[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Rules and Regulations]
[Pages 56712-56715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23046]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 906
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1206
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1701
RIN 2590-AA00
Assessments
AGENCIES: Federal Housing Finance Board; Office of Federal Housing
Enterprise Oversight; Federal Housing Finance Agency.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board, Office of Federal Housing
Enterprise Oversight and Federal Housing Finance Agency (FHFA) are
establishing policy and procedures for the FHFA to impose assessments
on the Federal National Mortgage Association (Fannie Mae), Federal Home
Loan Mortgage Corporation (Freddie Mac), and Federal Home Loan Banks
(Banks) (collectively, Regulated Entities), through a final rule,
pursuant to 12 U.S.C. 4516.
DATES: The final rule will become effective on September 30, 2008.
FOR FURTHER INFORMATION CONTACT: Frank Wright, Senior Counsel (OFHEO),
(202) 414-6439; Mark Kinsey, Chief Financial Officer (OFHEO), (202)
414-3816; Michele Horowitz, Chief Financial Officer (FHFB), (202) 408-
2878; Janice A. Kaye, Associate General Counsel (FHFB), (202) 408-2505
(not toll free numbers), Fourth Floor, 1700 G Street, NW., Washington
DC 20552. The telephone number for the Telecommunications Device for
the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On July 30, 2008, the President signed the Federal Housing Finance
Regulatory Reform Act of 2008 (Act) (Pub. L. 110-289, 122 Stat. 2564).
Among other things, the Act transferred the supervisory and oversight
responsibilities over the Banks, Fannie Mae, and Freddie Mac to a new
independent executive branch agency known as the Federal Housing
Finance Agency. To fund the operations of the FHFA, the Act amended
section 1316 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (Safety and Soundness Act), codified at 12 U.S.C.
4516. The Act also removed the provisions of section 38 of the Federal
Home Loan Bank Act, which were codified at 12 U.S.C. 1438(b), that had
authorized the Federal Housing Finance Board (FHFB) to impose
assessments on the Banks in an amount sufficient to provide for the
payment of the FHFB's estimated expenses for the period covered by the
assessment. This final rule will implement the FHFA's authority to
establish and collect assessments from the Regulated Entities and will
also remove the regulatory provisions that had implemented the
authority of the Office of Federal Housing Enterprise Oversight (OFHEO)
to assess Fannie Mae and Freddie Mac (12 CFR part 1701) and the
authority of the FHFB to assess the Banks (12 CFR 906.1-2).
II. Analysis of the Final Rule
In accordance with section 1316A of the Act, part 1206 of the final
rule authorizes the FHFA to impose assessments on the Regulated
Entities to pay its estimated costs and expenses. See 12 U.S.C. 4516.
The rule recognizes and addresses the differences between the Banks and
the Enterprises, where appropriate.
The final rule authorizes the FHFA to establish annual assessments
for the Regulated Entities to provide for the payment of the FHFA's
costs and expenses and maintain a working capital fund. The final rule
provides for the allocation of the annual assessments between the
Enterprises and the Banks, with the Enterprises paying proportional
shares sufficient to provide for payment of the costs and expenses
[[Page 56713]]
relating to the Enterprises, and the Banks paying proportional shares
sufficient to provide for payment of the costs and expenses relating to
the Banks. The shares paid by the Enterprises will be based on the
proportions of total exposure for the Enterprises, and the shares paid
by the Banks will be based on the proportions of their minimum required
regulatory capital, a measure based on the capital that the Banks are
required to hold by their regulator, rather than a measure of actual
capital held. Under this rule, each Regulated Entity must pay an amount
equal to one-half of its annual assessment twice each year. This
represents a significant change to the assessment procedure of the
FHFB, under which the FHFB made an assessment annually and the Banks
made payments in monthly installments.
This final rule also establishes the procedure for the FHFA to
increase or adjust the amount of the semiannual payment for a Regulated
Entity or to make additional assessments for a Regulated Entity, under
certain circumstances.
This final rule also implements another significant change in
establishing the procedures for collecting funds for a working capital
fund for the FHFA, under which the FHFA shall collect those assessments
deemed necessary 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.
The final rule also implements notice and review provisions for the
FHFA under which the FHFA will provide to each Regulated Entity written
notice of the projected budget for the FHFA for the upcoming year, and
the assessments and semiannual payments to be collected under this
rule.
Notice and Public Participation
The notice and comment procedure required by the Administrative
Procedure Act is inapplicable to this final rule because it is a rule
of agency procedure. See 5 U.S.C. 553(b)(3)(A).
Paperwork Reduction Act
The regulation does not contain any information collection
requirement that requires the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Regulatory Flexibility Act
Because the FHFA is promulgating part 1206 in the form of a final
rule and not as a proposed rule, the provisions of the Regulatory
Flexibility Act do not apply. See 5 U.S.C. 601(2), 603(a).
List of Subjects
12 CFR Part 906
Assessments, Federal home loan banks, Government contracts,
Minority businesses, Mortgages, Reporting and recordkeeping
requirements, Women and minority businesses.
12 CFR Part 1206
Assessments, Federal home loan banks, Government Sponsored
Enterprises, Reporting and recordkeeping requirements.
12 CFR Part 1701
Government Sponsored Enterprises, Reporting and recordkeeping
requirements.
Authority and Issuance
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Accordingly, for the reasons stated in the preamble, the Federal
Housing Finance Agency hereby amends chapters IX, XII, and XVII of
Title 12, Code of Federal Regulations as follows:
Chapter IX--Federal Housing Finance Board
PART 906--OPERATIONS
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1. The authority citation for part 906 is revised to read as follows:
Authority: 12 U.S.C. 4516.
Subpart A--[Removed]
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2. Remove and reserve subpart A, consisting of Sec. Sec. 906.1 through
906.2.
Chapter XII--Federal Housing Finance Agency
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3. Add Subchapter A, consisting of part 1206 to read as follows:
Subchapter A--Organization and Operations
PART 1206--ASSESSMENTS
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.
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:
[[Page 56714]]
(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;
(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, 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.
[[Page 56715]]
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).
Chapter XVII--Office of Federal Housing Enterprise Oversight,
Department of Housing and Urban Development
PART 1701--[REMOVED]
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4. Remove part 1701.
Dated: September 25, 2008.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E8-23046 Filed 9-26-08; 4:15 pm]
BILLING CODE 4220-01-P