine the 
capital classification for each Bank no less often than once a quarter 
based on the capital classifications in Sec. 1229.3 of this subpart. 
The Director may make a determination with regard to a capital 
classification for a Bank more often than the minimum required under 
this paragraph or make a determination for one or more Banks without 
making a determination for all the Banks.
    (b) Notification to a Bank. Before finalizing any action to classify 
a Bank under this section, the Director shall provide a Bank written 
notice describing the proposed action and an opportunity to submit 
information that the Bank considers relevant to the proposed action in 
accordance with Sec. 1229.12 of this subpart.
    (c) Notification to the FHFA. A Bank shall provide written 
notification within ten calendar days of any event or development that 
has caused or is likely to cause its permanent or total capital to fall 
below the level necessary to maintain its capital classification at the 
level assigned in the most recent capital classification or 
reclassification determination by the Director or that is contained in 
the most recent notice of a proposed capital classification or 
reclassification provided under Sec. 1229.12(a) of this subpart.



Sec. 1229.3  Criteria for a Bank's capital classification.

    (a) Adequately capitalized. Except where the Director has exercised 
authority to reclassify a Bank, a Bank shall be considered adequately 
capitalized if, at the time of the determination under Sec. 1229.2(a) 
of this subpart,

[[Page 141]]

the Bank has sufficient permanent and total capital, as applicable, to 
meet or exceed its risk-based and minimum capital requirements.
    (b) Undercapitalized. Except where the Director has exercised 
authority to reclassify a Bank, a Bank shall be considered 
undercapitalized if, at the time of the determination under Sec. 
1229.2(a) of this subpart, the Bank does not have sufficient permanent 
or total capital, as applicable, to meet any one or more of its risk-
based or minimum capital requirements but such deficiency is not of a 
magnitude to classify the Bank as significantly undercapitalized or 
critically undercapitalized.
    (c) Significantly undercapitalized. Except where the Director has 
exercised authority to reclassify a Bank, a Bank shall be considered 
significantly undercapitalized if, at the time of the determination 
under Sec. 1229.2(a) of this subpart, the amount of permanent or total 
capital held by the Bank is less than 75 percent of what is required to 
meet any one of its risk-based or minimum capital requirements but the 
magnitude of the Bank's deficiency in total capital is not sufficient to 
classify it as critically undercapitalized.
    (d) Critically undercapitalized. Except where the Director has 
exercised authority to reclassify a Bank, a Bank shall be considered 
critically undercapitalized if, at the time of the determination under 
Sec. 1229.2(a) of this subpart, the total capital held by the Bank is 
less than or equal to the critical capital level for a Bank as defined 
under Sec. 1229.1 of this subpart.



Sec. 1229.4  Reclassification by the Director.

    (a) Discretionary reclassification. Where the Director determines 
that any of the grounds described in paragraph (b) of this section 
exist, the Director may reclassify a Bank as:
    (1) Undercapitalized, if it is otherwise classified as adequately 
capitalized;
    (2) Significantly undercapitalized, if it is otherwise classified as 
undercapitalized; or
    (3) Critically undercapitalized if it is otherwise classified as 
significantly undercapitalized.
    (b) Grounds for discretionary reclassification. Notwithstanding any 
other provision of this subpart, the Director may at any time reclassify 
a Bank under this section if:
    (1) The Director determines in writing that:
    (i) The Bank is engaging in conduct that could result in the rapid 
depletion of permanent or total capital;
    (ii) The value of collateral pledged to the Bank has decreased 
significantly; or
    (iii) The value of property subject to mortgages owned by the Bank 
has decreased significantly.
    (2) The Director determines, after notice to the Bank and 
opportunity for an informal hearing before the Director, that a Bank is 
in an unsafe and unsound condition; or
    (3) The Director finds, under Sec. 1371(b) of Safety and Soundness 
Act (12 U.S.C. 4631(b)), that the Bank is engaging in an unsafe and 
unsound practice because the Bank's asset quality, management, earnings 
or liquidity were found to be less than satisfactory during the most 
recent examination, and any deficiency has not been corrected.
    (c) Procedures. Before finalizing any action to reclassify a Bank 
under this section, the Director shall provide a Bank written notice 
describing the proposed action and an opportunity to submit information 
that the Bank considers relevant to the Director's proposed action in 
accordance with Sec. 1229.12 of this subpart.
    (d) Duration. Any condition, action or inaction by a Bank that is 
the basis for a decision to reclassify a Bank under this section or 
under any other authority provided the Director may be considered by the 
Director and form the basis of further, subsequent actions to reclassify 
the Bank until such time as the Bank remedies such condition or takes 
necessary action to correct such situation to the satisfaction of the 
Director.
    (e) Reservation of authority. Nothing in this section shall prevent 
the Director from exercising any other authority under the Safety and 
Soundness Act, the Bank Act or any regulation to reclassify a Bank for 
reasons not set forth in paragraph (b) of this section or to take any 
other action against a Bank.

[[Page 142]]



Sec. 1229.5  Capital distributions for adequately capitalized Banks.

    (a) Restriction. An adequately capitalized Bank may not make a 
capital distribution if after doing so the Bank's capital would be 
insufficient to maintain a classification of adequately capitalized. A 
Bank may not make a capital distribution if such distribution would 
violate any restriction on the redemption or repurchase of capital stock 
or the payment of a dividend set forth in section 6 of the Bank Act (12 
U.S.C. 1426) and any other applicable regulation.
    (b) Exception. Notwithstanding the restriction in paragraph (a) of 
this section, the Director may permit a Bank to repurchase or redeem its 
shares of stock if the transaction is made in connection with the 
issuance of additional Bank shares or obligations in at least an 
equivalent amount to the shares that are redeemed or repurchased and 
will reduce the Bank's financial obligations or otherwise improve its 
financial condition. Any transaction under this paragraph also must 
conform with any restriction on the redemption or repurchase of Bank 
stock set forth in section 6 of the Bank Act (12 U.S.C. 1426) and in any 
other applicable regulation.



Sec. 1229.6  Mandatory actions applicable to undercapitalized Banks.

    (a) Mandatory Actions by the Bank. A Bank that is classified as 
undercapitalized shall:
    (1) Submit to the Director for approval a capital restoration plan 
that complies with the the requirements and procedures established by 
Sec. 1229.11 of this part and receive approval from the Director for 
such plan;
    (2) Fulfill all terms, conditions and obligations contained in the 
capital restoration plan as approved by the Director;
    (3) Not make any capital distribution that would result in the Bank 
being reclassified as significantly undercapitalized or critically 
undercapitalized, nor make a capital distribution if such distribution 
would violate any restriction on the redemption or repurchase of capital 
stock or the declaration or payment of a dividend set forth in section 6 
of the Bank Act (12 U.S.C. 1426) or in any other applicable regulation;
    (4) Not permit its average total assets in any calendar quarter to 
exceed its average total assets during the preceding calendar quarter, 
where such average is calculated based on the total amount of assets 
held by the Bank for each day in a quarter, unless:
    (i) The Director has approved the Bank's capital restoration plan; 
and
    (ii) The Director determines that:
    (A) The increase in total assets is consistent with the approved 
capital restoration plan; and
    (B) The ratio of tangible equity to the Bank's total assets is 
increasing at a rate sufficient to enable the Bank to become adequately 
capitalized within a reasonable time and consistent with any schedule 
established in the capital restoration plan; and
    (5) Not acquire, directly or indirectly, an equity interest in any 
operating entity (other than as necessary to enforce a security interest 
granted to the Bank) nor engage in any new business activity unless:
    (i) The Director has approved the Bank's capital restoration plan, 
the Bank is implementing the capital restoration plan and the Director 
determines that proposed acquisition or activity will further 
achievement of the goals set forth in that plan; or
    (ii) The Director determines that the proposed acquisition or 
activity will be consistent with the safe and sound operation of the 
Bank and will further the Bank's compliance with its risk-based and 
minimum capital requirements in a reasonable period of time.
    (b) Mandatory reclassification by the Director. The Director shall 
reclassify an undercapitalized Bank as significantly undercapitalized 
if:
    (1) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of this subpart and 
within the time frame required.
    (2) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (3) The Director determines that the Bank has failed in any material 
respect to comply with its approved capital restoration plan or fulfill 
any schedule for action established by that plan.

[[Page 143]]

    (c) Monitoring. The Director shall monitor the condition of any 
undercapitalized Bank and monitor the Bank's compliance with the capital 
restoration plan and any restrictions imposed under this section or 
Sec. 1229.7 of this subpart. As part of this process, the Director 
shall review the capital restoration plan and any restrictions or 
requirements imposed on the undercapitalized Bank to determine whether 
such plan, restrictions or requirements are consistent with the safe and 
sound operation of the Bank and will further the Bank's compliance with 
its risk-based and minimum capital requirements in a reasonable period 
of time.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.7  Discretionary actions applicable to undercapitalized Banks.

    (a) Discretionary safeguards. The Director may take any action with 
regard to an undercapitalized Bank that may be taken with regard to a 
significantly undercapitalized Bank under section 1366 of the Safety and 
Soundness Act (12 U.S.C. 4616) or Sec. 1229.7 or Sec. 1229.8 of this 
subpart if the Director determines that such action is necessary to 
assure the safe and sound operation of the Bank and the Bank's 
compliance with its risk-based and minimum capital requirements in a 
reasonable period of time.
    (b) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such action in 
accordance with Sec. 1229.12 of this subpart.



Sec. 1229.8  Mandatory actions applicable to significantly 
undercapitalized Banks.

    A Bank that is classified as significantly undercapitalized:
    (a) Shall submit to the Director for approval a capital restoration 
plan that complies with the requirements and procedures established by 
Sec. 1229.11 of this part and receive approval from the Director for 
such plan;
    (b) Fulfill all terms, conditions and obligations contained in the 
capital restoration plan once the plan is approved by the Director;
    (c) Shall not make any capital distribution that would result in the 
Bank being reclassified as critically undercapitalized or that would 
violate any restriction on the redemption or repurchase of capital stock 
or the payment of a dividend set forth in section 6 of the Bank Act (12 
U.S.C. 1426) or any applicable regulation;
    (d) Shall not make any capital distribution not otherwise prohibited 
under paragraph (c) of this section absent the prior written approval of 
the Director, provided that the Director may approve such distribution 
only if the Director determines that:
    (1) The capital distribution will enhance the ability of the Bank to 
meet its risk-based and minimum capital requirements promptly;
    (2) The capital distribution will contribute to the long-term 
financial safety and soundness of the Bank; or
    (3) The capital distribution is otherwise in the public interest;
    (e) Shall not without prior written approval of the Director pay a 
bonus to any executive officer, provided that for purposes of this 
paragraph a bonus shall include any amount paid or accruing to an 
executive officer under a profit sharing arrangement;
    (f) Shall not without the prior written approval of the Director 
compensate an executive officer at a rate exceeding the average rate of 
compensation of that officer during the 12 months preceding the calendar 
month in which the Bank became significantly undercapitalized, provided 
however, that for purposes of calculating the executive officer's 
average rate of compensation, such compensation shall not include any 
bonus or profit sharing paid or accruing to the officer during the 12 
month period;
    (g) Comply with Sec. 1229.6(a)(4) and (a)(5) of this subpart; and
    (h) Comply with any on-going restrictions or obligations that were 
imposed on the Bank by the Director under Sec. 1229.7 of this subpart.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]

[[Page 144]]



Sec. 1229.9  Discretionary actions applicable to significantly 
undercapitalized Banks.

    (a) Actions by the Director. The Director shall carry out this 
section by taking, at any time, one or more of the following actions 
with respect to a significantly undercapitalized Bank:
    (1) Limit the increase in any obligations or class of obligations of 
the Bank, including any off-balance sheet obligations. Such limitation 
may be stated in an absolute dollar amount, as a percentage of current 
obligations or in any other form chosen by the Director;
    (2) Reduce the amount of any obligations or class of obligations 
held by the Bank, including any off-balance sheet obligations. Such 
reduction may be stated in an absolute dollar amount, as a percentage of 
current obligations or in any other form chosen by the Director;
    (3) Limit the increase in, or prohibit the growth of any asset or 
class of assets held by the Bank. Such limitation may be stated in an 
absolute dollar amount, as a percentage of current assets or in any 
other form chosen by the Director;
    (4) Reduce the amount of any asset or class of asset held by the 
Bank. Such reduction may be stated in an absolute dollar amount, as a 
percentage of current obligations or in any other form chosen by the 
Director;
    (5) Acquire new capital in the form and amount determined by the 
Director, which specifically may include requiring a Bank to increase 
its level of retained earnings;
    (6) Modify, limit or terminate any activity of the Bank that the 
Director determines creates excessive risk;
    (7) Take steps to improve the management at the Bank by:
    (i) Ordering a new election for the Bank's board of directors in 
accordance with procedures established by the Director;
    (ii) Dismissing particular directors or executive officers, in 
accordance with section 1366(b)(5)(B) of the Safety and Soundness Act 
(12 U.S.C. 4616(b)(5)(B)), who held office for more than 180 days 
immediately prior to the date on which the Bank became undercapitalized, 
provided further that such dismissals shall not be considered removal 
pursuant to an enforcement action under section 1377 of the Safety and 
Soundness Act (12 U.S.C. 4636a) and shall not be subject to the 
requirements necessary to remove an officer or director under that 
section; or
    (iii) Ordering the Bank to hire qualified executive officers, the 
hiring of whom, prior to employment by the Bank and at of the option of 
the Director, may be subject to review and approval by the Director; or
    (8)(i) Reclassify a significantly undercapitalized Bank as 
critically undercapitalized if:
    (A) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of this part and within 
the time frame required;
    (B) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (C) The Director determines that the Bank has failed to make 
reasonable, good faith efforts to comply with its approved capital 
restoration plan and fulfill any schedule established by that plan.
    (ii) Subject to paragraph (c) of this section, the Director may 
reclassify a significantly undercapitalized Bank under paragraph 
(a)(8)(i) of this section at any time the grounds for such action exist, 
notwithstanding the fact that such grounds had formed the basis on which 
the Director reclassified a Bank from undercapitalized to significantly 
undercapitalized.
    (b) Additional safeguards. The Director may require a significantly 
undercapitalized Bank to take any other action not specifically listed 
in this section if the Director determines such action will help ensure 
the safe and sound operation of the Bank and the Bank's compliance with 
its risk-based and minimum capital requirements in a reasonable period 
of time more than any action specifically authorized under paragraph (a) 
of this section.
    (c) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such

[[Page 145]]

action in accordance with Sec. 1229.12 of this subpart.



Sec. 1229.10  Actions applicable to critically undercapitalized Banks.

    (a) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank at any time after the 
Director determines that the Bank is, or the Director otherwise 
exercises authority to reclassify the Bank as, critically 
undercapitalized.
    (b) Periodic determination--(1) Determination. Not later than 30 
calendar days after the Director first determines that a Bank is, or the 
Director otherwise exercises authority to reclassify the Bank as, 
critically undercapitalized, and a least once during each succeeding 30-
day calendar period, the Director make a determination in writing as to 
whether:
    (i) The assets of the Bank are, and during the preceding 60 calendar 
days have been, less than its obligations to its creditors and others, 
provided that the Director shall consider as an obligation only that 
amount of outstanding consolidated obligations for which the Bank is 
primary obligor or for which the Bank has been ordered to make payments 
of principal or interest on behalf of another Bank, or is actually 
making payments of principal or interest on behalf of another Bank; or
    (ii) The Bank is not, and during the previous 60 calendar days has 
not been paying its debts on a regular basis as such debts become due, 
provided that this provision does not apply to any unpaid debts that are 
the subject of a bona fide dispute.
    (2) Mandatory receivership. If the Director determines that the 
conditions described in either paragraph (b)(1)(i) or (b)(1)(ii) of this 
section applies to a Bank, the Director shall appoint the FHFA as 
receiver for the Bank. The appointment of the FHFA as receiver under 
this paragraph shall immediately terminate any conservatorship 
established for the Bank.
    (3) Determination not required. A determination under paragraph 
(b)(1) of this section shall not be required during any period in which 
the FHFA serves as receiver for a Bank.
    (c) Judicial review. If the Director appoints the FHFA as 
conservator or receiver of a Bank under paragraph (a) or (b)(2) of this 
section, the Bank may within 30 days of such appointment bring an action 
in the United States district court for the judicial district in which 
the Bank was established pursuant to section 3 of the Bank Act (12 
U.S.C. 1423) or in the United States District Court for the District of 
Columbia, for an order requiring the FHFA to remove itself as 
conservator or receiver.
    (d) Other applicable actions. Until such time as FHFA is appointed 
as conservator or receiver for a critically undercapitalized Bank, a 
critically undercapitalized Bank shall be subject to all mandatory 
restrictions or obligations applicable to a significantly 
undercapitalized Bank under Sec. 1229.8 of this subpart and will remain 
subject to any on-going restrictions or obligations that the Director 
imposed on the Bank under Sec. 1229.7 or Sec. 1229.9 of this subpart, 
or any restrictions or obligations that are applicable to the Bank under 
the terms of an approved capital restoration plan.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.11  Capital restoration plans.

    (a) Contents. Each capital restoration plan submitted by a Bank 
shall set forth a plan to restore its permanent and total capital to 
levels sufficient to fulfill its risk-based and minimum capital 
requirements within a reasonable period of time. Such plan must be 
feasible given general market conditions and the conditions of the Bank 
and, at a minimum, shall:
    (1) Describe the actions the Bank will take, including any changes 
that the Bank will make to member stock purchase requirements, to assure 
that it will become adequately capitalized within the meaning of Sec. 
1229.3(a) of this subpart and, if appropriate, to resolve any structural 
or long term causes for the capital deficiency;
    (2) Specify the level of permanent and total capital the Bank will 
achieve and maintain and provide quarterly

[[Page 146]]

projections indicating how each component of total and permanent capital 
and the major components of income, assets and liabilities are expected 
to change over the term of the plan;
    (3) Specify the types and levels of activities in which the Bank 
will engage during the term of the plan, including any new business 
activities that it intends to begin during such term;
    (4) Describe any other actions the Bank intends to take to comply 
with any other requirements imposed on it under this subpart A of part 
1229;
    (5) Provide a schedule which sets forth dates for meeting specific 
goals and benchmarks and taking other actions described in the proposed 
capital restoration plan, including setting forth a schedule for it to 
restore its permanent and total capital to levels necessary for meeting 
its risk-based and minimum capital requirements; and
    (6) Address such other items that the Director shall provide in 
writing in advance of such submission.
    (b) Deadline for submission. A Bank must submit a proposed capital 
restoration plan no later than 15 business-days after it receives 
written notification that such a plan is required either because the 
notice specifically states that the Director has required the submission 
of a plan or the notice indicates that the Bank's capital classification 
or reclassification is to a category for which a capital restoration 
plan is a mandatory action required of the Bank. The Director may extend 
this deadline if the Director determines that such extension is 
necessary. Any such extension shall be in writing and provide a specific 
date by which the Bank must submit its proposed capital restoration 
plan.
    (c) Review of the plan by the Director. The Director shall have 30 
calendar days from the date the Bank submits a proposed capital 
restoration plan to approve or disapprove the plan. The Director may 
extend the period for consideration of a capital restoration plan for a 
single 30 calendar day period by providing the Bank with written 
notification that the decision deadline has been extended. The Director 
shall provide the Bank with written notification of the decision to 
approve or not approve a proposed capital restoration plan. If the 
Director does not approve the capital restoration plan, the written 
notification of such decision shall provide the reasons for the 
disapproval.
    (d) Resubmission. If the Director does not approve the Bank's 
proposed capital restoration plan, the Bank shall submit a new capital 
restoration plan acceptable to the Director within 30 calendar days of 
the date that the Bank was notified of the disapproval. The Director may 
extend the period for the Bank's submission of a new acceptable capital 
restoration plan upon a determination that such extension is in the 
public interest. The Director shall provide the Bank written notice of 
the extension and include in such notice the date by which the Bank must 
submit an acceptable plan.
    (e) Amendments. The Director, in his or her sole discretion, may 
approve amendments to an approved capital restoration plan if, after 
consideration of changes in conditions of the Bank, changes in market 
conditions and other relevant factors, the Director determines that such 
amendments are consistent with the restoration of the Bank's capital to 
levels necessary to meet its risk-based and minimum capital requirements 
in a reasonable period of time and with the safe and sound operations of 
the Bank.
    (f) Effectiveness of provisions. A Bank is obligated to implement 
and fulfill all provisions of an approved capital restoration plan. 
Unless expressly addressed by the terms of the capital restoration plan, 
a Bank remains bound by each and every obligation and requirement set 
forth in the approved capital restoration plan until such requirement or 
obligation is amended under paragraph (e) of this section or terminated 
in writing by the Director.
    (g) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank that is classified as 
undercapitalized or significantly undercapitalized if the Bank fails to 
submit a capital restoration plan acceptable to the Director within the 
time frames established by this section or if the Bank materially fails 
to implement any capital restoration

[[Page 147]]

plan that has been approved by the Director. A Bank may within 30 days 
of such appointment bring an action in the United States district court 
for the judicial district in which the Bank is established pursuant to 
section 3 of the Bank Act (12 U.S.C. 1423) or in the United States 
District Court for the District of Columbia, for an order requiring the 
FHFA to remove itself as conservator or receiver.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.12  Procedures related to capital classification and
other actions.

    (a) Classification or reclassification of a Bank. Before finalizing 
any decision to classify a Bank under Sec. 1229.2(a) of this subpart or 
reclassify the Bank under Sec. 1229.4(a) of this subpart, the Director 
shall provide the Bank with written notification of the proposed action 
that states the reasons for the proposed action and describes the 
information on which the proposed action is based. The notice required 
under this paragraph may be combined with the notice of a proposed 
supervisory action required under paragraph (b) of this section. The 
Director also may combine a notice informing the Bank of its capital 
classification and simultaneously informing the Bank that the Director 
intends to reclassify a Bank to a lower capital classification category.
    (b) Notice of a supervisory action. Before finalizing any action or 
actions authorized under Sec. 1229.7 or Sec. 1229.9 of this subpart, 
the Director shall provide the Bank with written notification of the 
proposed action that states the reasons for the proposed action and 
describes the information on which the proposed action is based. The 
notice required under this paragraph may be combined with the notice of 
a proposed action to classify or reclassify the Bank required under 
paragraph (a) of this section.
    (c) Bank response. During the 30 calendar day period beginning on 
the date that the Bank is provided notice under paragraph (a) or (b) of 
this section of a proposed action or actions, a Bank may submit to the 
Director any information that the Bank considers relevant or appropriate 
for the Director to consider in determining whether to finalize the 
proposed action. The Director may, in his or her sole discretion, 
convene an informal hearing with representatives of the Bank to receive 
or discuss any such information. The Director, in his or her sole 
discretion, also may extend the period in which the Bank may respond to 
a notice for an additional 30 calendar days for good cause, or shorten 
such comment period if the Director determines the condition of the Bank 
requires faster action or a shorter comment period or if the Bank 
consents to a shorter comment period. The Director shall inform the Bank 
in writing, which may be provided as part of the notice required under 
paragraphs (a) or (b) of this section, of any decision to extend or 
shorten the comment period. The failure of a Bank to provide information 
during the allotted comment period will waive any right of the Bank to 
comment on the proposed action.
    (d) Final action. At the earlier of the completion of the comment 
period established under paragraph (c) or the receipt of information 
provided by the Bank during such period, the Director shall determine 
whether to take the proposed action or actions that were the subject of 
the notice under paragraphs (a) or (b) of this section, after taking 
into consideration any information provided by the Bank. Such notice 
shall respond to any information submitted by the Bank. Any final order 
that the Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall take effect upon the Bank's receipt of the notice required 
under this paragraph, unless a different effective date is set forth in 
this notice, and shall remain in effect and binding on the Bank until 
terminated in writing by the Director or until any terms and conditions 
for termination, as set forth in the notice, have been met.
    (e) Final actions under this section. Any final decision that the 
Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall constitute an order under the Safety and Soundness Act. 
The Director in his or her discretion may apply to the United States

[[Page 148]]

District Court for the District of Columbia or to the United States 
district court for the judicial district in which the Bank in question 
is established pursuant to section 3 of the Bank Act (12 U.S.C. 1423) 
for the enforcement of such order, as allowed under Sec. 1375 of the 
Safety and Soundness Act (12 U.S.C. 4635) . In addition, a Bank or any 
executive officer or director of a Bank can be subject to enforcement 
action, including the imposition of civil monetary penalties, under 
Sec. 1371, Sec. 1372 or Sec. 1376 of the Safety and Soundness Act (12 
U.S.C. 4631, 4632, or 4636) for failure to comply with such an order.
    (f) Judicial review. A Bank that is not classified as critically 
undercapitalized may obtain judicial review of any final capital 
classification decision or of any final decision to take supervisory 
action made by the Director under Sec. 1229.2, Sec. 1229.4, Sec. 
1229.7 or Sec. 1229.9 in accordance with the requirements and 
procedures set forth in Sec. 1369D of the Safety and Soundness Act (12 
U.S.C. 4623).



                          Subpart B_Enterprises

    Authority: 12 U.S.C. 4513b, 4526, 4613, 4614, 4615, 4616, 4617.

    Source: 76 FR 35733, June 20, 2011, unless otherwise noted.



Sec. 1229.13  Definitions.

    For purposes of this subpart:
    Capital distribution means--
    (1) Any dividend or other distribution in cash or in kind made with 
respect to any shares of, or other ownership interest in, an Enterprise, 
except a dividend consisting only of shares of the Enterprise;
    (2) Any payment made by an Enterprise to repurchase, redeem, retire, 
or otherwise acquire any of its shares or other ownership interests, 
including any extension of credit made to finance an acquisition by the 
Enterprise of such shares or other ownership interests, except to the 
extent the Enterprise makes a payment to repurchase its shares for the 
purpose of fulfilling an obligation of the Enterprise under an employee 
stock ownership plan that is qualified under the Internal Revenue Code 
of 1986 (26 U.S.C. 401 et seq.) or any substantially equivalent plan as 
determined by the Director of FHFA in writing in advance; and
    (3) Any payment of any claim, whether or not reduced to judgment, 
liquidated or unliquidated, fixed, contingent, matured or unmatured, 
disputed or undisputed, legal, equitable, secured or unsecured, arising 
from rescission of a purchase or sale of an equity security of an 
Enterprise or for damages arising from the purchase, sale, or retention 
of such a security.



PART 1231_GOLDEN PARACHUTE PAYMENTS--Table of Contents



Sec.
1231.1 Purpose.
1231.2 Definitions.
1231.3-1231.4 [Reserved]
1231.5 Factors to be taken into account.

    Authority: 12 U.S.C. 4518(e).

    Source: 73 FR 53357, Sept. 16, 2008, unless otherwise noted.



Sec. 1231.1  Purpose.

    The purpose of this part is to implement section 1318(e) of the Act 
by setting forth the standards that the Director will take into 
consideration in determining whether to limit or prohibit golden 
parachute payments to entity-affiliated parties.

[73 FR 54673, Sept. 23, 2008]



Sec. 1231.2  Definitions.

    The following definitions apply to the terms used in this part:
    (a) Act means the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended by the 
Federal Housing Finance Regulatory Reform Act of 2008, enacted under 
Division A of the HERA.
    (b) Director means the Director of FHFA or his or her designee.
    (c) Enterprise means the Federal National Mortgage Association and 
the Federal Home Loan Mortgage Corporation (collectively, Enterprises) 
and, except as provided by the Director, any affiliate thereof.
    (d) Entity-affiliated party means--
    (1) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;

[[Page 149]]

    (2) Any shareholder, affiliate, consultant, or joint venture partner 
of a regulated entity, and any other person, as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Bank shall not be deemed to have participated in the affairs of 
that Bank solely by virtue of being a shareholder of, and obtaining 
advances from, that Bank;
    (3) Any independent contractor for a regulated entity (including any 
attorney, appraiser, or accountant), if--
    (i) The independent contractor knowingly or recklessly participates 
in--
    (A) Any violation of any law or regulation;
    (B) Any breach of fiduciary duty; or
    (C) Any unsafe or unsound practice; and
    (ii) Such violation, breach, or practice caused, or is likely to 
cause, more than a minimal financial loss to, or a significant adverse 
effect on, the regulated entity;
    (4) Any not-for-profit corporation that receives its principal 
funding, on an ongoing basis, from any regulated entity; and
    (5) The Office of Finance.
    (e) Federal Home Loan Bank means a bank established under the 
Federal Home Loan Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    (f)(1) Golden parachute payment means any payment (or any agreement 
to make any payment) in the nature of compensation by any regulated 
entity for the benefit of any current entity-affiliated party pursuant 
to an obligation of such regulated entity that--
    (i) Is contingent on, or by its terms is payable on or after, the 
termination of such party's primary employment or affiliation with the 
regulated entity; and
    (ii) Is received on or after the date on which--
    (A) The regulated entity became insolvent;
    (B) Any conservator or receiver is appointed for such regulated 
entity; or
    (C) The Director determines that the regulated entity is in a 
troubled condition.
    (2) The term ``golden parachute payment'' shall not include:
    (i) Any payment made pursuant to a pension or retirement plan which 
is qualified (or is intended within a reasonable period of time to be 
qualified) under section 401 of the Internal Revenue Code of 1986 (26 
U.S.C. 401) or pursuant to a pension or other retirement plan which is 
governed by the laws of any foreign country;
    (ii) Any payment made pursuant to a bona fide deferred compensation 
plan or arrangement which the Director determines, by regulation or 
order, to be permissible; or
    (iii) Any payment made by reason of death or by reason of 
termination caused by the disability of an entity-affiliated party.
    (3) Any payment which would be a golden parachute payment but for 
the fact that such payment was made before the date referred to in 
paragraph (f)(1)(ii) shall be treated as a golden parachute payment if 
the payment was made in contemplation of the occurrence of an event 
described that paragraph.
    (g) FHFA means the Federal Housing Finance Agency.
    (h) HERA means the Housing and Economic Recovery Act of 2008, Public 
Law No. 110-289, 122 Stat. 2654 (July 30, 2008).
    (i) Office of Finance means the Office of Finance of the Federal 
Home Loan Bank System (or any successor thereto).
    (j) Regulated entity means the Federal National Mortgage Association 
and any affiliate thereof; the Federal Home Loan Mortgage Corporation 
and any affiliate thereof; or any Federal Home Loan Bank; the term 
``regulated entities'' means, collectively, the Federal National 
Mortgage Association and any affiliate thereof; the Federal Home Loan 
Mortgage Corporation and any affiliate thereof; and any Federal Home 
Loan Bank.
    (k) Troubled condition means a regulated entity that--
    (1) Is subject to a cease-and-desist order or written agreement 
issued by the FHFA that requires action to improve the financial 
condition of the regulated entity or is subject to a proceeding 
initiated by the Director,

[[Page 150]]

which contemplates the issuance of an order that requires action to 
improve the financial condition of the regulated entity, unless 
otherwise informed in writing by the FHFA; or
    (2) Is informed in writing by the Director that it is in a troubled 
condition for purposes of the requirements of this part on the basis of 
the regulated entity's most recent report of examination or other 
information available to the FHFA.
    (l)-(n) [Reserved]



Sec. Sec. 1231.3--1231.4  [Reserved]



Sec. 1231.5  Factors to be taken into account.

    In determining whether to prohibit or limit any golden parachute 
payment, the Director shall consider the following factors--
    (a) Whether there is a reasonable basis to believe that the entity-
affiliated party has committed any fraudulent act or omission, breach of 
trust or fiduciary duty, or insider abuse with regard to the regulated 
entity that has had a material effect on the financial condition of the 
regulated entity;
    (b) Whether there is a reasonable basis to believe that the entity-
affiliated party is substantially responsible for the insolvency of the 
regulated entity, the appointment of a conservator or receiver for the 
regulated entity, or the troubled condition of the regulated entity (as 
defined in regulations prescribed by the Director);
    (c) Whether there is a reasonable basis to believe that the entity-
affiliated party has materially violated any applicable provision of 
Federal or State law or regulation that has had a material effect on the 
financial condition of the regulated entity;
    (d) Whether the entity-affiliated party was in a position of 
managerial or fiduciary responsibility;
    (e) The length of time that the party was affiliated with the 
regulated entity, and the degree to which the payment reasonably 
reflects compensation earned over the period of employment and the 
compensation involved represents a reasonable payment for services 
rendered; and
    (f) Any other factor the Director determines relevant to the facts 
and circumstances surrounding the golden parachute payment, including 
any fraudulent act or omission, breach of fiduciary duty, violation of 
law, rule, regulation, order, or written agreement, and the level of 
willful misconduct, breach of fiduciary duty, and malfeasance on the 
part of an entity-affiliated party.

[73 FR 53357, Sept. 16, 2008, as amended at 73 FR 54673, Sept. 23, 2008; 
74 FR 5102, Jan. 29, 2009]



PART 1233_REPORTING OF FRAUDULENT FINANCIAL INSTRUMENTS--
Table of Contents



Sec.
1233.1 Purpose.
1233.2 Definitions.
1233.3 Reporting.
1233.4 Internal controls, policies, procedures, and training.
1233.5 Protection from liability for reports.
1233.6 Supervisory action.

    Authority: 12 U.S.C. 4511, 4513, 4514, 4526, 4642.

    Source: 75 FR 4258, Jan. 27, 2010, unless otherwise noted.



Sec. 1233.1  Purpose.

    The purpose of this part is to implement the Safety and Soundness 
Act by requiring each regulated entity to report to FHFA upon discovery 
that it has purchased or sold a fraudulent loan or financial instrument, 
or suspects a possible fraud relating to the purchase or sale of any 
loan or financial instrument. In addition, each regulated entity must 
establish and maintain internal controls, policies, procedures, and 
operational training to discover such transactions.



Sec. 1233.2  Definitions.

    The following definitions apply to the terms used in this part:
    Bank or Federal Home Loan Bank means a Bank established under the 
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    Director means the Director of FHFA or his or her designee.
    Enterprise means the Federal National Mortgage Association, the 
Federal Home Loan Mortgage Corporation

[[Page 151]]

(collectively, Enterprises), and any affiliate thereof.
    Entity-affiliated party means--
    (1) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;
    (2) Any shareholder, affiliate, consultant, or joint venture partner 
of a regulated entity, and any other person, as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Federal Home Loan Bank shall not be deemed to have participated in 
the affairs of that Federal Home Loan Bank solely by virtue of being a 
shareholder of, and obtaining advances from, that Federal Home Loan 
Bank;
    (3) Any independent contractor for a regulated entity (including any 
attorney, appraiser, or accountant);
    (4) Any not-for-profit corporation that receives its principal 
funding, on an ongoing basis, from any regulated entity; and
    (5) The Office of Finance.
    Financial instrument means any legally enforceable agreement, 
certificate, or other writing, in hardcopy or electronic form, having 
monetary value including, but not limited to, any agreement, 
certificate, or other writing evidencing an asset pledged as collateral 
to a Bank by a member to secure an advance by the Bank to that member.
    Fraud means a misstatement, misrepresentation, or omission that 
cannot be corrected and that was relied upon by a regulated entity to 
purchase or sell a loan or financial instrument.
    Possible fraud means that a regulated entity has a reasonable 
belief, based upon a review of information available to the regulated 
entity, that fraud may be occurring or has occurred.
    Purchased or sold or relating to the purchase or sale means any 
transaction involving a financial instrument including, but not limited 
to, any purchase, sale, other acquisition, or creation of a financial 
instrument by the member of a Bank to be pledged as collateral to the 
Bank to secure an advance by the Bank to that member, the pledging by a 
member to a Bank of such financial instrument to secure such an advance, 
the making of a grant by a Bank under its affordable housing program or 
community investment program, and the effecting of a wire transfer or 
other form of electronic payments transaction by the Bank.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, and any Federal Home Loan Bank; the term 
``regulated entities'' means, collectively, the Federal National 
Mortgage Association and any affiliate thereof, the Federal Home Loan 
Mortgage Corporation and any affiliate thereof, and the Federal Home 
Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Federal 
Housing Finance Regulatory Reform Act of 2008, Division A of the Housing 
and Economic Recovery Act of 2008, Public Law 110-289, 122 Stat. 2654 
(2008).



Sec. 1233.3  Reporting.

    (a) Timeframe for reporting. (1) A regulated entity shall submit to 
the Director a timely written report upon discovery by the regulated 
entity that it has purchased or sold a fraudulent loan or financial 
instrument, or suspects a possible fraud relating to the purchase or 
sale of any loan or financial instrument.
    (2) In addition to submitting a report in accordance with paragraph 
(a)(1) of this section, in any situation that would have a significant 
impact on the regulated entity, the regulated entity shall immediately 
report any fraud or possible fraud to the Director by telephone or 
electronic communication.
    (b) Format for reporting. (1) The report shall be in such format and 
shall be filed in accordance with such procedures that the Director may 
prescribe.
    (2) The Director may require a regulated entity to provide such 
additional or continuing information relating to such fraud or possible 
fraud that the Director deems appropriate.
    (3) A regulated entity may satisfy the reporting requirements of 
this section by submitting the required information on a form or in 
another format used by any other regulatory agency,

[[Page 152]]

provided it has first obtained the prior written approval of the 
Director.
    (c) Retention of records. A regulated entity or entity-affiliated 
party shall maintain a copy of any report submitted to the Director and 
the original or business record equivalent of any supporting 
documentation for a period of five years from the date of submission.
    (d) Nondisclosure. (1) A regulated entity or entity-affiliated party 
may not disclose to any person that it has submitted a report to the 
Director pursuant to this section, unless it has first obtained the 
prior written approval of the Director.
    (2) The restriction in paragraph (d)(1) of this section does not 
prohibit a regulated entity from--
    (i) Disclosing or reporting such fraud or possible fraud pursuant to 
legal requirements, including reporting to appropriate law enforcement 
or other governmental authorities; or
    (ii) Taking any legal or business action it may deem appropriate, 
including any action involving the party or parties connected with the 
fraud or possible fraud.
    (e) No waiver of privilege. A regulated entity does not waive any 
privilege it may possess under any applicable law as a consequence of 
reporting fraud or possible fraud under this part.



Sec. 1233.4  Internal controls, policies, procedures, and training.

    (a) In general. Each regulated entity shall establish and maintain 
adequate and efficient internal controls, policies, procedures, and an 
operational training program to discover and report fraud or possible 
fraud in connection with the purchase or sale of any loan or financial 
instrument.
    (b) Examination. The examination by FHFA of fraud reporting programs 
of each regulated entity includes an evaluation of the effectiveness of 
the internal controls, policies, procedures, and operational training 
program in place to minimize risks from fraud and to report fraud or 
possible fraud to FHFA in accordance with this regulation.



Sec. 1233.5  Protection from liability for reports.

    As provided by section 1379E of the Safety and Soundness Act (12 
U.S.C. 4642(b)), a regulated entity that, in good faith, submits a 
report pursuant to this part, and any entity-affiliated party, that, in 
good faith, submits or requires a person to submit a report pursuant to 
this part, shall not be liable to any person under any provision of law 
or regulation, any constitution, law, or regulation of any State or 
political subdivision of any State, or under any contract or other 
legally enforceable agreement (including any arbitration agreement) for 
such report, or for any failure to provide notice of such report to the 
person who is the subject of such report, or any other persons 
identified in the report.



Sec. 1233.6  Supervisory action.

    Failure by a regulated entity to comply with this part may subject 
the regulated entity or the board members, officers, or employees 
thereof to supervisory action by FHFA, including but not limited to, 
cease-and-desist proceedings and civil money penalties.



PART 1235_RECORD RETENTION FOR REGULATED ENTITIES AND OFFICE
OF FINANCE--Table of Contents



Sec.
1235.1 Purpose and scope.
1235.2 Definitions.
1235.3 Establishment and evaluation of a record retention program.
1235.4 Minimum requirements of a record retention program.
1235.5 Record hold.
1235.6 Access to records.
1235.7 Supervisory action.

    Authority: 12 U.S.C. 4511(b), 4513(a), 4513b(a)(10) and (11), 4526.

    Source: 76 FR 33127, June 8, 2011, unless otherwise noted.



Sec. 1235.1  Purpose and scope.

    The purpose of this part is to set forth minimum requirements for a 
record retention program for each regulated entity and the Office of 
Finance. The requirements are intended to further prudent management as 
well as to ensure that complete and accurate records of each regulated 
entity and

[[Page 153]]

the Office of Finance are readily accessible to FHFA.



Sec. 1235.2  Definitions.

    For purposes of this part, the term--
    Director means the Director of FHFA, or his or her designee.
    Electronic record means a record created, generated, communicated, 
or stored by electronic means.
    E-mail means a document created or received on a computer network 
for transmitting messages electronically, and any attachments which may 
be transmitted with the document.
    Employee means any officer or employee of a regulated entity or the 
Office of Finance.
    Federal Home Loan Bank means a Bank established under the Federal 
Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    FHFA means the Federal Housing Finance Agency.
    Financing Corporation means the entity established by the 
Competitive Equality Banking Act of 1987, as a mixed-ownership 
government corporation whose purpose is to function as a financing 
vehicle for the Federal Savings & Loan Insurance Corporation. The 
Financing Corporation has a board of directors consisting of the 
managing director of the Office of Finance and two Federal Home Loan 
Bank presidents.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Record means any information, whether generated internally or 
received from outside sources by a regulated entity or the Office of 
Finance, related to the conduct of the business of a regulated entity or 
the Office of Finance (which business, in the case of the Office of 
Finance, shall include any functions performed with respect to the 
Financing Corporation) or to legal or regulatory requirements, 
regardless of the following--
    (1) Form or format, including hard copy documents (e.g., files, 
logs, and reports), electronic documents (e.g., e-mail, databases, 
spreadsheets, PowerPoint presentations, electronic reporting systems, 
electronic tapes and back-up tapes, optical discs, CD-ROMS, and DVDs), 
and voicemail or recorded telephone line records;
    (2) Where the information is stored or located, including network 
servers, desktop or laptop computers and handheld computers, other 
wireless devices with text messaging capabilities, and on-site or off-
site at a storage facility;
    (3) Whether the information is maintained or used on regulated 
entity or Office of Finance equipment, or on personal or home computer 
systems of an employee; or
    (4) Whether the information is active or inactive.
    Record hold means a requirement, an order, or a directive from a 
regulated entity, the Office of Finance, or FHFA that the regulated 
entity or the Office of Finance is to retain records relating to a 
particular issue in connection with an actual or a potential FHFA 
examination, investigation, enforcement proceeding, or litigation of 
which the regulated entity or the Office of Finance has received notice 
from FHFA or otherwise has knowledge.
    Record retention schedule means a schedule that details the 
categories of records a regulated entity or the Office of Finance is 
required to retain and the corresponding retention periods. The record 
retention schedule includes all media, such as microfilm and machine-
readable computer records, for each record category.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, or any Federal Home Loan Bank; the term 
``regulated entities'' means, collectively, the Federal National 
Mortgage Association and any affiliate thereof, the Federal Home Loan 
Mortgage Corporation and any affiliate thereof, and the Federal Home 
Loan Banks.
    Retention period means the length of time that records must be kept 
before they are destroyed, as determined by the organization's record 
retention schedule. Records not authorized for destruction have a 
retention period of ``permanent.''
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial

[[Page 154]]

Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended.



Sec. 1235.3  Establishment and evaluation of a record retention program.

    (a) Establishment. Each regulated entity and the Office of Finance 
shall establish and maintain a written record retention program and 
provide a copy of such program to the Deputy Director of the Division of 
Enterprise Regulation, or his or her designee, or the Deputy Director 
for the Division of Federal Home Loan Bank Regulation, or his or her 
designee, as appropriate, within 180 days of the effective date of this 
part, and annually thereafter, and whenever a significant revision to 
the program has been made.
    (b) Evaluation. Management of each regulated entity and the Office 
of Finance shall evaluate in writing the adequacy and effectiveness of 
the record retention program at least every two years and provide a copy 
of the evaluation to the board of directors and the Director.



Sec. 1235.4  Minimum requirements of a record retention program.

    (a) General minimum requirements. The record retention program 
established and maintained by each regulated entity and the Office of 
Finance under Sec. 1235.3 shall:
    (1) Assure that retained records are complete and accurate;
    (2) Assure that the form of retained records and the retention 
period--
    (i) Are appropriate to support administrative, business, external 
and internal audit functions, and litigation of the regulated entity or 
the Office of Finance; and
    (ii) Comply with requirements of applicable laws and regulations, 
including this part;
    (3) Assign in writing the authorities and responsibilities for 
record retention activities for employees, including line managers and 
corporate management;
    (4) Include policies and procedures concerning record holds, 
consistent with Sec. 1235.5, and, as appropriate, integrate them with 
policies and procedures throughout the organization;
    (5) Include an accurate, current, and comprehensive record retention 
schedule that lists records by major categories, subcategories, record 
type, and retention period, which retention period is appropriate to the 
specific record and consistent with applicable legal, regulatory, 
fiscal, operational, and business requirements;
    (6) Include appropriate security and internal controls to protect 
records from unauthorized access and data alteration;
    (7) Provide for appropriate back-up and recovery of electronic 
records to ensure the same accuracy as the primary records;
    (8) Provide for a periodic testing of the ability to access records; 
and
    (9) Provide for the proper disposition of records.
    (b) Minimum storage requirements for electronic records. Electronic 
records, preferably searchable, must be maintained on immutable, non-
rewritable storage in a manner that provides for both ready access by 
any person who is entitled to access the records, including staff of 
FHFA, and accurate reproduction for later reference by transmission, 
printing or other means.
    (c) Communication and training. (1) The record retention program 
established and maintained by each regulated entity and the Office of 
Finance under Sec. 1235.3 shall provide for periodic training and 
communication throughout the organization.
    (2) The record retention program shall:
    (i) Provide for communication throughout the organization on record 
retention policies, procedures, and record retention schedule updates; 
and
    (ii) Provide for training of and notice to all employees on a 
periodic basis on their record retention responsibilities, including 
instruction regarding penalties provided by law for the unlawful removal 
or destruction of records. The record retention program also shall 
provide for training for the agents or independent contractors of a 
regulated entity or the Office of Finance, as appropriate, consistent 
with their respective roles and responsibilities to the regulated entity 
or the Office of Finance.

[[Page 155]]



Sec. 1235.5  Record hold.

    (a) Notification by FHFA. In the event that FHFA is requiring a 
record hold, FHFA shall notify the chief executive officer of the 
regulated entity or the Office of Finance. Regulated entities and the 
Office of Finance must have a written policy for handling notice of a 
record hold.
    (b) Notification by a regulated entity or the Office of Finance. The 
record retention program of a regulated entity and the Office of Finance 
shall--
    (1) Address how employees and, as appropriate, how agents or 
independent contractors consistent with their respective roles and 
responsibilities to the regulated entity or the Office of Finance, will 
receive prompt notification of a record hold;
    (2) Designate an individual to communicate specific requirements and 
instructions, including, when necessary, the instruction to cease 
immediately any otherwise permissible destruction of records; and
    (3) Provide that any employee and, as appropriate, any agent or 
independent contractor consistent with his or her respective role and 
responsibility to the regulated entity or Office of Finance, who has 
received notice of a potential investigation, enforcement proceeding, or 
litigation by FHFA involving the regulated entity or the Office of 
Finance or an employee, or otherwise has actual knowledge that an issue 
is subject to such an investigation, enforcement proceeding or 
litigation, shall notify immediately the legal department or the 
individual providing legal services as well as senior management of the 
regulated entity or the Office of Finance and shall retain any records 
that may be relevant in any way to such investigation, enforcement 
proceeding, or litigation.
    (c) Method of record retention during a record hold. The record 
retention program of each regulated entity and the Office of Finance 
shall address the method by which the regulated entity or the Office of 
Finance will retain records during a record hold. Specifically, the 
program shall describe the method for the continued preservation of 
electronic records, including e-mail, and, as applicable, the conversion 
of records from paper to electronic form as well as any alternative 
storage method.
    (d) Access to and retrieval of records during a record hold. The 
record retention program of each regulated entity or the Office of 
Finance shall ensure access to and retrieval of records by the regulated 
entity and the Office of Finance, and access, upon request, by FHFA, 
during a record hold. Such access shall be by reasonable means, 
consistent with the nature and availability of the records and existing 
information technology.



Sec. 1235.6  Access to records.

    Each regulated entity and the Office of Finance shall make its 
records available promptly upon request by FHFA, at a location and in a 
form and manner acceptable to FHFA.



Sec. 1235.7  Supervisory action.

    (a) Supervisory action. Failure by a regulated entity or the Office 
of Finance to comply with this part may subject the regulated entity or 
the Office of Finance or the board members, officers, or employees 
thereof to supervisory action by FHFA under the Safety and Soundness 
Act, including but not limited to cease-and-desist proceedings, 
temporary cease-and-desist proceedings, and civil money penalties.
    (b) No limitation of authority. This part does not limit or restrict 
the authority of FHFA to act under its safety and soundness mandate, in 
accordance with the Safety and Soundness Act. Such authority includes, 
but is not limited to, conducting examinations, requiring reports and 
disclosures, and enforcing compliance with applicable laws, rules, and 
regulations.



PART 1237_CONSERVATORSHIP AND RECEIVERSHIP--Table of Contents



Sec.
1237.1 Purpose and applicability.
1237.2 Definitions.

                            Subpart A_Powers

1237.3 Powers of the Agency as conservator or receiver.
1237.4 Receivership following conservatorship; administrative expenses.
1237.5 Contracts entered into before appointment of a conservator or 
          receiver.

[[Page 156]]

1237.6 Authority to enforce contracts.

                            Subpart B_Claims

1237.7 Period for determination of claims.
1237.8 Alternate procedures for determination of claims.
1237.9 Priority of expenses and unsecured claims.

                Subpart C_Limited-Life Regulated Entities

1237.10 Limited-life regulated entities.
1237.11 Authority of limited-life regulated entities to obtain credit.

                             Subpart D_Other

1237.12 Capital distributions while in conservatorship.
1237.13 Payment of Securities Litigation Claims while in 
          conservatorship.
1237.14 Golden parachute payments. [Reserved]

    Authority: 12 U.S.C. 4513b, 4526, 4617.

    Source: 76 FR 35733, June 20, 2011, unless otherwise noted.



Sec. 1237.1  Purpose and applicability.

    The provisions of this part shall apply to the appointment and 
operations of the Federal Housing Finance Agency (``Agency'') as 
conservator or receiver of a regulated entity. These provisions 
implement and supplement the procedures and process set forth in the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended, by the Housing and Economic Recovery Act of 2008 (HERA), 
Public Law 110-289 for conduct of a conservatorship or receivership of 
such entity.



Sec. 1237.2  Definitions.

    For the purposes of this part the following definitions shall apply:
    Agency means the Federal Housing Finance Agency (``FHFA'') 
established under 12 U.S.C. 4511, as amended.
    Authorizing statutes mean--
    (1) The Federal National Mortgage Association Charter Act,
    (2) The Federal Home Loan Mortgage Corporation Act, and
    (3) The Federal Home Loan Bank Act.
    Capital distribution has, with respect to a Bank, the definition 
stated in Sec. 1229.1 of this chapter, and with respect to an 
Enterprise, the definition stated in Sec. 1229.13 of this chapter.
    Compensation means any payment of money or the provision of any 
other thing of current or potential value in connection with employment.
    Conservator means the Agency as appointed by the Director as 
conservator for a regulated entity.
    Default; in danger of default:
    (1) Default means, with respect to a regulated entity, any official 
determination by the Director, pursuant to which a conservator or 
receiver is appointed for a regulated entity.
    (2) In danger of default means, with respect to a regulated entity, 
the definition under section 1303(8)(B) of the Safety and Soundness Act 
or applicable FHFA regulations.
    Director means the Director of the Federal Housing Finance Agency.
    Enterprise means the Federal National Mortgage Association and any 
affiliate thereof or the Federal Home Loan Mortgage Corporation and any 
affiliate thereof.
    Entity-affiliated party means any party meeting the definition of an 
entity-affiliated party under section 1303(11) of the Safety and 
Soundness Act or applicable FHFA regulations.
    Equity security of any person shall mean any and all shares, 
interests, rights to purchase or otherwise acquire, warrants, options, 
participations or other equivalents of or interests (however designated) 
in equity, ownership or profits of such person, including any preferred 
stock, any limited or general partnership interest and any limited 
liability company membership interest, and any securities or other 
rights or interests convertible into or exchangeable for any of the 
foregoing.
    Executive officer means, with respect to an Enterprise, any person 
meeting the definition of executive officer under section 1303(12) of 
the Safety and Soundness Act and applicable FHFA regulations under that 
section, and, with respect to a Bank, an executive officer as defined in 
applicable FHFA regulations.
    Golden parachute payment means, with respect to a regulated entity, 
the definition under 12 CFR part 1231 or other applicable FHFA 
regulations.
    Limited-life regulated entity means an entity established by the 
Agency under

[[Page 157]]

section 1367(i) of the Safety and Soundness Act with respect to a 
Federal Home Loan Bank in default or in danger of default, or with 
respect to an Enterprise in default or in danger of default.
    Receiver means the Agency as appointed by the Director to act as 
receiver for a regulated entity.
    Regulated entity means:
    (1) The Federal National Mortgage Association and any affiliate 
thereof;
    (2) The Federal Home Loan Mortgage Corporation and any affiliate 
thereof; and
    (3) Any Federal Home Loan Bank.
    Securities litigation claim means any claim, whether or not reduced 
to judgment, liquidated or unliquidated, fixed, contingent, matured or 
unmatured, disputed or undisputed, legal, equitable, secured or 
unsecured, arising from rescission of a purchase or sale of an equity 
security of a regulated entity or for damages arising from the purchase, 
sale, or retention of such a security.
    Transfer means every mode, direct or indirect, absolute or 
conditional, voluntary or involuntary, of disposing of or parting with 
property or with an interest in property, including retention of title 
as a security interest and foreclosure of the equity of redemption of 
the regulated entity.



                            Subpart A_Powers



Sec. 1237.3  Powers of the Agency as conservator or receiver.

    (a) Operation of the regulated entity. The Agency, as it determines 
appropriate to its operations as either conservator or receiver, may:
    (1) Take over the assets of and operate the regulated entity with 
all the powers of the shareholders (including the authority to vote 
shares of any and all classes of voting stock), the directors, and the 
officers of the regulated entity and conduct all business of the 
regulated entity;
    (2) Continue the missions of the regulated entity;
    (3) Ensure that the operations and activities of each regulated 
entity foster liquid, efficient, competitive, and resilient national 
housing finance markets;
    (4) Ensure that each regulated entity operates in a safe and sound 
manner;
    (5) Collect all obligations and money due the regulated entity;
    (6) Perform all functions of the regulated entity in the name of the 
regulated entity that are consistent with the appointment as conservator 
or receiver;
    (7) Preserve and conserve the assets and property of the regulated 
entity (including the exclusive authority to investigate and prosecute 
claims of any type on behalf of the regulated entity, or to delegate to 
management of the regulated entity the authority to investigate and 
prosecute claims); and
    (8) Provide by contract for assistance in fulfilling any function, 
activity, action, or duty of the Agency as conservator or receiver.
    (b) Agency as receiver. The Agency, as receiver, shall place the 
regulated entity in liquidation, employing the additional powers 
expressed in 12 U.S.C. 4617(b)(2)(E).
    (c) Powers as conservator or receiver. The Agency, as conservator or 
receiver, shall have all powers and authorities specifically provided by 
section 1367 of the Safety and Soundness Act and paragraph (a) of this 
section, including incidental powers, which include the authority to 
suspend capital classifications under section 1364(e)(1) of the Safety 
and Soundness Act during the duration of the conservatorship or 
receivership of that regulated entity.
    (d) Transfer or sale of assets and liabilities. The Agency may, as 
conservator or receiver, transfer or sell any asset or liability of the 
regulated entity in default, and may do so without any approval, 
assignment, or consent with respect to such transfer or sale. Exercise 
of this authority by the Agency as conservator will nullify any 
restraints on sales or transfers in any agreement not entered into by 
the Agency as conservator. Exercise of this authority by the Agency as 
receiver will nullify any restraints on sales or transfers in any 
agreement not entered into by the Agency as receiver.

[[Page 158]]



Sec. 1237.4  Receivership following conservatorship; administrative
expenses.

    If a receivership immediately succeeds a conservatorship, the 
administrative expenses of the conservatorship shall also be deemed to 
be administrative expenses of the subsequent receivership.



Sec. 1237.5  Contracts entered into before appointment of a 
conservator or receiver.

    (a) The conservator or receiver for any regulated entity may 
disaffirm or repudiate any contract or lease to which such regulated 
entity is a party pursuant to section 1367(d) of the Safety and 
Soundness Act.
    (b) For purposes of section 1367(d)(2) of the Safety and Soundness 
Act, a reasonable period shall be defined as a period of 18 months 
following the appointment of a conservator or receiver.



Sec. 1237.6  Authority to enforce contracts.

    The conservator or receiver may enforce any contract entered into by 
the regulated entity pursuant to the provisions and subject to the 
restrictions of section 1367(d)(13) of the Safety and Soundness Act.



                            Subpart B_Claims



Sec. 1237.7  Period for determination of claims.

    Before the end of the 180-day period beginning on the date on which 
any claim against a regulated entity is filed with the Agency as 
receiver, the Agency shall determine whether to allow or disallow the 
claim and shall notify the claimant of any determination with respect to 
such claim. This period may be extended by a written agreement between 
the claimant and the Agency as receiver, which may include an agreement 
to toll any applicable statute of limitations.



Sec. 1237.8  Alternate procedures for determination of claims.

    Claimants seeking a review of the determination of claims may seek 
alternative dispute resolution from the Agency as receiver in lieu of a 
judicial determination. The Director may by order, policy statement, or 
directive establish alternative dispute resolution procedures for this 
purpose.



Sec. 1237.9  Priority of expenses and unsecured claims.

    (a) General. The receiver will grant priority to unsecured claims 
against a regulated entity or the receiver for that regulated entity 
that are proven to the satisfaction of the receiver in the following 
order:
    (1) Administrative expenses of the receiver (or an immediately 
preceding conservator).
    (2) Any other general or senior liability of the regulated entity 
(that is not a liability described under paragraph (a)(3) or (a)(4) of 
this section).
    (3) Any obligation subordinated to general creditors (that is not an 
obligation described under paragraph (a)(4) of this section).
    (4) Any claim by current or former shareholders or members arising 
as a result of their current or former status as shareholders or 
members, including, without limitation, any securities litigation claim. 
Within this priority level, the receiver shall recognize the priorities 
of shareholder claims inter se, such as that preferred shareholder 
claims are prior to common shareholder claims. This subparagraph (a)(4) 
shall not apply to any claim by a current or former member of a Federal 
Home Loan Bank that arises from transactions or relationships distinct 
from the current or former member's ownership, purchase, sale, or 
retention of an equity security of the Federal Home Loan Bank.
    (b) Similarly situated creditors. All claimants that are similarly 
situated shall be treated in a similar manner, except that the receiver 
may take any action (including making payments) that does not comply 
with this section, if:
    (1) The Director determines that such action is necessary to 
maximize the value of the assets of the regulated entity, to maximize 
the present value return from the sale or other disposition of the 
assets of the regulated entity, or to minimize the amount of any loss 
realized upon the sale or other disposition of the assets of the 
regulated entity; and

[[Page 159]]

    (2) All claimants that are similarly situated under paragraph (a) of 
this section receive not less than the amount such claimants would have 
received if the receiver liquidated the assets and liabilities of the 
regulated entity in receivership and such action had not been taken.
    (c) Priority determined at default. The receiver will determine 
priority based on a claim's status at the time of default, such default 
having occurred at the time of entry into the receivership, or if a 
conservatorship immediately preceded the receivership, at the time of 
entry into the conservatorship provided the claim then existed.



                Subpart C_Limited-Life Regulated Entities



Sec. 1237.10  Limited-life regulated entities.

    (a) Status. The United States Government shall be considered a 
person for purposes of section 1367(i)(6)(C)(i) of the Safety and 
Soundness Act.
    (b) Investment authority. The requirements of section 1367(i)(4) 
shall apply only to the liquidity portfolio of a limited-life regulated 
entity.
    (c) Policies and procedures. The Agency may draft such policies and 
procedures with respect to limited-life regulated entities as it 
determines to be necessary and appropriate, including policies and 
procedures regarding the timing of the creation of limited-life 
regulated entities.



Sec. 1237.11  Authority of limited-life regulated entities to obtain
credit.

    (a) Ability to obtain credit. A limited-life regulated entity may 
obtain unsecured credit and issue unsecured debt.
    (b) Inability to obtain credit. If a limited-life regulated entity 
is unable to obtain unsecured credit or issue unsecured debt, the 
Director may authorize the obtaining of credit or the issuance of debt 
by the limited-life regulated entity with priority over any and all of 
the obligations of the limited-life regulated entity, secured by a lien 
on property of the limited-life regulated entity that is not otherwise 
subject to a lien, or secured by a junior lien on property of the 
limited-life regulated entity that is subject to a lien.
    (c) Limitations. The Director, after notice and a hearing, may 
authorize a limited-life regulated entity to obtain credit or issue debt 
that is secured by a senior or equal lien on property of the limited-
life regulated entity that is already subject to a lien (other than 
mortgages that collateralize the mortgage-backed securities issued or 
guaranteed by an Enterprise) only if the limited-life regulated entity 
is unable to obtain such credit or issue such debt otherwise on 
commercially reasonable terms and there is adequate protection of the 
interest of the holder of the earlier lien on the property with respect 
to which such senior or equal lien is proposed to be granted.
    (d) Adequate protection. The adequate protection referred to in 
paragraph (c) of this section may be provided by:
    (1) Requiring the limited-life regulated entity to make a cash 
payment or periodic cash payments to the holder of the earlier lien, to 
the extent that there is likely to be a decrease in the value of such 
holder's interest in the property subject to the lien;
    (2) Providing to the holder of the earlier lien an additional or 
replacement lien to the extent that there is likely to be a decrease in 
the value of such holder's interest in the property subject to the lien; 
or
    (3) Granting the holder of the earlier lien such other relief, other 
than entitling such holder to compensation allowable as an 
administrative expense under section 1367(c) of the Safety and Soundness 
Act, as will result in the realization by such holder of the equivalent 
of such holder's interest in such property.



                             Subpart D_Other



Sec. 1237.12  Capital distributions while in conservatorship.

    (a) Except as provided in paragraph (b) of this section, a regulated 
entity shall make no capital distribution while in conservatorship.
    (b) The Director may authorize, or may delegate the authority to 
authorize, a capital distribution that would otherwise be prohibited by 
paragraph (a) of this section if he or she determines that such capital 
distribution:

[[Page 160]]

    (1) Will enhance the ability of the regulated entity to meet the 
risk-based capital level and the minimum capital level for the regulated 
entity;
    (2) Will contribute to the long-term financial safety and soundness 
of the regulated entity;
    (3) Is otherwise in the interest of the regulated entity; or
    (4) Is otherwise in the public interest.
    (c) This section is intended to supplement and shall not replace or 
affect any other restriction on capital distributions imposed by statute 
or regulation.



Sec. 1237.13  Payment of Securities Litigation Claims while in
conservatorship.

    (a) Payment of Securities Litigation Claims while in 
conservatorship. The Agency, as conservator, will not pay a Securities 
Litigation Claim against a regulated entity, except to the extent the 
Director determines is in the interest of the conservatorship.
    (b) Claims against limited-life regulated entities. A limited-life 
regulated entity shall not assume, acquire, or succeed to any obligation 
that a regulated entity for which a receiver has been appointed may have 
to any shareholder of the regulated entity that arises as a result of 
the status of that person as a shareholder of the regulated entity, 
including any Securities Litigation Claim. No creditor of the regulated 
entity shall have a claim against a limited-life regulated entity unless 
the receiver has transferred that liability to the limited-life 
regulated entity. The charter of the regulated entity, or of the 
limited-life regulated entity, is not an asset against which any claim 
can be made by any creditor or shareholder of the regulated entity.



Sec. 1237.14  Golden parachute payments. [Reserved]

[[Page 161]]



                        SUBCHAPTER C_ENTERPRISES





PART 1249_BOOK	ENTRY PROCEDURES--Table of Contents



Sec.
1249.10 Definitions.
1249.11 Maintenance of Enterprise Securities.
1249.12 Law governing rights and obligations of United States, Federal 
          Reserve Banks, and Enterprises; rights of any person against 
          United States, Federal Reserve Banks, and Enterprises; law 
          governing other interests.
1249.13 Creation of Participant's Security Entitlement; security 
          interests.
1249.14 Obligations of Enterprises; no adverse claims.
1249.15 Authority of Federal Reserve Banks.
1249.16 Withdrawal of Eligible Book-entry Enterprise Securities for 
          conversion to definitive form.
1249.17 Waiver of regulations.
1249.18 Liability of Enterprises and Federal Reserve Banks.
1249.19 Additional provisions.

    Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526.

    Source: 75 FR 55928, Sept. 14, 2010, unless otherwise noted.



Sec. 1249.10  Definitions.

    (a) General. Unless the context requires otherwise, terms used in 
this part that are not defined in this part, have the meanings as set 
forth in 31 CFR 357.2 and in 12 CFR 1282.1. Definitions and terms used 
in 31 CFR part 357 should read as though modified to effectuate their 
application to the Enterprises.
    (b) Other terms. As used in this part, the term:
    Book-entry Enterprise Security means an Enterprise Security issued 
or maintained in the Book-entry System. Book-entry Enterprise Security 
also means the separate interest and principal components of a Book-
entry Enterprise Security if such security has been designated by the 
Enterprise as eligible for division into such components and the 
components are maintained separately on the books of one or more Federal 
Reserve Banks.
    Book-entry System means the automated book-entry system operated by 
the Federal Reserve Banks acting as the fiscal agent for the 
Enterprises, on which Book-entry Enterprise Securities are issued, 
recorded, transferred and maintained in book-entry form.
    Definitive Enterprise Security means an Enterprise Security in 
engraved or printed form, or that is otherwise represented by a 
certificate.
    Eligible Book-entry Enterprise Security means a Book-entry 
Enterprise Security issued or maintained in the Book-entry System which 
by the terms of its Securities Documentation is eligible to be converted 
from book-entry form into definitive form.
    Enterprise Security means any security or obligation of Fannie Mae 
or Freddie Mac issued under its respective Charter Act in the form of a 
Definitive Enterprise Security or a Book-entry Enterprise Security.
    Entitlement Holder means a Person or an Enterprise to whose account 
an interest in a Book-entry Enterprise Security is credited on the 
records of a Securities Intermediary.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Reserve Bank maintains Book-entry Securities accounts 
(including Book-entry Enterprise Securities) and transfers Book-entry 
Securities (including Book-entry Enterprise Securities).
    Participant means a Person or Enterprise that maintains a 
Participant's Securities Account with a Federal Reserve Bank.
    Person, as used in this part, means and includes an individual, 
corporation, company, governmental entity, association, firm, 
partnership, trust, estate, representative, and any other similar 
organization, but does not mean or include the United States, an 
Enterprise, or a Federal Reserve Bank.
    Revised Article 8 has the same meaning as in 31 CFR 357.2.
    Securities Documentation means the applicable statement of terms, 
trust indenture, securities agreement or other documents establishing 
the terms of a Book-entry Enterprise Security.

[[Page 162]]

    Security means any mortgage participation certificate, note, bond, 
debenture, evidence of indebtedness, collateral-trust certificate, 
transferable share, certificate of deposit for a security, or, in 
general, any interest or instrument commonly known as a ``security''.
    Transfer message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry Security (including a 
Book-entry Enterprise Security) maintained in the Book-entry System, as 
set forth in Federal Reserve Bank Operating Circulars.



Sec. 1249.11  Maintenance of Enterprise Securities.

    An Enterprise Security may be maintained in the form of a Definitive 
Enterprise Security or a Book-entry Enterprise Security. A Book-entry 
Enterprise Security shall be maintained in the Book-entry System.



Sec. 1249.12  Law governing rights and obligations of United States,
Federal Reserve Banks, and Enterprises; rights of any person against 
United States, Federal Reserve Banks, and Enterprises; 
law governing other interests.

    (a) Except as provided in paragraph (b) of this section, the 
following rights and obligations are governed solely by the book-entry 
regulations contained in this part, the Securities Documentation, and 
Federal Reserve Bank Operating Circulars (but not including any choice 
of law provisions in the Securities Documentation to the extent such 
provisions conflict with the Book-entry regulations contained in this 
part):
    (1) The rights and obligations of an Enterprise and the Federal 
Reserve Banks with respect to:
    (i) A Book-entry Enterprise Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to 
Enterprise Securities; and
    (2) The rights of any Person, including a Participant, against an 
Enterprise and the Federal Reserve Banks with respect to:
    (i) A Book-entry Enterprise Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to 
Enterprise Securities;
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 1249.13(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 1249.13(c)(1), 
is governed by the law determined in the manner specified in paragraph 
(d) of this section.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8, 
then the law specified in paragraph (b) of this section shall be the law 
of that State as though Revised Article 8 had been adopted by that 
State.
    (d) To the extent not otherwise inconsistent with this part, and 
notwithstanding any provision in the Securities Documentation setting 
forth a choice of law, the provisions set forth in 31 CFR 357.11 
regarding law governing other interests apply and shall be read as 
though modified to effectuate the application of 31 CFR 357.11 to the 
Enterprises.



Sec. 1249.13  Creation of Participant's Security Entitlement; 
security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book-entry that a Book-entry Enterprise 
Security has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including without limitation deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is

[[Page 163]]

marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Federal Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the security. For purposes of this 
paragraph, an ``authorized representative of the United States'' is the 
official designated in the applicable regulations or agreement to which 
a Federal Reserve Bank is a party, governing the security interest.
    (c)(1) An Enterprise and the Federal Reserve Banks have no 
obligation to agree to act on behalf of any Person or to recognize the 
interest of any transferee of a security interest or other limited 
interest in favor of any Person except to the extent of any specific 
requirement of Federal law or regulation or to the extent set forth in 
any specific agreement with the Federal Reserve Bank on whose books the 
interest of the Participant is recorded. To the extent required by such 
law or regulation or set forth in an agreement with a Federal Reserve 
Bank, or the Federal Reserve Bank Operating Circular, a security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank, an Enterprise, or a Person may be created and perfected by a 
Federal Reserve Bank marking its books to record the security interest. 
Except as provided in paragraph (b) of this section, a security interest 
in a Security Entitlement marked on the books of a Federal Reserve Bank 
shall have priority over any other interest in the securities.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest, including a security interest in favor of 
a Federal Reserve Bank, may be perfected by any method by which a 
security interest may be perfected under applicable law as described in 
Sec. 1249.12(b) or (d). The perfection, effect of perfection or non-
perfection and priority of a security interest are governed by such 
applicable law. A security interest in favor of a Federal Reserve Bank 
shall be treated as a security interest in favor of a clearing 
corporation in all respects under such law, including with respect to 
the effect of perfection and priority of such security interest. A 
Federal Reserve Bank Operating Circular shall be treated as a rule 
adopted by a clearing corporation for such purposes.



Sec. 1249.14  Obligations of Enterprises; no adverse claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in Sec. 
1249.13(c)(1), for the purposes of this part, each Enterprise and the 
Federal Reserve Banks shall treat the Participant to whose Securities 
Account an interest in a Book-entry Enterprise Security has been 
credited as the person exclusively entitled to issue a Transfer Message, 
to receive interest and other payments with respect thereof and 
otherwise to exercise all the rights and powers with respect to such 
Security, notwithstanding any information or notice to the contrary. 
Neither the Federal Reserve Banks nor an Enterprise shall be liable to a 
Person asserting or having an adverse claim to a Security Entitlement or 
to a Book-entry Enterprise Security in a Participant's Securities 
Account, including any such claim arising as a result of the transfer or 
disposition of a Book-entry Enterprise Security by a Federal Reserve 
Bank pursuant to a Transfer Message that the Federal Reserve Bank 
reasonably believes to be genuine.
    (b) The obligation of the Enterprise to make payments (including 
payments of interest and principal) with respect to Book-entry 
Enterprise Securities is discharged at the time payment in the 
appropriate amount is made as follows:
    (1) Interest or other payments on Book-entry Enterprise Securities 
is either credited by a Federal Reserve Bank to a Funds Account 
maintained at such Federal Reserve Bank or otherwise paid as directed by 
the Participant.
    (2) Book-entry Enterprise Securities are redeemed in accordance with 
their terms by a Federal Reserve Bank withdrawing the securities from 
the Participant's Securities Account in which

[[Page 164]]

they are maintained and by either crediting the amount of the redemption 
proceeds, including both redemption proceeds, where applicable, to a 
Funds Account at such Federal Reserve Bank or otherwise paying such 
redemption proceeds as directed by the Participant. No action by the 
Participant ordinarily is required in connection with the redemption of 
a Book-entry Enterprise Security.



Sec. 1249.15  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the Enterprises to perform the following functions with respect to 
the issuance of Book-entry Enterprise Securities offered and sold by an 
Enterprise to which this part applies, in accordance with the Securities 
Documentation, Federal Reserve Bank Operating Circulars, this part, and 
any procedures established by the Director consistent with these 
authorities:
    (1) To service and maintain Book-entry Enterprise Securities in 
accounts established for such purposes;
    (2) To make payments with respect to such securities, as directed by 
the Enterprise;
    (3) To effect transfer of Book-entry Enterprise Securities between 
Participants' Securities Accounts as directed by the Participants;
    (4) To effect conversions between Book-entry Enterprise Securities 
and Definitive Enterprise Securities with respect to those securities as 
to which conversion rights are available pursuant to the applicable 
Securities Documentation; and
    (5) To perform such other duties as fiscal agent as may be requested 
by the Enterprise.
    (b) Each Federal Reserve Bank may issue Federal Reserve Bank 
Operating Circulars not inconsistent with this part, governing the 
details of its handling of Book-entry Enterprise Securities, Security 
Entitlements, and the operation of the Book-entry System under this 
part.



Sec. 1249.16  Withdrawal of Eligible Book-entry Enterprise Securities
for conversion to definitive form.

    (a) Eligible Book-entry Enterprise Securities may be withdrawn from 
the Book-entry System by requesting delivery of like Definitive 
Enterprise Securities.
    (b) A Federal Reserve Bank shall, upon receipt of appropriate 
instructions to withdraw Eligible Book-entry Enterprise Securities from 
book-entry in the Book-entry System, convert such securities into 
Definitive Enterprise Securities and deliver them in accordance with 
such instructions. No such conversion shall affect existing interests in 
such Enterprise Securities.
    (c) All requests for withdrawal of Eligible Book-entry Enterprise 
Securities must be made prior to the maturity or date of call of the 
securities.
    (d) Enterprise Securities which are to be delivered upon withdrawal 
may be issued in either registered or bearer form, to the extent 
permitted by the applicable Securities Documentation.



Sec. 1249.17  Waiver of regulations.

    The Director reserves the right, in the Director's discretion, to 
waive any provision(s) of this part in any case or class of cases for 
the convenience of an Enterprise, the United States, or in order to 
relieve any person(s) of unnecessary hardship, if such action is not 
inconsistent with law, does not adversely affect any substantial 
existing rights, and the Director is satisfied that such action will not 
subject an Enterprise or the United States to any substantial expense or 
liability.



Sec. 1249.18  Liability of Enterprises and Federal Reserve Banks.

    An Enterprise and the Federal Reserve Banks may rely on the 
information provided in a Transfer Message, and are not required to 
verify the information. An Enterprise and the Federal Reserve Banks 
shall not be liable for any action taken in accordance with the 
information set out in a Transfer Message, or evidence submitted in 
support thereof.



Sec. 1249.19  Additional provisions.

    (a) Additional requirements. In any case or any class of cases 
arising under

[[Page 165]]

this part, an Enterprise may require such additional evidence and a bond 
of indemnity, with or without surety, as may in the judgment of the 
Enterprise be necessary for the protection of the interests of the 
Enterprise.
    (b) Notice of attachment for Enterprise Securities in Book-entry 
System. The interest of a debtor in a Security Entitlement may be 
reached by a creditor only by legal process upon the Securities 
Intermediary with whom the debtor's securities account is maintained, 
except where a Security Entitlement is maintained in the name of a 
secured party, in which case the debtor's interest may be reached by 
legal process upon the secured party. These regulations do not purport 
to establish whether a Federal Reserve Bank is required to honor an 
order or other notice of attachment in any particular case or class of 
cases.



PART 1250_FLOOD INSURANCE--Table of Contents



Sec.
1250.1 Purpose.
1250.2 Procedural requirements.
1250.3 Civil money penalties.

    Authority: 12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note; 42 
U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and (10).

    Source: 74 FR 2349, Jan. 15, 2009, unless otherwise noted.



Sec. 1250.1  Purpose.

    The purpose of this part is to set forth the responsibilities of the 
Federal National Mortgage Association and the Federal Home Loan Mortgage 
Corporation (collectively, Enterprises) under the Flood Disaster 
Protection Act of 1973 (FDPA), as amended (42 U.S.C. 4002 et seq.) and 
the procedures to be used by the Federal Housing Finance Agency (FHFA) 
in any proceeding to assess civil money penalties against an Enterprise.



Sec. 1250.2  Procedural requirements.

    (a) Procedures. An Enterprise shall implement procedures reasonably 
designed to ensure for any loan that is secured by improved real estate 
or a mobile home located in an area that has been identified, at the 
time of the origination of the loan or at any time during the term of 
the loan, by the Director of the Federal Emergency Management Agency as 
an area having special flood hazards and in which flood insurance is 
available under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 
et seq.), as amended and purchased by the Enterprise, the building or 
mobile home and any personal property securing the loan is covered for 
the term of the loan by flood insurance in an amount at least equal to 
the lesser of the outstanding principal balance of the loan or the 
maximum limit of coverage made available with respect to the particular 
type of property under the National Flood Insurance Act of 1968, as 
amended.
    (b) Applicability. (1) Paragraph (a) of this section shall apply 
only with respect to any loan made, increased, extended, or renewed 
after September 22, 1995.
    (2) Paragraph (a) of this section shall not apply to any loan having 
an original outstanding balance of $5,000 or less and a repayment term 
of one year or less.



Sec. 1250.3  Civil money penalties.

    (a) In general. If an Enterprise is determined by the Director of 
FHFA, or his or her designee, to have a pattern or practice of 
purchasing loans in violation of the procedures established pursuant to 
Sec. 1250.2, the Director of FHFA, or his or her designee, may assess 
civil money penalties against such Enterprise in such amount or amounts 
as deemed to be appropriate under paragraph (c) of this section.
    (b) Notice and hearing. A civil money penalty under this section may 
be assessed only after notice and an opportunity for a hearing on the 
record has been provided to the Enterprise.
    (c) Amount. The maximum civil money penalty amount is $385 for each 
violation that occurs before the effective date of this part, with total 
penalties not to exceed $110,000. For violations that occur on or after 
the effective date of this part, the civil money penalty under this 
section may not exceed $485 for each violation, with total penalties 
assessed under this section against an Enterprise during any calendar 
year not to exceed $140,000.
    (d) Deposit of penalties. Any penalties under this section shall be 
paid into

[[Page 166]]

the National Flood Mitigation Fund in accordance with section 1367 of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4104d.), as amended.
    (e) Additional penalties. Any penalty under this section shall be in 
addition to, and shall not preclude, any civil remedy, or criminal 
penalty otherwise available.
    (f) Statute of limitations. No civil money penalty may be imposed 
under this section after the expiration of the four-year period 
beginning on the date of the occurrence of the violation for which the 
penalty is authorized under this section.



PART 1252_PORTFOLIO HOLDINGS--Table of Contents



Sec.
1252.1 Enterprise portfolio holdings criteria.
1252.2 Effective duration.

    Authority: 12 U.S.C. 4624.

    Source: 74 FR 5618, Jan. 30, 2009, unless otherwise noted.



Sec. 1252.1  Enterprise portfolio holding criteria.

    The Enterprises are required to comply with the portfolio holdings 
criteria set forth in their respective Senior Preferred Stock Purchase 
Agreements with the Department of the Treasury, as they may be amended 
from time to time.



Sec. 1252.2  Effective duration.

    This part shall be in effect for each Enterprise so long as--
    (a) This part has not been superseded through amendment, and
    (b) The Enterprise remains subject to the terms and obligations of 
the respective Senior Preferred Stock Purchase Agreement.



PART 1253_PRIOR APPROVAL FOR ENTERPRISE PRODUCTS--Table of Contents



Sec.
1253.1 Purpose and authority.
1253.2 Definitions.
1253.3 Notice of new activity.
1253.4 New product approval.
1253.5 Confidential information.
1253.6 Certifying and nullifying an approval.
1253.7 Failure to comply.
1253.8 Availability of new product to an Enterprise after it has been 
          approved for the other Enterprise.
1253.9 Preservation of authority.

Appendix to Part 1253--Prior Approval for Enterprise Products: 
          Instructions and Notice of New Activity Form

    Authority: 12 U.S.C. 4526; 12 U.S.C. 4541.

    Source: 74 FR 31604, July 2, 2009, unless otherwise noted.



Sec. 1253.1  Purpose and authority.

    The purpose of this part is to establish policies and procedures 
implementing the prior approval authority for enterprise products, in 
accordance with section 1321 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (Safety and Soundness Act) 
(12 U.S.C. 4541), as amended.



Sec. 1253.2  Definitions.

    For purposes of this part:
    Authorizing statute means, in the case of Fannie Mae, the Federal 
National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) and, 
in the case of Freddie Mac, the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1451 et seq.).
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Enterprise means the Federal National Mortgage Association (Fannie 
Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).
    FHFA means the Federal Housing Finance Agency.
    New activity means with respect to an Enterprise, any business line, 
business practice, or service, including guarantee, financial 
instrument, consulting, or marketing, that is proposed to be undertaken 
by the Enterprise either on a standalone basis or as an incident to 
providing one or more Enterprise products to the market, and which was--
    (a) Not initially engaged in prior to July 30, 2008;
    (b) Commenced by the Enterprise prior to July 30, 2008, but which, 
after July 30, 2008, the Enterprise ceased to engage in, and presently 
intends to resume; or

[[Page 167]]

    (c) Offered or engaged in by the Enterprise after July 30, 2008, at 
a significantly different level, or in a significantly different manner, 
in terms of the activity's effect on public interest or risk to the 
Enterprise or the mortgage finance or financial system.
    The term ``new activity'' does not include--
    (1) Any Enterprise business practice, transactions, or conduct 
performed solely as an incident to the administration of the 
Enterprise's internal affairs to conduct its business; or
    (2) Any business practice or service undertaken by an Enterprise 
that is de minimis in scope, volume, risk, or duration.
    New product means any activity that the Director determines merits 
public notice and comment on matters of compliance with the applicable 
authorizing statute, safety and soundness, or public interest. ``New 
product'' does not include--
    (a) The automated loan underwriting system of an Enterprise in 
existence as of July 30, 2008, including any upgrade to the technology, 
operating system, or software to operate the underwriting system;
    (b) Any modification to the mortgage terms and conditions or 
mortgage underwriting criteria relating to the mortgages that are 
purchased or guaranteed by the Enterprise, provided that such 
modifications do not alter the underlying transaction so as to include 
services or financing, other than residential mortgage financing;
    (c) Any activity that is substantially similar to the activities 
described in paragraphs (a) or (b) of this section;
    (d) Any activity that is substantially similar to an activity or 
product that has been approved in accordance with this part for either 
Enterprise; or
    (e) Any activity that is substantially similar to an activity or 
product continuously undertaken by the other Enterprise since prior to 
July 30, 2008.
    Substantially similar. In considering whether an activity is 
``substantially similar'' to any activity described in section 
1321(e)(1)(A) and (B) of the Safety and Soundness Act, 12 U.S.C. 
4541(e)(1)(A) and in paragraphs (a) or (b) of this section under the 
definition of new product, or to any activity approved in accordance 
with this part, or continuously engaged in by the other Enterprise as 
referenced in paragraphs (d) and (e) of this section under the 
definition of new product, the Director may consider if the activity in 
question--
    (1) Is a product;
    (2) Is authorized under the applicable authorizing statute;
    (3) Represents an upgrade to the way an approved product is 
delivered;
    (4) Poses a significant change in risk to the Enterprise or the 
mortgage finance system from a previously approved product or activity;
    (5) Involves a significant change in terms, conditions, or 
limitations expressly contained in any prior approval granted under this 
part;
    (6) Poses a significant change in its effect on the public interest 
compared to a previously approved product or activity;
    (7) Poses a significant change from a previously approved product or 
activity and if so, does a tradeoff exist in the composite of risk, 
public interest, and safety and soundness elements in the proposed new 
activity;
    (8) Is likely to have significantly more enterprise resources 
dedicated to it;
    (9) Requires approval by regulators other than FHFA, including 
Federal, State, or local regulators;
    (10) Involves new classes or types of borrowers, investors, or 
counterparties;
    (11) Involves new classes or types of collateral; or
    (12) Such other factor as the Director determines to be appropriate.



Sec. 1253.3  Notice of new activity.

    (a) Before commencing a new activity, an Enterprise must submit a 
Notice of New Activity (Notice) to the FHFA, and either receive a 
determination that the new activity is not a new product, await passage 
of the 15 business-day period as described in paragraph (d) of this 
section, or, where FHFA determines the new activity to be a new product, 
await approval of the new product under Sec. 1253.4. In addition, for 
any new activity that an Enterprise seeks to engage in which FHFA had 
previously approved in accordance with this part for the other 
Enterprise, or in

[[Page 168]]

which the other Enterprise had engaged continuously since prior to July 
30, 2008, the Enterprise must submit a Notice to FHFA. In support of its 
Notice, the Enterprise shall submit information sufficient to allow the 
Director to make a determination on the Notice pursuant to section 1321 
of the Safety and Soundness Act (12 U.S.C. 4541), as amended, including 
any information required by FHFA by regulation or otherwise. The 
Enterprise shall provide a thorough, meaningful, complete and specific 
description of the new activity such that the public will be able to 
provide fully informed comment on the new activity if FHFA determines 
the new activity to be a new product. Such information shall include 
that contained in the FHFA Notice Form and the Instructions for the FHFA 
Notice of New Activity Form (Notice Form Instructions) that appear in 
the appendix of this part. The Notice Form and Notice Form Instructions 
may be amended from time to time by written direction of the Director. 
Requests for confidential treatment for any portion of an Enterprise's 
submission must be made consistent with Sec. 1253.5.
    (b) FHFA will evaluate a Notice to establish whether the submission 
contains sufficient information for FHFA to make a determination whether 
the new activity is a new product subject to prior approval. Upon 
establishing that the Notice contains sufficient information, FHFA shall 
deem the submission complete and ``received'' for purposes of section 
1321(e)(2)(B) of the Safety and Soundness Act (12 U.S.C. 4541(e)(2)(B)), 
and shall notify the Enterprise accordingly.
    (c) No later than 15 business-days after the Notice is deemed 
completed and ``received'' for purposes of section 1321(e)(2)(B) of the 
Safety and Soundness Act (12 U.S.C. 4541(e)(2)(B)), the Director will 
make a written determination on the Notice, and shall notify the 
Enterprise accordingly. The Director may also approve the new activity 
subject to such terms, conditions, or limitations on the Enterprise's 
engagement in the new activity as the Director determines to be 
appropriate.
    (d) If the Director fails to make a determination within the 15 
business-day period specified in paragraph (c) of this section, the 
Enterprise may commence the new activity. The Director's failure to make 
a determination within the 15-day period does not limit or restrict the 
Director's safety and soundness authority or the authority of the 
Director to review the new activity to determine whether the activity is 
consistent with the statutory mission of the Enterprise.



Sec. 1253.4  New product approval.

    (a) Public notice. If the Director determines that the new activity 
is a new product, FHFA shall publish a public notice soliciting comments 
on the proposed product for a 30 calendar-day period.
    (1) The public notice will describe the new product and state the 
closing date of the public comment period. The public notice will 
provide instructions for submission of public comment.
    (2) The Director will consider all public comments received by the 
closing date of the comment period.
    (3) In computing the 30 calendar-day public comment period, FHFA 
excludes the day on which the public notice is published in the Federal 
Register, from which the period begins to run, and includes the last day 
of the period, regardless of whether it is a Saturday, Sunday, or legal 
holiday.
    (b) Director's determination. (1) No later than 30 calendar-days 
after the end of the public comment period, the Director will provide 
the Enterprise with a written determination on whether it may proceed 
with the new product. The written determination will specify the grounds 
for the Director's determination.
    (2) The Director will approve the new product if the Director 
determines that the new product complies with the applicable authorizing 
statute, is in the public interest, and is consistent with the safety 
and soundness of the Enterprise and the mortgage finance and financial 
system. The Enterprise may then offer the new product subject to any 
terms, conditions, or limitations as may be established by the Director.
    (3) Among the factors that the Director may consider when 
determining whether a new product is in the public interest are--

[[Page 169]]

    (i) The degree to which the new product might reasonably be expected 
to advance any of the purposes of the Enterprise under the applicable 
authorizing statute;
    (ii) The degree to which the new product serves underserved markets 
as set forth in section 1335 of the Safety and Soundness Act (12 U.S.C. 
4565);
    (iii) The degree to which the new product is being supplied or could 
be supplied by non-government-sponsored-enterprise firms;
    (iv) Other alternatives for providing the new product;
    (v) The degree to which the new product promotes competition in the 
marketplace or, to the contrary, would result in less competition and 
greater concentration of economic activity or risk;
    (vi) The degree to which Enterprise provision of the new product 
overcomes natural market barriers or inefficiencies;
    (vii) The degree to which Enterprise provision of the new product 
might raise or mitigate systemic risks to the mortgage, mortgage finance 
or other financial markets;
    (viii) The degree to which the new product furthers fair housing; 
and
    (ix) Such other factors determined appropriate by the Director.
    (4) The Director will disapprove the new product if the Director 
determines that approval is inconsistent with applicable law, 
regulation, or FHFA policy thereunder, or contrary to public interest or 
the safety and soundness of the Enterprise or the mortgage finance or 
financial system. If the Director disapproves the new product, the 
Enterprise may not offer the new product.
    (5) The Director may establish terms, conditions, or limitations on 
the Enterprise's offering of the new product to ensure that the product 
offering is consistent with applicable statutory and regulatory 
standards, FHFA policies, public interest, or the safety and soundness 
of the Enterprise or the mortgage finance or financial system.
    (6) If the Director fails to make a determination within the 30 
calendar-day period that begins on the day after the end of the public 
comment period, the Enterprise may offer the new product. The Director's 
failure to make a determination within such 30-day period does not limit 
or restrict the Director's safety and soundness authority or the 
authority of the Director to review the new product to determine that 
the product is consistent with the statutory mission of the Enterprise.
    (c) Temporary approval. (1) FHFA may approve a new product without 
first seeking public comments as described in Sec. 1253.4(c) if--
    (i) The Enterprise submits a specific request for Temporary Approval 
that describes the exigent circumstances that make the delay associated 
with the 30-day public comment period contrary to the public interest 
and the Director determines that exigent circumstances exist and that 
delay associated with first seeking public comment would be contrary to 
the public interest; or
    (ii) Notwithstanding the absence of a request by the Enterprise for 
Temporary Approval, the Director determines on his or her own initiative 
that there are exigent circumstances that make the delay associated with 
first seeking public comment contrary to the public interest.
    (2) The Director may impose terms, conditions, or limitations on the 
Temporary Approval to ensure that the new product offering is consistent 
with applicable statutory and regulatory standards, FHFA policies, 
public interest, and the safety and soundness of the Enterprise or the 
mortgage finance system.
    (3) If the Director grants Temporary Approval, the Director will 
notify the Enterprise in writing of the Director's decision, and include 
the period for which it is effective and any terms, conditions or 
limitations. Upon granting of Temporary Approval, FHFA will also publish 
the request for public comment to begin the process for permanent 
approval.
    (4) If the Director denies a request for Temporary Approval, the 
Director will notify the Enterprise in writing of the Director's 
decision, and will evaluate the new product in accordance with 
paragraphs (a) through (c) of this section.

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    (d) Additional information. The Director may request any information 
in addition to that supplied in the completed Notice if, as a result of 
public comment or otherwise in the course of considering the Notice, the 
Director believes that the information is necessary for his or her 
decision. The Director may disapprove a new product if he or she does 
not receive the information requested from the Enterprise in sufficient 
time to permit adequate evaluation of the information within the time 
periods set forth in paragraph (c) of this section.



Sec. 1253.5  Confidential information.

    (a) Information presumed public. FHFA will treat all information an 
Enterprise submits in a Notice as public information, except as provided 
in paragraphs (b) through (d) of this section. FHFA will also treat 
information provided by a commenter, in response to a notice requesting 
comment on an Enterprise new product, as public information, except as 
provided in paragraphs (b) through (d) of this section.
    (b) Confidential treatment request. An Enterprise or commenter may 
designate specific information as confidential and request that it not 
be made publicly available. For any information that an Enterprise or 
commenter seeks confidential treatment, the Enterprise or commenter is 
required to submit a complete copy of the Notice or comment, with a 
specific request for confidential treatment. Simultaneously, the 
Enterprise or commenter is required to submit a copy of the Notice or 
comment containing only those portions for which no request for 
confidential treatment is made, and from which those portions for which 
confidential treatment is requested have been redacted. The Enterprise 
or commenter must specify the bases for designated information not being 
made public as set forth in paragraph (c) of this section.
    (c) Required information. The Enterprise or commenter is required to 
provide the following information in support of its request for 
confidential treatment of the designated information--
    (1) Identification of the specific information for which 
confidential treatment is sought, and the specific Notice for which the 
information is being submitted;
    (2) Explanation of the bases for the proposed confidential treatment 
including, but not limited to, why the information is ``commercial or 
financial information obtained from a person and privileged or 
confidential'' as that phrase is used in Exemption 4 of the Freedom of 
Information Act (FOIA), 5 U.S.C. 552(b)(4), and Sec. 1202.4(a)(4) of 
this chapter;
    (3) Explanation of the relevance and necessity of the information to 
whether the Notice should be approved or denied;
    (4) Explanation of how disclosure of the information would result in 
substantial harm to the competitive position of the Enterprise or 
commenter;
    (5) Explanation of whether the information is available to the 
public and the extent of any previous disclosure to third parties;
    (6) Justification of the time period during which the Enterprise or 
commenter asserts that the material should not be available for public 
disclosure; and
    (7) Any other information that the Enterprise or commenter seeking 
confidential treatment believes may be useful in assessing whether its 
request for confidentiality should be granted.
    (d) FHFA determination. FHFA will determine whether the designated 
information may be withheld from public disclosure and will notify the 
Enterprise or commenter of the determination. In the event that FHFA 
determines the information may not be withheld from public disclosure, 
the Enterprise or commenter may withdraw the information or consent to 
public disclosure. Requests for confidential treatment that do not 
comply with paragraphs (b) and (c) of this section will not be 
considered.



Sec. 1253.6  Certifying and nullifying an approval.

    (a) An Enterprise shall certify, through an executive officer, as 
that term is defined by Sec. 1770.3(g) of this title, that any filing 
or supporting material submitted to FHFA pursuant to regulations in this 
part contains no

[[Page 171]]

material misrepresentations or omissions. FHFA may review and verify any 
information filed in connection with a Notice. If FHFA discovers a 
material misrepresentation or omission after the Director has rendered a 
decision on the filing, FHFA may nullify any approval or modify the 
terms, conditions, and limitations to such approval. For purposes of 
this paragraph, an Enterprise's authority to offer a new product or 
engage in a new activity by reason of the Director's not having made an 
explicit determination within the statutory time period constitutes an 
approval.
    (b) Any person responsible for any material misrepresentation or 
omission in a submission or supporting materials may be subject to 
enforcement action and other penalties, including criminal penalties 
provided in 18 U.S.C. 1001.



Sec. 1253.7  Failure to comply.

    (a) Unless the Director otherwise informs the Enterprise in writing, 
an Enterprise must cease offering a new product or engaging in a new 
activity immediately upon discovering or receiving notice from the 
Director that the Enterprise has--
    (1) Offered a new product or commenced a new activity without 
submitting a Notice;
    (2) Offered a new product or commenced a new activity after 
submitting a Notice but before approval is granted, and before the 
expiration of the time provided for the Director to make a determination 
under Sec. Sec. 1253.3 and 1253.4;
    (3) Offered a new product after the Director disapproved it; or
    (4) Failed to adhere to any terms, conditions or limitations 
established by the Director in his or her approval of a new product or 
activity.
    (b) Within five (5) business-days of the discovery or notice of any 
of the events described in paragraph (a) of this section, the Enterprise 
must provide the Director a written description of the failure or 
failures of controls that resulted in the offering of the new product or 
commencement of the new activity in contravention of this regulation, 
and the steps that the Enterprise has taken or will take to remediate 
the control failures. The Enterprise must provide the board of directors 
of the Enterprise and chief risk officer, internal audit, and compliance 
officer of the Enterprise with a copy of the written description on the 
same date the description is provided to the Director of FHFA.
    (c) In the event that the Enterprise elects to resubmit the Notice 
of a new product or new activity that was undertaken in contravention of 
this regulation, the resubmission must provide sufficient documentation 
of the effectiveness of the remediation efforts described in paragraph 
(b) of this section.
    (d) Failure to comply with paragraphs (a) or (b) of this section 
above may result in FHFA's taking enforcement action, including pursuant 
to 12 U.S.C. 4631 (orders to cease and desist), 12 U.S.C. 4632 
(temporary orders to cease and desist), and 12 U.S.C. 4636 (civil money 
penalties).



Sec. 1253.8  Availability of new product to an Enterprise after it 
has been approved for the other Enterprise.

    (a) If the Director approves a new product for one Enterprise or the 
new product is otherwise available to that Enterprise under Sec. 
1253.4, the other Enterprise may also undertake that new product, 
subject to submitting a request to the Director in the form of a Notice 
under Sec. 1253.3 and approval by the Director.
    (b) The Director may require such further information from the 
requesting Enterprise as he or she deems necessary to approve or deny 
the request. Approving the request does not require public notice and 
comment.



Sec. 1253.9  Preservation of authority.

    (a) The Director's exercise of his or her authority pursuant to the 
prior approval authority for products under section 1321 of the Safety 
and Soundness Act (12 U.S.C. 4541), and this regulation and other 
issuances in no way restricts--
    (1) The safety and soundness authority of the Director over all new 
and existing products or activities; or
    (2) The authority of the Director to review all new and existing 
products or activities to determine that such products or activities are 
consistent with the statutory mission of an Enterprise.

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              Instructions and Notice of New Activity Form
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                  SUBCHAPTER D_FEDERAL HOME LOAN BANKS





PART 1261_FEDERAL HOME LOAN BANK DIRECTORS--Table of Contents



                          Subpart A_Definitions

1261.1 Definitions.

 Subpart B_Federal Home Loan Bank Boards of Directors: Eligibility and 
                                Elections

Sec.
1261.2 Definitions.
1261.3 General provisions.
1261.4 Designation of member directorships.
1261.5 Director eligibility.
1261.6 Determination of member votes.
1261.7 Nominations for member and independent directorships.
1261.8 Election process.
1261.9 Actions affecting director elections.
1261.10 Independent director conflict of interests.
1261.11 Conflict-of-interests policy for Bank directors.
1261.12 Reporting requirements for Bank directors.
1261.13 Ineligible Bank directors.
1261.14 Vacant Bank directorships.
1261.15 Minimum number of member directorships.
1261.16 [Reserved]

  Subpart C_Federal Home Loan Bank Directors' Compensation and Expenses

1261.20 Definitions.
1261.21 General.
1261.22 Directors' compensation policy.
1261.23 Director disapproval.
1261.24 Board meetings.

Subpart D [Reserved]

    Authority: 12 U.S.C. 1426, 1427, 1432, 4511 and 4526.

    Source: 73 FR 55715, Sept. 26, 2008, unless otherwise noted.



                          Subpart A_Definitions

    Source: 75 FR 17039, May 5, 2010, unless otherwise noted.



Sec. 1261.1  Definitions.

    As used in this part:
    Bank written in title case means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Director means the Director of the Federal Housing Finance Agency.
    FHFA means Federal Housing Finance Agency.



 Subpart B_Federal Home Loan Bank Boards of Directors: Eligibility and 
                                Elections



Sec. 1261.2  Definitions.

    As used in this Subpart B:
    Bona fide resident of a Bank district means an individual who:
    (1) Maintains a principal residence in the Bank district; or
    (2) If serving as an independent director, owns or leases in his or 
her own name a residence in the Bank district and is employed in a 
voting state in the Bank district.
    FHFA ID number means the number assigned to a member by FHFA and 
used by FHFA and the Banks to identify a particular member.
    Independent directorship means a directorship, as defined by section 
7(a)(4)(A) of the Bank Act, 12 U.S.C. 1427(a)(4)(A), that is filled by a 
plurality vote of the members at large by an individual having the 
qualifications specified by section 7(a)(3)(B)(i) or (ii), 12 U.S.C. 
1427(a)(3)(B)(i) or (ii).
    Member directorship means a directorship, as defined by section 
7(a)(4)(A) of the Bank Act, 12 U.S.C. 1427(a)(4)(A), that is filled by a 
plurality vote of the members located in a particular State by an 
individual who is an officer or director of a member located in that 
State, and includes guaranteed directorships and stock directorships.
    Method of equal proportions means the mathematical formula used by 
FHFA to allocate member directorships among the States in a Bank's 
district based on the relative amounts of Bank stock required to be held 
as of the record date by members located in each State.
    Public interest director means an individual serving in a public 
interest directorship.

[[Page 182]]

    Public interest directorship means an independent directorship 
filled by an individual with more than four years experience 
representing consumer or community interests in banking services, credit 
needs, housing or consumer financial protections.
    Record date means December 31 of the calendar year immediately 
preceding the election year.
    Stock directorship means a member directorship that is designated by 
FHFA as representing the members located in a particular voting State 
based on the amount of Bank stock required to be held by the members in 
that State as of the record date, other than a guaranteed directorship.
    Voting State means the District of Columbia, Puerto Rico, or the 
State of the United States in which a member's principal place of 
business, as determined in accordance with 12 CFR part 1263, or any 
successor provision, is located as of the record date. The voting State 
of a member with a principal place of business located in the U.S. 
Virgin Islands as of the record date is Puerto Rico, and the voting 
State of a member with a principal place of business located in American 
Samoa, Guam, or the Commonwealth of the Northern Mariana Islands as of 
the record date is Hawaii.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010]



Sec. 1261.3  General provisions.

    (a) Board size and composition. Annually, the FHFA Director will 
determine the size of the board of directors for each Bank and will 
designate at least a majority, but no more than 60 percent, of the 
directorships as member directorships and the remainder as independent 
directorships. Annually, the board of directors of each Bank shall 
determine how many, if any, of the independent directorships with terms 
beginning the following January 1 shall be public interest 
directorships, ensuring that at all times the Bank will have at least 
two public interest independent directorships.
    (b) Term of directorships. The term of office of each directorship 
commencing on or after January 1, 2009 shall be four years, except as 
adjusted pursuant to section 7(d) of the Bank Act (12 U.S.C 1427(d)) to 
achieve a staggered board, and shall commence on January 1 of the 
calendar year so designated by FHFA.
    (c) Annual elections. Each Bank annually shall conduct an election 
the purpose of which is to fill all directorships designated by FHFA as 
commencing on January 1 of the calendar year immediately following the 
year in which such election is commenced. Subject to the provisions of 
the Bank Act and in accordance with the requirements of this subpart, 
the disinterested members of the board of directors of each Bank, or a 
committee of disinterested directors, shall administer and conduct the 
annual election of directors. In so doing, the disinterested directors 
may use Bank staff or independent contractors to perform ministerial and 
administrative functions concerning the elections process.
    (d) Location of members. In accordance with section 7(c) of the Bank 
Act (12 U.S.C 1427(c)), for purposes of the election of member 
directors, a member is deemed to be located in its voting state, unless 
otherwise designated by the Director.
    (e) Dates. If any date specified in this part for action by a Bank, 
or specified by a Bank pursuant to this part, falls on a Saturday, 
Sunday, or Federal holiday, the relevant time period is deemed to be 
extended to the next calendar day that is not a Saturday, Sunday, or 
Federal holiday.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. 
Redesignated at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.4  Designation of member directorships.

    (a) Determination of voting stock. (1) On or before April 10 of each 
year, each Bank shall deliver to FHFA a capital stock report that 
indicates, as of the record date, the number of members located in each 
voting State in the Bank's district, the number of shares of Bank stock 
that each member (identified by its FHFA ID number) was required to 
hold, and the number of shares of Bank stock that all members located in 
each voting State were required to hold. If a Bank has issued more than 
one class of stock, it shall

[[Page 183]]

report the total shares of stock of all classes required to be held by 
the members. The Bank shall certify to FHFA that, to the best of its 
knowledge, the information provided in the capital stock report is 
accurate and complete, and that it has notified each member of its 
minimum capital stock holding requirement as of the record date.
    (2) If a Bank's capital plan was not in effect as of the record 
date, the number of shares of Bank stock that any member was required to 
hold as of the record date shall be determined in accordance with 
Sec. Sec. 1263.20 and 1263.22 of this chapter. If a Bank's capital plan 
was in effect as of the record date, the number of shares of Bank stock 
that any member was required to hold as of the record date shall be 
determined in accordance with the minimum investment established by the 
capital plan for that Bank; however, for any member whose Bank stock is 
less than the minimum investment during a transition period, the amount 
of Bank stock to be reported shall be the number of shares of Bank stock 
actually owned by the member as of the record date.
    (b) Designation of member directorships as stock directorships. 
Using the method of equal proportions, the Director annually will 
conduct a designation of member directorships for each Bank based on the 
number of shares of Bank stock required to be held by the members in 
each State as of December 31 of the preceding calendar year. If a Bank 
has issued more than one class of stock, the Director will designate the 
directorships for each State in that Bank district based on the combined 
number of shares required to be held by the members in that State. For 
purposes of conducting the designation, if a Bank's capital plan was not 
in effect on the immediately preceding December 31, the number of shares 
of Bank stock required to be held by members as of that date shall be 
determined in accordance with Sec. Sec. 1263.20 and 1263.22 of this 
chapter. If a Bank's capital plan was in effect on the immediately 
preceding December 31, the number of shares of Bank stock required to be 
held by members as of that date shall be determined in accordance with 
the minimum investment established by such capital plan; however, for 
any members whose Bank stock is less than the minimum investment during 
a transition period, the amount of stock to be used in the designation 
of directorships shall be the number of shares of Bank stock actually 
owned by those members as of that December 31. In all cases, the 
Director will designate the directorships by using the information 
provided by each Bank in its capital stock report required by paragraph 
(a)(1) of this section.
    (c) Allocation of directorships. The member directorships designated 
by the Director will be allocated among the States by the Director in 
accordance with section 7(b) and (c) of the Bank Act.
    (d) Notification. On or before June 1 of each year, FHFA will notify 
each Bank in writing of the total number of directorships established 
for the Bank and the number of member directorships designated as 
representing the members in each voting state in the Bank district.
    (e) Change of state. If the annual designation of member 
directorships results in an existing directorship being redesignated as 
representing members in a different State, that directorship shall be 
deemed to terminate in the previous State as of December 31 of that 
year, and a new directorship to begin in the succeeding State as of 
January 1 of the next year. The new directorship shall be filled by vote 
of the members in the succeeding State and, in order to maintain the 
staggered terms of directorships, shall be adjusted to a term equal to 
the remaining term of the previous directorship if it had not been 
redesignated to another State.

[74 FR 51460, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, 
17040, Apr. 5, 2010]



Sec. 1261.5  Director eligibility.

    (a) Eligibility requirements for member directors. Each member 
director, and each nominee to a member directorship, shall be:
    (1) A citizen of the United States; and
    (2) An officer or director of a member that is located in the 
district in which the Bank is located and that meets all

[[Page 184]]

minimum capital requirements established by its appropriate Federal 
banking agency or appropriate State regulator. In the case of a director 
elected by the members, the institution of which the director is an 
officer or director must have been a member as of the record date. In 
the case of a director elected by a Bank's board of directors to fill a 
vacancy, the institution of which the director is an officer or director 
must be a member at the time the board acts.
    (b) State designation for member directors. Each member director, 
and each nominee to a member directorship, shall be an officer or 
director of a member that is located in the State to which the Director 
has allocated such directorship under Sec. 1261.4(c)..
    (c) Eligibility requirements for independent directors. Each 
independent director, and each nominee to an independent directorship, 
shall be:
    (1) A citizen of the United States; and
    (2) A bona fide resident of the district in which the Bank is 
located.
    (d) Restrictions. (1) A nominee is not eligible if he or she:
    (i) Is an incumbent director, unless:
    (A) The incumbent director's term of office would expire before the 
new term of office would begin; and
    (B) The new term of office would not be barred by the term limit 
provision of section 7(d) of the Bank Act (12 U.S.C. 1427(d)); or
    (ii) Is a former director whose service would be barred by the term 
limit provision of section 7(d) of the Bank Act.
    (2) For purposes of applying the term limit provision of section 
7(d) of the Bank Act (12 U.S.C. 1427(d)):
    (i) A term of office that is adjusted after July 30, 2008 to a 
period of fewer than four years shall not be deemed to be a full term;
    (ii) Any member director's election and service to a directorship 
with a three year term of office prior to July 30, 2008 shall be deemed 
to be a full term;
    (iii) Any three-year term of office that ends immediately before a 
term of office that is adjusted after July 30, 2008 to a period of fewer 
than four years, and any term of office commencing immediately following 
such adjusted term of office, shall constitute consecutive full terms of 
office; and
    (iv) Any period of time served by a director who has been elected by 
the board of directors to fill a vacancy shall not be deemed to 
constitute a full term.
    (e) Loss of eligibility. A director shall become ineligible to 
remain in office if, during his or her term of office, the directorship 
to which he or she has been elected is eliminated. The incumbent 
director shall become ineligible after the close of business on December 
31 of the year in which the directorship is eliminated.
    (2) In the case of a redesignation to another State, the 
redesignated directorship shall be filled by a majority vote of the 
remaining Bank directors, in accordance with Sec. 1261.14(a).

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009; 
75 FR 17039, 17040, Apr. 5, 2010.]



Sec. 1261.6  Determination of member votes.

    (a) In general. Each Bank shall determine, in accordance with this 
section, the number of votes that each member of the Bank may cast for 
each directorship that is to be filled by the vote of the members.
    (b) Number of votes. For each member directorship and each 
independent directorship that is to be filled in an election, each 
member shall be entitled to cast one vote for each share of Bank stock 
that the member was required to hold as of the record date. 
Notwithstanding the preceding sentence, the number of votes that any 
member may cast for any one directorship shall not exceed the average 
number of shares of Bank stock required to be held as of the record date 
by all members located in the same State as of the record date. If a 
Bank has issued more than one class of stock, it shall calculate the 
average number of shares separately for each class of stock, using the 
total number of members in a State as the denominator, and shall apply 
those limits separately in determining the maximum number of votes that 
any member owning that class of stock may cast in the election. If a 
Bank's capital plan was not in effect as of the record date, the number 
of shares of

[[Page 185]]

Bank stock that a member was required to hold as of the record date 
shall be determined in accordance with Sec. Sec. 1263.20 and 1263.22 of 
this chapter. If a Bank's capital plan was in effect as of the record 
date, the number of shares of Bank stock that a member was required to 
hold as of the record date shall be determined in accordance with the 
minimum investment requirement established by the Bank's capital plan; 
however, for any member whose Bank stock is less than the minimum 
investment during a transition period, the amount of Bank stock to be 
used shall be the number of shares of Bank stock actually owned by the 
member as of the record date.
    (c) Voting preferences. If the board of directors of a Bank includes 
any voting preferences as part of its approved capital plan, those 
preferences shall supersede the provisions of paragraph (b) of this 
section that otherwise would allow a member to cast one vote for each 
share of Bank stock it was required to hold as of the record date. If a 
Bank establishes a voting preference for a class of stock, the members 
with voting rights shall remain subject to the provisions of section 
7(b) of the Bank Act (12 U.S.C. 1427(b)) that prohibit any member from 
casting any vote in excess of the average number of shares of stock 
required to be held by all members in its state.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.7  Nominations for member and independent directorships.

    (a) Election announcement. (1) Within a reasonable time in advance 
of an election, a Bank shall notify each member in its district of the 
commencement of the election process. Such notice shall include:
    (1) The number of member directorships designated for each voting 
state in the Bank district and the number of independent directorships 
for the Bank;
    (2) The name of each incumbent Bank director, the name and location 
of the member at which each member director serves, and the name and 
location of the organization with which each independent director is 
affiliated, if any, and the expiration date of each Bank director's term 
of office;
    (3) A brief statement describing the skills and experience the Bank 
believes are most likely to add strength to the board of directors, 
provided that the Bank previously has conducted the annual assessment 
permitted by Sec. 1261.9 and the Bank has elected to provide the 
results of the assessment to the members;
    (4) An attachment indicating the name, location, and FHFA ID number 
of every member in the member's voting state, and the number of votes 
each such member may cast for each directorship to be filled by such 
members, as determined in accordance with Sec. 1261.6; and
    (5) If a member directorship is to be filled by members in a State, 
a nominating certificate for those members.
    (b) Member directorship nominations. (1) Any member that is entitled 
to vote in the election may nominate an eligible individual to fill each 
available member directorship for its voting state by delivering to its 
Bank, prior to a deadline to be established by the Bank and set forth in 
the notice required in paragraph (a) of this section, a nominating 
certificate duly adopted by the member's governing body or by an 
individual authorized by the member's governing body to act on its 
behalf.
    (2) The nominating certificate shall include the name of the nominee 
and the name, location, and FHFA ID number of the member the nominee 
serves as an officer or director.
    (3) The Bank shall establish a deadline for delivery of nominating 
certificates, which shall be no earlier than 30 calendar days after the 
date on which the Bank delivers the notice required by paragraph (a) of 
this section, and the Bank shall not accept certificates received after 
that deadline. The Bank shall retain all accepted nominating 
certificates for at least two years after the date of the election.
    (c) Accepting member directorship nominations. Promptly after 
receipt of any nominating certificate, a Bank shall notify in writing 
any individual nominated for a member directorship. An individual may 
accept the nomination only by delivering to the Bank, prior to

[[Page 186]]

a deadline established by the Bank and set forth in its notice, an 
executed director eligibility certification form prescribed by FHFA. A 
Bank shall allow each nominee at least 30 calendar days after the date 
the Bank delivered the notice of nomination within which to deliver the 
executed form. A nominee may decline the nomination by so advising the 
Bank in writing, or by failing to deliver a properly executed director 
eligibility certification form prior to the deadline. Each Bank shall 
retain all information received under this paragraph for at least two 
years after the date of the election.
    (d) Independent directorship nominations. (1) Any individual who 
seeks to be an independent director of the board of directors of a Bank 
may deliver to the Bank, on or before the deadline set by the Bank for 
delivery of nominating certificates, an executed independent director 
application form prescribed by FHFA that demonstrates that the 
individual both is eligible and has either of the following 
qualifications:
    (i) More than four years experience representing consumer or 
community interests in banking services, credit needs, housing, or 
consumer financial protections; or
    (ii) Knowledge of or experience in one or more of the areas set 
forth in paragraph (e) of this section.
    (2) Any other interested party may recommend to the Bank that it 
consider a particular individual as a nominee for an independent 
directorship, but the Bank shall not nominate any individual unless the 
individual has delivered to the Bank, on or before the date the Bank has 
set for delivery of nominating certificates, an executed independent 
director application form prescribed by FHFA. The application form 
prescribed by FHFA will provide a means by which an individual can 
indicate an intent to be considered for a public interest directorship. 
The board of directors of the Bank may consider any individual for any 
independent directorship nomination, provided it has determined that the 
individual is eligible and qualified, but the board shall nominate for a 
public interest directorship only an individual who indicates on the 
application form a desire to be considered for a public interest 
directorship. The board of directors of the Bank shall consult with the 
Bank's Advisory Council before nominating any individual for any 
independent directorship. Each Bank shall include in its bylaws the 
procedures it intends to use for the nomination and election of the 
independent directors, and shall retain all information received under 
this paragraph for at least two years after the date of the election.
    (3) Each Bank shall determine the number of public interest 
directorships to be included among its authorized independent 
directorships, provided that each Bank shall at all times have at least 
two such directorships, and shall announce that number to its members in 
the notice required by paragraph (a) of this section. In submitting 
nominations to its members, each Bank shall nominate at least as many 
individuals as there are independent directorships to be filled in that 
year's election.
    (e) Independent director qualifications. (1) Each independent 
director and each nominee for an independent directorship, other than a 
public interest directorship, shall have experience in, or knowledge of, 
one or more of the following areas: auditing and accounting, 
derivatives, financial management, organizational management, project 
development, risk management practices, and the law. Before nominating 
any individual for an independent directorship, other than a public 
interest directorship, the board of directors of a Bank shall determine 
that such knowledge or experience of the nominee is commensurate with 
that needed to oversee a financial institution with a size and 
complexity that is comparable to that of the Bank.
    (2) Each public interest independent director and each nominee for a 
public interest directorship shall have more than four years experience 
representing consumer or community interests in banking services, credit 
needs, housing or consumer financial protection.
    (f) Eligibility verification. Using the information provided on 
member director eligibility forms prescribed by FHFA, each Bank shall 
verify that each nominee for each member directorship meets all the 
eligibility requirements

[[Page 187]]

for such directorship. Using the information provided on independent 
director application forms prescribed by FHFA, each Bank shall verify 
that each nominee for each public interest independent directorship and 
each other independent directorship meets all eligibility requirements 
and any knowledge or experience qualifications for such directorship, as 
set forth in the Bank Act and this subpart. Before announcing any 
independent director nominee, the Bank shall deliver to FHFA, for the 
Director's review, a copy of the independent director application forms 
executed by the individuals nominated for independent directorships. If 
within two weeks of such delivery FHFA provides comments to the Bank on 
any independent director nominee, the board of directors of the Bank 
shall consider the FHFA's comments in determining whether to proceed 
with those nominees or to reopen the nomination.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.8  Election process.

    (a) Ballots. Promptly after fulfilling the requirements of Sec. 
1261.7(f), each Bank shall prepare and deliver a ballot to each member 
that was a member as of the record date. The Bank shall include with 
each ballot a closing date for the Bank's receipt of voted ballots, 
which date shall be no earlier than 30 calendar days after the date such 
ballot is delivered to the member.
    (i) For states in which one or more member directorships are to be 
filled in the election, an alphabetical listing of the names of each 
nominee for such directorship, the name, location, and FHFA ID number of 
the member each nominee serves, the nominee's title or position with the 
member, and the number of member directorships to be filled by the 
members in that voting state in the election;
    (ii) An alphabetical listing of the names of each nominee for a 
public interest independent directorship and a brief description of each 
nominee's experience representing consumer and community interests;
    (iii) An alphabetical listing of the names nominee for the other 
independent directorships and a brief description of each nominee's 
qualifications, including his or her knowledge or experience in the 
areas of financial management, auditing and accounting, risk management 
practices, derivatives, project development, organizational management 
and any other area of knowledge or experience set forth in Sec. 
1261.7(e);
    (iv) A statement that write-in candidates are not permitted; and
    (v) A confidentiality statement prohibiting the Bank from disclosing 
how any member voted.
    (2) At the election of the Bank, a ballot also may include, in the 
body or as an attachment, a brief description of the skills and 
experience of each nominee for a member directorship.
    (b) Statement on skills and experience. If a Bank has conducted an 
annual assessment permitted by Sec. 1261.9 and has included the results 
of the assessment as part of the notice to members required in Sec. 
1261.7(a), it may include with each ballot a statement of the results of 
that assessment or any subsequent assessment. If the statement differs 
from the statement provided under Sec. 1261.7(a)(3), the Bank also 
shall include an explanation of why the statements differ.
    (c) Lack of member directorship nominees. If, for any voting State, 
the number of nominees for the member directorships for that State is 
equal to or fewer than the number of such directorships to be filled in 
that year's election, the Bank shall deliver a notice to the members in 
the affected voting State (in lieu of including any member directorship 
nominees on the ballot for that State) that such nominees shall be 
deemed elected without further action, due to an insufficient number of 
nominees to warrant balloting. Thereafter, the Bank shall declare 
elected all such eligible nominees and in doing so shall designate 
particular nominees to guaranteed directorships or stock directorships, 
respectively, if necessary. The nominees declared elected shall be 
included as directors-elect in the report of election required under 
paragraph (g) of this section. Any member directorship that is not 
filled due to a lack of nominees shall be deemed vacant as of January 1 
of the following year and

[[Page 188]]

shall be filled by the Bank's board of directors in accordance with 
Sec. 1261.14(a).
    (d) Voting. For each directorship to be filled, a member may cast 
the number of votes determined by the Bank pursuant to Sec. 1261.6. A 
member may not split its votes among multiple nominees for a single 
directorship, and, where there are multiple directorships to be filled, 
either within the member's voting state or at large, in the case of 
independent directorships, a member may not cumulatively vote for a 
single nominee. If any member votes, it shall by resolution of its 
governing body either authorize the voting for specific nominees or 
delegate to an individual the authority to vote for specific nominees. 
To vote, a member shall:
    (1) Mark on the ballot the name of not more than one of the nominees 
for each directorship to be filled. Each nominee so selected shall 
receive all of the votes that the member is entitled to cast.
    (2) Execute and deliver the ballot to the Bank on or before the 
closing date. A Bank shall not allow a member to change a ballot after 
it has been delivered to the Bank.
    (e) Counting ballots. A Bank shall not review any ballot until after 
the closing date, and shall not include in the election results any 
ballot received after the closing date. Promptly after the closing date, 
each Bank shall tabulate the votes cast in the election: for the member 
directorships, the Bank shall tabulate votes by each voting state; for 
the independent directorships, the Bank shall tabulate votes for the 
district at-large. Any ballots cast in violation of paragraph (d) of 
this section shall be void.
    (f) Declaring results. (1) For member directorships. The Bank shall 
declare elected the nominee receiving the highest number of votes. If 
more than one member directorship is to be filled for a particular 
State, the Bank shall declare elected each successive nominee receiving 
the next highest number of votes until all such open directorships are 
filled.
    (2) For independent directorships. (i) The bank shall tabulate 
separately the votes received for public interest independent director 
nominees and those received for other independent director nominees, in 
each case in accordance with paragraph (f)(2)(ii) of this section.
    (ii) If the number of nominees exceeds the number of directorships 
to be filled, the Bank shall declare elected the nominee receiving the 
highest number of votes. If more than one directorship is to be filled, 
the Bank shall declare elected each successive nominee receiving the 
next highest number of votes for such directorship until all such open 
directorships are filled.
    (iii) If the number of nominees is no more than the number of 
directorships to be filled, the Bank shall declare elected each nominee 
receiving at least 20 percent of the number of votes eligible to be cast 
in the election. If any directorship is not filled due to any nominee's 
failure to receive at least 20 percent of the votes eligible to be cast, 
the Bank shall continue the election process for that directorship under 
the procedures in paragraph (h) of this section.
    (3) Tie votes. In the event of a tie for the last available 
directorship, the disinterested incumbent members of the board of 
directors of the Bank, by a majority vote, shall declare elected one of 
the nominees for whom the number of votes cast was tied.
    (4) Eligibility. A Bank shall not declare elected a nominee that it 
has reason to know is ineligible to serve, nor shall it seat a director-
elect that it has reason to know is ineligible to serve.
    (5) Record retention. The Bank shall retain all ballots it receives 
for at least two years after the date of the election, and shall not 
disclose how any member voted.
    (g) Report of election. Promptly following the election, each Bank 
shall deliver a notice to its members, to each nominee, and to FHFA that 
contains the following information:
    (1) For each member directorship, the name of the director-elect, 
the name and location of the member at which he or she serves, his or 
her title or position at the member, the voting State represented, and 
the expiration date of the term of office;
    (2) For each independent directorship, the name of the director-
elect, whether the director-elect will fill a

[[Page 189]]

public interest directorship and, if so, the consumer or community 
interest represented by such directorship, any qualifications under 
Sec. 1261.7(e), and the expiration date of the term of office;
    (3) For member directorships, the total number of eligible votes, 
the number of members voting in the election, and the total number of 
votes cast for each nominee, which shall be reported by State; and
    (4) For independent directorships, the total number of eligible 
votes, the number of members voting in the election, and the total 
number of votes cast for each nominee, which shall be reported for the 
district at large.
    (h) Failure to fill all independent directorships. If any 
independent directorship is not filled due to the failure of any nominee 
to receive at least 20 percent of the eligible vote, the Bank shall 
continue the election process for that directorship under the following 
procedures:
    (1) The Bank's board of directors, after again consulting with the 
Bank's Advisory Council, shall nominate at least as many individuals as 
there are independent directorships to be filled. It may nominate 
individuals who failed to be elected in the initial vote. The Bank 
thereafter shall deliver to FHFA a copy of the independent director 
application form executed by each nominee.
    (2) The Bank then shall follow the provisions in this section that 
are applicable to the election process for independent directors, except 
for the following:
    (i) The Bank shall not place the name of any nominee on a ballot 
without prior approval of FHFA; and
    (ii) The Bank may adopt a closing date that is earlier than 30 
calendar days after delivery of the ballots to the eligible voting 
members, provided the Bank determines that an earlier closing date 
provides a reasonable amount of time to vote the ballots.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51462, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010]



Sec. 1261.9  Actions affecting director elections.

    (a) Banks. Each Bank, acting through its board of directors, may 
conduct an annual assessment of the skills and experience possessed by 
the members of its board of directors as a whole and may determine 
whether the capabilities of the board would be enhanced through the 
addition of individuals with particular skills and experience. If the 
board of directors determines that the Bank could benefit by the 
addition to the board of directors of individuals with particular 
qualifications, such as auditing and accounting, derivatives, financial 
management, organizational management, project development, risk 
management practices, or the law , it may identify those qualifications 
and so inform the members as part of its announcement of elections 
pursuant to Sec. 1261.7(a).
    (b) Support for nomination or election. (1) A Bank director, 
officer, attorney, employee, or agent, acting in his or her personal 
capacity, may support the nomination or election of any individual for a 
member directorship, provided that no such individual shall purport to 
represent the views of the Bank or its board of directors in doing so.
    (2) A Bank director, officer, attorney, employee or agent and the 
board of directors and Advisory Council (including members of the 
Council) of a Bank may support the candidacy of any individual nominated 
by the board of directors for election to an independent directorship.
    (c) Prohibition. Except as provided in paragraphs (a) and (b) of 
this section, no director, officer, attorney, employee, or agent of a 
Bank shall:
    (1) Communicate in any manner that a director, officer, attorney, 
employee, or agent of a Bank, directly or indirectly, supports or 
opposes the nomination or election of a particular individual for a 
directorship; or
    (2) Take any other action to influence the voting with respect to 
any particular individual.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009]



Sec. 1261.10  Independent director conflict of interests.

    (a) Employment interests. During any independent director's term of 
service,

[[Page 190]]

such director shall not serve as an officer, employee, or director of 
any member of the Bank on whose board the individual sits, or of any 
recipient of advances from such Bank, and shall not serve as an officer 
of any Bank. An independent director or nominee for any independent 
directorship shall disclose all such interests to the Bank on whose 
board of directors the individual serves or which is considering the 
individual for nomination to its board of directors.
    (b) Holding companies. Service as an officer, employee, or director 
of a holding company that controls one or more members of, or one or 
more recipients of advances from, the Bank on whose board an independent 
director serves is not deemed to be service as an officer, employee or 
director of a member or recipient of advances if the assets of all such 
members or all such recipients of advances constitute less than 35 
percent of the assets of the holding company, on a consolidated basis.
    (c) Attribution. For purposes of determining compliance with this 
section, a Bank shall attribute to the independent director any officer 
position, employee position, or directorship of the director's spouse.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009]



Sec. 1261.11  Conflict-of-interests policy for Bank directors.

    (a) Adoption of conflict-of-interests policy. Each Bank shall adopt 
a written conflict-of-interests policy that applies to all members of 
its board of directors. At a minimum, the conflict-of-interests policy 
of each Bank shall:
    (1) Require the directors to administer the affairs of the Bank 
fairly and impartially and without discrimination in favor of or against 
any member;
    (2) Require independent directors to comply with Sec. 1261.10(a);
    (3) Prohibit the use of a director's official position for personal 
gain;
    (4) Require directors to disclose actual or apparent conflicts of 
interests and establish procedures for addressing such conflicts;
    (5) Require the establishment of internal controls to ensure that 
conflict-of-interests reports are made and filed and that conflict-of-
interests issues are disclosed and resolved; and
    (6) Establish procedures to monitor compliance with the conflict-of-
interests policy.
    (b) Disclosure and recusal. A director shall disclose to the Bank's 
board of directors any financial interests he or she has, as well as any 
financial interests known to the director of any immediate family member 
or business associate of the director, in any matter to be considered by 
the Bank's board of directors and in any other business matter or 
proposed business matter involving the Bank and any other person or 
entity. A director shall disclose fully the nature of his or her 
interests in the matter and shall provide to the Bank's board of 
directors any information requested to aid in its consideration of the 
director's interest. A director shall refrain from considering or voting 
on any issue in which the director, any immediate family member, or any 
business associate has any financial interest.
    (c) Confidential Information. Directors shall not disclose or use 
confidential information they receive solely by reason of their position 
with the Bank to obtain any benefit for themselves or for any other 
individual or entity.
    (d) Gifts. No Bank director shall accept, and each Bank director 
shall discourage the director's immediate family members from accepting, 
any gift that the director believes or has reason to believe is given 
with the intent to influence the director's actions as a member of the 
Bank's board of directors, or where acceptance of such gift would have 
the appearance of intending to influence the director's actions as a 
member of the board. Any insubstantial gift would not be expected to 
trigger this prohibition.
    (e) Compensation. Directors shall not accept compensation for 
services performed for the Bank from any source other than the Bank for 
which the services are performed.
    (f) Definitions. For purposes of this section:
    (1) Immediate family member means parent, sibling, spouse, child, or 
dependent, or any relative sharing the same residence as the director.

[[Page 191]]

    (2) Financial interest means a direct or indirect financial interest 
in any activity, transaction, property, or relationship that involves 
receiving or providing something of monetary value, and includes, but is 
not limited to any right, contractual or otherwise, to the payment of 
money, whether contingent or fixed. It does not include a deposit or 
savings account maintained with a member, nor does it include a loan or 
extension of credit obtained from a member in the normal course of 
business on terms that are available generally to the public.
    (3) Business associate means any individual or entity with whom a 
director has a business relationship, including, but not limited to:
    (i) Any corporation or organization of which the director is an 
officer or partner, or in which the director beneficially owns ten 
percent or more of any class of equity security, including subordinated 
debt;
    (ii) Any other partner, officer, or beneficial owner of ten percent 
or more of any class of equity security, including subordinated debt, of 
any such corporation or organization; and
    (iii) Any trust or other estate in which a director has a 
substantial beneficial interest or as to which the director serves as 
trustee or in a similar fiduciary capacity.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009]



Sec. 1261.12  Reporting requirements for Bank directors.

    (a) Annual reporting. Annually, each Bank shall require each of its 
directors to execute and deliver to the Bank the appropriate director 
eligibility certification form prescribed by FHFA for the type of 
directorship held by such director. The Bank promptly shall deliver to 
FHFA a copy of the certification form delivered to it by each director.
    (b) Report of noncompliance. At any time that any director believes 
or has reason to believe that he or she no longer meets the eligibility 
requirements set forth in the Bank Act or this subpart, the director 
promptly shall so notify the Bank and FHFA in writing. At any time that 
a Bank believes or has reason to believe that any director no longer 
meets the eligibility requirements set forth in the Bank Act or this 
subpart, the Bank promptly shall notify FHFA in writing.

[74 FR 51463, Oct. 7, 2009]



Sec. 1261.13  Ineligible Bank directors.

    Upon a determination by FHFA or a Bank that any director of the Bank 
no longer satisfies the eligibility requirements set forth in the Bank 
Act or this part, or has failed to comply with the reporting 
requirements of Sec. 1261.12, the directorship shall immediately become 
vacant. Any director that is determined to have failed to comply with 
any of these requirements shall not continue to serve as a Bank 
director. Whenever a Bank makes such a determination, the Bank promptly 
shall notify the Bank director and FHFA in writing.

[74 FR 51464, Oct. 7, 2009]



Sec. 1261.14  Vacant Bank directorships.

    (a) Filling unexpired terms. (1) When a vacancy occurs on the board 
of directors of any Bank, the board of directors of the Bank shall 
elect, by a majority vote of the remaining Bank directors sitting as a 
board, an individual to fill the unexpired term of office of the vacant 
directorship, regardless of whether the remaining Bank directors 
constitute a quorum of the Bank's board of directors.
    (2) The board of directors of the Bank may fill an anticipated 
vacancy prior to the effective date of the vacancy, provided the board 
does so no sooner than the date of the regularly scheduled board meeting 
that occurs immediately prior to the effective date of the vacancy.
    (3) The board of directors shall elect only an individual who 
satisfies all the eligibility requirements in the Bank Act and in this 
subpart that applied to his or her predecessor and, for independent 
directorships, also satisfies any of the qualifications in the Bank Act 
or this subpart. If a Bank does not have at least two sitting public 
interest independent directors, the board of directors of the Bank shall 
designate the directorship as a public interest directorship and shall 
elect an individual

[[Page 192]]

who satisfies a public interest independent directorship qualification 
in the Bank Act or in this subpart.
    (b) Verifying eligibility. Prior to any election by the board of 
directors, the Bank shall obtain an executed member director eligibility 
certification form prescribed by FHFA from each individual being 
considered to fill a member directorship and an executed independent 
director application form prescribed by FHFA from each individual being 
considered to fill an independent directorship. Using the executed 
forms, each Bank shall verify each individual's eligibility and, as to 
independent directors, also shall verify the individual's 
qualifications. Before any independent director is elected by the board 
of directors of a Bank, the Bank shall deliver to FHFA for its review a 
copy of the application form of each individual being considered by the 
board. The Bank shall retain the information it receives in accordance 
with Sec. 1261.7(c) and (d).
    (c) Notification. Promptly after allowing the individual to assume 
the directorship, as provided in paragraph (b) of this section, a Bank 
shall notify FHFA and each member located in the Bank's district in 
writing of the following:
    (1) For each member directorship filled by the board of a Bank, the 
name of the director, the name, location, and FHFA ID number of the 
member the director serves, the director's title or position with the 
member, the voting State that the director represents, and the 
expiration date of the director's term of office; and
    (2) For each independent directorship filled by the board of a Bank, 
the name of the director, the name and location of the organization with 
which the director is affiliated, if any, the director's title or 
position with such organization, and the expiration date of the 
director's term of office.

[74 FR 51464, Oct. 7, 2009, as amended at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.15  Minimum number of member directorships.

    Except with respect to member directorships of a Bank resulting from 
the merger of any two or more Banks, the number of member directorships 
allocated to each state shall not be less than the number of 
directorships allocated to that state on December 31, 1960. The 
following list sets forth the states whose members held more than one 
directorship on December 31, 1960:

------------------------------------------------------------------------
                                                     Number of elective
                       State                          directorships on
                                                      December 31, 1960
------------------------------------------------------------------------
California........................................                     3
Colorado..........................................                     2
Illinois..........................................                     4
Indiana...........................................                     5
Iowa..............................................                     2
Kansas............................................                     3
Kentucky..........................................                     2
Louisiana.........................................                     2
Massachusetts.....................................                     3
Michigan..........................................                     3
Minnesota.........................................                     2
Missouri..........................................                     2
New Jersey........................................                     4
New York..........................................                     4
Ohio..............................................                     4
Oklahoma..........................................                     2
Pennsylvania......................................                     6
Tennessee.........................................                     2
Texas.............................................                     3
Wisconsin.........................................                     4
------------------------------------------------------------------------



Sec. 1261.16  [Reserved]



  Subpart C_Federal Home Loan Bank Directors' Compensation and Expenses

    Source: 75 FR 17040, Apr. 5, 2010, unless otherwise noted.



Sec. 1261.20  Definitions.

    As used in this subpart C:
    Compensation means any payment of money or the provision of any 
other thing of current or potential value in connection with service as 
a director. Compensation includes all direct and indirect payments of 
benefits, both cash and non-cash, granted to or for the benefit of any 
director.
    Expenses means necessary and reasonable travel, subsistence and 
other related expenses incurred in connection with the performance of 
official duties as are payable to senior officers of the Bank under the 
Bank's travel policy, except gift or entertainment expenses.



Sec. 1261.21  General.

    (a) Standard. Each Bank may pay its directors reasonable 
compensation for the time required of them, and their necessary 
expenses, in the performance

[[Page 193]]

of their duties, as determined by a resolution adopted by the board of 
directors of the Bank and subject to the provisions of this subpart.
    (b) Reporting. (1) Following calendar year. By December 31 of each 
calendar year, each Bank shall report to the Director the compensation 
it anticipates paying to its directors for the following calendar year.
    (2) Preceding calendar year. No later than the tenth business day of 
each calendar year, each Bank shall report to the Director the following 
information relating to director compensation, expenses and meeting 
attendance for the immediately preceding calendar year:
    (i) The total compensation paid to each director;
    (ii) The total expenses paid to each director;
    (iii) The total compensation paid to all directors;
    (iv) The total expenses paid to all directors;
    (v) The total of all expenses incurred at group functions that are 
not reimbursed to individual directors, such as the cost of group meals 
in connection with board and committee meetings;
    (vi) The total number of meetings held by the board and its 
designated committees; and
    (vii) The number of board and designated committee meetings each 
director attended in-person or through electronic means such as video or 
teleconferencing.



Sec. 1261.22  Directors' compensation policy.

    (a) General. Each Bank's board of directors annually shall adopt a 
written compensation policy to provide for the payment of reasonable 
compensation and expenses to the directors for the time required of them 
in performing their duties as directors. Payments under the directors' 
compensation policy may be based on any factors that the board of 
directors determines reasonably to be appropriate, subject to the 
requirements in this subpart.
    (b) Minimum contents. The compensation policy shall address the 
activities or functions for which director attendance or participation 
is necessary and which may be compensated, and shall explain and justify 
the methodology used to determine the amount of compensation to be paid 
to the Bank directors. The compensation policy shall require that any 
compensation paid to a director reflect the amount of time the director 
has spent on official Bank business, and shall require that compensation 
be reduced, as necessary to reflect lesser attendance or performance at 
board or committee meetings during a given year.
    (c) Prohibited payments. A Bank shall not pay a director who 
regularly fails to attend board or committee meetings, and shall not pay 
fees to a director that do not reflect the director's performance of 
official Bank business conducted prior to the payment of such fees.
    (d) Submission requirements. No later than the tenth business day 
after adopting its annual policy for director compensation and expenses, 
and at least 30 days prior to disbursing the first payment to any 
director, each Bank shall submit to the Director a copy of the policy, 
along with all studies or other supporting materials upon which the 
board relied in determining the level of compensation and expenses to 
pay to its directors.



Sec. 1261.23  Director disapproval.

    The Director may determine, based upon his or her review of a Bank's 
director compensation policy, methodology and/or other related 
materials, that the compensation and/or expenses to be paid to the 
directors are not reasonable. In such case, the Director may order the 
Bank to refrain from making any further payments under that compensation 
policy. Any such order shall apply prospectively only and will not 
affect either compensation or expenses that have been earned but not yet 
paid or reimbursed or payments that had been made prior to the date of 
the Director's determination and order.



Sec. 1261.24  Board meetings.

    (a) Number of meetings. The board of directors of each Bank shall 
hold as many meetings each year as necessary and appropriate to carry 
out its fiduciary responsibilities with respect to

[[Page 194]]

the effective oversight of Bank management and such other duties and 
obligations as may be imposed by applicable laws, provided the board of 
directors of a Bank must hold a minimum of six in-person meetings in any 
year.
    (b) Site of meetings. The bank usually should hold board of director 
and committee meetings within the district served by the Bank. The Bank 
shall not hold board of director or committee meetings in any location 
that is not within the United States, including its possessions and 
territories.

Subpart D [Reserved]



PART 1263_MEMBERS OF THE BANKS--Table of Contents



                          Subpart A_Definitions

Sec.
1263.1 Definitions.

                Subpart B_Membership Application Process

1263.2 Membership application requirements.
1263.3 Decision on application.
1263.4 Automatic membership.
1263.5 Appeals.

                   Subpart C_Eligibility Requirements

1263.6 General eligibility requirements.
1263.7 Duly organized requirement.
1263.8 Subject to inspection and regulation requirement.
1263.9 Makes long-term home mortgage loans requirement.
1263.10 Ten percent requirement for certain insured depository 
          institution applicants.
1263.11 Financial condition requirement for depository institutions and 
          CDFI credit unions.
1263.12 Character of management requirement.
1263.13 Home financing policy requirement.
1263.14 De novo insured depository institution applicants.
1263.15 Recent merger or acquisition applicants.
1263.16 Financial condition requirement for insurance company and 
          certain CDFI applicants.
1263.17 Rebuttable presumptions.
1263.18 Determination of appropriate Bank district for membership.

                      Subpart D_Stock Requirements

1263.19 Par value and price of stock.
1263.20 Stock purchase.
1263.21 Issuance and form of stock.
1263.22 Adjustments in stock holdings.
1263.23 Excess stock.

               Subpart E_Consolidations Involving Members

1263.24 Consolidations involving members.

            Subpart F_Withdrawal and Removal from Membership

1263.25 [Reserved]
1263.26 Voluntary withdrawal from membership.
1263.27 Involuntary termination of membership.
1263.28 [Reserved]

    Subpart G_Orderly Liquidation of Advances and Redemption of Stock

1263.29 Disposition of claims.

                  Subpart H_Reacquisition of Membership

1263.30 Readmission to membership.

                  Subpart I_Bank Access to Information

1263.31 Reports and examinations.

                      Subpart J_Membership Insignia

1263.32 Official membership insignia.

    Authority: 12 U.S.C. 1422, 1423, 1424, 1426, 1430, 1442, 4511, 4513.

    Source: 75 FR 690, Jan. 5, 2010, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1263.1  Definitions.

    For purposes of this part:
    Adjusted net income means net income, excluding extraordinary items 
such as income received from, or expense incurred in, sales of 
securities or fixed assets, reported on a regulatory financial report.
    Aggregate unpaid loan principal means the aggregate unpaid principal 
of a subscriber's or member's home mortgage loans, home-purchase 
contracts and similar obligations.
    Allowance for loan and lease losses means a specified balance-sheet 
account held to fund potential losses on loans or leases, which is 
reported on a regulatory financial report.
    Appropriate regulator means:
    (1) In the case of an insured depository institution or CDFI credit 
union,

[[Page 195]]

the Federal Deposit Insurance Corporation, Board of Governors of the 
Federal Reserve System, National Credit Union Administration, Office of 
the Comptroller of the Currency, Office of Thrift Supervision, or 
appropriate State regulator that has regulatory authority over, or is 
empowered to institute enforcement action against, the institution, as 
applicable, and
    (2) In the case of an insurance company, an appropriate State 
regulator accredited by the National Association of Insurance 
Commissioners.
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    CDFI credit union means a State-chartered credit union that has been 
certified as a CDFI by the CDFI Fund and that does not have Federal 
share insurance.
    CDFI Fund means the Community Development Financial Institutions 
Fund established under section 104(a) of the Community Development 
Banking and Financial Institutions Act of 1994 (12 U.S.C. 4703(a)).
    CFI asset cap means $1 billion, as adjusted annually by FHFA, 
beginning in 2009, to reflect any percentage increase in the preceding 
year's Consumer Price Index (CPI) for all urban consumers, as published 
by the U.S. Department of Labor.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(i) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(i)) and 
applicable FHFA regulations.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(ii) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(ii)) and 
applicable FHFA regulations.
    Combination business or farm property means real property for which 
the total appraised value is attributable to residential, and business 
or farm uses.
    Community development financial institution or CDFI means an 
institution that is certified as a community development financial 
institution by the CDFI Fund under the Community Development Banking and 
Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.), other than 
a bank or savings association insured under the Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.), a holding company for such a 
bank or savings association, or a credit union insured under the Federal 
Credit Union Act (12 U.S.C. 1751 et seq.).
    Community financial institution or CFI means an institution:
    (1) The deposits of which are insured under the Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.); and
    (2) The total assets of which, as of the date of a particular 
transaction, are less than the CFI asset cap, with total assets being 
calculated as an average of total assets over three years, with such 
average being based on the institution's regulatory financial reports 
filed with its appropriate regulator for the most recent calendar 
quarter and the immediately preceding 11 calendar quarters.
    Composite regulatory examination rating means a composite rating 
assigned to an institution following the guidelines of the Uniform 
Financial Institutions Rating System (issued by the Federal Financial 
Institutions Examination Council), including a CAMELS rating or other 
similar rating, contained in a written regulatory examination report.
    Consolidation includes a consolidation, a merger, or a purchase of 
all of the assets and assumption of all of the liabilities of an entity 
by another entity.
    Director means the Director of FHFA or his or her designee.
    Dwelling unit means a single room or a unified combination of rooms 
designed for residential use.
    Enforcement action means any written notice, directive, order, or 
agreement initiated by an applicant for Bank membership or by its 
appropriate regulator to address any operational, financial, managerial 
or other deficiencies of the applicant identified by such regulator. An 
``enforcement action'' does not include a board of directors' resolution 
adopted by the applicant in response to examination weaknesses 
identified by such regulator.
    Funded residential construction loan means the portion of a loan 
secured by real property made to finance the on-site construction of 
dwelling units on

[[Page 196]]

one-to-four family property or multifamily property disbursed to the 
borrower.
    Gross revenues means, in the case of a CDFI applicant, total 
revenues received from all sources, including grants and other donor 
contributions and earnings from operations.
    Home mortgage loan means:
    (1) A loan, whether or not fully amortizing, or an interest in such 
a loan, which is secured by a mortgage, deed of trust, or other security 
agreement that creates a first lien on one of the following interests in 
property:
    (i) One-to-four family property or multifamily property, in fee 
simple;
    (ii) A leasehold on one-to-four family property or multifamily 
property under a lease of not less than 99 years that is renewable, or 
under a lease having a period of not less than 50 years to run from the 
date the mortgage was executed; or
    (iii) Combination business or farm property where at least 50 
percent of the total appraised value of the combined property is 
attributable to the residential portion of the property, or in the case 
of any community financial institution, combination business or farm 
property, on which is located a permanent structure actually used as a 
residence (other than for temporary or seasonal housing), where the 
residence constitutes an integral part of the property; or
    (2) A mortgage pass-through security that represents an undivided 
ownership interest in:
    (i) Long-term loans, provided that, at the time of issuance of the 
security, all of the loans meet the requirements of paragraph (1) of 
this definition; or
    (ii) A security that represents an undivided ownership interest in 
long-term loans, provided that, at the time of issuance of the security, 
all of the loans meet the requirements of paragraph (1) of this 
definition.
    Insured depository institution means an insured depository 
institution as defined in section 2(9) of the Bank Act, as amended (12 
U.S.C. 1422(9)).
    Long-term means a term to maturity of five years or greater.
    Manufactured housing means a manufactured home as defined in section 
603(6) of the National Manufactured Housing Construction and Safety 
Standards Act of 1974, as amended (42 U.S.C. 5402(6)).
    Multifamily property means:
    (1) Real property that is solely residential and includes five or 
more dwelling units;
    (2) Real property that includes five or more dwelling units combined 
with commercial units, provided that the property is primarily 
residential; or
    (3) Nursing homes, dormitories, or homes for the elderly.
    Nonperforming loans and leases means the sum of the following, 
reported on a regulatory financial report:
    (1) Loans and leases that have been past due for 90 days (60 days, 
in the case of credit union applicants) or longer but are still 
accruing;
    (2) Loans and leases on a nonaccrual basis; and
    (3) Restructured loans and leases (not already reported as 
nonperforming).
    Nonresidential real property means real property that is not used 
for residential purposes, including business or industrial property, 
hotels, motels, churches, hospitals, educational and charitable 
institution buildings or facilities, clubs, lodges, association 
buildings, golf courses, recreational facilities, farm property not 
containing a dwelling unit, or similar types of property.
    One-to-four family property means:
    (1) Real property that is solely residential, including one-to-four 
family dwelling units or more than four family dwelling units if each 
dwelling unit is separated from the other dwelling units by dividing 
walls that extend from ground to roof, such as row houses, townhouses or 
similar types of property;
    (2) Manufactured housing if applicable State law defines the 
purchase or holding of manufactured housing as the purchase or holding 
of real property;
    (3) Individual condominium dwelling units or interests in individual 
cooperative housing dwelling units that are part of a condominium or 
cooperative building without regard to the number of total dwelling 
units therein; or
    (4) Real property which includes one-to-four family dwelling units 
combined with commercial units, provided the property is primarily 
residential.

[[Page 197]]

    Operating expenses means, in the case of a CDFI applicant, expenses 
for business operations, including, but not limited to, staff salaries 
and benefits, professional fees, interest, loan loss provision, and 
depreciation, contained in the applicant's audited financial statements.
    Other real estate owned means all other real estate owned (i.e., 
foreclosed and repossessed real estate), reported on a regulatory 
financial report, and does not include direct and indirect investments 
in real estate ventures.
    Regulatory examination report means a written report of examination 
prepared by the applicant's appropriate regulator, containing, in the 
case of insured depository institution applicants, a composite rating 
assigned to the institution following the guidelines of the Uniform 
Financial Institutions Rating System, including a CAMELS rating or other 
similar rating.
    Regulatory financial report means a financial report that an 
applicant is required to file with its appropriate regulator on a 
specific periodic basis, including the quarterly call report for 
commercial banks, thrift financial report for savings associations, 
quarterly or semi-annual call report for credit unions, the National 
Association of Insurance Commissioners' annual or quarterly report for 
insurance companies, or other similar report, including such report 
maintained by the appropriate regulator on a computer on-line database.
    Residential mortgage loan means any one of the following types of 
loans, whether or not fully amortizing:
    (1) Home mortgage loans;
    (2) Funded residential construction loans;
    (3) Loans secured by manufactured housing whether or not defined by 
State law as secured by an interest in real property;
    (4) Loans secured by junior liens on one-to-four family property or 
multifamily property;
    (5) Mortgage pass-through securities representing an undivided 
ownership interest in
    (i) Loans that meet the requirements of paragraphs (1) through (4) 
of this definition at the time of issuance of the security;
    (ii) Securities representing an undivided ownership interest in 
loans, provided that, at the time of issuance of the security, all of 
the loans meet the requirements of paragraphs (1) through (4) of this 
definition; or
    (iii) Mortgage debt securities as defined in paragraph (6) of this 
definition;
    (6) Mortgage debt securities secured by
    (i) Loans, provided that, at the time of issuance of the security, 
substantially all of the loans meet the requirements of paragraphs (1) 
through (4) of this definition;
    (ii) Securities that meet the requirements of paragraph (5) of this 
definition; or
    (iii) Securities secured by assets, provided that, at the time of 
issuance of the security, all of the assets meet the requirements of 
paragraphs (1) through (5) of this definition;
    (7) Home mortgage loans secured by a leasehold interest, as defined 
in paragraph (1)(ii) of the definition of ``home mortgage loan,'' except 
that the period of the lease term may be for any duration; or
    (8) Loans that finance properties or activities that, if made by a 
member, would satisfy the statutory requirements for the Community 
Investment Program established under section 10(i) of the Bank Act (12 
U.S.C. 1430(i)), or the regulatory requirements established for any CICA 
program.
    Restricted assets means both permanently restricted assets and 
temporarily restricted assets, as those terms are used in Financial 
Accounting Standard No. 117, or any successor publication.
    Total assets means the total assets reported on a regulatory 
financial report or, in the case of a CDFI applicant, the total assets 
contained in the applicant's audited financial statements.
    Unrestricted cash and cash equivalents means, in the case of a CDFI 
applicant, cash and highly liquid assets that can be easily converted 
into cash that are not restricted in a manner that prevents their use in 
paying expenses, as contained in the applicant's audited financial 
statements.

[[Page 198]]



                Subpart B_Membership Application Process



Sec. 1263.2  Membership application requirements.

    (a) Application. An applicant for membership in a Bank shall submit 
to that Bank an application that satisfies the requirements of this 
part. The application shall include a written resolution or 
certification duly adopted by the applicant's board of directors, or by 
an individual with authority to act on behalf of the applicant's board 
of directors, of the following:
    (1) Applicant review. Applicant has reviewed the requirements of 
this part and, as required by this part, has provided to the best of 
applicant's knowledge the most recent, accurate, and complete 
information available; and
    (2) Duty to supplement. Applicant will promptly supplement the 
application with any relevant information that comes to applicant's 
attention prior to the Bank's decision on whether to approve or deny the 
application, and if the Bank's decision is appealed pursuant to Sec. 
1263.5, prior to resolution of any appeal by FHFA.
    (b) Digest. The Bank shall prepare a written digest for each 
applicant stating whether or not the applicant meets each of the 
requirements in Sec. Sec. 1263.6 to 1263.18, the Bank's findings, and 
the reasons therefor.
    (c) File. The Bank shall maintain a membership file for each 
applicant for at least three years after the Bank decides whether to 
approve or deny membership or, in the case of an appeal to FHFA, for 
three years after the resolution of the appeal. The membership file 
shall contain at a minimum:
    (1) Digest. The digest required by paragraph (b) of this section.
    (2) Required documents. All documents required by Sec. Sec. 1263.6 
to 1263.18, including those documents required to establish or rebut a 
presumption under this part, shall be described in and attached to the 
digest. The Bank may retain in the file only the relevant portions of 
the regulatory financial reports required by this part. If an 
applicant's appropriate regulator requires return or destruction of a 
regulatory examination report, the date that the report is returned or 
destroyed shall be noted in the file.
    (3) Additional documents. Any additional document submitted by the 
applicant, or otherwise obtained or generated by the Bank, concerning 
the applicant.
    (4) Decision resolution. The decision resolution described in Sec. 
1263.3(b).



Sec. 1263.3  Decision on application.

    (a) Authority. FHFA hereby authorizes the Banks to approve or deny 
all applications for membership, subject to the requirements of this 
part. The authority to approve membership applications may be exercised 
only by a committee of the Bank's board of directors, the Bank 
president, or a senior officer who reports directly to the Bank 
president, other than an officer with responsibility for business 
development.
    (b) Decision resolution. For each applicant, the Bank shall prepare 
a written resolution duly adopted by the Bank's board of directors, by a 
committee of the board of directors, or by an officer with delegated 
authority to approve membership applications. The decision resolution 
shall state:
    (1) That the statements in the digest are accurate to the best of 
the Bank's knowledge, and are based on a diligent and comprehensive 
review of all available information identified in the digest; and
    (2) The Bank's decision and the reasons therefor. Decisions to 
approve an application should state specifically that:
    (i) The applicant is authorized under the laws of the United States 
and the laws of the appropriate State to become a member of, purchase 
stock in, do business with, and maintain deposits in, the Bank to which 
the applicant has applied; and
    (ii) The applicant meets all of the membership eligibility criteria 
of the Bank Act and this part.
    (c) Action on applications. The Bank shall act on an application 
within 60 calendar days of the date the Bank deems the application to be 
complete. An application is ``complete'' when a Bank has obtained all 
the information required by this part, and any other information the 
Bank deems necessary,

[[Page 199]]

to process the application. If an application that was deemed complete 
subsequently is deemed incomplete because the Bank determines during the 
review process that additional information is necessary to process the 
application, the Bank may stop the 60-day clock until the application 
again is deemed complete, and then resume the clock where it left off. 
The Bank shall notify an applicant in writing when its application is 
deemed by the Bank to be complete, and shall maintain a copy of such 
letter in the applicant's membership file. The Bank shall notify an 
applicant if the 60-day clock is stopped, and when the clock is resumed, 
and shall maintain a written record of such notifications in the 
applicant's membership file. Within three business days of a Bank's 
decision on an application, the Bank shall provide the applicant and 
FHFA with a copy of the Bank's decision resolution.



Sec. 1263.4  Automatic membership.

    (a) Automatic membership for certain charter conversions. An insured 
depository institution member that converts from one charter type to 
another automatically shall become a member of the Bank of which the 
converting institution was a member on the effective date of such 
conversion, provided that the converting institution continues to be an 
insured depository institution and the assets of the institution 
immediately before and immediately after the conversion are not 
materially different. In such case, all relationships existing between 
the member and the Bank at the time of such conversion may continue.
    (b) Automatic membership for transfers. Any member whose membership 
is transferred pursuant to Sec. 1263.18(d) automatically shall become a 
member of the Bank to which it transfers.
    (c) Automatic membership, in the Bank's discretion, for certain 
consolidations.--(1) If a member institution (or institutions) and a 
nonmember institution are consolidated, and the consolidated institution 
has its principal place of business in a State in the same Bank district 
as the disappearing institution (or institutions), and the consolidated 
institution will operate under the charter of the nonmember institution, 
on the effective date of the consolidation, the consolidated institution 
may, in the discretion of the Bank of which the disappearing institution 
(or institutions) was a member immediately prior to the effective date 
of the consolidation, automatically become a member of such Bank upon 
the purchase of the minimum amount of Bank stock required for membership 
in that Bank, as required by Sec. 1263.20, provided that:
    (i) 90 percent or more of the consolidated institution's total 
assets are derived from the total assets of the disappearing member 
institution (or institutions); and
    (ii) The consolidated institution provides written notice to such 
Bank, within 60 calendar days after the effective date of the 
consolidation, that it desires to be a member of the Bank.
    (2) The provisions of Sec. 1263.24(b)(4)(i) shall apply, and upon 
approval of automatic membership by the Bank, the provisions of Sec. 
1263.24(c) and (d) shall apply.



Sec. 1263.5  Appeals.

    (a) Appeals by applicants.--(1) Filing procedure. Within 90 calendar 
days of the date of a Bank's decision to deny an application for 
membership, the applicant may file a written appeal of the decision with 
FHFA.
    (2) Documents. The applicant's appeal shall be addressed to the 
Deputy Director for Federal Home Loan Bank Regulation, Federal Housing 
Finance Agency, 1625 Eye Street, NW., Washington, DC 20006, with a copy 
to the Bank, and shall include the following documents:
    (i) Bank's decision resolution. A copy of the Bank's decision 
resolution; and
    (ii) Basis for appeal. An applicant must provide a statement of the 
basis for the appeal with sufficient facts, information, analysis, and 
explanation to rebut any applicable presumptions, or otherwise to 
support the applicant's position.
    (b) Record for appeal.--(1) Copy of membership file. Upon receiving 
a copy of an appeal, the Bank whose action has been appealed (appellee 
Bank) shall provide FHFA with a copy of the applicant's complete 
membership file. Until FHFA resolves the appeal, the appellee Bank shall 
supplement the materials

[[Page 200]]

provided to FHFA as any new materials are received.
    (2) Additional information. FHFA may request additional information 
or further supporting arguments from the appellant, the appellee Bank, 
or any other party that FHFA deems appropriate.
    (c) Deciding appeals. FHFA shall consider the record for appeal 
described in paragraph (b) of this section and shall resolve the appeal 
based on the requirements of the Bank Act and this part within 90 
calendar days of the date the appeal is filed with FHFA. In deciding the 
appeal, FHFA shall apply the presumptions in this part, unless the 
appellant or appellee Bank presents evidence to rebut a presumption as 
provided in Sec. 1263.17.



                   Subpart C_Eligibility Requirements



Sec. 1263.6  General eligibility requirements.

    (a) Requirements. Any building and loan association, savings and 
loan association, cooperative bank, homestead association, insurance 
company, savings bank, community development financial institution 
(including a CDFI credit union), or insured depository institution, upon 
submission of an application satisfying all of the requirements of the 
Bank Act and this part, shall be eligible to become a member of a Bank 
if:
    (1) It is duly organized under Tribal law, or under the laws of any 
State or of the United States;
    (2) It is subject to inspection and regulation under the banking 
laws, or under similar laws, of any State or of the United States or, in 
the case of a CDFI, is certified by the CDFI Fund;
    (3) It makes long-term home mortgage loans;
    (4) Its financial condition is such that advances may be safely made 
to it;
    (5) The character of its management is consistent with sound and 
economical home financing; and
    (6) Its home financing policy is consistent with sound and 
economical home financing.
    (b) Additional eligibility requirement for insured depository 
institutions other than community financial institutions. In order to be 
eligible to become a member of a Bank, an insured depository institution 
applicant other than a community financial institution also must have at 
least 10 percent of its total assets in residential mortgage loans.
    (c) Additional eligibility requirement for applicants that are not 
insured depository institutions. In order to be eligible to become a 
member of a Bank, an applicant that is not an insured depository 
institution also must have mortgage-related assets that reflect a 
commitment to housing finance, as determined by the Bank in its 
discretion.
    (d) Ineligibility. Except as otherwise provided in this part, if an 
applicant does not satisfy the requirements of this part, the applicant 
is ineligible for membership.



Sec. 1263.7  Duly organized requirement.

    An applicant shall be deemed to be duly organized, as required by 
section 4(a)(1)(A) of the Bank Act (12 U.S.C. 1424(a)(1)(A)) and Sec. 
1263.6(a)(1), if it is chartered by a State or Federal agency as a 
building and loan association, savings and loan association, cooperative 
bank, homestead association, insurance company, savings bank, or insured 
depository institution or, in the case of a CDFI applicant, is 
incorporated under State or Tribal law.



Sec. 1263.8  Subject to inspection and regulation requirement.

    An applicant shall be deemed to be subject to inspection and 
regulation, as required by section 4(a)(1)(B) of the Bank Act (12 U.S.C. 
1424 (a)(1)(B)) and Sec. 1263.6(a)(2) if, in the case of an insured 
depository institution or insurance company applicant, it is subject to 
inspection and regulation by its appropriate regulator. A CDFI applicant 
that is certified by the CDFI Fund is not subject to this requirement.



Sec. 1263.9  Makes long-term home mortgage loans requirement.

    An applicant shall be deemed to make long-term home mortgage loans, 
as required by section 4(a)(1)(C) of the Bank Act (12 U.S.C. 
1424(a)(1)(C)) and Sec. 1263.6(a)(3), if, based on the applicant's most 
recent regulatory financial report filed with its appropriate regulator, 
or

[[Page 201]]

other documentation provided to the Bank, in the case of a CDFI 
applicant that does not file such reports, the applicant originates or 
purchases long-term home mortgage loans.



Sec. 1263.10  Ten percent requirement for certain insured depository 
institution applicants.

    An insured depository institution applicant that is subject to the 
10 percent requirement of section 4(a)(2)(A) of the Bank Act (12 U.S.C. 
1424(a)(2)(A)) and Sec. 1263.6(b) shall be deemed to be in compliance 
with such requirement if, based on the applicant's most recent 
regulatory financial report filed with its appropriate regulator, the 
applicant has at least 10 percent of its total assets in residential 
mortgage loans, except that any assets used to secure mortgage debt 
securities as described in paragraph (6) of the definition of 
``residential mortgage loan'' set forth in Sec. 1263.1 shall not be 
used to meet this requirement.



Sec. 1263.11  Financial condition requirement for depository 
institutions and CDFI credit unions.

    (a) Review requirement. In determining whether a building and loan 
association, savings and loan association, cooperative bank, homestead 
association, savings bank, insured depository institution, or CDFI 
credit union has complied with the financial condition requirements of 
section 4(a)(2)(B) of the Bank Act (12 U.S.C. 1424(a)(2)(B)) and Sec. 
1263.6(a)(4), the Bank shall obtain as a part of the membership 
application and review each of the following documents:
    (1) Regulatory financial reports. The regulatory financial reports 
filed by the applicant with its appropriate regulator for the last six 
calendar quarters and three year-ends preceding the date the Bank 
receives the application;
    (2) Financial statement. In order of preference--
    (i) The most recent independent audit of the applicant conducted in 
accordance with generally accepted auditing standards by a certified 
public accounting firm which submits a report on the applicant;
    (ii) The most recent independent audit of the applicant's parent 
holding company conducted in accordance with generally accepted auditing 
standards by a certified public accounting firm which submits a report 
on the consolidated holding company but not on the applicant separately;
    (iii) The most recent directors' examination of the applicant 
conducted in accordance with generally accepted auditing standards by a 
certified public accounting firm;
    (iv) The most recent directors' examination of the applicant 
performed by other external auditors;
    (v) The most recent review of the applicant's financial statements 
by external auditors;
    (vi) The most recent compilation of the applicant's financial 
statements by external auditors; or
    (vii) The most recent audit of other procedures of the applicant.
    (3) Regulatory examination report. The applicant's most recent 
available regulatory examination report prepared by its appropriate 
regulator, a summary prepared by the Bank of the applicant's strengths 
and weaknesses as cited in the regulatory examination report, and a 
summary prepared by the Bank or applicant of actions taken by the 
applicant to respond to examination weaknesses;
    (4) Enforcement actions. A description prepared by the Bank or 
applicant of any outstanding enforcement actions against the applicant, 
responses by the applicant, reports as required by the enforcement 
action, and verbal or written indications, if available, from the 
appropriate regulator of how the applicant is complying with the terms 
of the enforcement action; and
    (5) Additional information. Any other relevant document or 
information concerning the applicant that comes to the Bank's attention 
in reviewing the applicant's financial condition.
    (b) Standards. An applicant of the type described in paragraph (a) 
of this section shall be deemed to be in compliance with the financial 
condition requirement of section 4(a)(2)(B) of the Bank Act (12 U.S.C. 
1424(a)(2)(B)) and Sec. 1263.6(a)(4), if:

[[Page 202]]

    (1) Recent composite regulatory examination rating. The applicant 
has received a composite regulatory examination rating from its 
appropriate regulator within two years preceding the date the Bank 
receives the application;
    (2) Capital requirement. The applicant meets all of its minimum 
statutory and regulatory capital requirements as reported in its most 
recent quarter-end regulatory financial report filed with its 
appropriate regulator; and
    (3) Minimum performance standard--(i) Except as provided in 
paragraph (b)(3)(iii) of this section, the applicant's most recent 
composite regulatory examination rating from its appropriate regulator 
within the past two years was ``1'', or the most recent rating was ``2'' 
or ``3'' and, based on the applicant's most recent regulatory financial 
report filed with its appropriate regulator, the applicant satisfied all 
of the following performance trend criteria--
    (A) Earnings. The applicant's adjusted net income was positive in 
four of the six most recent calendar quarters;
    (B) Nonperforming assets. The applicant's nonperforming loans and 
leases plus other real estate owned, did not exceed 10 percent of its 
total loans and leases plus other real estate owned, in the most recent 
calendar quarter; and
    (C) Allowance for loan and lease losses. The applicant's ratio of 
its allowance for loan and lease losses plus the allocated transfer risk 
reserve to nonperforming loans and leases was 60 percent or greater 
during four of the six most recent calendar quarters.
    (ii) For applicants that are not required to report financial data 
to their appropriate regulator on a quarterly basis, the information 
required in paragraph (b)(3)(i) of this section may be reported on a 
semi-annual basis.
    (iii) A CDFI credit union applicant must meet the performance trend 
criteria in paragraph (b)(3)(i) of this section irrespective of its 
composite regulatory examination rating.
    (c) Eligible collateral not considered. The availability of 
sufficient eligible collateral to secure advances to the applicant is 
presumed and shall not be considered in determining whether an applicant 
is in the financial condition required by section 4(a)(2)(B) of the Bank 
Act (12 U.S.C. 1424(a)(2)(B)) and Sec. 1263.6(a)(4).



Sec. 1263.12  Character of management requirement.

    (a) General. A building and loan association, savings and loan 
association, cooperative bank, homestead association, savings bank, 
insured depository institution, insurance company, and CDFI credit union 
shall be deemed to be in compliance with the character of management 
requirements of section 4(a)(2)(C) of the Bank Act (12 U.S.C. 
1424(a)(2)(C)) and Sec. 1263.6(a)(5) if the applicant provides to the 
Bank an unqualified written certification duly adopted by the 
applicant's board of directors, or by an individual with authority to 
act on behalf of the applicant's board of directors, that:
    (1) Enforcement actions. Neither the applicant nor any of its 
directors or senior officers is subject to, or operating under, any 
enforcement action instituted by its appropriate regulator;
    (2) Criminal, civil or administrative proceedings. Neither the 
applicant nor any of its directors or senior officers has been the 
subject of any criminal, civil or administrative proceedings reflecting 
upon creditworthiness, business judgment, or moral turpitude since the 
most recent regulatory examination report; and
    (3) Criminal, civil or administrative monetary liabilities, lawsuits 
or judgments. There are no known potential criminal, civil or 
administrative monetary liabilities, material pending lawsuits, or 
unsatisfied judgments against the applicant or any of its directors or 
senior officers since the most recent regulatory examination report, 
that are significant to the applicant's operations.
    (b) CDFIs other than CDFI credit unions. A CDFI applicant, other 
than a CDFI credit union, shall be deemed to be in compliance with the 
character of management requirement of Sec. 1263.6(a)(5), if the 
applicant provides an unqualified written certification duly adopted by 
the applicant's board of directors, or by an individual with authority 
to act on behalf of the applicant's board of directors, that:

[[Page 203]]

    (1) Criminal, civil or administrative proceedings. Neither the 
applicant nor any of its directors or senior officers has been the 
subject of any criminal, civil or administrative proceedings reflecting 
upon creditworthiness, business judgment, or moral turpitude in the past 
three years; and
    (2) Criminal, civil or administrative monetary liabilities, lawsuits 
or judgments. There are no known potential criminal, civil or 
administrative monetary liabilities, material pending lawsuits, or 
unsatisfied judgments against the applicant or any of its directors or 
senior officers arising within the past three years that are significant 
to the applicant's operations.



Sec. 1263.13  Home financing policy requirement.

    (a) Standard. An applicant shall be deemed to be in compliance with 
the home financing policy requirements of section 4(a)(2)(C) of the Bank 
Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 1263.6(a)(6), if the applicant 
has received a Community Reinvestment Act (CRA) rating of 
``Satisfactory'' or better on its most recent formal, or if unavailable, 
informal or preliminary, CRA performance evaluation.
    (b) Written justification required. An applicant that is not subject 
to the CRA shall file, as part of its application for membership, a 
written justification acceptable to the Bank of how and why the 
applicant's home financing policy is consistent with the Bank System's 
housing finance mission.



Sec. 1263.14  De novo insured depository institution applicants.

    (a) Duly organized, subject to inspection and regulation, financial 
condition and character of management requirements. An insured 
depository institution applicant whose date of charter approval is 
within three years prior to the date the Bank receives the applicant's 
application for membership in the Bank (de novo applicant) is deemed to 
meet the requirements of Sec. Sec. 1263.7, 1263.8, 1263.11 and 1263.12.
    (b) Makes long-term home mortgage loans requirement. A de novo 
applicant shall be deemed to make long-term home mortgage loans as 
required by Sec. 1263.9, if it has filed as part of its application for 
membership, a written justification acceptable to the Bank of how its 
home financing credit policy and lending practices will include 
originating or purchasing long-term home mortgage loans.
    (c) 10 percent requirement--(1) One-year requirement. A de novo 
applicant subject to the 10 percent requirement of section 4(a)(2)(A) of 
the Bank Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 1263.6(b) shall have 
until one year after commencing its initial business operations to meet 
the 10 percent requirement of Sec. 1263.10.
    (2) Conditional approval. A de novo applicant shall be conditionally 
deemed to be in compliance with the 10 percent requirement of section 
4(a)(2)(A) of the Bank Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 
1263.6(b). A de novo applicant that receives such conditional membership 
approval is subject to the stock purchase requirements established by 
FHFA regulation or the Bank's capital plan, as applicable, as well as 
FHFA regulations governing advances to members.
    (3) Approval. A de novo applicant shall be deemed to be in 
compliance with the 10 percent requirement of section 4(a)(2)(A) of the 
Bank Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 1263.6(b) upon receipt by 
the Bank from the applicant, within one year after commencement of the 
applicant's initial business operations, of evidence acceptable to the 
Bank that the applicant satisfies the 10 percent requirement.
    (4) Conditional approval deemed null and void. If the requirements 
of paragraph (c)(3) of this section are not satisfied, a de novo 
applicant shall be deemed to be in noncompliance with the 10 percent 
requirement of section 4(a)(2)(A) of the Bank Act (12 U.S.C. 
1424(a)(2)(A)) and Sec. 1263.6(b), and its conditional membership 
approval is deemed null and void.
    (5) Treatment of outstanding advances and Bank stock. If a de novo 
applicant's conditional membership approval is deemed null and void 
pursuant to paragraph (c)(4) of this section, the liquidation of any 
outstanding indebtedness owed by the applicant to the Bank and 
redemption of stock of such Bank shall be carried out in accordance with 
Sec. 1263.29.

[[Page 204]]

    (d) Home financing policy requirement--(1) Conditional approval. A 
de novo applicant that has not received its first formal, or, if 
unavailable, informal or preliminary, CRA performance evaluation, shall 
be conditionally deemed to be in compliance with the home financing 
policy requirement of section 4(a)(2)(C) of the Bank Act (12 U.S.C. 
1424(a)(2)(C)) and Sec. 1263.6(a)(6), if the applicant has filed, as 
part of its application for membership, a written justification 
acceptable to the Bank of how and why its home financing credit policy 
and lending practices will meet the credit needs of its community. An 
applicant that receives such conditional membership approval is subject 
to the stock purchase requirements established by FHFA regulation or the 
Bank's capital plan, as applicable, as well as FHFA regulations 
governing advances to members.
    (2) Approval. A de novo applicant that has been granted conditional 
approval under paragraph (d)(1) of this section shall be deemed to be in 
compliance with the home financing policy requirement of section 
4(a)(2)(C) of the Bank Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 
1263.6(a)(6) upon receipt by the Bank of evidence from the applicant 
that it received a CRA rating of ``Satisfactory'' or better on its first 
formal, or if unavailable, informal or preliminary, CRA performance 
evaluation.
    (3) Conditional approval deemed null and void. If the de novo 
applicant's first such CRA rating is ``Needs to Improve'' or 
``Substantial Non-Compliance,'' the applicant shall be deemed to be in 
noncompliance with the home financing policy requirement of section 
4(a)(2)(C) of the Bank Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 
1263.6(a)(6), subject to rebuttal by the applicant under Sec. 
1263.17(f), and its conditional membership approval is deemed null and 
void.
    (4) Treatment of outstanding advances and Bank stock. If the 
applicant's conditional membership approval is deemed null and void 
pursuant to paragraph (d)(3) of this section, the liquidation of any 
outstanding indebtedness owed by the applicant to the Bank and 
redemption of stock of such Bank shall be carried out in accordance with 
Sec. 1263.29.



Sec. 1263.15  Recent merger or acquisition applicants.

    An applicant that merged with or acquired another institution prior 
to the date the Bank receives its application for membership is subject 
to the requirements of Sec. Sec. 1263.7 to 1263.13 except as provided 
in this section.
    (a) Financial condition requirement--(1) Regulatory financial 
reports. For purposes of Sec. 1263.11(a)(1), an applicant that, as a 
result of a merger or acquisition preceding the date the Bank receives 
its application for membership, has not yet filed regulatory financial 
reports with its appropriate regulator for the last six calendar 
quarters and three year-ends preceding such date, shall provide any 
regulatory financial reports that the applicant has filed with its 
appropriate regulator.
    (2) Performance trend criteria. For purposes of Sec. 
1263.11(b)(3)(i)(A) to (C), an applicant that, as a result of a merger 
or acquisition preceding the date the Bank receives its application for 
membership, has not yet filed combined regulatory financial reports with 
its appropriate regulator for the last six calendar quarters preceding 
such date, shall provide pro forma combined financial statements for 
those calendar quarters in which actual combined regulatory financial 
reports are unavailable.
    (b) Home financing policy requirement. For purposes of Sec. 
1263.13, an applicant that, as a result of a merger or acquisition 
preceding the date the Bank receives its application for membership, has 
not received its first formal, or if unavailable, informal or 
preliminary, CRA performance evaluation, shall file as part of its 
application, a written justification acceptable to the Bank of how and 
why the applicant's home financing credit policy and lending practices 
will meet the credit needs of its community.
    (c) Makes long-term home mortgage loans requirement; 10 percent 
requirement. For purposes of determining compliance with Sec. Sec. 
1263.9 and 1263.10, a Bank may, in its discretion, permit an applicant 
that, as a result of a merger or acquisition preceding the date the Bank 
receives its application for membership, has not yet filed a 
consolidated

[[Page 205]]

regulatory financial report as a combined entity with its appropriate 
regulator, to provide the combined pro forma financial statement for the 
combined entity filed with the regulator that approved the merger or 
acquisition.



Sec. 1263.16  Financial condition requirement for insurance company
and certain CDFI applicants.

    (a) Insurance companies. An insurance company applicant shall be 
deemed to meet the financial condition requirement of Sec. 1263.6(a)(4) 
if, based on the information contained in the applicant's most recent 
regulatory financial report filed with its appropriate regulator, the 
applicant meets all of its minimum statutory and regulatory capital 
requirements and the capital standards established by the National 
Association of Insurance Commissioners.
    (b) CDFIs other than CDFI credit unions--(1) Review requirement. In 
order for a Bank to determine whether a CDFI applicant, other than a 
CDFI credit union, has complied with the financial condition requirement 
of Sec. 1263.6(a)(4), the applicant shall submit, as a part of its 
membership application, each of the following documents, and the Bank 
shall consider all such information prior to acting on the application 
for membership:
    (i) Financial statements. An independent audit conducted within the 
prior year in accordance with generally accepted auditing standards by a 
certified public accounting firm, plus more recent quarterly statements, 
if available, and financial statements for the two years prior to the 
most recent audited financial statement. At a minimum, all such 
financial statements must include income and expense statements, 
statements of activities, statements of financial position, and 
statements of cash flows. The financial statement for the most recent 
year must include separate schedules or disclosures of the financial 
position of each of the applicant's affiliates, descriptions of their 
lines of business, detailed financial disclosures of the relationship 
between the applicant and its affiliates (such as indebtedness or 
subordinate debt obligations), disclosures of interlocking directorships 
with each affiliate, and identification of temporary and permanently 
restricted funds and the requirements of these restrictions;
    (ii) CDFI Fund certification. The certification that the applicant 
has received from the CDFI Fund. If the certification is more than three 
years old, the applicant must also submit a written statement attesting 
that there have been no material events or occurrences since the date of 
certification that would adversely affect its strategic direction, 
mission, or business operations; and
    (iii) Additional information. Any other relevant document or 
information a Bank requests concerning the applicant's financial 
condition that is not contained in the applicant's financial statements, 
as well as any other information that the applicant believes 
demonstrates that it satisfies the financial condition requirement of 
Sec. 1263.6(a)(4), notwithstanding its failure to meet any of the 
financial condition standards of paragraph (b)(2) of this section.
    (2) Standards. A CDFI applicant, other than a CDFI credit union, 
shall be deemed to be in compliance with the financial condition 
requirement of Sec. 1263.6(a)(4) if it meets all of the following 
minimum financial standards--
    (i) Net asset ratio. The applicant's ratio of net assets to total 
assets is at least 20 percent, with net and total assets including 
restricted assets, where net assets is calculated as the residual value 
of assets over liabilities and is based on information derived from the 
applicant's most recent financial statements;
    (ii) Earnings. The applicant has shown positive net income, where 
net income is calculated as gross revenues less total expenses, is based 
on information derived from the applicant's most recent financial 
statements, and is measured as a rolling three-year average;
    (iii) Loan loss reserves. The applicant's ratio of loan loss 
reserves to loans and leases 90 days or more delinquent (including loans 
sold with full recourse) is at least 30 percent, where loan loss 
reserves are a specified balance sheet account that reflects the amount 
reserved for loans expected to

[[Page 206]]

be uncollectible and are based on information derived from the 
applicant's most recent financial statements;
    (iv) Liquidity. The applicant has an operating liquidity ratio of at 
least 1.0 for the four most recent quarters, and for one or both of the 
two preceding years, where the numerator of the ratio includes 
unrestricted cash and cash equivalents and the denominator of the ratio 
is the average quarterly operating expense.



Sec. 1263.17  Rebuttable presumptions.

    (a) Rebutting presumptive compliance. The presumption that an 
applicant meeting the requirements of Sec. Sec. 1263.7 to 1263.16 is in 
compliance with section 4(a) of the Bank Act (12 U.S.C. 1424(a)) and 
Sec. 1263.6(a) and (b), may be rebutted, and the Bank may deny 
membership to the applicant, if the Bank obtains substantial evidence to 
overcome the presumption of compliance.
    (b) Rebutting presumptive noncompliance. The presumption that an 
applicant not meeting a particular requirement of Sec. Sec. 1263.8, 
1263.11, 1263.12, 1263.13, or 1263.16, is in noncompliance with section 
4(a) of the Bank Act (12 U.S.C. 1424(a)), and Sec. 1263.6(a)(2), (4), 
(5), or (6) may be rebutted. The applicant shall be deemed to meet such 
requirement, if the applicable requirements in this section are 
satisfied.
    (c) Presumptive noncompliance by insurance company applicant with 
``subject to inspection and regulation'' requirement of Sec. 1263.8. If 
an insurance company applicant is not subject to inspection and 
regulation by an appropriate State regulator accredited by the National 
Association of Insurance Commissioners (NAIC), as required by Sec. 
1263.8, the applicant or the Bank shall prepare a written justification 
that provides substantial evidence acceptable to the Bank that the 
applicant is subject to inspection and regulation as required by Sec. 
1263.6(a)(2), notwithstanding the lack of NAIC accreditation.
    (d) Presumptive noncompliance with financial condition requirements 
of Sec. Sec. 1263.11 and 1263.16--(1) Applicants subject to Sec. 
1263.11. For applicants subject to Sec. 1263.11, in the case of an 
applicant's lack of a composite regulatory examination rating within the 
two-year period required by Sec. 1263.11(b)(1), a variance from the 
rating required by Sec. 1263.11(b)(3)(i), or a variance from a 
performance trend criterion required by Sec. 1263.11(b)(3)(i), the 
applicant or the Bank shall prepare a written justification pertaining 
to such requirement that provides substantial evidence acceptable to the 
Bank that the applicant is in the financial condition required by Sec. 
1263.6(a)(4), notwithstanding the lack of rating or variance.
    (2) Applicants subject to Sec. 1263.16. For applicants subject to 
Sec. 1263.16, in the case of an insurance company applicant's variance 
from a capital requirement or standard of Sec. 1263.16(a) or, in the 
case of a CDFI applicant's variance from the standards of Sec. 
1263.16(b), the applicant or the Bank shall prepare a written 
justification pertaining to such requirement or standard that provides 
substantial evidence acceptable to the Bank that the applicant is in the 
financial condition required by Sec. 1263.6(a)(4), notwithstanding the 
variance.
    (e) Presumptive noncompliance with character of management 
requirement of Sec. 1263.12--(1) Enforcement actions. If an applicant 
or any of its directors or senior officers is subject to, or operating 
under, any enforcement action instituted by its appropriate regulator, 
the applicant shall provide or the Bank shall obtain:
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the applicant or its directors or 
senior officers are in substantial compliance with all aspects of the 
enforcement action; or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the applicant or its directors or senior officers are in 
substantial compliance with all aspects of the enforcement action. The 
written analysis shall state each action the applicant or its directors 
or senior officers are required to take by the enforcement action, the 
actions actually taken by the applicant or its directors or senior 
officers, and whether the applicant regards this as substantial 
compliance with all aspects of the enforcement action.
    (2) Criminal, civil or administrative proceedings. If an applicant 
or any of its directors or senior officers has been the

[[Page 207]]

subject of any criminal, civil or administrative proceedings reflecting 
upon creditworthiness, business judgment, or moral turpitude since the 
most recent regulatory examination report or, in the case of a CDFI 
applicant, during the past three years, the applicant shall provide or 
the Bank shall obtain--
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the proceedings will not likely 
result in enforcement action; or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the proceedings will not likely result in enforcement 
action or, in the case of a CDFI applicant, that the proceedings will 
not likely have a significantly deleterious effect on the applicant's 
operations. The written analysis shall state the severity of the 
charges, and any mitigating action taken by the applicant or its 
directors or senior officers.
    (3) Criminal, civil or administrative monetary liabilities, lawsuits 
or judgments. If there are any known potential criminal, civil or 
administrative monetary liabilities, material pending lawsuits, or 
unsatisfied judgments against the applicant or any of its directors or 
senior officers since the most recent regulatory examination report or, 
in the case of a CDFI applicant, occurring within the past three years, 
that are significant to the applicant's operations, the applicant shall 
provide or the Bank shall obtain--
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the liabilities, lawsuits or 
judgments will not likely cause the applicant to fall below its 
applicable capital requirements set forth in Sec. Sec. 1263.11(b)(2) 
and 1263.16(a); or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the liabilities, lawsuits or judgments will not likely 
cause the applicant to fall below its applicable capital requirements 
set forth in Sec. 1263.11(b)(2) or Sec. 1263.16(a), or the net asset 
ratio set forth in Sec. 1263.16(b)(2)(i). The written analysis shall 
state the likelihood of the applicant or its directors or senior 
officers prevailing, and the financial consequences if the applicant or 
its directors or senior officers do not prevail.
    (f) Presumptive noncompliance with home financing policy 
requirements of Sec. Sec. 1263.13 and 1263.14(d). If an applicant 
received a ``Substantial Non-Compliance'' rating on its most recent 
formal, or if unavailable, informal or preliminary, CRA performance 
evaluation, or a ``Needs to Improve'' CRA rating on its most recent 
formal, or if unavailable, informal or preliminary, CRA performance 
evaluation and a CRA rating of ``Needs to Improve'' or better on any 
immediately preceding CRA performance evaluation, the applicant shall 
provide or the Bank shall obtain:
    (1) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator of the applicant's recent satisfactory 
CRA performance, including any corrective action that substantially 
improved upon the deficiencies cited in the most recent CRA performance 
evaluation(s); or
    (2) Written analysis. A written analysis acceptable to the Bank 
demonstrating that the CRA rating is unrelated to home financing, and 
providing substantial evidence of how and why the applicant's home 
financing credit policy and lending practices meet the credit needs of 
its community.



Sec. 1263.18  Determination of appropriate Bank district 
for membership.

    (a) Eligibility. (1) An institution eligible to become a member of a 
Bank under the Bank Act and this part may become a member only of the 
Bank of the district in which the institution's principal place of 
business is located, except as provided in paragraph (a)(2) of this 
section. A member shall promptly notify its Bank in writing whenever it 
relocates its principal place of business to another State and the Bank 
shall inform FHFA in writing of any such relocation.
    (2) An institution eligible to become a member of a Bank under the 
Bank Act and this part may become a member of the Bank of a district 
adjoining the district in which the institution's principal place of 
business is located, if demanded by convenience and then only with the 
approval of FHFA.

[[Page 208]]

    (b) Principal place of business. Except as otherwise designated in 
accordance with this section, the principal place of business of an 
institution is the State in which the institution maintains its home 
office established as such in conformity with the laws under which the 
institution is organized.
    (c) Designation of principal place of business. (1) A member or an 
applicant for membership may request in writing to the Bank in the 
district where the institution maintains its home office that a State 
other than the State in which it maintains its home office be designated 
as its principal place of business. Within 90 calendar days of receipt 
of such written request, the board of directors of the Bank in the 
district where the institution maintains its home office shall designate 
a State other than the State where the institution maintains its home 
office as the institution's principal place of business, provided that 
all of the following criteria are satisfied:
    (i) At least 80 percent of the institution's accounting books, 
records, and ledgers are maintained, located or held in such designated 
State;
    (ii) A majority of meetings of the institution's board of directors 
and constituent committees are conducted in such designated State; and
    (iii) A majority of the institution's five highest paid officers 
have their place of employment located in such designated State.
    (2) Written notice of a designation made pursuant to paragraph 
(c)(1) of this section shall be sent to the Bank in the district 
containing the designated State, FHFA, and the institution.
    (3) The notice of designation made pursuant to paragraph (c)(1) of 
this section shall include the State designated as the principal place 
of business and the resulting Bank to which membership will be 
transferred.
    (4) If the board of directors of the Bank in the district where the 
institution maintains its home office fails to make the designation 
requested by the member or applicant pursuant to paragraph (c)(1) of 
this section, then the member or applicant may request in writing that 
FHFA make the designation.
    (d) Transfer of membership. (1) No transfer of membership from one 
Bank to another Bank shall take effect until the Banks involved reach an 
agreement on a method of orderly transfer.
    (2) In the event that the Banks involved fail to agree on a method 
of orderly transfer, FHFA shall determine the conditions under which the 
transfer shall take place.
    (e) Effect of transfer. A transfer of membership pursuant to this 
section shall be effective for all purposes, but shall not affect voting 
rights in the year of the transfer and shall not be subject to the 
provisions on termination of membership set forth in section 6 of the 
Bank Act (12 U.S.C. 1426) or Sec. Sec. 1263.26 and 1263.27, nor the 
restriction on reacquiring Bank membership set forth in Sec. 1263.30.



                      Subpart D_Stock Requirements



Sec. 1263.19  Par value and price of stock.

    The capital stock of each Bank shall be sold at par, unless the 
Director has fixed a higher price.



Sec. 1263.20  Stock purchase.

    (a) Minimum stock purchase. Each member shall purchase stock in the 
Bank of which it is a member in an amount specified by the Bank's 
capital plan, except that each member of a Bank that has not converted 
to the capital structure authorized by the Gramm-Leach-Bliley Act (GLB 
Act) shall purchase stock in the Bank in an amount equal to the greater 
of:
    (1) $500;
    (2) 1 percent of the member's aggregate unpaid loan principal; or
    (3) 5 percent of the member's aggregate amount of outstanding 
advances.
    (b) Timing of minimum stock purchase. (1) Within 60 calendar days 
after an institution is approved for membership in a Bank, the 
institution shall purchase its minimum stock requirement as set forth in 
paragraph (a) of this section.
    (2) In the case of a Bank that has not converted to the capital 
structure authorized by the GLB Act, an institution that has been 
approved for membership may elect to purchase its minimum stock 
requirement in installments, provided that not less than one-

[[Page 209]]

fourth of the total amount shall be purchased within 60 calendar days of 
the date of approval of membership, and that a further sum of not less 
than one-fourth of such total shall be purchased at the end of each 
succeeding period of four months from the date of approval of 
membership.
    (c) Commencement of membership. An institution that has been 
approved for membership shall become a member at the time it purchases 
its minimum stock requirement or the first installment thereof pursuant 
to this section.
    (d) Failure to purchase minimum stock requirement. If an institution 
that has submitted an application and been approved for membership fails 
to purchase its minimum stock requirement or its first installment 
within 60 calendar days of the date of its approval for membership, such 
approval shall be null and void and the institution, if it wants to 
become a member, shall be required to submit a new application for 
membership.
    (e) Reports. The Bank shall make reports to FHFA setting forth 
purchases by institutions approved for membership of their minimum stock 
requirement pursuant to this section and in accordance with the 
instructions provided in the Data Reporting Manual issued by FHFA, as 
amended from time to time.



Sec. 1263.21  Issuance and form of stock.

    (a) A Bank shall issue to each new member, as of the effective date 
of membership, stock in the member's name for the amount of stock 
purchased and paid for in full.
    (b) If the member purchases stock in installments, the stock shall 
be issued in installments with the appropriate number of shares issued 
after each payment is made.
    (c) A Bank that has not converted to the capital structure 
authorized by the GLB Act may issue stock in certificated or 
uncertificated form at the discretion of the Bank.
    (d) A Bank that has not converted to the capital structure 
authorized by the GLB Act may convert all outstanding certificated stock 
to uncertificated form at its discretion.



Sec. 1263.22  Adjustments in stock holdings.

    (a) Adjustment in general. A Bank may from time to time increase or 
decrease the amount of stock any member is required to hold.
    (b)(1) Annual adjustment. A Bank shall calculate annually, in the 
manner set forth in Sec. 1263.20(a), each member's required minimum 
holdings of stock in the Bank in which it is a member using calendar 
year-end financial data provided by the member to the Bank, pursuant to 
Sec. 1263.31(d), and shall notify each member of the adjustment. The 
notice shall clearly state that the Bank's calculation of each member's 
minimum stock holdings is to be used to determine the number of votes 
that the member may cast in that year's election of directors and shall 
identify the State within the district in which the member will vote. A 
member that does not agree with the Bank's calculation of the minimum 
stock requirement or with the identification of its voting State may 
request FHFA to review the Bank's determination. FHFA shall promptly 
determine the member's minimum required holdings and its proper voting 
State, which determination shall be final.
    (2) Redemption of excess shares. If, in the case of a Bank that has 
not converted to the capital structure authorized by the GLB Act and 
after the annual adjustment required by paragraph (b)(1) of this section 
is made, the amount of stock that a member is required to hold is 
decreased, the Bank may, in its discretion and upon proper application 
of the member, retire such excess stock, and the Bank shall pay for each 
share upon surrender of the stock an amount equal to the par value 
thereof (except that if at any time FHFA finds that the paid-in capital 
of a Bank is or is likely to be impaired as a result of losses in or 
depreciation of the assets held, the Bank shall on the order of FHFA 
withhold from the amount to be paid in retirement of the stock a pro 
rata share of the amount of such impairment as determined by FHFA) or, 
at its election, the Bank may credit any part of such payment against 
the member's debt to the Bank. The Bank's authority to retire such 
excess stock shall be further subject to

[[Page 210]]

the limitations of section 6(f) of the Bank Act (12 U.S.C. 1426(f)).
    (c) A member's stock holdings shall not be reduced under this 
section to an amount less than required by sections 6(b) and 10(c) of 
the Bank Act (12 U.S.C. 1426(b), 1430(c)).



Sec. 1263.23  Excess stock.

    (a) Sale of excess stock. Subject to the restriction in paragraph 
(b) of this section, a member may purchase excess stock as long as the 
purchase is approved by the member's Bank and is permitted by the laws 
under which the member operates.
    (b) Restriction. Any Bank with excess stock greater than 1 percent 
of its total assets shall not declare or pay any dividends in the form 
of additional shares of Bank stock or otherwise issue any excess stock. 
A Bank shall not issue excess stock, as a dividend or otherwise, if 
after the issuance, the outstanding excess stock at the Bank would be 
greater than 1 percent of its total assets.



               Subpart E_Consolidations Involving Members



Sec. 1263.24  Consolidations involving members.

    (a) Consolidation of members. Upon the consolidation of two or more 
institutions that are members of the same Bank into one institution 
operating under the charter of one of the consolidating institutions, 
the membership of the surviving institution shall continue and the 
membership of each disappearing institution shall terminate on the 
cancellation of its charter. Upon the consolidation of two or more 
institutions, at least two of which are members of different Banks, into 
one institution operating under the charter of one of the consolidating 
institutions, the membership of the surviving institution shall continue 
and the membership of each disappearing institution shall terminate upon 
cancellation of its charter, provided, however, that if more than 80 
percent of the assets of the consolidated institution are derived from 
the assets of a disappearing institution, then the consolidated 
institution shall continue to be a member of the Bank of which that 
disappearing institution was a member prior to the consolidation, and 
the membership of the other institutions shall terminate upon the 
effective date of the consolidation.
    (b) Consolidation into nonmember--(1) In general. Upon the 
consolidation of a member into an institution that is not a member of a 
Bank, where the consolidated institution operates under the charter of 
the nonmember institution, the membership of the disappearing 
institution shall terminate upon the cancellation of its charter.
    (2) Notification. If a member has consolidated into a nonmember that 
has its principal place of business in a State in the same Bank district 
as the former member, the consolidated institution shall have 60 
calendar days after the cancellation of the charter of the former member 
within which to notify the Bank of the former member that the 
consolidated institution intends to apply for membership in such Bank. 
If the consolidated institution does not so notify the Bank by the end 
of the period, the Bank shall require the liquidation of any outstanding 
indebtedness owed by the former member, shall settle all outstanding 
business transactions with the former member, and shall redeem or 
repurchase the Bank stock owned by the former member in accordance with 
Sec. 1263.29.
    (3) Application. If such a consolidated institution has notified the 
appropriate Bank of its intent to apply for membership, the consolidated 
institution shall submit an application for membership within 60 
calendar days of so notifying the Bank. If the consolidated institution 
does not submit an application for membership by the end of the period, 
the Bank shall require the liquidation of any outstanding indebtedness 
owed by the former member, shall settle all outstanding business 
transactions with the former member, and shall redeem or repurchase the 
Bank stock owned by the former member in accordance with Sec. 1263.29.
    (4) Outstanding indebtedness. If a member has consolidated into a 
nonmember institution, the Bank need not

[[Page 211]]

require the former member or its successor to liquidate any outstanding 
indebtedness owed to the Bank or to redeem its Bank stock, as otherwise 
may be required under Sec. 1263.29, during:
    (i) The initial 60 calendar-day notification period;
    (ii) The 60 calendar-day period following receipt of a notification 
that the consolidated institution intends to apply for membership; and
    (iii) The period of time during which the Bank processes the 
application for membership.
    (5) Approval of membership. If the application of such a 
consolidated institution is approved, the consolidated institution shall 
become a member of that Bank upon the purchase of the amount of Bank 
stock required by section 6 of the Bank Act (12 U.S.C. 1426). If a 
Bank's capital plan has not taken effect, the amount of stock that the 
consolidated institution is required to own shall be as provided in 
Sec. Sec. 1263.20 and 1263.22. If the capital plan for the Bank has 
taken effect, the amount of stock that the consolidated institution is 
required to own shall be equal to the minimum investment established by 
the capital plan for that Bank.
    (6) Disapproval of membership. If the Bank disapproves the 
application for membership of the consolidated institution, the Bank 
shall require the liquidation of any outstanding indebtedness owed by, 
and the settlement of all other outstanding business transactions with, 
the former member, and shall redeem or repurchase the Bank stock owned 
by the former member in accordance with Sec. 1263.29.
    (c) Dividends on acquired Bank stock. A consolidated institution 
shall be entitled to receive dividends on the Bank stock that it 
acquires as a result of a consolidation with a member in accordance with 
applicable FHFA regulations.
    (d) Stock transfers. With regard to any transfer of Bank stock from 
a disappearing member to the surviving or consolidated member, as 
appropriate, for which the approval of FHFA is required pursuant to 
section 6(f) of the Bank Act (12 U.S.C. 1426(f)), as in effect prior to 
November 12, 1999, such transfer shall be deemed to be approved by FHFA 
by compliance in all applicable respects with the requirements of this 
section.



            Subpart F_Withdrawal and Removal From Membership



Sec. 1263.25  [Reserved]



Sec. 1263.26  Voluntary withdrawal from membership.

    (a) In general. (1) Any institution may withdraw from membership by 
providing to the Bank written notice of its intent to withdraw from 
membership. A member that has so notified its Bank shall be entitled to 
have continued access to the benefits of membership until the effective 
date of its withdrawal. The Bank need not commit to providing any 
further services, including advances, to a withdrawing member that would 
mature or otherwise terminate subsequent to the effective date of the 
withdrawal. A member may cancel its notice of withdrawal at any time 
prior to its effective date by providing a written cancellation notice 
to the Bank. A Bank may impose a fee on a member that cancels a notice 
of withdrawal, provided that the fee or the manner of its calculation is 
specified in the Bank's capital plan.
    (2) A Bank shall notify FHFA within 10 calendar days of receipt of 
any notice of withdrawal or notice of cancellation of withdrawal from 
membership.
    (b) Effective date of withdrawal. The membership of an institution 
that has submitted a notice of withdrawal shall terminate as of the date 
on which the last of the applicable stock redemption periods ends for 
the stock that the member is required to hold, as of the date that the 
notice of withdrawal is submitted, under the terms of a Bank's capital 
plan as a condition of membership, unless the institution has cancelled 
its notice of withdrawal prior to the effective date of the termination 
of its membership.
    (c) Stock redemption periods. The receipt by a Bank of a notice of 
withdrawal shall commence the applicable 6-month and 5-year stock 
redemption periods, respectively, for all of the Class A and Class B 
stock held by that member that is not already subject to a pending 
request for redemption. In

[[Page 212]]

the case of an institution, the membership of which has been terminated 
as a result of a merger or other consolidation into a nonmember or into 
a member of another Bank, the applicable stock redemption periods for 
any stock that is not subject to a pending notice of redemption shall be 
deemed to commence on the date on which the charter of the former member 
is cancelled.
    (d) Certification. No institution may withdraw from membership 
unless, on the date that the membership is to terminate, there is in 
effect a certification from FHFA that the withdrawal of a member will 
not cause the Bank System to fail to satisfy its requirements under 
section 21B(f)(2)(C) of the Bank Act (12 U.S.C. 1441b(f)(2)(C)) to 
contribute toward the interest payments owed on obligations issued by 
the Resolution Funding Corporation.



Sec. 1263.27  Involuntary termination of membership.

    (a) Grounds. The board of directors of a Bank may terminate the 
membership of any institution that:
    (1) Fails to comply with any requirement of the Bank Act, any 
regulation adopted by FHFA, or any requirement of the Bank's capital 
plan;
    (2) Becomes insolvent or otherwise subject to the appointment of a 
conservator, receiver, or other legal custodian under Federal or State 
law; or
    (3) Would jeopardize the safety or soundness of the Bank if it were 
to remain a member.
    (b) Stock redemption periods. The applicable 6-month and 5-year 
stock redemption periods, respectively, for all of the Class A and Class 
B stock owned by a member and not already subject to a pending request 
for redemption, shall commence on the date that the Bank terminates the 
institution's membership.
    (c) Membership rights. An institution whose membership is terminated 
involuntarily under this section shall cease being a member as of the 
date on which the board of directors of the Bank acts to terminate the 
membership, and the institution shall have no right to obtain any of the 
benefits of membership after that date, but shall be entitled to receive 
any dividends declared on its stock until the stock is redeemed or 
repurchased by the Bank.



Sec. 1263.28  [Reserved]



    Subpart G_Orderly Liquidation of Advances and Redemption of Stock



Sec. 1263.29  Disposition of claims.

    (a) In general. If an institution withdraws from membership or its 
membership is otherwise terminated, the Bank shall determine an orderly 
manner for liquidating all outstanding indebtedness owed by that member 
to the Bank and for settling all other claims against the member. After 
all such obligations and claims have been extinguished or settled, the 
Bank shall return to the member all collateral pledged by the member to 
the Bank to secure its obligations to the Bank.
    (b) Bank stock. If an institution that has withdrawn from membership 
or that otherwise has had its membership terminated remains indebted to 
the Bank or has outstanding any business transactions with the Bank 
after the effective date of its termination of membership, the Bank 
shall not redeem or repurchase any Bank stock that is required to 
support the indebtedness or the business transactions until after all 
such indebtedness and business transactions have been extinguished or 
settled.



                  Subpart H_Reacquisition of Membership



Sec. 1263.30  Readmission to membership.

    (a) In general. An institution that has withdrawn from membership or 
otherwise has had its membership terminated and which has divested all 
of its shares of Bank stock, may not be readmitted to membership in any 
Bank, or acquire any capital stock of any Bank, for a period of 5 years 
from the date on which its membership terminated and it divested all of 
its shares of Bank stock.
    (b) Exceptions. An institution that transfers membership between two 
Banks without interruption shall not be deemed to have withdrawn from

[[Page 213]]

Bank membership or had its membership terminated.



                  Subpart I_Bank Access to Information



Sec. 1263.31  Reports and examinations.

    As a condition precedent to Bank membership, each member:
    (a) Consents to such examinations as the Bank or FHFA may require 
for purposes of the Bank Act;
    (b) Agrees that reports of examinations by local, State or Federal 
agencies or institutions may be furnished by such authorities to the 
Bank or FHFA upon request;
    (c) Agrees to give the Bank or the appropriate Federal banking 
agency, upon request, such information as the Bank or the appropriate 
Federal banking agency may need to compile and publish cost of funds 
indices and to publish other reports or statistical summaries pertaining 
to the activities of Bank members;
    (d) Agrees to provide the Bank with calendar year-end financial data 
each year, for purposes of making the calculation described in Sec. 
1263.22(b)(1); and
    (e) Agrees to provide the Bank with copies of reports of condition 
and operations required to be filed with the member's appropriate 
Federal banking agency, if applicable, within 20 calendar days of 
filing, as well as copies of any annual report of condition and 
operations required to be filed.



                      Subpart J_Membership Insignia



Sec. 1263.32  Official membership insignia.

    Members may display the approved insignia of membership on their 
documents, advertising and quarters, and likewise use the words ``Member 
Federal Home Loan Bank System.''



PART 1264_FEDERAL HOME LOAN BANK HOUSING ASSOCIATES--Table of Contents



Sec.
1264.1 Definitions.
1264.2 Bank authority to make advances to housing associates.
1264.3 Housing associate eligibility requirements.
1264.4 Satisfaction of eligibility requirements.
1264.5 Housing associate application process.
1264.6 Appeals.

    Authority: 12 U.S.C. 1430b, 4511, 4513 and 4526.

    Source: 65 FR 44426, July 18, 2000, unless otherwise noted. 
Redesignated at 75 FR 8240, Feb. 24, 2010.



Sec. 1264.1  Definitions.

    As used in this part:
    Act means the Federal Home Loan Bank Act as amended (12 U.S.C. 1421 
through 1449).
    Bank written in title case means a Federal Home Loan Bank 
established under section 12 of the Act (12 U.S.C. 1432).
    FHFA means the Federal Housing Finance Agency.
    Governmental agency means the governor, legislature, and any other 
component of a federal, state, local, tribal, or Alaskan native village 
government with authority to act for or on behalf of that government.
    State housing finance agency or SHFA means:
    (1) A public agency, authority, or publicly sponsored corporation 
that serves as an instrumentality of any state or political subdivision 
of any state, and functions as a source of residential mortgage loan 
financing in that state; or
    (2) A legally established agency, authority, corporation, or 
organization that serves as an instrumentality of any Indian tribe, 
band, group, nation, community, or Alaskan Native village recognized by 
the United States or any state, and functions as a source of residential 
mortgage loan financing for the Indian or Alaskan Native community.

[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002; 
75 FR 8240, Feb. 24, 2010]



Sec. 1264.2  Bank authority to make advances to housing associates.

    Subject to the provisions of the Act and part 950 of this title, a 
Bank may make advances to an entity that is not a member of the Bank if 
the Bank has certified the entity as a housing associate under the 
provisions of this part.

[65 FR 44426, July 18, 2000, as amended at 75 FR 8240, Feb. 24, 2010]

[[Page 214]]



Sec. 1264.3  Housing associate eligibility requirements.

    (a) General. A Bank may certify as a housing associate any applicant 
that meets the following requirements, as determined using the criteria 
set forth in Sec. 1264.4:
    (1) The applicant is approved under title II of the National Housing 
Act (12 U.S.C. 1707, et seq.);
    (2) The applicant is a chartered institution having succession;
    (3) The applicant is subject to the inspection and supervision of 
some governmental agency;
    (4) The principal activity of the applicant in the mortgage field 
consists of lending its own funds; and
    (5) The financial condition of the applicant is such that advances 
may be safely made to it.
    (b) State housing finance agencies. In addition to meeting the 
requirements in paragraph (a) of this section, any applicant seeking 
access to advances as a SHFA pursuant to Sec. 1266.17(b)(2) of this 
chapter shall provide evidence satisfactory to the Bank, such as a copy 
of, or a citation to, the statutes and/or regulations describing the 
applicant's structure and responsibilities, that the applicant is a 
state housing finance agency as defined in Sec. 1264.1.

[65 FR 44426, July 18, 2000, as amended at 75 FR 8240, Feb. 24, 2010; 75 
FR 76622, Dec. 9, 2010]



Sec. 1264.4  Satisfaction of eligibility requirements.

    (a) HUD approval requirement. An applicant shall be deemed to meet 
the requirement in section 10b(a) of the Act (12 U.S.C. 1430b(a)) and 
Sec. 1264.3(a)(1) that it be approved under title II of the National 
Housing Act if it submits a current HUD Yearly Verification Report or 
other documentation issued by HUD stating that the Federal Housing 
Administration of HUD has approved the applicant as a mortgagee.
    (b) Charter requirement. An applicant shall be deemed to meet the 
requirement in section 10b(a) of the Act and Sec. 1264.3(a)(2) that it 
be a chartered institution having succession if it provides evidence 
satisfactory to the Bank, such as a copy of, or a citation to, the 
statutes and/or regulations under which the applicant was created, that:
    (1) The applicant is a government agency; or
    (2) The applicant is chartered under state, federal, local, tribal, 
or Alaskan Native village law as a corporation or other entity that has 
rights, characteristics, and powers under applicable law similar to 
those granted a corporation.
    (c) Inspection and supervision requirement. (1) An applicant shall 
be deemed to meet the inspection and supervision requirement in section 
10b(a) of the Act (12 U.S.C. 1430b(a)) and Sec. 1264.3(a)(3) if it 
provides evidence satisfactory to the Bank, such as a copy of, or a 
citation to, relevant statutes and/or regulations, that, pursuant to 
statute or regulation, the applicant is subject to the inspection and 
supervision of a federal, state, local, tribal, or Alaskan native 
village governmental agency.
    (2) An applicant shall be deemed to meet the inspection requirement 
if there is a statutory or regulatory requirement that the applicant be 
audited or examined periodically by a governmental agency or by an 
external auditor.
    (3) An applicant shall be deemed to meet the supervision requirement 
if the governmental agency has statutory or regulatory authority to 
remove an applicant's officers or directors for cause or otherwise 
exercise enforcement or administrative control over actions of the 
applicant.
    (d) Mortgage activity requirement. An applicant shall be deemed to 
meet the mortgage activity requirement in section 10b(a) of the Act (12 
U.S.C. 1430b(a)) and Sec. 1264.3(a)(4) if it provides documentary 
evidence satisfactory to the Bank, such as a financial statement or 
other financial documents that include the applicant's mortgage loan 
assets and their funding liabilities, that it lends its own funds as its 
principal activity in the mortgage field. For purposes of this 
paragraph, lending funds includes, but is not limited to, the purchase 
of whole mortgage loans. In the case of a federal, state, local, tribal, 
or Alaskan Native village government agency, appropriated funds shall be 
considered an applicant's own funds. An applicant shall be deemed to 
satisfy this requirement

[[Page 215]]

notwithstanding that the majority of its operations are unrelated to 
mortgage lending if its mortgage activity conforms to this requirement. 
An applicant that acts principally as a broker for others making 
mortgage loans, or whose principal activity is to make mortgage loans 
for the account of others, does not meet this requirement.
    (e) Financial condition requirement. An applicant shall be deemed to 
meet the financial condition requirement in Sec. 1264.3(a)(5) if the 
Bank determines that advances may be safely made to the applicant. The 
applicant shall submit to the Bank copies of its most recent regulatory 
audit or examination report, or external audit report, and any other 
documentary evidence, such as financial or other information, that the 
Bank may require to make the determination.

[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002; 
70 FR 9510, Feb. 28, 2005; 75 FR 8240, Feb. 24, 2010]



Sec. 1264.5  Housing associate application process.

    (a) Authority. The Banks are authorized to approve or deny all 
applications for certification as a housing associate, subject to the 
requirements of the Act and this part. A Bank may delegate the authority 
to approve applications for certification as a housing associate only to 
a committee of the Bank's board of directors, the Bank president, or a 
senior officer who reports directly to the Bank president other than an 
officer with responsibility for business development.
    (b) Application requirements. An applicant for certification as a 
housing associate shall submit an application that satisfies the 
requirements of the Act and this part to the Bank of the district in 
which the applicant's principal place of business, as determined in 
accordance with part 925 of this title, is located.
    (c) Bank decision process--(1) Action on applications. A Bank shall 
approve or deny an application for certification as a housing associate 
within 60 calendar days of the date the Bank deems the application to be 
complete. A Bank shall deem an application complete, and so notify the 
applicant in writing, when it has obtained all of the information 
required by this part and any other information it deems necessary to 
process the application. If a Bank determines during the review process 
that additional information is necessary to process the application, the 
Bank may deem the application incomplete and stop the 60-day time period 
by providing written notice to the applicant. When the Bank receives the 
additional information, it shall again deem the application complete, so 
notify the applicant in writing, and resume the 60-day time period where 
it stopped.
    (2) Decision on applications. The Bank or a duly delegated committee 
of the Bank's board of directors, the Bank president, or a senior 
officer who reports directly to the Bank president other than an officer 
with responsibility for business development shall approve, or the board 
of directors of a Bank shall deny, each application for certification as 
a housing associate by a written decision resolution stating the grounds 
for the decision. Within three business days of a Bank's decision on an 
application, the Bank shall provide the applicant and the FHFA with a 
copy of the Bank's decision resolution.
    (3) File. The Bank shall maintain a certification file for each 
applicant for at least three years after the date the Bank decides 
whether to approve or deny certification or the date the FHFA resolves 
any appeal, whichever is later. At a minimum, the certification file 
shall include all documents submitted by the applicant or otherwise 
obtained or generated by the Bank concerning the applicant, all 
documents the Bank relied upon in making its determination regarding 
certification, including copies of statutes and regulations, and the 
decision resolution.

[65 FR 44426, July 18, 2000, as amended at 70 FR 9510, Feb. 28, 2005; 75 
FR 8240, Feb. 24, 2010]



Sec. 1264.6  Appeals.

    (a) General. Within 90 calendar days of the date of a Bank's 
decision to deny an application for certification as a housing 
associate, the applicant may submit a written appeal to FHFA that

[[Page 216]]

includes the Bank's decision resolution and a statement of the basis for 
the appeal with sufficient facts, information, analysis and explanation 
to support the applicant's position. Send appeals to the Deputy Director 
for Federal Home Loan Bank Regulation, Federal Housing Finance Agency, 
1625 Eye Street NW., Washington DC 20006, with a copy to the Bank.
    (b) Record for appeal. Upon receiving a copy of an appeal, the Bank 
whose action has been appealed shall provide to the FHFA a complete copy 
of the applicant's certification file maintained by the Bank under Sec. 
1264.5(c)(3). Until the FHFA resolves the appeal, the Bank shall 
promptly provide to the FHFA any relevant new materials it receives. The 
FHFA may request additional information or further supporting arguments 
from the applicant, the Bank, or any other party that the FHFA deems 
appropriate.
    (c) Deciding appeals. Within 90 calendar days of the date an 
applicant files an appeal with the FHFA, the FHFA shall consider the 
record for appeal described in paragraph (b) of this section and resolve 
the appeal based on the requirements of the Act and this part.

[65 FR 44426, July 18, 2000, as amended at 70 FR 9510, Feb. 28, 2005; 75 
FR 8240, Feb. 24, 2010]



PART 1265_CORE MISSION ACTIVITIES--Table of Contents



Sec.
1265.1 Definitions.
1265.2 Mission of the Banks.
1265.3 Core mission activities.

    Authority: 12 U.S.C. 1430, 1430b, 1431, 4511, 4513 and 4526.

    Source: 65 FR 25278, May 1, 2000, unless otherwise noted. 
Redesignated at 75 FR 8240, Feb. 24, 2010.



Sec. 1265.1  Definitions.

    As used in this part:
    Acquired member assets or AMA means those assets that may be 
acquired by a Bank under part 955 of this title.
    Advance means a loan from a Bank that is:
    (1) Provided pursuant to a written agreement;
    (2) Supported by a note or other written evidence of the borrower's 
obligations; and
    (3) Fully secured by collateral in accordance with the Federal Home 
Loan Bank Act (12 U.S.C. 1421 through 1449) and applicable regulations.
    Bank written in title case means a Federal Home Loan Bank 
established under section 12 of the Federal Home Loan Bank Act (12 
U.S.C. 1432).
    SBIC means a small business investment company formed pursuant to 
section 301 of the Small Business Investment Act (15 U.S.C. 681).
    Targeted income level means:
    (1) For rural areas, incomes at or below 115 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four; and
    (2) For urban areas, incomes at or below 100 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four.

[75 FR 8240, Feb. 24, 2010]



Sec. 1265.2  Mission of the Banks.

    The mission of the Banks is to provide to their members' and housing 
associates financial products and services, including but not limited to 
advances, that assist and enhance such members' and housing associates 
financing:
    (a) Financing of housing, including single-family and multi-family 
housing serving consumers at all income levels; and
    (b) Community lending.

[65 FR 25278, May 1, 2000, as amended at 67 FR 12850, Mar. 20, 2002; 67 
FR 39791, June 10, 2002]



Sec. 1265.3  Core mission activities.

    The following Bank activities qualify as core mission activities:
    (a) Advances;
    (b) Acquired member assets (AMA), except that United States 
government-insured or guaranteed whole single-family residential 
mortgage loans acquired under a commitment entered

[[Page 217]]

into after April 12, 2000 shall qualify only in a cumulative dollar 
amount up to 33 percent of: The cumulative total dollar amount of AMA 
acquired by a Bank after April 12, 2000, less the cumulative dollar 
amount of United States government-insured or guaranteed whole single-
family residential mortgage loans acquired after April 12, 2000 under 
commitments entered into on or before April 12, 2000 (which calculation, 
at the discretion of two or more Banks, may be made based on aggregate 
transactions among those Banks);
    (c) Standby letters of credit;
    (d) Intermediary derivative contracts;
    (e) Debt or equity investments:
    (1) That primarily benefit households having a targeted income 
level, a significant proportion of which must benefit households with 
incomes at or below 80 percent of area median income, or areas targeted 
for redevelopment by local, state, tribal or Federal government 
(including Federal Empowerment Zones and Enterprise and Champion 
Communities), by providing or supporting one or more of the following 
activities:
    (i) Housing;
    (ii) Economic development;
    (iii) Community services;
    (iv) Permanent jobs; or
    (v) Area revitalization or stabilization;
    (2) In the case of mortgage- or asset-backed securities, the 
acquisition of which would expand liquidity for loans that are not 
otherwise adequately provided by the private sector and do not have a 
readily available or well established secondary market; and
    (3) That involve one or more members or housing associates in a 
manner, financial or otherwise, and to a degree to be determined by the 
Bank;
    (f) Investments in SBICs, where one or more members or housing 
associates of the Bank also make a material investment in the same 
activity;
    (g) SBIC debentures, the short term tranche of SBIC securities, ore 
other debentures that are guaranteed by the Small Business 
Administration under title III of the Small Business Investment Act of 
1958, as amended (15 U.S.C. 681 et seq.);
    (h) Section 108 Interim Notes and Participation Certificates 
guaranteed by the Department of Housing and Urban Development under 
section 108 of the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5308); and
    (i) Investments and obligations issued or guaranteed under the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.).

[65 FR 43981, July 17, 2000]



PART 1266_ADVANCES--Table of Contents



                      Subpart A_Advances to Members

Sec.
1266.1 Definitions.
1266.2 Authorization and application for advances; obligation to repay 
          advances.
1266.3 Purpose of long-term advances; Proxy text.
1266.4 Limitations on access to advances.
1266.5 Terms and conditions for advances.
1266.6 Fees.
1266.7 Collateral.
1266.8 Banks as secured creditors.
1266.9 Pledged collateral; verification.
1266.10 Collateral valuation; appraisals.
1266.11 Capital stock requirements; redemption of excess stock.
1266.12 Intradistrict transfer of advances.
1266.13 Special advances to savings associations.
1266.14 Advances to the Savings Association Insurance Fund.
1266.15 Liquidation of advances upon termination of membership.

                Subpart B_Advances to Housing Associates

1266.16 Scope.
1266.17 Advances to housing associates.

  Subpart C_Advances to Out-of-District Members and Housing Associates

1266.25 Advances to out-of-district members and housing associates.

    Authority: 12 U.S.C. 1426, 1429, 1430, 1430b, 1431, 4511(b), 4513, 
4526(a).

    Source: 58 FR 29469, May 20, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000 and 75 FR 76622, Dec. 9, 2010.

    Editorial Note: Nomenclature changes to part 1266 appear at 75 FR 
76622, Dec. 9, 2010.

[[Page 218]]



                      Subpart A_Advances to Members



Sec. 1266.1  Definitions.

    As used in this part:
    Advance means a loan from a Bank that is:
    (1) Provided pursuant to a written agreement;
    (2) Supported by a note or other written evidence of the borrower's 
obligation; and
    (3) Fully secured by collateral in accordance with the Bank Act and 
this part.
    Affiliate means any business entity that controls, is controlled by, 
or is under common control with, a member.
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act, as amended (12 U.S.C. 
1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Capital deficient member means a member that fails to meet its 
minimum regulatory capital requirements as defined or otherwise required 
by the member's appropriate federal banking agency, insurer or, in the 
case of members that are not federally insured depository institutions, 
state regulator.
    Cash equivalents means investments that--
    (1) Are readily convertible into known amounts of cash;
    (2) Have a remaining maturity of 90 days or less at the acquisition 
date; and
    (3) Are held for liquidity purposes.
    CFI member means a member that is a Community Financial Institution, 
as defined in Sec. 1263.1 of this chapter, except that, for purposes of 
this part, the member's average of total assets over three years shall 
be calculated by the Bank:
    (1) Based on the average of total assets drawn from the 
institution's regulatory financial reports (as defined in Sec. 1263.1 
of this chapter) filed with its appropriate regulator (as defined in 
Sec. 1263.1 of this chapter) for the three most recent calendar year-
ends; and
    (2) Annually, and shall be effective April 1 of each year.
    Community development has the same meaning as under the definition 
set forth in the Community Reinvestment rule for the Federal Reserve 
System (12 CFR part 228), Federal Deposit Insurance Corporation (12 CFR 
part 345), the Office of Thrift Supervision (12 CFR part 563e) or the 
Office of the Comptroller of the Currency (12 CFR part 25), whichever is 
the CFI member's primary Federal regulator.
    Community development loan means a loan, or a participation interest 
in such loan, that has as its primary purpose community development, but 
such loans shall not include:
    (1) Any loan or instrument that qualifies as eligible security for 
an advance under Sec. 1266.7(a) of this part;
    (2) Any loan that qualifies as a small agri-business loan, small 
business loan or small farm loan, under definitions set forth in this 
section; or
    (3) Consumer loans or credit extended to one or more individuals for 
household, family or other personal expenditures.
    Credit union means a credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752).
    Depository institution means a bank, savings association, or credit 
union.
    Dwelling unit means a single room or a unified combination of rooms 
designed for residential use by one household.
    FHFA means the Federal Housing Finance Agency.
    Improved residential real property means residential real property 
excluding real property to be improved, or in the process of being 
improved, by the construction of dwelling units.
    Insurer means the FDIC for insured depository institutions, as 
defined section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(c)(2)), and the NCUA for federally-insured credit unions.
    Long-term advance means an advance with an original term to maturity 
greater than five years.
    Manufactured housing means a manufactured home as defined in section 
603(6) of the Manufactured Home Construction and Safety Standards Act of 
1974, as amended (42 U.S.C. 5402(6)).
    Mortgage-backed security means:
    (1) An equity security representing an ownership interest in:

[[Page 219]]

    (i) Fully disbursed, whole first mortgage loans on improved 
residential real property; or
    (ii) Mortgage pass-through or participation securities which are 
themselves backed entirely by fully disbursed, whole first mortgage 
loans on improved residential real property; or
    (2) An obligation, bond, or other debt security backed entirely by 
the assets described in paragraph (1)(i) or (ii) of this definition.
    Multifamily property means:
    (1)(i) Real property that is solely residential and which includes 
five or more dwelling units; or
    (ii) Real property which includes five or more dwelling units with 
commercial units combined, provided the property is primarily 
residential.
    (2) Multifamily property as defined in this section includes nursing 
homes, dormitories and homes for the elderly.
    Nonresidential real property means real property not used for 
residential purposes, including business or industrial property, hotels, 
motels, churches, hospitals, educational and charitable institutions, 
clubs, lodges, association buildings, golf courses, recreational 
facilities, farm property not containing a dwelling unit, or similar 
types of property, except as otherwise determined by the FHFA in its 
discretion.
    One-to-four family property means any of the following:
    (1) Real property containing:
    (i) One-to-four dwelling units; or
    (ii) More than four dwelling units if each unit is separated from 
the other units by dividing walls that extend from ground to roof, 
including row houses, townhouses or similar types of property;
    (2) Manufactured housing if:
    (i) Applicable state law defines the purchase or holding of 
manufactured housing as the purchase or holding of real property; and
    (ii) The loan to purchase the manufactured housing is secured by 
that manufactured housing;
    (3) Individual condominium dwelling units or interests in individual 
cooperative housing dwelling units that are part of a condominium or 
cooperative building without regard to the number of total dwelling 
units therein; or
    (4) Real property containing one-to-four dwelling units with 
commercial units combined, provided the property is primarily 
residential.
    Residential housing finance assets means any of the following:
    (1) Loans secured by residential real property;
    (2) Mortgage-backed securities;
    (3) Participations in loans secured by residential real property;
    (4) Loans or investments providing financing for economic 
development projects for targeted beneficiaries;
    (5) Loans secured by manufactured housing, regardless of whether 
such housing qualifies as residential real property;
    (6) Any loans or investments which FHFA, in its discretion, 
otherwise determines to be residential housing finance assets; and
    (7) For CFI members, and to the extent not already included in 
categories (1) through (6), small business loans, small farm loans, 
small agri-business loans, or community development loans.
    Residential real property means:
    (1) Any of the following:
    (i) One-to-four family property;
    (ii) Multifamily property;
    (iii) Real property to be improved by the construction of dwelling 
units;
    (iv) Real property in the process of being improved by the 
construction of dwelling units;
    (2) The term residential real property does not include 
nonresidential real property as defined in this section.
    Savings association means a savings association as defined in 
section 3(b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. 
1813(b)).
    Small agri-business loans means loans to finance agricultural 
production and other loans to farmers that are within the legal lending 
limit of the reporting CFI member, and that are reported on either: 
Schedule RC-C, Part I, item 3 of the Report of Condition and Income 
filed by insured commercial banks and FDIC-supervised savings banks; or 
Schedule SC300, SC303 or SC306 of the Thrift Financial Report filed by 
savings associations (or equivalent successor schedules).

[[Page 220]]

    Small business loans means commercial and industrial loans that are 
within the legal lending limit of the reporting CFI member and that are 
reported on either: Schedule RC-C, Part I, item 1.e or Schedule RC-C, 
Part I, item 4 of the Report of Condition and Income filed by insured 
commercial banks and FDIC-supervised savings banks; or Schedule SC300, 
SC303 or SC306 of the Thrift Financial Report filed by savings 
associations (or equivalent successor schedules).
    Small farm loans means loans secured primarily by farmland that are 
within the legal lending limit of the reporting CFI member, and that are 
reported on either: Schedule RC-C, Part I, item 1.a. or 1.b. of the 
Report of Condition and Income filed by insured commercial banks and 
FDIC-supervised savings banks; or Schedule SC260 of the Thrift Financial 
Report filed by savings associations (or equivalent successor 
schedules).
    State housing finance agency or SHFA has the meaning set forth in 
Sec. 1264.1 of this chapter.
    State regulator means a state insurance commissioner or state 
regulatory entity with primary responsibility for supervising a member 
borrower that is not a federally insured depository institution.
    Tangible capital means:
    (1) Capital, calculated according to GAAP, less ``intangible 
assets'' except for purchased mortgage servicing rights to the extent 
such assets are included in a member's core or Tier 1 capital, as 
reported in the member's Thrift Financial Report for members whose 
primary federal regulator is the OTS, or as reported in the Report of 
Condition and Income for members whose primary federal regulator is the 
FDIC, the OCC, or the FRB.
    (2) Capital calculated according to GAAP, less intangible assets, as 
defined by a Bank for members that are not regulated by the OTS, the 
FDIC, the OCC, or the FRB; provided that a Bank shall include a member's 
purchased mortgage servicing rights to the extent such assets are 
included for the purpose of meeting regulatory capital requirements.
    Targeted beneficiaries has the meaning set forth in Sec. 952.1 of 
this title.

[58 FR 29469, May 20, 1993, as amended at 58 FR 29477, May 20, 1993; 59 
FR 2949, Jan. 20, 1994; 62 FR 8871, Feb. 27, 1997; 62 FR 12079, Mar. 14, 
1997; 63 FR 35128, June 29, 1998; 63 FR 65545, Nov. 27, 1998; 64 FR 
16621, Apr. 6, 1999; 65 FR 8262, Feb. 18, 2000; 65 FR 44428, July 18, 
2000; 66 FR 50295, Oct. 3, 2001; 67 FR 12850, Mar. 20, 2002; 75 FR 
76622, Dec. 9, 2010]



Sec. 1266.2  Authorization and application for advances; obligation
to repay advances.

    (a) Application for advances. A Bank may accept oral or written 
applications for advances from its members.
    (b) Obligation to repay advances. (1) A Bank shall require any 
member to which an advance is made to enter into a primary and 
unconditional obligation to repay such advance and all other 
indebtedness to the Bank, together with interest and any unpaid costs 
and expenses in connection therewith, according to the terms under which 
such advance was made or other indebtedness incurred.
    (2) Such obligations shall be evidenced by a written advances 
agreement that shall be reviewed by the Bank's legal counsel to ensure 
such agreement is in compliance with applicable law.
    (c) Secured advances. (1) Each Bank shall make only fully secured 
advances to its members as set forth in the Bank Act, the provisions of 
this part and policy guidelines established by the FHFA.
    (2) The Bank shall execute a written security agreement with each 
borrowing member which establishes the Bank's security interest in 
collateral securing advances.
    (3) Such written security agreement shall, at a minimum, describe 
the type of collateral securing the advances and give the Bank a 
perfectible security interest in the collateral.
    (d) Form of applications and agreements. Applications for advances, 
advances agreements and security agreements shall be in substantially 
such form as approved by the Bank's board of directors, or a committee 
thereof specifically authorized by the board of directors to approve 
such forms.
    (e) Status of secured lending. All secured transactions, regardless 
of the

[[Page 221]]

form of the transaction, for money borrowed from a Bank by a member of 
any Bank shall be considered an advance subject to the requirements of 
this part.

[58 FR 29469, May 20, 1993, as amended at 64 FR 71278, Dec. 21, 1999; 65 
FR 8262, Feb. 18, 2000. Redesignated at 65 FR 44429, July 18, 2000; 67 
FR 12851, Mar. 20, 2002; 75 FR 76623, Dec. 9, 2010]



Sec. 1266.3  Purpose of long-term advances; Proxy test.

    (a) A Bank shall make long-term advances only for the purpose of 
enabling any member to purchase or fund new or existing residential 
housing finance assets.
    (b)(1) Prior to approving an application for a long-term advance, a 
Bank shall determine that the principal amount of all long-term advances 
currently held by the member does not exceed the total book value of 
residential housing finance assets held by such member. The Bank shall 
determine the total book value of such residential housing finance 
assets, using the most recent Thrift Financial Report, Report of 
Condition and Income, financial statement or other reliable 
documentation made available by the member.
    (2) Applications for CICA advances are exempt from the requirements 
of paragraph (b)(1) of this section.

[75 FR 76623, Dec. 9, 2010]



Sec. 1266.4  Limitations on access to advances.

    (a) Credit underwriting. A Bank, in its discretion, may:
    (1) Limit or deny a member's application for an advance if, in the 
Bank's judgment, such member:
    (i) Is engaging or has engaged in any unsafe or unsound banking 
practices;
    (ii) Has inadequate capital;
    (iii) Is sustaining operating losses;
    (iv) Has financial or managerial deficiencies, as determined by the 
Bank, that bear upon the member's creditworthiness; or
    (v) Has any other deficiencies, as determined by the Bank; or
    (2) Make advances and renewals only if the Bank determines that it 
may safely make such advance or renewal to the member, including 
advances and renewals made pursuant to this section.
    (b) New advances to members without positive tangible capital. (1) A 
Bank shall not make a new advance to a member without positive tangible 
capital unless the member's appropriate federal banking agency or 
insurer requests in writing that the Bank make such advance. The Bank 
shall promptly provide the FHFA with a copy of any such request.
    (2) A Bank shall use the most recently available Thrift Financial 
Report, Report of Condition, and Income or other regulatory report of 
financial condition to determine whether a member has positive tangible 
capital.
    (c) Renewals of advances to members without positive tangible 
capital--(1) Renewal for 30-day terms. A Bank may renew outstanding 
advances, for successive terms of up to 30 days each, to a member 
without positive tangible capital; provided, however, that a Bank shall 
honor any written request of the appropriate federal banking agency or 
insurer that the Bank not renew such advances.
    (2) Renewal for longer than 30-day terms. A Bank may renew 
outstanding advances to a member without positive tangible capital for a 
term greater than 30 days at the written request of the appropriate 
federal banking agency or insurer.
    (d) Advances to capital deficient but solvent members. (1) Except as 
provided in paragraph (d)(2)(i) of this section, a Bank may make a new 
advance or renew an outstanding advance to a capital deficient member 
that has positive tangible capital.
    (2)(i) A Bank shall not lend to a capital deficient member that has 
positive tangible capital if it receives written notice from the 
appropriate federal banking agency or insurer that the member's use of 
Bank advances has been prohibited. The Bank shall promptly provide the 
FHFA with a copy of any such notice.
    (ii) A Bank may resume lending to such a capital deficient member if 
the Bank receives a written statement from the appropriate federal 
banking agency or insurer which re-establishes the member's ability to 
use advances.

[[Page 222]]

    (e) Reporting. (1) Each Bank shall provide the FHFA with a report of 
the advances and commitments outstanding to each of its members in 
accordance with the instructions provided in the Data Reporting Manual 
issued by the FHFA, as amended from time to time.
    (2) Each Bank shall, upon written request from a member's 
appropriate federal banking agency or insurer, provide to such entity 
information on advances and commitments outstanding to the member.
    (f) Members without federal regulators. In the case of members that 
are not federally insured depository institutions, the references in 
paragraphs (b), (c), (d) and (e) of this section to ``appropriate 
federal banking agency or insurer'' shall mean the member's state 
regulator acting in a capacity similar to an appropriate federal banking 
agency or insurer.
    (g) Advance commitments. (1) In the event that a member's access to 
advances from a Bank is restricted pursuant to this section, the Bank 
shall not fund outstanding commitments for advances not exercised prior 
to the imposition of the restriction. This requirement shall apply to 
all advance commitments made by a Bank after August 25, 1993.
    (2) Each Bank shall include the stipulation contained in paragraph 
(g)(1) of this section as a clause in either:
    (i) The written advances agreement required by Sec. 1266.2(b)(2) of 
this part; or
    (ii) The written advances application required by Sec. 1266.2(a) of 
this part.

[58 FR 29469, May 20, 1993, as amended at 59 FR 2949, Jan. 20, 1994; 64 
FR 71278, Dec. 21, 1999; 65 FR 8263, Feb. 18, 2000. Redesignated at 65 
FR 44429, July 18, 2000, as amended at 67 FR 12851, Mar. 20, 2002; 71 FR 
35500, June 21, 2006]



Sec. 1266.5  Terms and conditions for advances.

    (a) Advance maturities. Each Bank shall offer advances with 
maturities of up to ten years, and may offer advances with longer 
maturities consistent with the safe and sound operation of the Bank.
    (b) Advance pricing--(1) General. A Bank shall not price its 
advances to members below:
    (i) The marginal cost to the Bank of raising matching term and 
maturity funds in the marketplace, including embedded options; and
    (ii) The administrative and operating costs associated with making 
such advances to members.
    (2) Differential pricing. (i) Each Bank may, in pricing its 
advances, distinguish among members based upon its assessment of:
    (A) The credit and other risks to the Bank of lending to any 
particular member; or
    (B) Other reasonable criteria that may be applied equally to all 
members.
    (ii) Each Bank shall include in its member products policy required 
by Sec. 917.4 of this title, standards and criteria for such 
differential pricing and shall apply such standards and criteria 
consistently and without discrimination to all members applying for 
advances.
    (3) Exceptions. The advance pricing policies contained in paragraph 
(b)(1) of this section shall not apply in the case of:
    (i) A Bank's CICA programs; and
    (ii) Any other advances programs that are volume limited and 
specifically approved by the Bank's board of directors.
    (c) Authorization for pricing advances. (1) A Bank's board of 
directors, a committee thereof, or the Bank's president, if so 
authorized by the Bank's board of directors, shall set the rates of 
interest on advances consistent with paragraph (b) of this section.
    (2) A Bank president authorized to set interest rates on advances 
pursuant to this paragraph (c) may delegate any part of such authority 
to any officer or employee of the Bank.
    (d) Putable or convertible advances--(1) Disclosure. A Bank that 
offers a putable or convertible advance to a member shall disclose in 
writing to such member the type and nature of the risks associated with 
putable or convertible advance funding. The disclosure should include 
detail sufficient to describe such risks.
    (2) Replacement funding for putable advances. If a Bank terminates a 
putable advance prior to the stated maturity date of such advance, the 
Bank shall offer to provide replacement funding to

[[Page 223]]

the member, provided the member is able to satisfy the normal credit and 
collateral requirements of the Bank for the replacement funding 
requested.
    (3) Definition. For purposes of this paragraph (d), the term putable 
advance means an advance that a Bank may, at its discretion, terminate 
and require the member to repay prior to the stated maturity date of the 
advance.

[58 FR 29469, May 20, 1993, as amended at 61 FR 52687, Oct. 8, 1996; 65 
FR 8263, Feb. 18, 2000. Redesignated and amended at 65 FR 44429, July 
18, 2000]



Sec. 1266.6  Fees.

    (a) Fees in member products policy. All fees charged by each Bank 
and any schedules or formulas pertaining to such fees shall be included 
in the Bank's member products policy required by Sec. 917.4 of this 
title. Any such fee schedules or formulas shall be applied consistently 
and without discrimination to all members.
    (b) Prepayment fees. (1) Except where an advance product contains a 
prepayment option, each Bank shall establish and charge a prepayment fee 
pursuant to a specified formula which makes the Bank financially 
indifferent to the borrower's decision to repay the advance prior to its 
maturity date.
    (2) Prepayment fees are not required for:
    (i) Advances with original terms to maturity or repricing periods of 
six months or less;
    (ii) Advances funded by callable debt; or
    (iii) Advances which are otherwise appropriately hedged so that the 
Bank is financially indifferent to their prepayment.
    (3) The board of directors of each Bank, a designated committee 
thereof, or officers specifically authorized by the board of directors, 
may waive a prepayment fee only if such prepayment will not result in an 
economic loss to the Bank. Any such waiver must subsequently be ratified 
by the board of directors.
    (4) A Bank, in determining whether or not to waive a prepayment fee, 
shall apply consistent standards to all of its members.
    (c) Commitment fees. Each Bank may charge a fee for its commitment 
to fund an advance.
    (d) Other fees. Each Bank is authorized to charge other fees as it 
deems necessary and appropriate.

[58 FR 29469, May 20, 1993; 65 FR 8263, Feb. 18, 2000. Redesignated and 
amended at 65 FR 44429, July 18, 2000]



Sec. 1266.7  Collateral.

    (a) Eligible security for advances to all members. At the time of 
origination or renewal of an advance, each Bank shall obtain from the 
borrowing member or, in accordance with paragraph (g) of this section, 
an affiliate of the borrowing member, and thereafter maintain, a 
security interest in collateral that meets the requirements of one or 
more of the following categories:
    (1) Mortgage loans and privately issued securities. (i) Fully 
disbursed, whole first mortgage loans on improved residential real 
property not more than 90 days delinquent; or
    (ii) Privately issued mortgage-backed securities, excluding the 
following:
    (A) Securities that represent a share of only the interest payments 
or only the principal payments from the underlying mortgage loans;
    (B) Securities that represent a subordinate interest in the cash 
flows from the underlying mortgage loans;
    (C) Securities that represent an interest in any residual payments 
from the underlying pool of mortgage loans; or
    (D) Such other high-risk securities as the FHFA in its discretion 
may determine.
    (2) Agency securities. Securities issued, insured or guaranteed by 
the United States Government, or any agency thereof, including without 
limitation:
    (i) Mortgage-backed securities issued or guaranteed by Freddie Mac, 
Fannie Mae, Ginnie Mae, or any other agency of the United States 
Government;
    (ii) Mortgages or other loans, regardless of delinquency status, to 
the extent that the mortgage or loan is insured or guaranteed by the 
United States or any agency thereof, or otherwise is backed by the full 
faith and credit of the United States, and such insurance, guarantee or 
other backing

[[Page 224]]

is for the direct benefit of the holder of the mortgage or loan; and
    (iii) Securities backed by, or representing an equity interest in, 
mortgages or other loans referred to in paragraph (a)(2)(ii) of this 
section.
    (3) Cash or deposits. Cash or deposits in a Bank.
    (4) Other real estate-related collateral. (i) Other real estate-
related collateral provided that:
    (A) Such collateral has a readily ascertainable value, can be 
reliably discounted to account for liquidation and other risks, and can 
be liquidated in due course; and
    (B) The Bank can perfect a security interest in such collateral.
    (ii) Eligible other real estate-related collateral may include, but 
is not limited to:
    (A) Privately issued mortgage-backed securities not otherwise 
eligible under paragraph (a)(1)(ii) of this section;
    (B) Second mortgage loans, including home equity loans;
    (C) Commercial real estate loans; and
    (D) Mortgage loan participations.
    (5) Securities representing equity interests in eligible advances 
collateral. Any security the ownership of which represents an undivided 
equity interest in underlying assets, all of which qualify either as:
    (i) Eligible collateral under paragraphs (a)(1), (2), (3) or (4) of 
this section; or
    (ii) Cash equivalents.
    (b) Additional collateral eligible as security for advances to CFI 
members or their affiliates--(1) General. Subject to the requirements 
set forth in part 1272 of this chapter, a Bank is authorized to accept 
from CFI members or their affiliates as security for advances small 
business loans, small farm loans, small agri-business loans, or 
community development loans, in each case fully secured by collateral 
other than real estate, or securities representing a whole interest in 
such secured loans, provided that:
    (i) Such collateral has a readily ascertainable value, can be 
reliably discounted to account for liquidation and other risks, and can 
be liquidated in due course; and
    (ii) The Bank can perfect a security interest in such collateral.
    (2) Change in CFI status. If a Bank determines, as of April 1 of 
each year, that a member that has previously qualified as a CFI no 
longer qualifies as a CFI, and the member has total advances outstanding 
that exceed the amount that can be fully secured by collateral under 
paragraph (a) of this section, the Bank may:
    (i) Permit the advances of such member to run to their stated 
maturities; and
    (ii) Renew such member's advances to mature no later than March 31 
of the following year; provided that the total of the member's advances 
under paragraphs (b)(2)(i) and (ii) of this section shall be fully 
secured by collateral set forth in paragraphs (a) and (b) of this 
section.
    (c) Bank restrictions on eligible advances collateral. A Bank at its 
discretion may further restrict the types of eligible collateral 
acceptable to the Bank as security for an advance, based upon the 
creditworthiness or operations of the borrower, the quality of the 
collateral, or other reasonable criteria.
    (d) Additional advances collateral. The provisions of paragraph (a) 
of this section shall not affect the ability of any Bank to take such 
steps as it deems necessary to protect its secured position on 
outstanding advances, including requiring additional collateral, whether 
or not such additional collateral conforms to the requirements for 
eligible collateral in paragraphs (a) or (b) of this section or section 
10 of the Bank Act (12 U.S.C. 1430).
    (e) Bank stock as collateral. (1) Pursuant to section 10(c) of the 
Bank Act (12 U.S.C. 1430(c)), a Bank shall have a lien upon, and shall 
hold, the stock of a member in the Bank as further collateral security 
for all indebtedness of the member to the Bank.
    (2) The written security agreement used by the Bank shall provide 
that the borrowing member's Bank stock is assigned as additional 
security by the member to the Bank.
    (3) The security interest of the Bank in such member's Bank stock 
shall be entitled to the priority provided for in section 10(e) of the 
Bank Act (12 U.S.C. 1430(e)).

[[Page 225]]

    (f) Advances collateral security requiring formal approval. No home 
mortgage loan otherwise eligible to be accepted as collateral for an 
advance by a Bank under this section shall be accepted as collateral for 
an advance if any director, officer, employee, attorney or agent of the 
Bank or of the borrowing member is personally liable thereon, unless the 
board of directors of the Bank has specifically approved such acceptance 
by formal resolution, and the FHFA has endorsed such resolution.
    (g) Pledge of advances collateral by affiliates. Assets held by an 
affiliate of a member that are eligible as collateral under paragraphs 
(a) or (b) of this section may be used to secure advances to that member 
only if:
    (1) The collateral is pledged to secure either:
    (i) The member's obligation to repay advances; or
    (ii) A surety or other agreement under which the affiliate has 
assumed, along with the member, a primary obligation to repay advances 
made to the member; and
    (2) The Bank obtains and maintains a legally enforceable security 
interest pursuant to which the Bank's legal rights and privileges with 
respect to the collateral are functionally equivalent in all material 
respects to those that the Bank would possess if the member were to 
pledge the same collateral directly, and such functional equivalence is 
supported by adequate documentation.

[58 FR 29469, May 20, 1993, as amended at 64 FR 16621, Apr. 6, 1999; 65 
FR 8262, Feb. 18, 2000. Redesignated and amended at 65 FR 44429, July 
18, 2000; 67 FR 12851, Mar. 20, 2002; 75 FR 76623, Dec. 9, 2010]



Sec. 1266.8  Banks as secured creditors.

    (a) Except as provided in paragraph (b) of this section, 
notwithstanding any other provision of law, any security interest 
granted to a Bank by a member, or by an affiliate of a member, shall be 
entitled to priority over the claims and rights of any party, including 
any receiver, conservator, trustee or similar party having rights of a 
lien creditor, to such collateral.
    (b) A Bank's security interest as described in paragraph (a) of this 
section shall not be entitled to priority over the claims and rights of 
a party that:
    (1) Would be entitled to priority under otherwise applicable law; 
and
    (2) Is an actual bona fide purchaser for value of such collateral or 
is an actual secured party whose security interest in such collateral is 
perfected in accordance with applicable state law.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44429, July 18, 2000, as amended at 67 
FR 12851, Mar. 20, 2002]



Sec. 1266.9  Pledged collateral; verification.

    (a) Collateral safekeeping. (1) A Bank may permit a member that is a 
depository institution to retain documents evidencing collateral pledged 
to the Bank, provided that the Bank and such member have executed a 
written security agreement pursuant to Sec. 1266.2(c) of this part 
whereby such collateral is retained solely for the Bank's benefit and 
subject to the Bank's control and direction.
    (2) A Bank shall take any steps necessary to ensure that its 
security interest in all collateral pledged by non-depository 
institutions for an advance is as secure as its security interest in 
collateral pledged by depository institutions.
    (3) A Bank may at any time perfect its security interest in 
collateral securing an advance to a member.
    (b) Collateral verification. Each Bank shall establish written 
procedures and standards for verifying the existence of collateral 
securing the Bank's advances, and shall regularly verify the existence 
of the collateral securing its advances in accordance with such 
procedures and standards.

[58 FR 29469, May 20, 1993, as amended at 64 FR 16621, Apr. 6, 1999; 65 
FR 8263, Feb. 18, 2000. Redesignated at 65 FR 44430, July 18, 2000; 67 
FR 12851, Mar. 20, 2002]



Sec. 1266.10  Collateral valuation; appraisals.

    (a) Collateral valuation. Each Bank shall determine the value of 
collateral securing the Bank's advances in accordance with the 
collateral valuation procedures set forth in the Bank's member products 
policy established pursuant to Sec. 917.4 of this title.

[[Page 226]]

    (b) Fair application of procedures. Each Bank shall apply the 
collateral valuation procedures consistently and fairly to all borrowing 
members, and the valuation ascribed to any item of collateral by the 
Bank shall be conclusive as between the Bank and the member.
    (c) Appraisals. A Bank may require a member to obtain an appraisal 
of any item of collateral, and to perform such other investigations of 
collateral as the Bank deems necessary and proper.

[65 FR 44430, July 18, 2000]



Sec. 1266.11  Capital stock requirements; redemption of excess stock.

    (a) Capital stock requirement for advances. For a Bank that has not 
converted to the capital structure authorized by the Gramm-Leach-Bliley 
Act, the aggregate amount of outstanding advance made by the Bank to a 
member shall not exceed 20 times the amount paid in by such member for 
capital stock in the Bank.
    (b) Unilateral Redemption of excess stock. A Bank that has not 
converted to the capital structure authorized by the Gramm-Leach-Bliley 
Act:
    (1) May, after providing 15 calendar days advance written notice to 
a member, require the redemption of that amount of the member's Bank 
capital stock that exceeds the applicable capital stock requirements in 
paragraph (a) of this section, provided that the member continues to 
comply with the minimum stock purchase requirement set forth in Sec. 
1263.20(a) of this chapter; and
    (2) May not impose on, or accept from, a member a fee in lieu of 
redeeming a member's excess stock.

[75 FR 76623, Dec. 9, 2010]



Sec. 1266.12  Intradistrict transfer of advances.

    (a) Advances held by members. A Bank may allow one of its members to 
assume an advance extended by the Bank to another of its members, 
provided the assumption complies with the requirements of this part 
governing the issuance of new advances. A Bank may charge an appropriate 
fee for processing the transfer.
    (b) Advances held by nonmembers. A Bank may allow one of its members 
to assume an advance held by a nonmember, provided the advance was 
originated by the Bank and provided the assumption complies with the 
requirements of this part governing the issuance of new advances. A Bank 
may charge an appropriate fee for processing the transfer.

[59 FR 2950, Jan. 20, 1994. Redesignated at 65 FR 44430, July 18, 2000]



Sec. 1266.13  Special advances to savings associations.

    (a) Eligible institutions. (1) A Bank, upon receipt of a written 
request from the Director of the OTS, may make short-term advances to a 
savings association member.
    (2) Such request must certify that the member:
    (i) Is solvent but presents a supervisory concern to the OTS because 
of the member's financial condition; and
    (ii) Has reasonable and demonstrable prospects of returning to a 
satisfactory financial condition.
    (b) Terms and conditions. Advances made by a Bank to a member 
savings association under this section shall:
    (1) Be subject to all applicable collateral requirements of the 
Bank, this part and section 10(a) of the Bank Act (12 U.S.C. 1430(a)); 
and
    (2) Be at the interest rate applicable to advances of similar type 
and maturity that are made available to other members that do not pose 
such a supervisory concern.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44430, July 18, 2000]



Sec. 1266.14  Advances to the Savings Association Insurance Fund.

    (a) Authority. Upon receipt of a written request from the FDIC, a 
Bank may make advances to the FDIC for the use of the Savings 
Association Insurance Fund. The Bank shall provide a copy of such 
request to the FHFA.
    (b) Requirements. Advances to the FDIC for the use of the Savings 
Association Insurance Fund shall:
    (1) Bear a rate of interest not less than the Bank's marginal cost 
of funds, taking into account the maturities involved and reasonable 
administrative costs;

[[Page 227]]

    (2) Have a maturity acceptable to the Bank;
    (3) Be subject to any prepayment, commitment, or other appropriate 
fees of the Bank; and
    (4) Be adequately secured by collateral acceptable to the Bank.

[58 FR 29469, May 20, 1993, as amended at 65 FR 8262, Feb. 18, 2000. 
Redesignated at 65 FR 44430, July 18, 2000]



Sec. 1266.15  Liquidation of advances upon termination of membership.

    If an institution's membership in a Bank is terminated, the Bank 
shall determine an orderly schedule for liquidating any indebtedness of 
such member to the Bank; this section shall not require a Bank to call 
any such indebtedness prior to maturity of the advance. The Bank shall 
deem any such liquidation a prepayment of the member's indebtedness, and 
the member shall be subject to any fees applicable to such prepayment.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44430, July 18, 2000]



                Subpart B_Advances to Housing Associates

    Source: 62 FR 12079, Mar. 14, 1997, unless otherwise noted.



Sec. 1266.16  Scope.

    Except as otherwise provided in Sec. Sec. 1266.14 and 1266.17, the 
requirements of subpart A apply to this subpart.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 44430, July 18, 2000]



Sec. 1266.17  Advances to housing associates.

    (a) Authority. Subject to the provisions of the Bank Act and this 
subpart, a Bank may make advances only to a housing associate whose 
principal place of business, as determined in accordance with part 1263 
of this chapter, is located in the Bank's district.
    (b) Collateral requirements--(1) Advances to housing associates. A 
Bank may make an advance to any housing associate upon the security of 
the following collateral:
    (i) Mortgage loans insured by the Federal Housing Administration of 
HUD under title II of the National Housing Act; or
    (ii) Securities representing a whole interest in the principal and 
interest payments due on a pool of mortgage loans insured by the Federal 
Housing Administration of HUD under title II of the National Housing 
Act. A Bank may only accept as collateral the securities described in 
this paragraph (b)(1)(ii) if the housing associate provides evidence 
that such securities are backed solely by mortgages of the type 
described in paragraph (b)(1)(i) of this section.
    (2) Certain advances to SHFAs. (i) In addition to the collateral 
described in paragraph (b)(1) of this section, a Bank may make an 
advance to a housing associate that has satisfied the requirements of 
Sec. 1264.3(b) for the purpose of facilitating residential or 
commercial mortgage lending that benefits individuals or families 
meeting the income requirements in section 142(d) or 143(f) of the 
Internal Revenue Code (26 U.S.C. 142(d) or 143(f)) upon the security of 
the following collateral:
    (A) The collateral described in Sec. 1266.7(a)(1) or (2).
    (B) The collateral described in Sec. 1266.7(a)(3). Solely for the 
purpose of facilitating acceptance of such collateral, a Bank may 
establish a cash collateral account for a housing associate that has 
satisfied the requirements of Sec. 1264.3(b).
    (C) The other real estate-related collateral described in Sec. 
1266.7(a)(4), provided that such collateral comprises mortgage loans on 
one-to-four family or multifamily residential property.
    (ii) Prior to making an advance pursuant to this paragraph (b)(2), a 
Bank shall obtain a written certification from the housing associate 
that it shall use the proceeds of the advance for the purposes described 
in paragraph (b)(2)(i) of this section.
    (c) Terms and conditions--(1) General. Subject to the provisions of 
this paragraph (c), a Bank, in its discretion, shall determine whether, 
and on what terms, it will make advances to a housing associate.
    (2) Advance pricing. (i) A Bank shall price advances to housing 
associates in accordance with the requirements for pricing advances to 
members set forth

[[Page 228]]

in Sec. 1266.3(b). Wherever the term ``member'' appears in Sec. 
1266.3(b), the term shall be construed also to mean ``housing 
associate.''
    (ii) A Bank shall apply the pricing criteria identified in Sec. 
1266.5(b)(2) equally to all of its member and housing associate 
borrowers.
    (3) Limit on advances. The principal amount of any advance made to a 
housing associate may not exceed 90 percent of the unpaid principal of 
the mortgage loans or securities pledged as security for the advance. 
This limit does not apply to an advance made to a housing associate 
under paragraph (b)(2) of this section.
    (d) Transaction accounts. Solely for the purpose of facilitating the 
making of advances to a housing associate, a Bank may establish a 
transaction account for each housing associate.
    (e) Loss of eligibility--(1) Notification of status changes. A Bank 
shall require a housing associate that applies for an advance to agree 
in writing that it will promptly inform the Bank of any change in its 
status as a housing associate.
    (2) Verification of eligibility. A Bank may, from time to time, 
require a housing associate to provide evidence that it continues to 
satisfy all of the eligibility requirements of the Bank Act, this 
subpart and part 1264 of this chapter.
    (3) Loss of eligibility. A Bank shall not extend a new advance or 
renew an existing advance to a housing associate that no longer meets 
the eligibility requirements of the Bank Act, this subpart and part 1264 
of this chapter until the entity has provided evidence satisfactory to 
the Bank that it is in compliance with such requirements.

[58 FR 29469, May 20, 1993, as amended by 65 FR 203, Jan. 4, 2000; 65 FR 
8263, Feb. 18, 2000. Redesignated and amended at 65 FR 44430, July 18, 
2000; 67 FR 12851, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]



  Subpart C_Advances to Out-of-District Members and Housing
  Associates



Sec. 1266.25  Advances to out-of-district members and 
housing associates.

    (a) Establishment of creditor/debtor relationship. Any Bank may 
become a creditor to a member or housing associate of another Bank 
through the purchase of an outstanding advance, or a participation 
interest therein, from the other Bank, or through an arrangement with 
the other Bank that provides for the establishment of such a creditor/
debtor relationship at the time an advance is made.
    (b) Applicability of advances requirements. Any creditor/debtor 
relationship established pursuant to paragraph (a) of this section shall 
be subject to all of the provisions of this part that would apply to an 
advance made by a Bank to its own members or housing associates.

[65 FR 43981, July 17, 2000; 65 FR 46049, July 26, 2000, as amended at 
67 FR 12852, Mar. 20, 2002]



PART 1267_FEDERAL HOME LOAN BANK INVESTMENTS--Table of Contents



Sec.
1267.1 Definitions.
1267.2 Authorized investments and transactions.
1267.3 Prohibited investments and prudential rules.
1267.4 Limitations and prudential requirements on use of derivative 
          instruments.
1267.5 Risk-based capital requirements for investments.

    Authority: 12 U.S.C. 1429, 1430, 1430b, 1431, 1436, 4511, 4513, 
4526.

    Source: 76 FR 29151, May 20, 2011, unless otherwise noted.



Sec. 1267.1  Definitions.

    As used in this part:
    Asset-backed security means a debt instrument backed by loans, but 
does not include debt instruments that meet the definition of a 
mortgage-backed security.
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act, as amended (12 U.S.C. 
1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Consolidated obligation means any bond, debenture or note on which 
the Banks are jointly and severally liable and which was issued under 
section 11 of the Bank Act (12 U.S.C. 1431) and in accordance with any 
implementing

[[Page 229]]

regulations, whether or not such instrument was originally issued 
jointly by the Banks or by the Federal Housing Finance Board on behalf 
of the Banks.
    Deposits in banks or trust companies means:
    (1) A deposit in another Bank;
    (2) A demand account in a Federal Reserve Bank;
    (3) A deposit in or sale of Federal funds to:
    (i) An insured depository institution, as defined in section 2(9) of 
the Bank Act, that is designated by the Bank's board of directors;
    (ii) A trust company that is a member of the Federal Reserve System 
or insured by the Federal Deposit Insurance Corporation and is 
designated by the Bank's board of directors; or
    (iii) A U.S. branch or agency of a foreign Bank as defined in the 
International Banking Act of 1978, as amended, (12 U.S.C. 3101 et seq.) 
that is subject to supervision of the Board of Governors of the Federal 
Reserve System and is designated by the Bank's board of directors.
    Derivative contract means generally a financial contract the value 
of which is derived from the values of one or more referenced assets, 
rates, or indices of asset values, or credit-related events. Derivative 
contracts include interest rate derivative contracts, foreign exchange 
rate derivative contracts, equity derivative contracts, precious metals 
derivative contracts, commodity derivative contracts and credit 
derivatives, and any other instruments that pose similar risks.
    GAAP means the United States generally accepted accounting 
principles.
    Indexed principal swap means an interest rate swap agreement in 
which the notional principal balance amortizes based upon the prepayment 
experience of a specified group of mortgage-backed securities or asset-
backed securities or the behavior of an interest rate index.
    Interest-only stripped security means a class of mortgage-backed or 
asset-backed security that is allocated only the interest payments made 
on the underlying mortgages or loans and receives no principal payments.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest credit rating 
category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or similar standards.
    Mortgage-backed security means a security or instrument, including 
collateralized mortgage obligations (CMOs), and Real Estate Mortgage 
Investment Trusts (REMICS), that represents an interest in, or is 
secured by, one or more pools of mortgage loans.
    NRSRO means a credit rating organization registered with the 
Securities and Exchange Commission as a nationally recognized 
statistical rating organization.
    Principal-only stripped security means a class of mortgage-backed or 
asset-backed security that is allocated only the principal payments made 
on the underlying mortgages or loans and receives no interest payments.
    Total capital shall have the meaning set forth in Sec. 1229.1 of 
this chapter.



Sec. 1267.2  Authorized investments and transactions.

    (a) In addition to assets enumerated in parts 1266 and 955 of this 
title and subject to the applicable limitations set forth in this part, 
and in part 1272 of this chapter, each Bank may invest in:
    (1) Obligations of the United States;
    (2) Deposits in banks or trust companies;
    (3) Obligations, participations or other instruments of, or issued 
by, the Federal National Mortgage Association or the Government National 
Mortgage Association;
    (4) Mortgages, obligations, or other securities that are, or ever 
have been, sold by the Federal Home Loan Mortgage Corporation pursuant 
to section 305 or 306 of the Federal Home Loan Mortgage Corporation Act 
(12 U.S.C. 1454 or 1455);
    (5) Stock, obligations, or other securities of any small business 
investment company formed pursuant to 15 U.S.C.

[[Page 230]]

681, to the extent such investment is made for purposes of aiding 
members of the Bank; and
    (6) Instruments that the Bank has determined are permissible 
investments for fiduciary or trust funds under the laws of the state in 
which the Bank is located.
    (b) Subject to any applicable limitations set forth in this part and 
in part 1272 of this chapter, a Bank also may enter into the following 
types of transactions:
    (1) Derivative contracts;
    (2) Standby letters of credit, pursuant to the requirements of part 
1269 of this title;
    (3) Forward asset purchases and sales;
    (4) Commitments to make advances; and
    (5) Commitments to make or purchase other loans.



Sec. 1267.3  Prohibited investments and prudential rules.

    (a) Prohibited investments. A Bank may not invest in:
    (1) Instruments that provide an ownership interest in an entity, 
except for investments described in Sec. 1265.3(e) and (f) of this 
chapter;
    (2) Instruments issued by non-United States entities, except United 
States branches and agency offices of foreign commercial banks;
    (3) Debt instruments that are not rated as investment grade, except:
    (i) Investments described in Sec. 1265.3(e) of this chapter; and
    (ii) Debt instruments that were downgraded to a below investment 
grade rating after acquisition by the Bank;
    (4) Whole mortgages or other whole loans, or interests in mortgages 
or loans, except:
    (i) Acquired member assets;
    (ii) Investments described in Sec. 1265.3(e) of this title;
    (iii) Marketable direct obligations of state, local, or Tribal 
government units or agencies, having at least the second highest credit 
rating from an NRSRO, where the purchase of such obligations by the Bank 
provides to the issuer the customized terms, necessary liquidity, or 
favorable pricing required to generate needed funding for housing or 
community lending;
    (iv) Mortgage-backed securities, or asset-backed securities 
collateralized by manufactured housing loans or home equity loans, that 
meet the definition of the term ``securities'' under 15 U.S.C. 77b(a)(1) 
and are not otherwise prohibited under paragraphs (a)(5) through (a)(7) 
of this section, and
    (v) Loans held or acquired pursuant to section 12(b) of the Bank Act 
(12 U.S.C. 1432(b)).
    (5) Residual interest and interest accrual classes of securities;
    (6) Interest-only and principal-only stripped securities; and
    (7) Fixed rate mortgage-backed securities or eligible asset-backed 
securities or floating rate mortgage-backed securities or eligible 
asset-backed securities that on the trade date are at rates equal to 
their contractual cap, with average lives that vary more than six years 
under an assumed instantaneous interest rate change of 300 basis points, 
unless the instrument qualifies as an acquired member asset under part 
955 of this title.
    (b) Foreign currency or commodity positions prohibited. A Bank may 
not take a position in any commodity or foreign currency. The Banks may 
issue consolidated obligations denominated in a currency other than U.S. 
Dollars or linked to equity or commodity prices, provided that the Banks 
meet the requirements of Sec. 1270.9(d) of this chapter, and all other 
applicable requirements related to issuing consolidated obligations.
    (c) Limits on certain investments. (1) A purchase, otherwise 
authorized under this part, of mortgage-backed securities or asset-
backed securities, may not cause the aggregate value of all such 
securities held by the Bank to exceed 300 percent of the Bank's total 
capital. For purposes of this limitation, such aggregate value will be 
measured as of the transaction trade date for such purchase, and total 
capital will be the most recent amount reported by a Bank to FHFA. A 
Bank will not be required to divest securities solely to bring the level 
of its holdings into compliance with the limits of this paragraph, 
provided that the original

[[Page 231]]

purchase of the securities complied with the limits in this paragraph.
    (2) A Bank's purchase of any mortgage-backed or asset-backed 
security may not cause the value of its total holdings of mortgage-
backed and asset-backed securities, measured as of the transaction trade 
date for such purchase, to increase in any calendar quarter by more than 
50 percent of its total capital as of the beginning of such quarter.
    (3) For purposes of applying the limits under this paragraph (c), 
the value of relevant mortgage-backed or asset-backed securities shall 
be calculated based on amortized historical costs for securities 
classified as held-to-maturity or available-for-sale and on fair value 
for trading securities.



Sec. 1267.4  Limitations and prudential requirements on use of 
derivative instruments.

    (a) Non-speculative use. Derivative instruments that do not qualify 
as hedging instruments pursuant to GAAP may be used only if a non-
speculative use is documented by the Bank.
    (b) Additional Prohibitions. (1) A Bank may not enter into interest 
rate swaps that amortize according to behavior of instruments described 
in Sec. 1267.3(a)(5) or (6) of this part.
    (2) A Bank may not enter into indexed principal swaps that have 
average lives that vary by more than six years under an assumed 
instantaneous change in interest rates of 300 basis points, unless they 
are entered into in conjunction with the issuance of consolidated 
obligations or the purchase of permissible investments or entry into a 
permissible transaction in which all interest rate risk is passed 
through to the investor or counterparty.
    (c) Documentation requirements. (1) Derivative transactions with a 
single counterparty shall be governed by a single master agreement when 
practicable.
    (2) A Bank's agreement with the counterparty for over-the-counter 
derivative contracts shall include:
    (i) A requirement that market value determinations and subsequent 
adjustments of collateral be made at least on a monthly basis;
    (ii) A statement that failure of a counterparty to meet a collateral 
call will result in an early termination event;
    (iii) A description of early termination pricing and methodology, 
with the methodology reflecting a reasonable estimate of the market 
value of the over-the-counter derivative contract at termination 
(standard International Swaps and Derivatives Association, Inc. language 
relative to early termination pricing and methodology may be used to 
satisfy this requirement); and
    (iv) A requirement that the Bank's consent be obtained prior to the 
transfer of an agreement or contract by a counterparty.



Sec. 1267.5  Risk-based capital requirements for investments.

    Any Bank which is not subject to the capital requirements set forth 
in part 932 of this title shall hold retained earnings plus general 
allowance for losses as support for the credit risk of all investments 
that are not rated by an NRSRO, or are rated or have a putative rating 
below the second highest credit rating, in an amount equal to or greater 
than the outstanding balance of the investments multiplied by:
    (a) A factor associated with the credit rating of the investments as 
determined by FHFA on a case-by-case basis for rated assets to be 
sufficient to raise the credit quality of the asset to the second 
highest credit rating category; and
    (b) 0.08 for assets having neither a putative nor actual rating.



PART 1269_STANDBY LETTERS OF CREDIT--Table of Contents



Sec.
1269.1 Definitions.
1269.2 Standby letters of credit on behalf of members.
1269.3 Standby letters of credit on behalf of housing associates.
1269.4 Obligation to Bank under all standby letters of credit.
1269.5 Additional provisions applying to all standby letters of credit.

    Authority: 12 U.S.C. 1429, 1430, 1430b, 1431, 4511, 4513 and 4526.

    Source: 63 FR 65699, Nov. 30, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256,

[[Page 232]]

Feb. 18, 2000, and further redesignated at 67 FR 12853, Mar. 20, 2002 
and 75 FR 8240, Feb. 24, 2010.



Sec. 1269.1  Definitions.

    As used in this part:
    Act means the Federal Home Loan Bank Act as amended (12 U.S.C. 1421 
through 1449).
    Applicant means a person or entity at whose request or for whose 
account a standby letter of credit is issued.
    Bank written in title case means a Federal Home Loan Bank 
established under section 12 of the Act (12 U.S.C. 1432).
    Beneficiary means a person or entity who, under the terms of a 
standby letter of credit, is entitled to have its complying presentation 
honored.
    Community lending means providing financing for economic development 
projects for targeted beneficiaries, and, for community financial 
institutions (as defined in Sec. 1263.1 of this title), purchasing or 
funding small business loans, small farm loans or small agri-business 
loans (as defined in Sec. 1266.1 of this chapter).
    Confirm means to undertake, at the request or with the consent of 
the issuer, to honor a presentation under a standby letter of credit 
issued by a member or housing associate.
    Document means a draft or other demand, document of title, 
investment security, certificate, invoice, or other record, statement, 
or representation of fact, law, right, or opinion that is presented 
under the terms of a standby letter of credit.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest credit rating 
category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or other similar standards.
    Issuer means a person or entity that issues a standby letter of 
credit.
    NRSRO means a credit rating organization registered with the 
Securities and Exchange Commission as a nationally recognized 
statistical rating organization.
    Presentation means delivery of a document to an issuer, or an entity 
that has undertaken a confirmation at the request or with the consent of 
the issuer, for the giving of value under a standby letter of credit.
    Residential housing finance means:
    (1) The purchase or funding of ``residential housing finance 
assets,'' as that term is defined in Sec. 1266.1 of this chapter; or
    (2) Other activities that support the development or construction of 
residential housing.
    SHFA associate means a housing associate that is a ``state housing 
finance agency,'' as that term is defined in Sec. 1264.1 of this 
chapter, and that has met the requirements of Sec. 1269.3(b) of this 
chapter.
    Standby letter of credit means a definite undertaking by an issuer 
on behalf of an applicant that represents an obligation to the 
beneficiary, pursuant to a complying presentation: to repay money 
borrowed by, advanced to, or for the account of the applicant; to make 
payment on account of any indebtedness undertaken by the applicant; or 
to make payment on account of any default by the applicant in the 
performance of an obligation. The term standby letter of credit does not 
include a commercial letter of credit, or any short-term self-
liquidating instrument used to finance the movement of goods.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002; 75 FR 8240, Feb. 24, 2010; 75 FR 76623, Dec. 9, 2010]



Sec. 1269.2  Standby letters of credit on behalf of members.

    (a) Authority and purposes. Each Bank is authorized to issue or 
confirm on behalf of members standby letters of credit that comply with 
the requirements of this part, for any of the following purposes:
    (1) To assist members in facilitating residential housing finance;
    (2) To assist members in facilitating community lending;
    (3) To assist members with asset/liability management; or

[[Page 233]]

    (4) To provide members with liquidity or other funding.
    (b) Fully secured. A Bank, at the time it issues or confirms a 
standby letter of credit on behalf of a member, shall obtain and 
maintain a security interest in collateral that is sufficient to secure 
fully the member's unconditional obligation described in Sec. 
1269.4(a)(2) of this part, and that complies with the requirements set 
forth in paragraph (c) of this section.
    (c) Eligible collateral. (1) Any standby letter of credit issued or 
confirmed on behalf of a member may be secured in accordance with the 
requirements for advances under Sec. 1266.7 of this chapter.
    (2) A standby letter of credit issued or confirmed on behalf of a 
member for a purpose described in paragraphs (a)(1) or (a)(2) of this 
section may, in addition to the collateral described in paragraph (c)(1) 
of this section, be secured by obligations of state or local government 
units or agencies rated as investment grade by an NRSRO.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002; 75 FR 8240, Feb. 24, 2010; 75 FR 76623, Dec. 9, 2010]



Sec. 1269.3  Standby letters of credit on behalf of housing associates.

    (a) Housing associates. Each Bank is authorized to issue or confirm 
on behalf of housing associates standby letters of credit that are fully 
secured by collateral described in Sec. 1266.17(b)(1)(i) or (ii) of 
this chapter, and that otherwise comply with the requirements of this 
part, for any of the following purposes:
    (1) To assist housing associates in facilitating residential housing 
finance;
    (2) To assist housing associates in facilitating community lending;
    (3) To assist housing associates with asset/liability management; or
    (4) To provide housing associates with liquidity or other funding.
    (b) SHFA associates. Each Bank is authorized to issue or confirm on 
behalf of SHFA associates standby letters of credit that are fully 
secured by collateral described in Sec. 1266.17(b)(2)(i)(A), (B) or (C) 
of this chapter, and that otherwise comply with the requirements of this 
part, for the purpose of facilitating residential or commercial mortgage 
lending that benefits individuals or families meeting the income 
requirements in section 142(d) or 143(f) of the Internal Revenue Code 
(26 U.S.C. 142(d) or 143(f)).

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000; 75 FR 8240, Feb. 24, 2010; 75 FR 76623, Dec. 9, 
2010]



Sec. 1269.4  Obligation to Bank under all standby letters of credit.

    (a) Obligation to reimburse. A Bank may issue or confirm a standby 
letter of credit only on behalf of a member or housing associate that 
has:
    (1) Established with the Bank a cash account pursuant to Sec. Sec. 
1266.17(b)(2)(i)(B), 1266.17(d), or 969.2 of this title; and
    (2) Assumed an unconditional obligation to reimburse the Bank for 
value given by the Bank to the beneficiary under the terms of the 
standby letter of credit by depositing immediately available funds into 
the account described in paragraph (a)(1) of this section not later than 
the date of the Bank's payment of funds to the beneficiary.
    (b) Prompt action to recover funds. If a member or housing associate 
fails to fulfill the obligation described in paragraph (a)(2) of this 
section, the Bank shall take action promptly to recover the funds that 
such member or housing associate is obligated to repay.
    (c) Obligation financed by advance. Notwithstanding the obligations 
and duties of the Bank and its member or housing associate under 
paragraphs (a) and (b) of this section, the Bank may, at its discretion, 
permit such member or housing associate to finance repayment of the 
obligation described in paragraph (a)(2) of this section by receiving an 
advance that complies with sections 10 or 10b of the Act (12 U.S.C. 
1430, 1430(b)) and part 1266 of this title.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002; 75 FR 8240, Feb. 24, 2010; 75 FR 76623, Dec. 9, 2010]

[[Page 234]]



Sec. 1269.5  Additional provisions applying to all standby letters
of credit.

    (a) Requirements. Each standby letter of credit issued or confirmed 
by a Bank shall:
    (1) Contain a specific expiration date, or be for a specific term; 
and
    (2) Require approval in advance by the Bank of any transfer of the 
standby letter of credit from the original beneficiary to another person 
or entity.
    (b) Additional collateral provisions. (1) A Bank may take such steps 
as it deems necessary to protect its secured position on standby letters 
of credit, including requiring additional collateral, whether or not 
such additional collateral conforms to the requirements of Sec. 1269.2 
or Sec. 1269.3 of this part.
    (2) Collateral pledged by a member or housing associate to secure a 
letter of credit issued or confirmed on its behalf by a Bank shall be 
subject to the provisions of Sec. Sec. 1266.7(d), 1266.7(e), 1266.8, 
1266.9 and 1266.10 of this chapter.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002; 75 FR 8240, Feb. 24, 2010; 75 FR 76623, Dec. 9, 2010]



PART 1270_LIABILITIES--Table of Contents



                          Subpart A_Definitions

Sec.
1270.1 Definitions.

                       Subpart B_Sources of Funds

1270.2 Authorized liabilities.
1270.3 Deposits from members.

                   Subpart C_Consolidated Obligations

1270.4 Issuance of consolidated obligations.
1270.5 Leverage limit and credit rating requirements.
1270.6 Transactions in consolidated obligations.
1270.7 Lost, stolen, destroyed, mutilated or defaced consolidated 
          obligations.
1270.8 Administrative provision.
1270.9 Conditions for issuance of consolidated obligations.
1270.10 Joint and several liability.
1270.11 Savings clause.

       Subpart D_Book-Entry Procedure for Consolidated Obligations

1270.12 Law governing rights and obligations of Banks, FHFA, Office of 
          Finance, United States and Federal Reserve Banks; rights of 
          any Person against Banks, FHFA, Office of Finance, United 
          States and Federal Reserve Banks.
1270.13 Law governing other interests.
1270.14 Creation of Participant's Security Entitlement; security 
          interests.
1270.15 Obligations of the Banks and the Office of Finance; no Adverse 
          Claims.
1270.16 Authority of Federal Reserve Banks.
1270.17 Liability of Banks, FHFA, Office of Finance and Federal Reserve 
          Banks.
1270.18 Additional requirements; notice of attachment for Book-entry 
          consolidated obligations.
1270.19 Reference to certain Department of Treasury commentary and 
          determinations.
1270.20 Consolidated obligations are not obligations of the United 
          States or guaranteed by the United States.

    Authority: 12 U.S.C. 1431, 1432, 1435, 4511, 4512, 4513, and 4526.

    Source: 76 FR 18369, Apr. 4, 2011, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1270.1  Definitions.

    As used in this part, unless the context otherwise requires or 
indicates:
    Adverse Claim means a claim that a claimant has a property interest 
in a Book-entry consolidated obligation and that it is a violation of 
the rights of the claimant for another Person to hold, transfer, or deal 
with the Security.
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act.
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Book-entry consolidated obligation means a consolidated obligation 
maintained in the book-entry system of the Federal Reserve Banks.
    Consolidated obligation means any bond, debenture or note on which 
the Banks are jointly and severally liable and which was issued under 
section 11 of the Bank Act (12 U.S.C. 1431) and in accordance with any 
implementing regulations, whether or not such instrument was originally 
issued jointly by the Banks or by the Federal Housing Finance Board on 
behalf of the Banks.
    Deposits in banks or trust companies means:

[[Page 235]]

    (1) A deposit in another Bank;
    (2) A demand account in a Federal Reserve Bank;
    (3) A deposit in, or a sale of Federal funds to:
    (i) An insured depository institution, as defined in section 2(9)(A) 
of the Bank Act (12 U.S.C. 1422(9)(A)), that is designated by a Bank's 
board of directors;
    (ii) A trust company that is a member of the Federal Reserve System 
or insured by the FDIC, and is designated by a Bank's board of 
directors; or
    (iii) A U.S. branch or agency of a foreign bank, as defined in the 
International Banking Act of 1978, as amended (12 U.S.C. 3101 et seq.), 
that is subject to the supervision of the Federal Reserve Board, and is 
designated by a Bank's board of directors.
    Director, written in title case, means the Director of FHFA or his 
or her designee.
    Entitlement Holder means a Person or a Bank to whose account an 
interest in a Book-entry consolidated obligation is credited on the 
records of a Securities Intermediary.
    Federal Reserve Bank means a Federal Reserve Bank or branch, acting 
as fiscal agent for the Office of Finance, unless otherwise indicated.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Federal Reserve Bank maintains Book-entry Securities 
accounts and transfers Book-entry Securities.
    Federal Reserve Board means the Board of Governors of the Federal 
Reserve System.
    FHFA means the Federal Housing Finance Agency.
    Funds account means a reserve and/or clearing account at a Federal 
Reserve Bank to which debits or credits are posted for transfers against 
payment, Book-entry Securities transaction fees, or principal and 
interest payments.
    Non-complying Bank means a Bank that has failed to provide the 
liquidity certification as required under Sec. 1270.10(b)(1).
    NRSRO means a credit rating organization registered with the 
Securities and Exchange Commission as a nationally recognized 
statistical rating organization.
    Office of Finance means the Office of Finance, a joint office of the 
Banks established under part 1273 of this chapter and referenced in the 
Bank Act and the Safety and Soundness Act, including the Office of 
Finance acting as agent of the Banks in all matters relating to the 
issuance of Book-entry consolidated obligations and in the performance 
of all other necessary and proper functions relating to Book-entry 
consolidated obligations, including the payment of principal and 
interest due thereon.
    Participant means a Person or a Bank that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    Participant's Securities Account means an account in the name of a 
Participant at a Federal Reserve Bank to which Book-entry consolidated 
obligations held for a Participant are or may be credited.
    Person means and includes an individual, corporation, company, 
governmental entity, association, firm, partnership, trust, estate, 
representative, and any other similar organization, but does not mean or 
include a Bank, the Director, FHFA, the Office of Finance, the United 
States, or a Federal Reserve Bank.
    Repurchase agreement means an agreement in which a Bank sells 
securities and simultaneously agrees to repurchase those securities or 
similar securities at an agreed upon price, with or without a stated 
time for repurchase.
    Revised Article 8 means Uniform Commercial Code, Revised Article 8, 
Investment Securities (with Conforming and Miscellaneous Amendments to 
Articles 1, 3, 4, 5, 9, and 10) 1994 Official Text. Copies of this 
publication are available from the Executive Office of the American Law 
Institute, 4025 Chestnut Street, Philadelphia, PA 19104, and the 
National Conference of Commissioners on Uniform State Laws, 676 North 
St. Clair Street, Suite 1700, Chicago, IL 60611.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) as 
amended.

[[Page 236]]

    SBIC means a small business investment company formed pursuant to 
section 301 of the Small Business Investment Act (15 U.S.C. 681).
    Securities Intermediary means:
    (1) A Person that is registered as a ``clearing agency'' under the 
Federal securities laws; a Federal Reserve Bank; any other person that 
provides clearance or settlement services with respect to a Book-entry 
consolidated obligation that would require it to register as a clearing 
agency under the Federal securities laws but for an exclusion or 
exemption from the registration requirement, if its activities as a 
clearing corporation, including promulgation of rules, are subject to 
regulation by a Federal or State governmental authority; or
    (2) A Person (other than an individual, unless such individual is 
registered as a broker or dealer under the Federal securities laws), 
including a bank or broker, that in the ordinary course of its business 
maintains securities accounts for others and is acting in that capacity.
    Security Entitlement means the rights and property interest of an 
Entitlement Holder with respect to a Book-entry consolidated obligation.
    Transfer Message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry consolidated 
obligation, as set forth in Federal Reserve Bank Operating Circulars.



                       Subpart B_Sources of Funds



Sec. 1270.2  Authorized liabilities.

    As a source of funds for business operations, each Bank is 
authorized to incur liabilities by:
    (a) Accepting proceeds from the issuance of consolidated obligations 
issued in accordance with this part;
    (b) Accepting time or demand deposits from members, other Banks or 
instrumentalities of the United States, and cash accounts from 
associates or members pursuant to Sec. Sec. 1266.17(b)(2)(i)(B), 
1266.17(d) and 1269.4(a)(1) of this chapter, or Sec. 1270.3 of this 
part, or from other institutions for which the Bank is providing 
correspondent services pursuant to section 11(e) of the Bank Act (12 
U.S.C. 1431(e));
    (c) Purchasing Federal funds; and
    (d) Entering into repurchase agreements.



Sec. 1270.3  Deposits from members.

    (a) Banks may accept demand and time deposits from members, 
reserving the right to require notice of intention to withdraw any part 
of time deposits. Rates of interest paid on all deposits shall be set by 
the Bank's board of directors (or, between regular meetings thereof, by 
a committee of directors selected by the board) or by the Bank 
President, if so authorized by the board. Unless otherwise specified by 
the board, a Bank President may delegate to any officer or employee of 
the Bank any authority he possesses under this section.
    (b) Each Bank shall at all times have at least an amount equal to 
the current deposits received from its members invested in:
    (1) Obligations of the United States;
    (2) Deposits in banks or trust companies; or
    (3) Advances with a remaining maturity not to exceed five years that 
are made to members in conformity with part 1266 of this chapter.



                   Subpart C_Consolidated Obligations



Sec. 1270.4  Issuance of consolidated obligations.

    (a) Consolidated obligations issued by the Banks. (1) Subject to the 
provisions of this part and such other rules, regulations, terms, and 
conditions as the Director may prescribe, the Banks may issue joint debt 
under section 11(c) of the Bank Act (12 U.S.C. 1431(c)), which shall be 
consolidated obligations, on which the Banks shall be jointly and 
severally liable in accordance with Sec. 1270.10 of this part.
    (2) Consolidated obligations shall be issued only through the Office 
of Finance, as agent of the Banks pursuant to this part and part 1273 of 
this chapter.
    (3) All consolidated obligations shall be issued in pari passu.
    (b) Negative pledge requirement. Each Bank shall at all times 
maintain assets described in paragraphs (b)(1) through (b)(6) of this 
section free from any lien

[[Page 237]]

or pledge, in an amount at least equal to a pro rata share of the total 
amount of currently outstanding consolidated obligations and equal to 
such Bank's participation in all such consolidated obligations 
outstanding, provided that any assets that are subject to a lien or 
pledge for the benefit of the holders of any issue of consolidated 
obligations shall be treated as if they were assets free from any lien 
or pledge for purposes of compliance with this paragraph (b). Eligible 
assets are:
    (1) Cash;
    (2) Obligations of or fully guaranteed by the United States;
    (3) Secured advances;
    (4) Mortgages as to which one or more Banks have any guaranty or 
insurance, or commitment therefor, by the United States or any agency 
thereof;
    (5) Investments described in section 16(a) of the Bank Act (12 
U.S.C. 1436(a)); and
    (6) Other securities that have been assigned a rating or assessment 
by an NRSRO that is equivalent to or higher than the rating or 
assessment assigned by that NRSRO to consolidated obligations 
outstanding.



Sec. 1270.5  Leverage limit and credit rating requirements.

    (a) Bank leverage. (1) Except as provided in paragraph (a)(2) of 
this section, the total assets of any Bank that is not subject to the 
capital requirements set forth in part 932 of this title shall not 
exceed 21 times the total of paid-in capital stock, retained earnings, 
and reserves (excluding loss reserves and liquidity reserves for 
deposits pursuant to section 11(g) of the Bank Act (12 U.S.C. 1431(g)) 
of that Bank.
    (2) The aggregate amount of assets of any Bank that is not subject 
to the capital requirements set forth in part 932 of this title may be 
up to 25 times the total paid-in capital stock, retained earnings, and 
reserves of that Bank, provided that non-mortgage assets, after 
deducting the amount of deposits and capital, do not exceed 11 percent 
of such total assets. For the purposes of this section, the amount of 
non-mortgage assets equals total assets after deduction of:
    (i) Advances;
    (ii) Acquired member assets, including all United States government-
insured or guaranteed whole single-family or multi-family residential 
mortgage loans;
    (iii) Standby letters of credit;
    (iv) Intermediary derivative contracts;
    (v) Debt or equity investments:
    (A) That primarily benefit households having a targeted income 
level, a significant proportion of which must benefit households with 
incomes at or below 80 percent of area median income, or areas targeted 
for redevelopment by local, state, tribal or Federal government 
(including Federal Empowerment Zones and Enterprise and Champion 
Communities), by providing or supporting one or more of the following 
activities:
    (1) Housing;
    (2) Economic development;
    (3) Community services;
    (4) Permanent jobs; or
    (5) Area revitalization or stabilization;
    (B) In the case of mortgage- or asset-backed securities, the 
acquisition of which would expand liquidity for loans that are not 
otherwise adequately provided by the private sector and do not have a 
readily available or well established secondary market; and
    (C) That involve one or more members or housing associates in a 
manner, financial or otherwise, and to a degree to be determined by the 
Bank;
    (vi) Investments in SBICs, where one or more members or housing 
associates of the Bank also make a material investment in the same 
activity;
    (vii) SBIC debentures, the short term tranche of SBIC securities, or 
other debentures that are guaranteed by the Small Business 
Administration under title III of the Small Business Investment Act of 
1958, as amended (15 U.S.C. 681 et seq.);
    (viii) Section 108 Interim Notes and Participation Certificates 
guaranteed by the Department of Housing and Urban Development under 
section 108 of the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5308);
    (ix) Investments and obligations issued or guaranteed under the 
Native

[[Page 238]]

American Housing Assistance and Self-Determination Act of 1996 (25 
U.S.C. 4101 et seq.).
    (x) Securities representing an interest in pools of mortgages (MBS) 
issued, guaranteed, or fully insured by the Government National Mortgage 
Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation 
(Freddie Mac), or the Federal National Mortgage Association (Fannie 
Mae), or Collateralized Mortgage Obligations (CMOs), including Real 
Estate Mortgage Investment Conduits (REMICs), backed by such securities;
    (xi) Other MBS, CMOs, and REMICs rated in the highest rating 
category by an NRSRO;
    (xii) Asset-backed securities collateralized by manufactured housing 
loans or home equity loans and rated in the highest rating category by 
an NRSRO; and
    (xiii) Marketable direct obligations of state or local government 
units or agencies, rated in one of the two highest rating categories by 
an NRSRO, where the purchase of such obligations by a Bank provides to 
the issuer the customized terms, necessary liquidity, or favorable 
pricing required to generate needed funding for housing or community 
development.
    (b) Credit ratings. (1) The Banks, collectively, shall obtain from 
an NRSRO and, at all times, maintain a current credit rating on the 
Banks' consolidated obligations.
    (2) Each Bank shall operate in such a manner and take any actions 
necessary, including without limitation reducing Bank leverage, to 
ensure that the Banks' consolidated obligations receive and continue to 
receive the highest credit rating from any NRSRO by which the 
consolidated obligations have then been rated.
    (c) Individual Bank credit rating. Each Bank shall operate in such a 
manner and take any actions necessary to ensure that the Bank has and 
maintains an individual issuer credit rating of at least the second 
highest credit rating from any NRSRO providing a rating, where such 
rating is a meaningful measure of the individual Bank's financial 
strength and stability, and is updated at least annually by an NRSRO, or 
more frequently as required by FHFA, to reflect any material changes in 
the condition of the Bank.



Sec. 1270.6  Transactions in consolidated obligations.

    The general regulations of the Department of the Treasury now or 
hereafter in force governing transactions in United States securities, 
except 31 CFR part 357 regarding book-entry procedure, are hereby 
incorporated into this subpart C of this part, so far as applicable and 
as necessarily modified to relate to consolidated obligations, as the 
regulations of FHFA for similar transactions on consolidated 
obligations. The book-entry procedure for consolidated obligations is 
contained in subpart D of this part.



Sec. 1270.7  Lost, stolen, destroyed, mutilated or defaced 
consolidated obligations.

    United States statutes and regulations of the Department of the 
Treasury now or hereafter in force governing relief on account of the 
loss, theft, destruction, mutilation or defacement of United States 
securities, so far as applicable and as necessarily modified to relate 
to consolidated obligations, are hereby adopted as the regulations of 
FHFA for the issuance of substitute consolidated obligations or the 
payment of lost, stolen, destroyed, mutilated or defaced consolidated 
obligations.



Sec. 1270.8  Administrative provision.

    The Secretary of the Treasury or the Acting Secretary of the 
Treasury is hereby authorized and empowered, as the agent of FHFA and 
the Banks, to administer Sec. Sec. 1270.6 and 1270.7, and to delegate 
such authority at their discretion to other officers, employees, and 
agents of the Department of the Treasury. Any such regulations may be 
waived on behalf of FHFA and the Banks by the Secretary of the Treasury, 
the Acting Secretary of the Treasury, or by an officer of the Department 
of the Treasury authorized to waive similar regulations with respect to 
United States securities, but only in any particular case in which a 
similar regulation with respect to United States securities would be 
waived. The terms ``securities'' and ``bonds'' as used

[[Page 239]]

in this section shall, unless the context otherwise requires, include 
and apply to coupons and interim certificates.



Sec. 1270.9  Conditions for issuance of consolidated obligations.

    (a) The Office of Finance board of directors shall authorize the 
offering for current and forward settlement (up to 12 months) or the 
reopening of consolidated obligations, as necessary, and authorize the 
maturities, rates of interest, terms and conditions thereof, subject to 
the provisions of 31 U.S.C. 9108.
    (b) Consolidated obligations may be offered for sale only to the 
extent that Banks are committed to take the proceeds.
    (c) Consolidated obligations shall not be purchased by any Bank as 
part of an initial issuance whether such consolidated obligation is 
purchased directly from the Office of Finance or indirectly from an 
underwriter.
    (d) If the Banks issue consolidated obligations denominated in a 
currency other than U.S. Dollars or linked to equity or commodity 
prices, then any Bank accepting proceeds from those consolidated 
obligations shall meet the following requirements with regard to such 
consolidated obligations:
    (1) The relevant foreign exchange, equity price or commodity price 
risks associated with the consolidated obligation must be hedged in 
accordance with Sec. 956.6 of this title;
    (2) If there is a default on the part of a counterparty to a 
contract hedging the foreign exchange, equity or commodity price risk 
associated with a consolidated obligation, the Bank shall enter into a 
replacement contract in a timely manner and as soon as market conditions 
permit.



Sec. 1270.10  Joint and several liability.

    (a) In general. (1) Each and every Bank, individually and 
collectively, has an obligation to make full and timely payment of all 
principal and interest on consolidated obligations when due.
    (2) Each and every Bank, individually and collectively, shall ensure 
that the timely payment of principal and interest on all consolidated 
obligations is given priority over, and is paid in full in advance of, 
any payment to or redemption of shares from any shareholder.
    (3) The provisions of this part shall not limit, restrict or 
otherwise diminish, in any manner, the joint and several liability of 
all of the Banks on any consolidated obligation.
    (b) Certification and reporting. (1) Before the end of each calendar 
quarter, and before declaring or paying any dividend for that quarter, 
the President of each Bank shall certify in writing to FHFA that, based 
on known current facts and financial information, the Bank will remain 
in compliance with the liquidity requirements set forth in section 11(g) 
of the Act (12 U.S.C. 1431(g)), and any regulations (as the same may be 
amended, modified or replaced), and will remain capable of making full 
and timely payment of all of its current obligations, including direct 
obligations, coming due during the next quarter.
    (2) A Bank shall immediately provide written notice to FHFA if at 
any time the Bank:
    (i) Is unable to provide the certification required by paragraph 
(b)(1) of this section;
    (ii) Projects at any time that it will fail to comply with statutory 
or regulatory liquidity requirements, or will be unable to timely and 
fully meet all of its current obligations, including direct obligations, 
due during the quarter;
    (iii) Actually fails to comply with statutory or regulatory 
liquidity requirements or to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter; or
    (iv) Negotiates to enter or enters into an agreement with one or 
more other Banks to obtain financial assistance to meet its current 
obligations, including direct obligations, due during the quarter; the 
notice of which shall be accompanied by a copy of the agreement, which 
shall be subject to the approval of FHFA.
    (c) Consolidated obligation payment plans. (1) A Bank promptly shall 
file a consolidated obligation payment plan for FHFA approval:
    (i) If the Bank becomes a non-complying Bank as a result of failing 
to

[[Page 240]]

provide the certification required in paragraph (b)(1) of this section;
    (ii) If the Bank becomes a non-complying Bank as a result of being 
required to provide the notice required pursuant to paragraph (b)(2) of 
this section, except in the event that a failure to make a principal or 
interest payment on a consolidated obligation when due was caused solely 
by a temporary interruption in the Bank's debt servicing operations 
resulting from an external event such as a natural disaster or a power 
failure; or
    (iii) If FHFA determines that the Bank will cease to be in 
compliance with the statutory or regulatory liquidity requirements, or 
will lack the capacity to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter.
    (2) A consolidated obligation payment plan shall specify the 
measures the non-complying Bank will undertake to make full and timely 
payments of all of its current obligations, including direct 
obligations, due during the applicable quarter.
    (3) A non-complying Bank may continue to incur and pay normal 
operating expenses incurred in the regular course of business (including 
salaries, benefits, or costs of office space, equipment and related 
expenses), but shall not incur or pay any extraordinary expenses, or 
declare, or pay dividends, or redeem any capital stock, until such time 
as FHFA has approved the Bank's consolidated obligation payment plan or 
inter-Bank assistance agreement, or ordered another remedy, and all of 
the non-complying Bank's direct obligations have been paid.
    (d) FHFA payment orders; Obligation to reimburse. (1) FHFA, in its 
discretion and notwithstanding any other provision in this section, may 
at any time order any Bank to make any principal or interest payment due 
on any consolidated obligation.
    (2) To the extent that a Bank makes any payment on any consolidated 
obligation on behalf of another Bank, the paying Bank shall be entitled 
to reimbursement from the non-complying Bank, which shall have a 
corresponding obligation to reimburse the Bank providing assistance, to 
the extent of such payment and other associated costs (including 
interest to be determined by FHFA).
    (e) Adjustment of equities. (1) Any non-complying Bank shall apply 
its assets to fulfill its direct obligations.
    (2) If a Bank is required to meet, or otherwise meets, the direct 
obligations of another Bank due to a temporary interruption in the 
latter Bank's debt servicing operations (e.g., in the event of a natural 
disaster or power failure), the assisting Bank shall have the same right 
to reimbursement set forth in paragraph (d)(2) of this section.
    (3) If FHFA determines that the assets of a non-complying Bank are 
insufficient to satisfy all of its direct obligations as set forth in 
paragraph (e)(1) of this section, then FHFA may allocate the outstanding 
liability among the remaining Banks on a pro rata basis in proportion to 
each Bank's participation in all consolidated obligations outstanding as 
of the end of the most recent month for which FHFA has data, or 
otherwise as FHFA may prescribe.
    (f) Reservation of authority. Nothing in this section shall affect 
the Director's authority to adjust equities between the Banks in a 
manner different than the manner described in paragraph (e) of this 
section, or to take enforcement or other action against any Bank 
pursuant to the Director's authority under the Safety and Soundness Act 
or the Bank Act, or otherwise to supervise the Banks and ensure that 
they are operated in a safe and sound manner.
    (g) No rights created. (1) Nothing in this part shall create or be 
deemed to create any rights in any third party.
    (2) Payments made by a Bank toward the direct obligations of another 
Bank are made for the sole purpose of discharging the joint and several 
liability of the Banks on consolidated obligations.
    (3) Compliance, or the failure to comply, with any provision in this 
section shall not be deemed a default under the terms and conditions of 
the consolidated obligations.



Sec. 1270.11  Savings clause.

    Any agreements or other instruments entered into in connection with

[[Page 241]]

the issuance of consolidated obligations prior to the amendments made to 
this part shall continue in effect with respect to all consolidated 
obligations issued under the authority of section 11 of the Bank Act (12 
U.S.C. 1431) and pursuant to this part. References to consolidated 
obligations in such agreements and instruments shall be deemed to refer 
to all joint and several obligations of the Banks.



       Subpart D_Book-Entry Procedure for Consolidated Obligations



Sec. 1270.12  Law governing rights and obligations of Banks, FHFA, 
Office of Finance, United States and Federal Reserve Banks; rights 
of any Person against Banks, FHFA, Office of Finance, United States
and Federal Reserve Banks.

    (a) Except as provided in paragraph (b) of this section, the rights 
and obligations of the Banks, FHFA, the Director, the Office of Finance, 
the United States and the Federal Reserve Banks with respect to: A Book-
entry consolidated obligation or Security Entitlement and the operation 
of the Book-entry system, as it applies to consolidated obligations; and 
the rights of any Person, including a Participant, against the Banks, 
FHFA, the Director, the Office of Finance, the United States and the 
Federal Reserve Banks with respect to: A Book-entry consolidated 
obligation or Security Entitlement and the operation of the Book-entry 
system, as it applies to consolidated obligations; are governed solely 
by regulations of FHFA, including the regulations of this part 1270, the 
applicable offering notice, applicable procedures established by the 
Office of Finance, and Federal Reserve Bank Operating Circulars.
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 1270.14(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 1270.14(c)(1), 
is governed by the law determined in the manner specified in Sec. 
1270.13.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8, 
then the law specified in the first sentence of paragraph (b) of this 
section shall be the law of that State as though Revised Article 8 had 
been adopted by that State.



Sec. 1270.13  Law governing other interests.

    (a) To the extent not inconsistent with this part 1270, the law (not 
including the conflict-of-law rules) of a Securities Intermediary's 
jurisdiction governs:
    (1) The acquisition of a Security Entitlement from the Securities 
Intermediary;
    (2) The rights and duties of the Securities Intermediary and 
Entitlement Holder arising out of a Security Entitlement;
    (3) Whether the Securities Intermediary owes any duties to an 
adverse claimant to a Security Entitlement;
    (4) Whether an Adverse Claim can be asserted against a Person who 
acquires a Security Entitlement from the Securities Intermediary or a 
Person who purchases a Security Entitlement or interest therein from an 
Entitlement Holder; and
    (5) Except as otherwise provided in paragraph (c) of this section, 
the perfection, effect of perfection or non-perfection, and priority of 
a security interest in a Security Entitlement.
    (b) The following rules determine a ``Securities Intermediary's 
jurisdiction'' for purposes of this section:
    (1) If an agreement between the Securities Intermediary and its 
Entitlement Holder specifies that it is governed by the law of a 
particular jurisdiction, that jurisdiction is the Securities 
Intermediary's jurisdiction.
    (2) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify the governing law as provided in 
paragraph (b)(1) of this section, but expressly

[[Page 242]]

specifies that the securities account is maintained at an office in a 
particular jurisdiction, that jurisdiction is the Securities 
Intermediary's jurisdiction.
    (3) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraphs (b)(1) or (b)(2) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
office identified in an account statement as the office serving the 
Entitlement Holder's account.
    (4) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraphs (b)(1) or (b)(2) of this section and an account statement 
does not identify an office serving the Entitlement Holder's account as 
provided in paragraph (b)(3) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
chief executive office of the Securities Intermediary.
    (c) Notwithstanding the general rule in paragraph (a)(5) of this 
section, the law (but not the conflict-of-law rules) of the jurisdiction 
in which the Person creating a security interest is located governs 
whether and how the security interest may be perfected automatically or 
by filing a financing statement.
    (d) If the jurisdiction specified in paragraph (b) of this section 
is a State that has not adopted Revised Article 8, then the law for the 
matters specified in paragraph (a) of this section shall be the law of 
that State as though Revised Article 8 had been adopted by that State. 
For purposes of the application of the matters specified in paragraph 
(a) of this section, the Federal Reserve Bank maintaining the Securities 
Account is a clearing corporation, and the Participant's interest in a 
Bank Book-entry Security is a Security Entitlement.



Sec. 1270.14  Creation of Participant's Security Entitlement;
security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book entry that a Book-entry consolidated 
obligation has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including, without limitation, deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the Securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Federal Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the Security. For purposes of this 
paragraph (b), an ``authorized representative of the United States'' is 
the official designated in the applicable regulations or agreement to 
which a Federal Reserve Bank is a party, governing the security 
interest.
    (c)(1) The Banks, FHFA, the Director, the Office of Finance, the 
United States and the Federal Reserve Banks have no obligation to agree 
to act on behalf of any Person or to recognize the interest of any 
transferee of a security interest or other limited interest in a 
Security Entitlement in favor of any Person except to the extent of any 
specific requirement of Federal law or regulation or to the extent set 
forth in any specific agreement with the Federal Reserve Bank on whose 
books the interest of the Participant is recorded. To the extent 
required by such law or regulation or set forth in an agreement with a 
Federal Reserve Bank, or the Federal Reserve Bank Operating Circular, a 
security interest in a Security Entitlement that is in favor of a 
Federal Reserve Bank or a Person may be created and perfected by a 
Federal Reserve Bank marking its books to record the security interest. 
Except as provided in paragraph (b) of this section, a security interest 
in a Security Entitlement marked on the books of a Federal Reserve Bank 
shall have priority over any other interest in the Securities.

[[Page 243]]

    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest in a Security Entitlement, including a 
security interest in favor of a Federal Reserve Bank, may be perfected 
by any method by which a security interest may be perfected under 
applicable law as described in Sec. 1270.12(b) or Sec. 1270.13. The 
perfection, effect of perfection or non-perfection, and priority of a 
security interest are governed by that applicable law. A security 
interest in favor of a Federal Reserve Bank shall be treated as a 
security interest in favor of a clearing corporation in all respects 
under that law, including with respect to the effect of perfection and 
priority of the security interest. A Federal Reserve Bank Operating 
Circular shall be treated as a rule adopted by a clearing corporation 
for such purposes.



Sec. 1270.15  Obligations of the Banks and the Office of Finance;
no Adverse Claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in Sec. 
1270.14(c)(1), for the purposes of this part 1270, the Banks, the Office 
of Finance and the Federal Reserve Banks shall treat the Participant to 
whose Securities Account an interest in a Book-entry consolidated 
obligations has been credited as the person exclusively entitled to 
issue a Transfer Message, to receive interest and other payments with 
respect thereof and otherwise to exercise all the rights and powers with 
respect to the Security, notwithstanding any information or notice to 
the contrary. Neither the Banks, FHFA, the Director, the Office of 
Finance, the United States, nor the Federal Reserve Banks are liable to 
a Person asserting or having an Adverse Claim to a Security Entitlement 
or to Book-entry consolidated obligations in a Participant's Securities 
Account, including any such claim arising as a result of the transfer or 
disposition of a Book-entry consolidated obligation by a Federal Reserve 
Bank pursuant to a Transfer Message that the Federal Reserve Bank 
reasonably believes to be genuine.
    (b) The obligation of the Banks and the Office of Finance to make 
payments of interest and principal with respect to Book-entry 
consolidated obligations is discharged at the time payment in the 
appropriate amount is made as follows:
    (1) Interest on Book-entry consolidated obligations is either 
credited by a Federal Reserve Bank to a Funds Account maintained at the 
Federal Reserve Bank or otherwise paid as directed by the Participant.
    (2) Book-entry consolidated obligations are paid, either at maturity 
or upon redemption, in accordance with their terms by a Federal Reserve 
Bank withdrawing the securities from the Participant's Securities 
Account in which they are maintained and by either crediting the amount 
of the proceeds, including both principal and interest, where 
applicable, to a Funds Account at the Federal Reserve Bank or otherwise 
paying such principal and interest as directed by the Participant. No 
action by the Participant is required in connection with the payment of 
a Book-entry consolidated obligation, unless otherwise expressly 
required.



Sec. 1270.16  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the Office of Finance: To perform functions with respect to the 
issuance of Book-entry consolidated obligations, in accordance with the 
terms of the applicable offering notice and with procedures established 
by the Office of Finance; to service and maintain Book-entry 
consolidated obligations in accounts established for such purposes; to 
make payments of principal, interest and redemption premium (if any), as 
directed by the Office of Finance; to effect transfer of Book-entry 
consolidated obligations between Participants' Securities Accounts as 
directed by the Participants; and to perform such other duties as fiscal 
agent as may be requested by the Office of Finance.
    (b) Each Federal Reserve Bank may issue Operating Circulars not 
inconsistent with this part 1270, governing the details of its handling 
of Book-entry consolidated obligations, Security Entitlements, and the 
operation of

[[Page 244]]

the Book-entry system under this part 1270.



Sec. 1270.17  Liability of Banks, FHFA, Office of Finance and Federal
Reserve Banks.

    The Banks, FHFA, the Director, the Office of Finance and the Federal 
Reserve Banks may rely on the information provided in a tender, 
transaction request form, other transaction documentation, or Transfer 
Message, and are not required to verify the information. Neither the 
Banks, FHFA, the Director, the Office of Finance, the United States, nor 
the Federal Reserve Banks shall be liable for any action taken in 
accordance with the information set out in a tender, transaction request 
form, other transaction documentation, or Transfer Message, or evidence 
submitted in support thereof.



Sec. 1270.18  Additional requirements; notice of attachment for 
Book-entry consolidated obligations.

    (a) Additional requirements. In any case or any class of cases 
arising under the regulations in this part 1270, the Office of Finance 
may require such additional evidence and a bond of indemnity, with or 
without surety, as may in its judgment, or in the judgment of the Banks 
or FHFA, be necessary for the protection of the interests of the Banks, 
FHFA, the Office of Finance or the United States.
    (b) Notice of attachment. The interest of a debtor in a Security 
Entitlement may be reached by a creditor only by legal process upon the 
Securities Intermediary with whom the debtor's securities account is 
maintained, except where a Security Entitlement is maintained in the 
name of a secured party, in which case the debtor's interest may be 
reached by legal process upon the secured party. The regulations in this 
part 1270 do not purport to establish whether a Federal Reserve Bank is 
required to honor an order or other notice of attachment in any 
particular case or class of cases.



Sec. 1270.19  Reference to certain Department of Treasury commentary
and determinations.

    Notwithstanding provisions in Sec. 1270.6 regarding Department of 
Treasury regulations set forth in 31 CFR part 357:
    (a) The Department of Treasury TRADES Commentary (31 CFR part 357, 
appendix B) addressing the Department of Treasury regulations governing 
book-entry procedure for Treasury Securities is hereby referenced, so 
far as applicable and as necessarily modified to relate to Book-entry 
consolidated obligations, as an interpretive aid to this subpart D of 
this part.
    (b) Determinations of the Department of Treasury regarding whether a 
State shall be considered to have adopted Revised Article 8 for purposes 
of 31 CFR part 357, as published in the Federal Register or otherwise, 
shall also apply to this subpart D of this part.



Sec. 1270.20  Consolidated obligations are not obligations of the 
United States or guaranteed by the United States.

    Consolidated obligations are not obligations of the United States 
and are not guaranteed by the United States.



PART 1272_NEW BUSINESS ACTIVITIES--Table of Contents



Sec.
1272.1 Definitions.
1272.2 Limitation on Bank authority to undertake new business 
          activities.
1272.3 New business activity notice requirement.
1272.4 Commencement of new business activities.
1272.5 Notice by the FHFA.
1272.6 FHFA consent.
1272.7 Examinations; requests for additional information.

    Authority: 12 U.S.C. 1431(a), 1432(a), 4511(b), 4513, 4526(a).

    Source: 65 FR 44431, July 18, 2000, unless otherwise noted. 
Redesignated at 75 FR 76622, Dec. 9, 2010.

    Editorial Note: Nomenclature changes to part appear at 75 FR 76624, 
Dec. 9, 2010.



Sec. 1272.1  Definitions.

    As used in this part:
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act, as amended (12 U.S.C. 
1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    FHFA means the Federal Housing Finance Agency.

[[Page 245]]

    New business activity means any business activity undertaken, 
transacted, conducted, or engaged in by a Bank that has not been 
previously undertaken, transacted, conducted, or engaged in by that 
Bank, or was previously undertaken, transacted, conducted, or engaged in 
under materially different terms and conditions, such that it:
    (1) Involves the acceptance of collateral enumerated under Sec. 
1266.7(a)(4) of this chapter;
    (2) Involves the acceptance of classes of collateral enumerated 
under Sec. 1266.7(b) of this chapter for the first time;
    (3) Entails risks not previously and regularly managed by that Bank, 
its members, or both, as appropriate; or
    (4) Involves operations not previously undertaken by that Bank.

[65 FR 44431, July 18, 2000. Redesignated and amended at 75 FR 76622, 
76624, Dec. 9, 2010]



Sec. 1272.2  Limitation on Bank authority to undertake new business
activities.

    No Bank shall undertake any new business activity except in 
accordance with the procedures set forth in this part.



Sec. 1272.3  New business activity notice requirement.

    At least sixty days prior to undertaking a new business activity, 
except as provided in Sec. 1272.4(b), a Bank shall submit to the FHFA a 
written notice containing the following information:
    (a) General requirements. Except as provided in paragraph (b) of 
this section, a Bank's notice of new business activity shall include:
    (1) An opinion of counsel citing the statutory, regulatory, or other 
legal authority for the new business activity;
    (2) A good faith estimate of the anticipated dollar volume of the 
activity over the short-and long-term;
    (3) A full description of:
    (i) The purpose and operation of the proposed activity;
    (ii) The market targeted by the activity;
    (iii) The delivery system for the activity; and
    (iv) The effect of the activity on the housing, or relevant 
community lending, market;
    (4) A demonstration of the Bank's capacity, through staff, or 
contractors employed by the Bank, sufficiency of experience and 
expertise, to safely administer and manage the risks associated with the 
new activity;
    (5) An assessment of the risks associated with the activity, 
including the Bank's ability to manage these risks and the Bank's 
ability to manage the risks associated with increasing volumes of the 
new activity; and
    (6) The criteria that the Bank will use to determine the eligibility 
of its members or housing associates to participate in the new activity.
    (b) New collateral activities. If a proposed new business activity 
relates to the acceptance of collateral under Sec. 1266.7 of this 
chapter, a Bank's notice of new business activity shall include:
    (1) A description of the classes or amounts of collateral proposed 
to be accepted by the Bank;
    (2) A copy of the Bank's member products policy, adopted pursuant to 
Sec. 917.4 of this title;
    (3) A copy of the Bank's procedures for determining the value of the 
collateral in question, established pursuant to Sec. 1266.10 of this 
chapter; and
    (4) A demonstration of the Bank's capacity, personnel, technology, 
experience and expertise to value, discount and manage the risks 
associated with the collateral in question.

[65 FR 44431, July 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 1272.4  Commencement of new business activities.

    A Bank may commence a new business activity:
    (a) Sixty days after receipt by the FHFA of the notice of new 
business activity under Sec. 1272.3, if the FHFA has not issued to the 
Bank a notice as described in Sec. 1272.5(a)(1) through (4);
    (b) In the case of the acceptance of collateral enumerated under 
Sec. 1266.7(a)(4) of this chapter, immediately upon receipt by the FHFA 
of a notice of new business activity under Sec. 1272.3; or

[[Page 246]]

    (c) Immediately upon issuance by the FHFA of a letter of approval 
under Sec. 1272.6.



Sec. 1272.5  Notice by the FHFA.

    (a) Issuance. Within sixty days after receipt of a notice of new 
business activity under Sec. 1272.3, the FHFA may issue to a Bank a 
notice that:
    (1) Disapproves the new business activity;
    (2) Instructs the Bank not to commence the new business pending 
further consideration by the FHFA;
    (3) Declares an intent to examine the Bank;
    (4) Requests additional information including but not limited to the 
requests listed in Sec. 1272.7;
    (5) Establishes conditions for the FHFA's approval of the new 
business activity, including but not limited to the conditions listed in 
Sec. 1272.7; or
    (6) Contains other instructions or information that the FHFA deems 
appropriate under the circumstances.
    (b) Effect. Following receipt of a notice issued pursuant to 
paragraph (a) of this section, a Bank may not undertake any new business 
activity that is the subject of the notice until the Bank has received 
the FHFA's consent pursuant to Sec. 1272.6.



Sec. 1272.6  FHFA consent.

    The FHFA may at any time provide consent for a Bank to undertake a 
particular new business activity and setting forth the terms and 
conditions that apply to the activity, with which the Bank shall comply 
if the Bank undertakes the activity in question.



Sec. 1272.7  Examinations; requests for additional information.

    (a) General. Nothing in this part shall limit in any manner the 
right of the FHFA to conduct any examination of any Bank.
    (b) Requests for additional information and conditions for approval. 
With respect to a new business activity, nothing in this part shall 
limit the right of the FHFA at any time to:
    (1) Request further information from a Bank concerning a new 
business activity; and
    (2) Require a Bank to comply with certain conditions in order to 
undertake, or continue to undertake, the new business activity in 
question, including but not limited to:
    (i) Successful completion of pre- or post-implementation safety and 
soundness examinations;
    (ii) Demonstration by the Bank of adequate operational capacity, 
including the existence of appropriate policies, procedures and 
controls;
    (iii) Demonstration by the Bank of its ability to manage the risks 
associated with accepting increasing volumes of particular collateral, 
or holding increasing volumes of particular assets, including the Bank's 
capacity reliably to value, discount and market the collateral or assets 
for liquidation;
    (iv) Demonstration by the Bank that the new business activity is 
consistent with the housing finance and community lending mission of the 
Banks and the cooperative nature of the Bank System; and
    (v) FHFA review of any contracts or agreements between the Bank and 
its members or housing associates.



PART 1273_OFFICE OF FINANCE--Table of Contents



Sec.
1273.1 Definitions.
1273.2 Authority of the OF.
1273.3 Functions of the OF.
1273.4 FHFA oversight.
1273.5 Funding of the OF.
1273.6 Debt management duties of the OF.
1273.7 Structure of the OF board of directors.
1273.8 General duties of the OF board of directors.
1273.9 Audit Committee.
1273.10 Transition.

Appendix A to Part 1273--Exceptions to the General Disclosure Standards

    Authority: 12 U.S.C. 1431, 1440, 4511(b), 4513, 4514(a), 4526(a).

    Source: 75 FR 23161, May 3, 2010, unless otherwise noted.



Sec. 1273.1  Definitions.

    For purposes of this part:
    Audit Committee means the OF Independent Directors acting as the 
committee established in accordance with Sec. 1273.9 of this part.
    Bank written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).

[[Page 247]]

    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Bank System means the Federal Home Loan Bank System, consisting of 
the twelve Banks and the Office of Finance.
    Chair means the chairperson of the board of directors of the Office 
of Finance.
    Chief Executive Officer or CEO means the chief executive officer of 
the Office of Finance.
    Consolidated obligations means any bond, debenture or note on which 
the Banks are jointly and severally liable and which was issued under 
section 11 of the Bank Act (12 U.S.C. 1431) and any implementing 
regulations, whether or not such instrument was originally issued 
jointly by the Banks or by the Federal Housing Finance Board on behalf 
of the Banks.
    FHFA means the Federal Housing Finance Agency.
    Financing Corporation or FICO means the Financing Corporation 
established and supervised by FHFA under section 21 of the Bank Act (12 
U.S.C. 1441).
    Generally accepted accounting principles or GAAP means accounting 
principles generally accepted in the United States.
    Independent Director means a member of the OF board of directors who 
meets the qualifications set forth in Sec. 1273.7(a)(2) of this part.
    NRSRO means a credit rating organization registered as a Nationally 
Recognized Statistical Rating Organization with the Securities and 
Exchange Commission.
    Office of Finance or OF means the Office of Finance, a joint office 
of the Banks established under this part 1273 and referenced in the Bank 
Act and the Safety and Soundness Act.
    Resolution Funding Corporation or REFCORP means the Resolution 
Funding Corporation established by section 21B of the Bank Act (12 
U.S.C. 1441b).
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as 
amended.



Sec. 1273.2  Authority of the OF.

    (a) General. The OF shall enjoy such incidental powers under section 
12(a) of the Bank Act (12 U.S.C. 1432(a)), as are necessary, convenient 
and proper to accomplish the efficient execution of its duties and 
functions pursuant to this part, including the authority to contract 
with a Bank or Banks for the use of Bank facilities or personnel in 
order to perform its functions or duties.
    (b) Agent. The OF, in the performance of its duties, shall have the 
power to act on behalf of the Banks in issuing consolidated obligations 
and in paying principal and interest due on the consolidated 
obligations, or other obligations of the Banks.
    (c) Assessments. The OF shall have authority to assess the Banks for 
the funding of its operations in accordance with Sec. 1273.5 of this 
part.



Sec. 1273.3  Functions of the OF.

    (a) Joint debt issuance. Subject to parts 965 and 966 of this title, 
and this part, the OF, as agent for the Banks, shall offer, issue, and 
service (including making timely payments on principal and interest due) 
consolidated obligations.
    (b) Preparation of combined financial reports. The OF shall prepare 
and issue the combined annual and quarterly financial reports for the 
Bank System in accordance with the requirements of Sec. 1273.6(b) and 
Appendix A of this part, using consistent accounting policies and 
procedures as provided in Sec. 1273.9(b) of this part.
    (c) Fiscal agent. The OF shall function as the fiscal agent of the 
Banks.
    (d) Financing Corporation and Resolution Funding Corporation. The OF 
shall perform such duties and responsibilities for FICO as may be 
required under part 995 of this title, or for REFCORP as may be required 
under part 996 of this title or authorized by FHFA pursuant to section 
21B(c)(6)(B) of the Bank Act (12 U.S.C. 1441b(c)(6)(B)).



Sec. 1273.4  FHFA oversight.

    (a) Oversight and enforcement actions. FHFA shall have such 
oversight authority over the OF, the OF board of directors, the 
officers, employees, agents, attorneys, accountants, or other OF staff 
as set forth in the Bank Act, the Safety and Soundness Act, and FHFA 
regulations issued thereunder.

[[Page 248]]

    (b) Examinations. Pursuant to section 20 of the Bank Act (12 U.S.C. 
1440), FHFA shall examine the OF, all funds and accounts that may be 
established pursuant to this part 1273, and the operations and 
activities of the OF, as provided for in the Bank Act, the Safety and 
Soundness Act, or any regulations promulgated pursuant thereto.
    (c) Combined financial reports. FHFA shall determine whether a 
combined Bank System annual or quarterly financial report complies with 
the standards of this part.



Sec. 1273.5  Funding of the OF.

    (a) Generally. The Banks are responsible for jointly funding all the 
expenses of the OF, including the costs of indemnifying the members of 
the OF board of directors, the Chief Executive Officer, and other 
officers and employees of the OF, as provided for in this part.
    (b) Funding policies.--(1) At the direction of and pursuant to 
policies and procedures adopted by the OF board of directors, the Banks 
shall periodically reimburse the OF in order to maintain sufficient 
operating funds under the budget approved by the OF board of directors. 
The OF operating funds shall be:
    (i) Available for expenses of the OF and the OF board of directors, 
according to their approved budgets; and
    (ii) Subject to withdrawal by check, wire transfer or draft signed 
by the Chief Executive Officer or other persons designated by the OF 
board of directors.
    (2) Each Bank's respective pro rata share of the reimbursement 
described in paragraph (b)(1) of this section shall be based on a 
reasonable formula approved by the OF board of directors. Such formula 
shall be subject to the review of FHFA, and the OF board of directors 
shall make any changes to the formula as may be ordered by FHFA from 
time to time.
    (c) Alternative funding method. With the prior approval of FHFA, the 
OF board of directors may, by contract with a Bank or Banks, choose to 
be reimbursed through a fee structure, in lieu of or in addition to 
assessment, for services provided to the Bank or Banks.
    (d) Prompt reimbursement. Each Bank from time to time shall promptly 
forward funds to the OF in an amount representing its share of the 
reimbursement described in paragraph (b) of this section when directed 
to do so by the Chief Executive Officer pursuant to the procedures of 
the OF board of directors.
    (e) Indemnification expenses. All expenses incident to 
indemnification of the members of the OF board of directors, the Chief 
Executive Officer, and other officers and employees of the OF shall be 
treated as an expense of the OF to be reimbursed by the Banks under the 
provisions of this part.
    (f) Operating funds segregated. Any funds received by the OF from 
the Banks pursuant to this section for OF operating expenses promptly 
shall be deposited into one or more accounts and shall not be commingled 
with any proceeds from the sale of consolidated obligations in any 
manner.



Sec. 1273.6  Debt management duties of the OF.

    (a) Issuing and servicing of consolidated obligations. The OF, as 
agent for the Banks, shall issue and service (including making timely 
payments on principal and interest due, subject to Sec. Sec. 966.8 and 
966.9 of this title) consolidated obligations pursuant to and in 
accordance with the policies and procedures established by the OF board 
of directors under this part.
    (b) Combined financial reports requirements. The OF, under the 
oversight of the Audit Committee, shall prepare and distribute the 
combined annual and quarterly financial reports for the Bank System in 
accordance with the following requirements:
    (1) The scope, form, and content of the disclosure generally shall 
be consistent with the requirements of the Securities and Exchange 
Commission Regulations S-K and S-X (17 CFR parts 229 and 210).
    (2) Information about each Bank shall be presented as a segment of 
the Bank System as if generally accepted accounting principles regarding 
business segment disclosure applied to the combined annual and quarterly 
financial reports of the Bank System, and

[[Page 249]]

shall be presented using consistent accounting policies and procedures 
as provided in Sec. 1273.9(b) of this part.
    (3) The standards set forth in paragraphs (b)(1) and (b)(2) of this 
section are subject to the exceptions set forth in Appendix A to this 
part.
    (4) The combined Bank System annual financial reports shall be filed 
with FHFA and distributed to each Bank and Bank member within 90 days 
after the end of the fiscal year. The combined Bank System quarterly 
financial reports shall be filed with FHFA and distributed to each Bank 
and Bank member within 45 days after the end of the of the first three 
fiscal quarters of each year.
    (5) The Audit Committee shall ensure that the combined Bank System 
annual or quarterly financial reports comply with the standards of this 
part.
    (6) The OF and the OF board of directors, including the Audit 
Committee, shall comply promptly with any directive of FHFA regarding 
the preparation, filing, amendment, or distribution of the combined Bank 
System annual or quarterly financial reports.
    (7) Nothing in this section shall create or be deemed to create any 
rights in any third party.
    (c) Capital markets data. The OF shall provide capital markets 
information concerning debt to the Banks.
    (d) NRSROs. The OF shall manage the relationships with NRSROs in 
connection with their rating of consolidated obligations.
    (e) Research. The OF shall conduct research reasonably related to 
the issuance or servicing of consolidated obligations.
    (f) Monitor Banks' credit exposure. The OF shall timely monitor, and 
compile relevant data on, each Bank's and the Bank System's unsecured 
credit exposure to individual counterparties.



Sec. 1273.7  Structure of the OF board of directors.

    (a) Membership. The OF board of directors shall consist of seventeen 
part-time members as follows:
    (1) The twelve Bank presidents, ex officio, provided that if the 
presidency of any Bank becomes vacant, the person designated by the 
Bank's board of directors to temporarily fulfill the duties of president 
of that Bank shall serve on the OF board of directors until the 
presidency is filled permanently; and
    (2) Five Independent Directors who--
    (i) Each shall be a citizen of the United States;
    (ii) As a group, shall have substantial experience in financial and 
accounting matters; and
    (iii) Shall not have any material relationship with a Bank, or the 
OF (directly or as a partner, shareholder or officer of an 
organization), as determined under criteria set forth in a policy 
adopted by the OF board of directors. At a minimum, such policy shall 
provide that an Independent Director may not:
    (A) Be an officer, director, or employee of any Bank or member of a 
Bank, or have been an officer director or employee of a Bank or member 
of a Bank during the previous three years;
    (B) Be an officer or employee of the OF, or have been an officer or 
employee of the OF during the previous three years; or
    (C) Be affiliated with any consolidated obligations selling or 
dealer group under contract with OF, or hold shares or any other 
financial interest in any entity that is part of a consolidated 
obligations seller or dealer group in an amount greater than the lesser 
of $250,000 or 0.01% of the market capitalization of the seller or 
dealer group; or in an amount that exceeds $1,000,000 for all entities 
that are part of any consolidated obligations seller dealer group, 
combined. For purposes of this paragraph (a)(2)(iii)(C), a holding 
company of an entity that is part of a consolidated obligations seller 
or dealer group shall be deemed to be part of the consolidated 
obligations selling or dealer group if the assets of the holding 
company's subsidiaries that are part of a consolidated obligation seller 
or dealer group constitute 35% or more of the consolidated assets of the 
holding company.
    (b) Terms. (1) Except as provided in paragraphs (b)(2) and (c)(1) of 
this section, each Independent Director shall serve for five-year terms 
(which shall be staggered so that no more than one Independent Director 
seat would be scheduled to become vacant in any one

[[Page 250]]

year), and shall be subject to removal or suspension in accordance with 
Sec. 1273.4(a) of this part. An Independent Director may not serve more 
than two full, consecutive terms, provided that any partial term served 
by an Independent Director pursuant to paragraph (b)(2) of this section, 
or time served by a private citizen member of the OF Board pursuant to 
an appointment made prior to the effective date of this part, shall not 
count as a term for purposes of this restriction.
    (2) The OF board of directors shall fill any vacancy among the 
Independent Directors occurring prior to the scheduled end of a term by 
majority vote, subject to FHFA's review of, and non-objection to, the 
new Independent Director. The OF board of directors shall provide FHFA 
with the same biographic and background information about the new 
Independent Director required under paragraph (d) of this section, and 
FHFA shall have the same rights of non-objection to the Independent 
Director (and to appoint a different Independent Director) as set forth 
in paragraph (d) of this section. A person shall be elected (or 
otherwise appointed by FHFA) under this paragraph to serve only for the 
remainder of the term associated with the vacant directorship.
    (c) Initial selection of Independent Directors. (1) As soon as 
practicable after the effective date of this regulation, FHFA shall fill 
the initial Independent Director positions by appointment. The 
Independent Directors shall be appointed for such periods of time, not 
to exceed five years, to assure the terms are staggered in accordance 
with paragraph (b)(1) of this section.
    (2) The two Bank presidents and the private citizen member who 
constituted the OF board of directors immediately prior to the effective 
date of this rule shall, in consultation with the Banks, agree on a 
slate of at least five persons and nominate such persons for 
consideration for appointment as Independent Directors by FHFA under 
this paragraph (c). The nominations shall be submitted to FHFA on or 
before June 17, 2010. FHFA may appoint persons nominated under this 
paragraph or other persons identified by it and meeting the requirements 
of paragraph (a)(2) of this section, or some combination.
    (d) Election of Independent Directors after the initial terms. Once 
the terms of the Independent Directors initially appointed by FHFA 
expire or the positions otherwise become vacant, the Independent 
Directors subsequently shall be elected by majority vote of the OF board 
of directors, subject to FHFA's review of, and non-objection to, each 
Independent Director. The OF board of directors shall provide FHFA with 
relevant biographic and background information, including information 
demonstrating that the new Independent Director meets the requirements 
of paragraph (a)(2) of this section, at least 20 business days before 
the person assumes any duties as a member of the OF board of directors. 
If the OF board of directors, in FHFA's judgment, fails to elect a 
suitably qualified person, FHFA may appoint some other person who meets 
the requirements of paragraph (a)(2) of this section. FHFA will provide 
notice of its objection to a particular Independent Director prior to 
the date that such Director is to assume duties as a member of the OF 
board of directors. Such notice shall indicate whether, given FHFA's 
objection, FHFA intends to fill the seat through appointment or a new 
election should be held by the OF board of directors.
    (e) Initial Selection of Chair and Vice-Chair. The first Chair and 
Vice-Chair of the OF board of directors after the effective date of this 
regulation shall be appointed by FHFA. The Chair shall be selected from 
among the Independent Directors appointed under paragraph (c)(1) of this 
section. The Vice-Chair shall be selected from among all OF board 
directors.
    (f) Subsequent Election of Chair and Vice-Chair. After the terms of 
the persons selected under paragraph (e) of this section expire or the 
positions otherwise become vacant:
    (1) Subsequent Chairs shall be elected by majority vote of the OF 
board of directors from among the Independent Directors then serving on 
the OF board of directors; and
    (2) Subsequent Vice-Chairs shall be elected by majority vote of the 
OF

[[Page 251]]

board of directors from among all directors.
    (3) The OF board of directors shall promptly inform FHFA of the 
election of a Chair or Vice-Chair. If FHFA objects to any Chair or Vice-
Chair elected by the OF board of directors, FHFA shall provide written 
notice of its objection within 20 business days of the date that FHFA 
first receives the notice of the election of the Chair and or Vice-
Chair, and the OF board of directors must then promptly elect a new 
Chair or Vice-Chair, as appropriate.
    (g) By-laws and Committees. (1) The OF board of directors shall 
adopt by-laws governing the manner in which the board conducts its 
affairs, which shall be consistent with the requirements of this part 
and other applicable laws and regulations as administered by FHFA. The 
by-laws of the board of directors shall be subject to review and 
approval by FHFA.
    (2) In addition to the Audit Committee required under Sec. 1273.9 
of this part, the OF board of directors may establish other committees, 
including an Executive Committee. The duties and powers of such 
committee, including any powers delegated by the OF board of directors, 
shall be specified in the by-laws of the board of directors or the 
charter of the committee.
    (h) Compensation. (1) The Bank presidents shall not receive any 
additional compensation or reimbursement as a result of their service as 
a director of the OF board.
    (2) The OF shall pay reasonable compensation and expenses to the 
Independent Directors in accordance with the requirements for payment of 
compensation and expenses to Bank directors as set forth in part 1261 of 
this title.
    (i) Corporate Governance and Indemnification. (1) General. The 
corporate governance practices and procedures of the OF, and practices 
and procedures related to indemnification (including advancement of 
expenses) shall comply with applicable Federal law rules and 
regulations.
    (2) Election and designation of body of law. To the extent not 
inconsistent with paragraph (i)(1) of this section, the OF shall elect 
to follow the corporate governance and indemnification practices and 
procedures set forth in one of the following: (i) The law of the 
jurisdiction in which the principal office of the OF is located, as 
amended; (ii) the Delaware General Corporation Law (Del. Code Ann. Title 
8, as amended); or (iii) the Revised Model Business Corporation Act, as 
amended. The OF board of directors, as constituted under this part, 
shall designate in its by-laws the body of law elected pursuant to this 
paragraph (i)(2) within 90 calendar days from the date that it holds the 
organizational meeting required under Sec. 1273.10(a) of this part.
    (3) Indemnification. Subject to paragraphs (i)(1) and (i)(2) of this 
section, to the extent applicable, the OF shall indemnify (and advance 
the expenses of) its directors, officers and employees under such terms 
and conditions as are determined by the OF board of directors. The OF 
shall be authorized to maintain insurance for its directors, the CEO, 
and any other officer or employee of the OF. Nothing in this paragraph 
shall affect any rights to indemnification (including the advancement of 
expenses) that a director, the CEO, or any other officer or employee of 
the OF had with respect to any actions, omissions, transactions, or 
facts occurring prior to the effective date of this paragraph (i).
    (j) Delegation. In addition to any delegation to a committee allowed 
under paragraph (g) of this section, the OF board of directors may 
delegate any of its authority or duties to any employee of the OF in 
order to enable OF to carry out its functions.
    (k) Outside staff and consultants. In carrying out its duties and 
responsibilities, the OF board of directors, or any committee thereof, 
shall have authority to retain staff and outside counsel, independent 
accountants, or other outside consultants at the expense of the OF.



Sec. 1273.8  General duties of the OF board of directors.

    (a) General. Each director shall have the duty to:
    (1) Carry out his or her duties as director in good faith, in a 
manner such director believes to be in the best interests of the OF and 
the Bank System,

[[Page 252]]

and with such care, including reasonable inquiry, as an ordinarily 
prudent person in a like position would use under similar circumstances;
    (2) Administer the affairs of the OF fairly and impartially and 
without discrimination in favor of or against any Bank;
    (3) At the time of appointment or election, or within a reasonable 
time thereafter, have a working familiarity with basic finance and 
accounting practices, including the ability to read and understand the 
Banks' combined balance sheets and income statements and the relevant 
financial statements of the OF and to ask substantive questions of 
management and the internal and external auditors with regard to both 
the combined financial statements of the Bank System and the operations 
and financial statements of the OF, as appropriate; and
    (4) Direct the operations of the OF in conformity with the 
requirements set forth in the Bank Act, Safety and Soundness Act, and 
this chapter.
    (b) Meetings and quorum. The OF board of directors shall conduct its 
business by majority vote of its members at meetings convened in 
accordance with its by-laws, and shall hold no fewer than six in-person 
meetings annually. Due notice shall be given to FHFA by the Chair prior 
to each meeting. A quorum, for purposes of meetings of the OF board of 
directors, shall require a majority of sitting board members, which must 
include a majority of sitting Independent Directors.
    (c) Duties regarding COs. The OF board of directors shall oversee 
the establishment of policies regarding COs that shall:
    (1) Govern the frequency and timing of issuance, issue size, minimum 
denomination, CO concessions, underwriter qualifications, currency of 
issuance, interest-rate change or conversion features, call features, 
principal indexing features, selection and retention of outside counsel, 
selection of clearing organizations, and the selection and compensation 
of underwriters for consolidated obligations, which shall be in 
accordance with the requirements and limitations set forth in paragraph 
(c)(4) of this section;
    (2) Prohibit the issuance of COs intended to be privately placed 
with or sold without the participation of an underwriter to retail 
investors, or issued with a concession structure designed to facilitate 
the placement of the COs in retail accounts, unless the OF has given 
notice to the board of directors of each Bank describing a policy 
permitting such issuances, soliciting comments from each Bank's board of 
directors, and considering the comments received before adopting a 
policy permitting such issuance activities;
    (3) Require all broker-dealers or underwriters under contract to the 
OF to have and maintain adequate suitability sales practices and 
policies, which shall be acceptable to, and subject to review by, the 
OF;
    (4) Require that COs shall be issued efficiently and at the lowest 
all-in funding costs over time, consistent with--
    (i) Prudent risk-management practices, prudential debt parameters, 
short and long-term market conditions, and the Banks' role as GSEs;
    (ii) Maintaining reliable access to the short-term and long-term 
capital markets; and
    (iii) Positioning the issuance of debt to take advantage of current 
and future capital market opportunities.
    (d) Other duties. The OF board of directors shall:
    (1) Set policies for management and operation of the OF;
    (2) Approve a strategic business plan for the OF in accordance with 
the provisions of Sec. 917.5 of this title, as appropriate;
    (3) Review, adopt and monitor annual operating and capital budgets 
of the OF in accordance with the provisions of Sec. 917.8 of this 
title, as appropriate;
    (4) Select, employ, determine the compensation for, and assign the 
duties and functions of a Chief Executive Officer of the OF who shall--
    (i) Be head of the OF and direct the implementation of the OF board 
of directors' policies;
    (ii) Serve as a member of the Directorate of the FICO, pursuant to 
section 21(b)(1)(A) of the Bank Act (12 U.S.C. 1441(b)(1)(A)); and

[[Page 253]]

    (iii) Serve as a member of the Directorate of the REFCORP, pursuant 
to section 21B(c)(1)(A) of the Bank Act (12 U.S.C. 1441b(c)(1)(A)).
    (5) Review and approve all contracts of the OF, except for contracts 
for which exclusive authority is provided to the Audit Committee by 
paragraphs (b)(5) and (b)(6) of Sec. 1273.9; and
    (6) Assume any other responsibilities that may from time to time be 
assigned to it by FHFA.
    (e) No rights created. Nothing in this part shall create or be 
deemed to create any rights in any third party.



Sec. 1273.9  Audit Committee.

    (a) Composition. The Independent Directors shall serve as the Audit 
Committee. The Audit Committee shall elect its chairperson from among 
its members. The Chairperson of the OF may also serve as chairperson of 
the Audit Committee, if the Audit Committee members so decide.
    (b) Responsibilities.--(1) The Audit Committee shall be responsible 
for overseeing the audit function of the OF and the preparation and the 
accurate and meaningful combination of information submitted by the 
Banks in the Bank System's combined financial reports.
    (2) For purposes of the combined financial reports, the Audit 
Committee shall ensure that the Banks adopt consistent accounting 
policies and procedures to the extent necessary for information 
submitted by the Banks to the OF to be combined to create accurate and 
meaningful combined financial reports.
    (3) The Audit Committee, in consultation with FHFA, may establish 
common accounting policies and procedures for the information submitted 
by the Banks to the OF for the combined financial reports where the 
Committee determines such information provided by the several Banks is 
inconsistent and that consistent policies and procedures regarding that 
information are necessary to create accurate and meaningful combined 
financial reports.
    (4) To the extent possible the Audit Committee shall operate 
consistent with the requirements pertaining to audit committee reports 
set forth in Item 407(d)(3) of Regulation S-K promulgated by the 
Securities and Exchange Commission.
    (5) The Audit Committee shall oversee internal audit activities, 
including the selection, evaluation, compensation and, where 
appropriate, replacement of the internal auditor. The internal auditor 
shall report directly to the Audit Committee and administratively to 
executive management.
    (6) The Audit Committee shall have the exclusive authority to employ 
and contract for the services of an independent, external auditor for 
the Banks' annual and quarterly combined financial statements and of an 
independent, external auditor for OF.
    (7) The Audit Committee shall direct senior management to maintain 
the reliability and integrity of the accounting policies and financial 
reporting of the OF.
    (8) The Audit Committee shall review the basis for the OF's 
financial statements and the external auditor's opinion rendered with 
respect to such financial statements.
    (9) The Audit Committee shall ensure that senior management has 
established and is maintaining an adequate internal control system 
within the OF by:
    (i) Reviewing the OF's internal control system and the resolution of 
identified material weaknesses and reportable conditions in the internal 
control system, including the prevention or detection of management 
override or compromise of the internal control system; and
    (ii) Reviewing the programs and policies of the OF designed to 
ensure compliance with applicable laws, regulations, and policies and 
monitoring the results of these compliance efforts.
    (10) The Audit Committee shall review the policies and procedures 
established by senior management to assess and monitor implementation of 
the OF strategic business plan and the operating goals and objectives 
contained therein.
    (11) The Audit Committee shall provide an independent, direct 
channel of communication between the OF's board of directors and the 
internal and external auditors.
    (12) The Audit Committee shall conduct or authorize investigations 
into

[[Page 254]]

any matters within the Audit Committee's scope of responsibilities.
    (13) The Audit Committee shall report periodically its findings to 
the OF's board of directors.
    (14) The Audit Committee shall prepare written minutes of each Audit 
Committee meeting.
    (c) Charter.--(1) The Audit Committee shall adopt, and the OF board 
of directors shall approve, a formal written charter, consistent with 
the duties and authority set forth in this section, that specifies the 
scope of the Audit Committee's powers and responsibilities. The Audit 
Committee and the OF board of directors shall:
    (i) Review, and assess the adequacy of and, where appropriate, amend 
the Audit Committee charter on an annual basis; and
    (ii) Re-adopt and re-approve, respectively, the Audit Committee 
charter not less often than every three years.
    (2) The charter of the Audit Committee shall be subject to review 
and approval by FHFA.
    (d) No delegation. The Audit Committee may not delegate the 
responsibilities assigned to it under this section to any person, or to 
any other committee or sub-committee of the OF board of directors.



Sec. 1273.10  Transition.

    (a) Within 45 calendar days of the date on which FHFA first appoints 
an Independent Director pursuant to Sec. 1273.7(c) of this part, the OF 
board of directors as structured under this part shall hold an 
organizational meeting. At the time of such meeting, the OF board of 
directors and its Audit Committee shall be deemed to be reconstituted in 
accordance with this part, and, except as set forth in paragraph (c) of 
this section, shall thereafter operate in accordance with this part. The 
date of this organizational meeting shall be set by the Independent 
Director that has been appointed as Chairman of the OF board of 
directors by FHFA pursuant to Sec. 1273.7(e) of this part.
    (b) Until the date of the organizational meeting required by 
paragraph (a) of this section, the board of directors of OF, and audit 
committee thereof, as in existence immediately prior to the effective 
date of this rule, shall continue to have power and authority to act as 
the OF board of directors or audit committee thereof, as applicable. 
Further, the board members who served as Chair and Vice-Chair of the OF 
board immediately prior to the effective date of this rule shall 
continue also to serve in these capacities until the date of the 
organizational meeting required under paragraph (a).
    (c) Further, the audit committee as in existence immediately prior 
to the effective date of this rule shall continue to have responsibility 
and oversight authority with regard to the preparation and publication 
of the combined financial report for any reporting period that ends 
prior to July 1, 2010, unless the board of directors established under 
this part determines that the Audit Committee as established under this 
part should be given such responsibility.



   Sec. Appendix A to Part 1273--Exceptions to the General Disclosure 
                                Standards

    A. Related-party transactions. Item 404 of Regulation S-K, 17 CFR 
229.404, requires the disclosure of certain relationships and related 
party transactions. In light of the cooperative nature of the Bank 
System, related-party transactions are to be expected, and a disclosure 
of all related-party transactions that meet the threshold would not be 
meaningful. Instead, the combined annual report will disclose the 
percent of advances to members an officer of which serves as a Bank 
director, and list the top ten holders of advances in the Bank System 
and the top five holders of advances by Bank, with a further disclosure 
indicating which of these members had an officer that served as a Bank 
director. The combined financial report will also disclose the top ten 
holders of advances in the Bank System by holding company, where the 
advances of all affiliates within a holding company are aggregated.
    B. Biographical information. The biographical information required 
by Items 401 and 405 of Regulation S-K, 17 CFR 229.401 and 405, will be 
provided only for members of the OF board of directors, including the 
Bank presidents, the Chair and Vice-Chair of the board of directors of 
each Bank, and the Chief Executive Officer of OF.
    C. Compensation. The information on compensation required by Item 
402 of Regulation S-K, 17 CFR 229.402, will be provided only for Bank 
presidents and the CEO of the OF. Since stock in each Bank trades at 
par, the OF will not include the performance graph

[[Page 255]]

specified in Item 402(1) of Regulation S-K, 17 CFR 229.402(1).
    D. Submission of matters to a vote of stockholders. No information 
will be presented on matters submitted to shareholders for a vote, as 
otherwise required by Item 4 of the SEC's form 10-K, 17 CFR 249.310. The 
only item shareholders vote upon is the annual election of directors.
    E. Exhibits. The exhibits required by Item 601 of Regulation S-K, 17 
CFR 229.601, are not applicable and will not be provided.
    F. Per share information. The statement of financial information 
required by Items 301 and 302 of Rule S-K, 17 CFR 229.301 and 302, is 
inapplicable because the shares of the Banks are subscription capital 
that trades at par, and the shares expand or contract with changes in 
member assets or advance levels.
    G. Beneficial ownership. Item 403 of Rule S-K, 17 CFR 229.403, 
requires the disclosure of security ownership of certain beneficial 
owners and management. The combined financial report will provide a 
listing of the ten largest holders of capital stock in the Bank System 
and a listing of the five largest holders of capital stock by Bank. This 
listing will also indicate which members had an officer that served as a 
director of a Bank. The combined financial report will also disclose the 
top ten holders of Bank stock in the Bank System by holding company, 
where the Bank stock of all affiliates within a holding company is 
aggregated.



PART 1274_FINANCIAL STATEMENTS OF THE BANKS--Table of Contents



Sec.
1274.1 Definitions.
1274.2 Audit requirements.
1274.3 Requirements to provide financial and other information to FHFA 
          and the OF.

    Authority: 12 U.S.C. 1426, 1431, 4511(b), 4513, 4526(a).

    Source: 75 FR 23166, May 3, 2010, unless otherwise noted.



Sec. 1274.1  Definitions.

    For purposes of this part:
    Audit means an examination of the financial statements by an 
independent accountant in accordance with generally accepted auditing 
standards for the purpose of expressing an opinion thereon.
    Audit report means a document in which an independent accountant 
indicates the scope the audit made and sets forth an opinion regarding 
the financial statement taken as a whole, or an assertion to the effect 
that an overall opinion cannot be expressed. When an overall opinion 
cannot be expressed, the reasons therefor shall be stated.
    Bank written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank System means the Federal Home Loan Bank System, consisting of 
the twelve Banks and the Office of Finance.
    FHFA means the Federal Housing Finance Agency.
    Financing Corporation or FICO means the Financing Corporation 
established and supervised by FHFA under section 21 of the Bank Act (12 
U.S.C. 1441).
    Office of Finance or OF has the same meaning as set forth in Sec. 
1273.1 of this chapter.



Sec. 1274.2  Audit requirements.

    (a) Each Bank, the OF, and the FICO shall obtain annually an 
independent external audit of and an audit report on its individual 
financial statement.
    (b) The OF audit committee shall obtain an audit and an audit report 
on the combined annual financial statements for the Bank System.
    (c) All audits must be conducted in accordance with generally 
accepted auditing standards and in accordance with the most current 
government auditing standards issued by the Office of the Comptroller 
General of the United States.
    (d) An independent, external auditor must meet at least twice each 
year with the audit committee of each Bank, the audit committee of OF, 
and the FICO Directorate.
    (e) FHFA examiners shall have unrestricted access to all auditors' 
work papers and to the auditors to address substantive accounting issues 
that may arise during the course of any audit.



Sec. 1274.3  Requirements to provide financial and other information 
to FHFA and the OF.

    In order to facilitate the preparation by the OF of combined Bank 
System annual and quarterly reports, each Bank shall provide to the OF 
in such form and within such timeframes as FHFA or the OF shall specify, 
all financial and other information and assistance that the OF shall 
request for

[[Page 256]]

that purpose. Nothing in this section shall contravene or be deemed to 
circumscribe in any manner the authority of FHFA to obtain any 
information from any Bank related to the preparation or review of any 
financial report.



PART 1278_VOLUNTARY MERGERS OF FEDERAL HOME LOAN BANKS--
Table of Contents



Sec.
1278.1 Definitions.
1278.2 Authority.
1278.3 Merger agreement.
1278.4 Merger application.
1278.5 Approval by Director.
1278.6 Ratification by Bank members.
1278.7 Consummation of the merger.

    Authority: 12 U.S.C. 1432(a), 1446, 4511.

    Source: 76 FR 72833, Nov. 28, 2011, unless otherwise noted.



Sec. 1278.1  Definitions.

    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Constituent Bank means a Bank that is proposing to merge with one or 
more other Banks. Each Bank entering into a merger is a Constituent 
Bank, regardless of whether it is also a Continuing Bank.
    Continuing Bank means a Bank that will exist as the result of a 
merger of two or more Constituent Banks, and when used in the singular 
shall include the plural.
    Director, written in title case, means the Director of FHFA or his 
or her designee.
    Disclosure Statement means a written document that contains, to the 
extent applicable, all of the items that a Bank would be required to 
include in a Form S-4 Registration Statement under the Securities Act of 
1933 (or any successor form promulgated by the United States Securities 
and Exchange Commission governing disclosure required for securities 
issued in business combination transactions) when prepared as a 
prospectus as directed in Part I of the form, if the Bank were required 
to provide such a prospectus to its shareholders in connection with a 
merger.
    Effective Date means the date on which the organization certificate 
of the Continuing Bank becomes effective as provided under Sec. 1278.7.
    FHFA means the Federal Housing Finance Agency.
    Financial Statements means statements of condition, income, capital, 
and cash flows, with explanatory notes, in such form as the Banks are 
required to include in their filings made under the Securities and 
Exchange Act of 1934.
    GAAP means accounting principles generally accepted in the United 
States as in effect from time to time.
    Merge or Merger means:
    (1) A merger of one or more Banks into another Bank;
    (2) A consolidation of two or more Banks resulting in a new Bank;
    (3) A purchase of substantially all of the assets, and assumption of 
substantially all of the liabilities, of one or more Banks by another 
Bank or Banks; or
    (4) Any other business combination of two or more Banks into one or 
more resulting Banks.
    Office of Finance means the Office of Finance, a joint office of the 
Banks established under part 1273 of this chapter.
    Record Date means the date established by a Bank's board of 
directors for determining the members that are entitled to vote on the 
ratification of the merger agreement and the number of ballots that may 
be cast by each in the election.



Sec. 1278.2  Authority.

    Any two or more Banks may merge voluntarily under authority of 
section 26(b) of the Bank Act, provided that each of the following 
requirements has been satisfied:
    (a) The Constituent Banks have executed a written merger agreement 
that satisfies all requirements of Sec. 1278.3;
    (b) The Constituent Banks have jointly filed a merger application 
with FHFA that satisfies all requirements of Sec. 1278.4;
    (c) The Director has approved the merger application in accordance 
with the requirements of Sec. 1278.5;

[[Page 257]]

    (d) The members of each Constituent Bank have ratified the merger 
agreement as provided under Sec. 1278.6; and
    (e) The Director has determined that the Constituent Banks have 
satisfied all conditions imposed in connection with the approval of the 
merger application, and has accepted the properly executed organization 
certificate of the Continuing Bank, as provided under Sec. 1278.7.



Sec. 1278.3  Merger agreement.

    A merger of Banks under the authority of Sec. 1278.2 shall require 
a written merger agreement that:
    (a) Has been authorized by the affirmative vote of a majority of a 
quorum of the board of directors of each Constituent Bank at a meeting 
on the record and has been executed by authorized signing officers of 
each Constituent Bank; and
    (b) Sets forth all material terms and conditions of the merger, 
including, without limitation, provisions addressing each of the 
following matters--
    (1) The proposed Effective Date and the proposed acquisition date 
for purposes of accounting for the transaction under GAAP, if that date 
is to be different from the Effective Date;
    (2) The proposed organization certificate and bylaws of the 
Continuing Bank;
    (3) The proposed capital structure plan for the Continuing Bank;
    (4) The proposed size and structure of the board of directors for 
the Continuing Bank;
    (5) The formula to be used to exchange the stock of the Constituent 
Banks for the stock of the Continuing Bank, and a provision prohibiting 
the issuance of fractional shares of stock;
    (6) Any conditions that must be satisfied prior to the Effective 
Date, which must include approval by the Director and ratification by 
the members of the Constituent Banks;
    (7) A statement of the representations or warranties, if any, made 
or to be made by any Constituent Bank;
    (8) A description of the legal or accounting opinions or rulings, if 
any, that are required to be obtained or furnished by any party in 
connection with the proposed merger; and
    (9) A statement that the board of directors of a Constituent Bank 
may terminate the merger agreement before the Effective Date upon a 
determination that:
    (i) The information disclosed to members contained material errors 
or omissions;
    (ii) Material misrepresentations were made to members regarding the 
impact of the merger;
    (iii) Fraudulent activities were used to obtain members' approval; 
or
    (iv) An event occurred subsequent to the members' vote that would 
have a significant adverse impact on the future viability of the 
Continuing Bank.



Sec. 1278.4  Merger application.

    (a) Contents of application. Any two or more Banks that wish to 
merge shall submit to FHFA a merger application that addresses all 
material aspects of the proposed merger. As provided in Sec. 1202.8 of 
this chapter, a Bank may submit separately any portions of the 
application that it believes contain confidential or privileged trade 
secrets or commercial or financial information, which portions will be 
handled in accordance with FHFA's Freedom of Information Act regulations 
set forth in part 1202 of this chapter. The application shall include, 
at a minimum, the following:
    (1) A written statement that includes--
    (i) A summary of the material features of the proposed merger;
    (ii) The reasons for the proposed merger;
    (iii) The effect of the proposed merger on the Constituent Banks and 
their members;
    (iv) The proposed Effective Date, the proposed acquisition date for 
purposes of accounting for the transaction under GAAP, if that date is 
to be different from the Effective Date (including the reasons for 
designating a different acquisition date), and the Record Date 
established by each Constituent Bank's board of directors;
    (v) If the Constituent Banks contemplate that the proposed merger 
will be one of two or more related transactions, a summary of the 
material features of any related transactions

[[Page 258]]

and the bearing that the consummation of, or failure to consummate, the 
related transactions is expected to have upon the proposed merger;
    (vi) If not addressed by the merger agreement, the Banks' proposal 
for the ultimate size and composition of the board of directors for the 
Continuing Bank and their plan for reducing the board to its ultimate 
size and composition, as well as the names of the persons proposed to 
serve as directors and senior executive officers of the Continuing Bank 
immediately after the merger;
    (vii) A description of all proposed material operational changes 
including, but not limited to, reductions in the existing staffs of the 
Constituent Banks (to the extent such information is known), whether and 
how Bank operations will be combined, and whether any Constituent Bank 
will continue to operate as a branch of the Continuing Bank;
    (viii) Information demonstrating that the Continuing Bank will 
comply with all applicable capital requirements after the Effective 
Date;
    (ix) A statement explaining all officer and director indemnification 
provisions; and
    (x) An undertaking that the Constituent Banks will continue to 
disclose all material information, and update all items of the 
application, as appropriate;
    (2) A copy of the executed merger agreement and a certified copy of 
the resolution of the board of directors of each Constituent Bank 
authorizing the merger agreement;
    (3) A copy of the proposed organization certificate of the 
Continuing Bank;
    (4) A copy of the proposed bylaws of the Continuing Bank;
    (5) A copy of the proposed capital structure plan of the Continuing 
Bank;
    (6) The most recent annual audited Financial Statements, and any 
interim quarterly financial statements for the year-to-date, for each 
Constituent Bank; and
    (7) Pro forma Financial Statements for the Continuing Bank as of the 
date of the most recent statement of condition supplied under paragraph 
(a)(6) of this section, and forecasted pro forma Financial Statements 
for each of at least two years following such date.
    (b) Additional information. FHFA may require the Constituent Banks 
to submit any additional information FHFA deems necessary to evaluate 
the proposed merger. If FHFA has determined a merger application to be 
complete as provided in paragraph (c) of this section, FHFA may require 
the Constituent Banks to submit additional information only with respect 
to matters derived from or prompted by the materials already submitted, 
or matters of a material nature that were not reasonably apparent 
previously, including matters concealed by the Constituent Banks or 
relating to developments that arose after the determination of 
completeness. If the Constituent Banks fail to provide the additional 
information in a timely manner, the Director may deem the failure to 
provide the required information as grounds to deny the application.
    (c) Completion of application. Within 30 days of the receipt of a 
merger application, FHFA shall determine whether the application is 
complete and whether FHFA has all information necessary for the Director 
to evaluate the proposed merger.
    (1) If FHFA determines that the application is complete and that it 
has all information necessary to evaluate the proposed merger, it shall 
so inform the Constituent Banks in writing.
    (2) If FHFA determines that the application is incomplete, or that 
it requires additional information in order to evaluate the application, 
it shall so inform the Constituent Banks in writing, and shall specify 
the number of days within which the Constituent Banks must provide any 
additional information or materials. Within 15 days of receipt of the 
additional information or materials, FHFA shall inform the Constituent 
Banks in writing whether the merger application is complete.



Sec. 1278.5  Approval by Director.

    (a) Standards. In determining whether to approve a merger of Banks 
under the authority of Sec. 1278.2, the Director shall take into 
consideration the financial and managerial resources of the Constituent 
Banks, the future prospects of the Continuing Bank, and the effect of

[[Page 259]]

the proposed merger on the safety and soundness of the Continuing Bank 
and the Bank system.
    (b) Determination by Director. After FHFA determines that a merger 
application is complete, as provided in Sec. 1278.4(c), the Director 
shall, within 30 days, either approve or deny the merger application. An 
approval of a merger application may include any conditions the Director 
determines to be appropriate, and shall in all cases be conditioned on 
each Constituent Bank demonstrating that it has obtained its members' 
ratification of the merger agreement in accordance with the requirements 
of Sec. 1278.6 by submitting to FHFA:
    (1) A certified copy of the members' resolution ratifying the merger 
agreement, on which the members cast their votes; and
    (2) A certification of the member vote from the Bank's corporate 
secretary or from an independent third party.
    (c) Notice. If the Director approves the merger application, FHFA 
shall provide written notice of the approval and any conditions to each 
Constituent Bank, as well as to each other Bank and the Office of 
Finance. If the Director denies the merger application, FHFA shall 
provide written notice of the denial to each Constituent Bank, as well 
as to each other Bank and the Office of Finance, and the notice to the 
Constituent Banks shall include a statement of the reasons for the 
denial.



Sec. 1278.6  Ratification by Bank members.

    (a) Requirements for member vote. No merger of Banks under the 
authority of Sec. 1278.2 may be consummated unless a merger agreement 
meeting the requirements of Sec. 1278.3 has been ratified by the 
affirmative vote of the members of each Constituent Bank in a voting 
process that meets the following requirements:
    (1) Notice of vote. Each Constituent Bank shall submit the 
authorized merger agreement to its members for ratification by 
delivering to each institution that was a member as of the Record Date--
    (i) A ballot that permits the member to vote for or against the 
ratification of the merger agreement, or to abstain from such vote; and
    (ii) A Disclosure Statement that establishes a closing date for the 
Bank's receipt of completed ballots that is no earlier than 30 days 
after the date that the ballot and Disclosure Statement are delivered to 
its members.
    (2) Voting rights and requirements. In the vote to ratify the merger 
agreement, each member of each Constituent Bank shall be entitled to 
cast one vote for each share of Bank stock that the member was required 
to own as of the Record Date, provided that the number of votes that any 
member may cast shall not exceed the average number of shares of Bank 
stock required to be held by all members of that Bank, calculated on a 
district-wide basis, as of the Record Date. A member must cast all of 
its votes either for or against the ratification of the merger 
agreement, or may abstain with respect to all of its votes. Each 
member's vote shall be made by resolution of its governing body, either 
authorizing the specific vote, or delegating to an individual the 
authority to vote.
    (3) Determination of result. No Constituent Bank shall review any 
ballot until after the closing date established in the Disclosure 
Statement or include in the tabulation any ballot received after the 
closing date. A Constituent Bank shall tabulate the votes cast 
immediately after the closing date. The members of a Constituent Bank 
shall be considered to have ratified a merger agreement if a majority of 
votes cast in the election have been cast in favor of the ratification 
of the merger agreement. The Constituent Bank, or the Continuing Bank, 
as appropriate, shall retain all ballots received for at least two years 
after the date of the election, and shall not disclose how any member 
voted.
    (4) Notice of result. Within 10 days of the closing date, a 
Constituent Bank shall deliver to its members, to each Constituent Bank 
with which it proposes to merge, and to FHFA a statement of--
    (i) The total number of eligible votes;
    (ii) The number of members voting in the election; and

[[Page 260]]

    (iii) The total number of votes cast both for and against 
ratification of the merger agreement, as well as those that were 
eligible to be cast by members that abstained and by members who failed 
to return completed ballots.
    (b) False and misleading statements. In connection with a proposed 
merger, no Bank, nor any director, officer, or employee thereof, shall 
make any statement, written or oral, which, at the time and in the light 
of the circumstances under which it is made, is false or misleading with 
respect to any material fact, or which omits to state any material fact 
necessary in order to make the statement not false or misleading, or 
necessary to correct any earlier statement that has become false or 
misleading.



Sec. 1278.7  Consummation of the merger.

    (a) Post-approval submissions. After the members of each Constituent 
Bank have voted to ratify the merger agreement, the Constituent Banks 
shall submit to FHFA:
    (1) Evidence acceptable to the Director that all conditions imposed 
in connection with the approval of the merger application under Sec. 
1278.5 have been satisfied, including the items specified in Sec. Sec. 
1278.5(b)(1) and (2); and
    (2) An organization certificate for the Continuing Bank, in such 
form as FHFA may specify, that has been executed by the individuals who 
will constitute the board of directors of the Continuing Bank.
    (b) Acceptance of organization certificate. Upon determining that 
all conditions have been satisfied and that the organization certificate 
meets the requirements of Sec. 1278.7(a)(2), the Director shall accept 
the organization certificate of the Continuing Bank by endorsing thereon 
the date of acceptance and the Effective Date, which date shall be:
    (1) The proposed Effective Date set forth in the merger agreement 
or, if the merger agreement expresses the proposed Effective Date in 
terms of a range of dates, a date within the applicable range of dates; 
or
    (2) If the proposed Effective Date set forth in the merger agreement 
has passed, the earlier of:
    (i) The 10th business day following the date of acceptance of the 
organization certificate by the Director; or
    (ii) The last business day preceding any date specified in the 
merger agreement by which the merger agreement will terminate if the 
merger has not become effective.
    (c) Effectiveness of merger. After the Director has accepted the 
organization certificate of the Continuing Bank as provided in Sec. 
1278.7(b), and as of the commencement of the Effective Date specified on 
such organization certificate:
    (1) The Continuing Bank shall become or remain a body corporate 
(depending on the type of transaction) operating under such organization 
certificate with all powers granted to a Bank under the Bank Act;
    (2) The Continuing Bank shall succeed to all rights, titles, powers, 
privileges, books, records, assets, and liabilities of the Constituent 
Banks, as provided in the merger agreement; and
    (3) The corporate existence of any Constituent Bank that is not a 
Continuing Bank shall cease, unless otherwise provided in the merger 
agreement.
    (d) Notice. After accepting the organization certificate for the 
Continuing Bank, the Director shall provide to the Constituent Banks, 
and to each other Bank and the Office of Finance, prompt written notice 
of that fact, which shall include the date of acceptance and the 
Effective Date of the organization certificate.

[[Page 261]]



                 SUBCHAPTER E_HOUSING GOALS AND MISSION





PART 1281_FEDERAL HOME LOAN BANK HOUSING GOALS--Table of Contents



                            Subpart A_General

Sec.
1281.1 Definitions.

                         Subpart B_Housing Goals

1281.10 General.
1281.11 Bank housing goals.
1281.12 General counting requirements.
1281.13 Special counting requirements.
1281.14 Determination of compliance with housing goals; notice of 
          determination.
1281.15 Housing plans.

                    Subpart C_Reporting Requirements

1281.20 General.
1281.21 Mortgage Reports.
1281.22 Periodic reports.
1281.23 Bank data integrity.


    Authority: 12 U.S.C. 1430c.

    Source: 75 FR 81105, Dec. 27, 2010, unless otherwise noted.



                            Subpart A_General



Sec. 1281.1  Definitions.

    As used in this part:
    Acquired Member Assets (AMA) program means a program that authorizes 
a Bank to hold assets acquired from or through Bank members or housing 
associates by means of either a purchase or a funding transaction, 
subject to the requirements of 12 CFR parts 955 and 980, or successor 
regulations.
    AMA-approved mortgage means a mortgage that meets the requirements 
of the AMA program at 12 CFR part 955, and is approved to be implemented 
under 12 CFR part 980, or successor regulations.
    Balloon mortgage means a mortgage providing for payments at regular 
intervals, with a final payment (balloon payment) that is at least 5 
percent more than the periodic payments. The periodic payments may cover 
some or all of the periodic principal or interest. Typically, the 
periodic payments are level monthly payments that would fully amortize 
the mortgage over a stated term and the balloon payment is a single 
payment due after a specific period (but before the mortgage would fully 
amortize) and pays off or satisfies the outstanding balance of the 
mortgage.
    Bank means a Federal Home Loan Bank established under section 12 of 
the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 et seq.).
    Bank System means the Federal Home Loan Bank System, consisting of 
the 12 Banks and the Office of Finance.
    Borrower income means the total gross income relied on in making the 
credit decision.
    Conforming mortgage means, with respect to a Bank, a conventional 
AMA-approved single-family mortgage having an original principal 
obligation that does not exceed the dollar limitation in effect at the 
time of such origination and applicable to such mortgage under 12 CFR 
955.2(a)(1)(i) and 12 U.S.C. 1717(b)(2), as these sections may be 
amended.
    Conventional mortgage means a mortgage other than a mortgage as to 
which a Bank has the benefit of any guaranty, insurance or other 
obligation by the United States or any of its agencies or 
instrumentalities.
    Data Reporting Manual (DRM) means the manual prepared by FHFA in 
connection with the Banks' reporting requirements, as may be 
supplemented from time to time, including reporting requirements under 
this part.
    Day means a calendar day.
    Designated disaster area means any census tract that is located in a 
county designated by the federal government as adversely affected by a 
declared major disaster administered by FEMA, where individual 
assistance payments were authorized by FEMA. A census tract shall be 
treated as a ``designated disaster area'' for purposes of this part 
beginning on the January 1 after the FEMA designation of the county, or 
such earlier date as determined by FHFA, and continuing through December 
31 of the third full calendar year following the FEMA designation. This

[[Page 262]]

time period may be adjusted for a particular disaster area by notice 
from FHFA to the Banks.
    Director means the Director of FHFA, or his or her designee.
    Dwelling unit means a room or unified combination of rooms intended 
for use, in whole or in part, as a dwelling by one or more persons, and 
includes a dwelling unit in a single-family property, multifamily 
property, or other residential or mixed-use property.
    Families in low-income areas means:
    (1) Any family that resides in a census tract or block numbering 
area in which the median income does not exceed 80 percent of the area 
median income;
    (2) Any family with an income that does not exceed area median 
income that resides in a minority census tract; and
    (3) Any family with an income that does not exceed area median 
income that resides in a designated disaster area.
    Family means one or more individuals who occupy the same dwelling 
unit.
    FEMA means the Federal Emergency Management Agency.
    FHFA means the Federal Housing Finance Agency.
    HMDA means the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801, 
et seq.), as amended.
    HOEPA mortgage means a mortgage covered by section 103(aa) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)), as amended by the Home 
Ownership Equity Protection Act (HOEPA), as implemented by the Board of 
Governors of the Federal Reserve System.
    HUD means the United States Department of Housing and Urban 
Development.
    Low-income means income not in excess of 80 percent of area median 
income.
    Median income means, with respect to an area, the unadjusted median 
family income for the area as most recently determined by HUD. FHFA will 
provide the Banks annually with information specifying how the median 
family income estimates for metropolitan areas are to be applied for the 
purposes of determining median family income.
    Member means an institution that has been approved for membership in 
a Bank and has purchased capital stock in the Bank in accordance with 12 
CFR 1263.20 or 1263.24(b), or successor regulation(s).
    Metropolitan area means a metropolitan statistical area (MSA), or a 
portion of such an area, including Metropolitan Divisions, for which 
median family income estimates are determined by HUD.
    Minority means any individual who is included within any one or more 
of the following racial and ethnic categories:
    (1) American Indian or Alaskan Native--a person having origins in 
any of the original peoples of North and South America (including 
Central America), and who maintains tribal affiliation or community 
attachment;
    (2) Asian--a person having origins in any of the original peoples of 
the Far East, Southeast Asia, or the Indian subcontinent, including, for 
example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the 
Philippine Islands, Thailand, and Vietnam;
    (3) Black or African American--a person having origins in any of the 
black racial groups of Africa;
    (4) Hispanic or Latino--a person of Cuban, Mexican, Puerto Rican, 
South or Central American, or other Spanish culture or origin, 
regardless of race; and
    (5) Native Hawaiian or Other Pacific Islander--a person having 
origins in any of the original peoples of Hawaii, Guam, Samoa, or other 
Pacific Islands.
    Minority census tract means a census tract that has a minority 
population of at least 30 percent and a median income of less than 100 
percent of the area median income.
    Moderate-income means income not in excess of area median income.
    Mortgage means a member of such classes of liens, including 
subordinate liens, as are commonly given or are legally effective to 
secure advances on, or the unpaid purchase price of, real estate under 
the laws of the State in which the real estate is located, together with 
the credit instruments, if any, secured thereby, and includes interests 
in mortgages. ``Mortgage'' includes a mortgage, lien, including a 
subordinate lien, or other security interest on the stock or membership 
certificate issued to a tenant-stockholder

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or resident-member by a cooperative housing corporation, as defined in 
section 216 of the Internal Revenue Code of 1986, and on the proprietary 
lease, occupancy agreement, or right of tenancy in the dwelling unit of 
the tenant-stockholder or resident-member in such cooperative housing 
corporation.
    Mortgage data means data obtained by the Director from the Bank or 
Banks under this part and/or the Data Reporting Manual.
    Mortgage purchase means a transaction in which a Bank bought or 
otherwise acquired a mortgage.
    Mortgage with unacceptable terms or conditions means a single-family 
mortgage, including a reverse mortgage, or a group or category of such 
mortgages, with one or more of the following terms or conditions:
    (1) Excessive fees, where the total points and fees charged to a 
borrower exceed the greater of 5 percent of the loan amount or a maximum 
dollar amount of $1,000, or an alternative amount requested by a Bank 
and determined by the Director as appropriate for small mortgages;
    (i) For purposes of this definition, points and fees include:
    (A) Origination fees;
    (B) Underwriting fees;
    (C) Broker fees;
    (D) Finder's fees; and
    (E) Charges that the member imposes as a condition of making the 
loan, whether they are paid to the member or a third party;
    (ii) For purposes of this definition, points and fees do not 
include:
    (A) Bona fide discount points;
    (B) Fees paid for actual services rendered in connection with the 
origination of the mortgage, such as attorneys' fees, notary's fees, and 
fees paid for property appraisals, credit reports, surveys, title 
examinations and extracts, flood and tax certifications, and home 
inspections;
    (C) The cost of mortgage insurance or credit-risk price adjustments;
    (D) The costs of title, hazard, and flood insurance policies;
    (E) State and local transfer taxes or fees;
    (F) Escrow deposits for the future payment of taxes and insurance 
premiums; and
    (G) Other miscellaneous fees and charges that, in total, do not 
exceed 0.25 percent of the loan amount;
    (2) An annual percentage rate that exceeds by more than 8 percentage 
points the yield on Treasury securities with comparable maturities as of 
the fifteenth day of the month immediately preceding the month in which 
the application for the extension of credit was received;
    (3) Prepayment penalties, except where:
    (i) The mortgage provides some benefit to the borrower in exchange 
for the prepayment penalty (e.g., a rate or fee reduction for accepting 
the prepayment premium);
    (ii) The borrower is offered the choice of another mortgage that 
does not contain payment of such a premium;
    (iii) The terms of the mortgage provision containing the prepayment 
penalty are adequately disclosed to the borrower; and
    (iv) The prepayment penalty is not charged when the mortgage debt is 
accelerated as the result of the borrower's default in making his or her 
mortgage payments;
    (4) The sale or financing of prepaid single-premium credit life 
insurance products in connection with the origination of the mortgage;
    (5) Underwriting practices contrary to the Interagency Guidance on 
Nontraditional Mortgage Product Risks (71 FR 58609) (Oct. 4, 2006), the 
Interagency Statement on Subprime Mortgage Lending (72 FR 37569) (July 
10, 2007), or similar guidance subsequently issued by federal banking 
agencies;
    (6) Failure to comply with fair lending requirements; or
    (7) Other terms or conditions that are determined by the Director to 
be an unacceptable term or condition of a mortgage.
    Non-metropolitan area means a county, or a portion of a county, 
including those counties that comprise Micropolitan Statistical Areas, 
located outside any metropolitan area for which median family income 
estimates are published annually by HUD.
    Owner-occupied housing means single-family housing in which a 
mortgagor resides, including two- to four-unit owner-occupied properties 
where one or

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more units are used for rental purposes.
    Purchase money mortgage means a mortgage given to secure a loan used 
for the purchase of a single-family residential property.
    Refinancing mortgage means a mortgage undertaken by a borrower that 
satisfies or replaces an existing mortgage of such borrower. The term 
does not include:
    (1) A renewal of a single payment obligation with no change in the 
original terms;
    (2) A reduction in the annual percentage rate of the mortgage as 
computed under the Truth in Lending Act, with a corresponding change in 
the payment schedule;
    (3) An agreement involving a court proceeding;
    (4) A workout agreement, in which a change in the payment schedule 
or collateral requirements is agreed to as a result of the mortgagor's 
default or delinquency, unless the rate is increased or the new amount 
financed exceeds the unpaid balance plus earned finance charges and 
premiums for the continuation of insurance;
    (5) The renewal of optional insurance purchased by the mortgagor and 
added to an existing mortgage; or
    (6) A conversion of a balloon mortgage note on a single-family 
property to a fully amortizing mortgage note where the Bank already owns 
or has an interest in the balloon note at the time of the conversion.
    Residence means a property where one or more families reside.
    Residential mortgage means a mortgage on single-family housing.
    Seasoned mortgage means a mortgage on which the date of the mortgage 
note is more than one year before the Bank purchased the mortgage.
    Second mortgage means any mortgage that has a lien position 
subordinate only to the lien of the first mortgage.
    Secondary residence means a dwelling where the mortgagor maintains 
(or will maintain) a part-time place of abode and typically spends (or 
will spend) less than the majority of the calendar year. A person may 
have more than one secondary residence at a time.
    Single-family housing means a residence consisting of one to four 
dwelling units. Single-family housing includes condominium dwelling 
units and dwelling units in cooperative housing projects.
    Very low-income means income not in excess of 50 percent of a