[Federal Register Volume 75, Number 247 (Monday, December 27, 2010)]
[Rules and Regulations]
[Pages 81096-81110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32350]
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1281
RIN 2590-AA16
Federal Home Loan Bank Housing Goals
AGENCY: Federal Housing Finance Agency.
ACTION: Final rule.
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SUMMARY: Section 1205 of the Housing and Economic Recovery Act of 2008
(HERA) amended the Federal Home Loan Bank Act (Bank Act) by adding a
new section 10C(a) that requires the Director of the Federal Housing
Finance Agency (FHFA) to establish housing goals with respect to the
Federal Home Loan Banks' (Banks) purchase of mortgages, if any. Section
10C(b) provides that the Banks' housing goals are to be consistent with
the housing goals established by FHFA for the Federal National Mortgage
Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation
(Freddie Mac) (collectively, the Enterprises) under sections 1331
through 1334 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (Safety and Soundness Act), as amended by HERA,
taking into consideration the unique mission and ownership structure of
the Banks.
To implement section 10C, FHFA is adopting a final rule that is
substantially the same as the proposed rule published by FHFA for
notice and comment. The final rule establishes three single-family
owner-occupied purchase money mortgage goals and one single-family
refinancing mortgage goal applicable to the Banks' purchases of single-
family owner-occupied mortgages, if any, under their Acquired Member
Assets (AMA) programs, consistent with the single-family housing goals
for the Enterprises. A Bank will be subject to the housing goals if its
AMA-approved mortgage purchases in a given year exceed a volume
threshold of $2.5 billion.
DATES: This rule is effective January 26, 2011.
FOR FURTHER INFORMATION CONTACT: Brian Doherty, Acting Senior Associate
Director, (202) 408-2991, Charles E. McLean, Associate Director, (202)
408-2537, or Rafe R. Ellison, Senior Program Analyst, (202) 408-2968,
Office of Housing and Community Investment, 1625 Eye Street, NW.,
Washington, DC 20006. (These are not toll-free numbers.) For legal
matters, contact Kevin Sheehan, Attorney, (202) 414-8952, or Sharon
Like, Managing Associate General Counsel, (202) 414-8950, Office of
General Counsel, Federal Housing Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. (These are not toll-free numbers.)
The telephone number for the Telecommunications Device for the Hearing
Impaired is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
A. Federal Home Loan Bank System
The Federal Home Loan Bank System (System) was created by the Bank
Act to support mortgage lending and related community investment. See
12 U.S.C. 1421 et seq. The System is composed of 12 Banks with more
than 8,000 member financial institutions, and the System's fiscal
agent, the Office of Finance. The Banks fulfill their statutory mission
primarily by providing secured loans (called advances) to their
members. The Bank Act provides the Banks explicit authority to make
secured advances. 12 U.S.C. 1430(a). Advances provide members with a
source of funding for mortgages and asset-liability management,
liquidity for a member's short-term needs, and additional funds for
housing finance and community investment. Advances are collateralized
primarily by residential mortgage loans and government and agency
securities. 12 U.S.C. 1430(a)(3). Community financial institutions
(CFIs) (i.e., members with average total assets of less than $1 billion
(as adjusted annually for inflation)) may also pledge small business,
small agriculture or community development loans as collateral for
advances. 12 U.S.C. 1430(a)(3)(E).
Consolidated obligations, consisting of bonds and discount notes,
are the principal source for the Banks to fund advances and
investments. The Office of Finance issues all consolidated obligations
on behalf of the 12 Banks. Although each Bank is primarily liable for
the portion of consolidated obligations corresponding to the proceeds
received by that Bank, each Bank is also jointly and severally liable
with the other eleven Banks for the payment of principal of, and
interest on, all consolidated obligations. See 12 CFR 966.9.
B. Bank AMA Programs
In July 2000, the Federal Housing Finance Board (FHFB) adopted a
final regulation authorizing the Banks to establish Acquired Member
Assets (AMA) programs. See 12 CFR part 955. A Bank may participate in
an AMA program at its discretion; FHFA does not have the authority to
compel a Bank to engage in any mortgage purchase activities. Each Bank
must receive approval from FHFA pursuant to the requirements for new
business activities in order to establish an AMA program. See 12 CFR
part 980. A majority of the Banks have implemented AMA programs
pursuant to the AMA approval authority.
In order for a Bank to acquire a mortgage loan under an AMA
program, the loan must meet the requirements set forth under a three-
part test established by the regulation. The three-part test consists
of: A loan type requirement; a member or housing associate nexus
requirement; and a credit risk-sharing requirement. 12 CFR 955.2. The
AMA regulation generally authorizes the Banks to purchase conforming
whole loans on single-family residential real property not more than 90
days delinquent. In addition, the Banks are authorized to purchase
conforming whole loans on single-family residential real property
regardless of delinquency status if the loan is insured or guaranteed
by the U.S. government, although such loans are not eligible to be
counted toward the Enterprises' housing goals, as provided in the
Safety and Soundness Act.\1\ The Banks acquire AMA from their
participating members
[[Page 81097]]
through either a purchase or funding transaction. The Banks are not
authorized under the AMA programs to securitize the mortgages they
purchase.
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\1\ See 12 U.S.C. 4562. For that reason, consistent with the
proposed rule, the final rule provides that such loans are not
eligible to be counted toward the Banks' housing goals either. The
AMA regulation also authorizes the Banks to purchase other real
estate-related collateral, including: second liens and commercial
real estate loans; small business, small farm and small agri-
business loans; whole loans secured by manufactured housing
regardless of whether the housing qualifies as residential real
property; and state and local housing finance agency bonds, subject
to prior new business activity approval by FHFA under 12 CFR part
980. See 12 CFR 955.2(a).
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To date, FHFA has approved two AMA programs--the Mortgage
Partnership Finance (MPF) program and the Mortgage Purchase Program
(MPP)--that authorize the Banks to purchase only eligible single-
family, fixed-rate mortgages, including manufactured housing loans,
from participating financial institution (PFI) members. The Banks are
not approved to purchase any other types of mortgages under the AMA
programs, including mortgages secured by multifamily properties. In
operation, the Banks have limited their AMA programs to purchasing
conforming, conventional and government-insured or -guaranteed fixed-
rate whole first mortgages on single-family residential property with
maturities ranging from 5 to 30 years. Banks have also purchased
participations in AMA-approved loan pools after the original Bank
acquired the loans. As of June 30, 2010, the combined value of the AMA
mortgage loans in the 12 Banks' portfolios was $67 billion,
representing approximately seven percent of the Banks' total combined
assets. In contrast, the Banks' outstanding advances, their primary
business line, totaled $540 billion as of June 30, 2010, representing
58 percent of the Banks' total combined assets.\2\
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\2\ See ``Federal Home Loan Banks Second Quarter 2010 Combined
Financial Report, Combined Statement of Condition,'' at 4.
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The MPF and MPP programs are designed such that the Banks manage
the interest-rate risk and the PFI assumes a substantial portion of the
risks associated with originating the mortgage, particularly the credit
risk. The AMA regulation requires that PFIs provide credit enhancement
to give the mortgages the Banks purchase the credit quality equivalent
to an instrument rated at least investment grade (the fourth highest
credit rating category or triple-B), although the approved AMA programs
require PFIs to enhance the loans to the second highest investment
grade (double-A). 12 CFR 955.3. The PFI may provide this credit
enhancement through various means, such as establishing a risk account
to cover losses in excess of a borrower's equity and primary mortgage
insurance on mortgages purchased by a Bank, accepting direct liability
to pay credit losses up to a specified amount, or entering into a
contractual obligation to provide supplemental mortgage guaranty
insurance.
As previously noted, advances remain the core business activity of
the Banks and a principal means by which they fulfill their mission.
Participation in an AMA program is elective. The acquisition of AMA has
presented certain risk management challenges for some Banks. The AMA
are long-term, fixed-rate loans, and the portfolio requires careful
attention to interest rate risk management in order to match the
duration of assets and liabilities and to adjust for loan prepayments.
The Banks must also competitively price their product in the market
without eroding their own financial interest. Given these challenges
and in light of recent interest rate and earnings volatility, several
Banks have scaled down their purchases of AMA and returned to their
core products. After peaking in 2003, when the Banks purchased over
$91.2 billion in AMA, annual AMA purchases have steadily declined to an
annualized average of about $6.7 billion during the period between 2006
and 2009. Several Banks either have stopped accepting additional master
commitments to purchase AMA from their members or no longer accept
delivery. In 2007, 2008 and 2009, the principal pay-down and maturities
of AMA held for portfolio were greater than purchases and funding of
new loans held for portfolio.\3\
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\3\ See ``Federal Home Loan Banks Combined Financial Report for
2008'' at 78-80, and ``Federal Home Loan Banks Combined Financial
Report for 2009'' at 55-56.
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C. Bank Housing Goals Statutory Provisions
Section 10C(a) of the Bank Act, as amended by HERA, requires the
Director of FHFA to ``establish housing goals with respect to the
purchase of mortgages, if any, by the [Banks],'' which ``shall be
consistent with the goals established under sections 1331 through 1334
of the [Safety and Soundness Act, as amended].'' 12 U.S.C. 1430c(a).
Section 10C(b) provides that, in establishing the goals for the Banks,
``the Director shall consider the unique mission and ownership
structure of the [Banks].'' 12 U.S.C. 1430c(b). In addition, section
10C(c) provides that, ``to facilitate an orderly transition,'' the
Director shall establish interim target goals for the purchase of
mortgages by the Banks for the calendar years 2009 and 2010. 12 U.S.C.
1430c(c). Section 10C(d) provides that the monitoring and enforcement
requirements of section 1336 of the Safety and Soundness Act shall
apply to the Banks in the same manner and to the same extent as they
apply to the Enterprises. 12 U.S.C. 1430c(d). Section 10C(e) requires
the Director to annually report to Congress on the performance of the
Banks in meeting the housing goals under section 10C. 12 U.S.C.
1430c(e).
Sections 1331 through 1333 of the Safety and Soundness Act, as
amended by HERA, require the Director of FHFA to establish new housing
goals effective for 2010 and beyond for the Enterprises. The new
Enterprise housing goals include four goals for conventional conforming
single-family owner-occupied housing, one multifamily special
affordable housing goal, and one multifamily special affordable housing
subgoal. See 12 U.S.C. 4561, 4563(a)(2). The single-family housing
goals target purchase money mortgages for low-income families,\4\
families that reside in low-income areas,\5\ and very low-income
families,\6\ and refinancing mortgages for low-income families. See 12
U.S.C. 4562. The multifamily special affordable housing goal targets
multifamily housing affordable to low-income families, and the
multifamily special affordable housing subgoal targets multifamily
housing affordable to very low-income families. See 12 U.S.C. 4563. In
a separate rulemaking, FHFA has published in the Federal Register a
final rule for the new housing goals for the Enterprises for 2010 and
2011 pursuant to the requirements of sections 1331 through 1333 of the
Safety and Soundness Act, as amended. 75 FR 55892 (Sept. 14, 2010).
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\4\ ``Low-income'' is defined as income not in excess of 80
percent of area median income. See 12 U.S.C. 4502(14).
\5\ ``Families in low-income areas'' is defined to include
families living in census tracts where the median income does not
exceed 80 percent of the area median income and families with
incomes not in excess of the area median income that either live in
a minority census tract or in a designated disaster area. See 12
U.S.C. 4502(28).
\6\ ``Very low-income'' is defined as income not in excess of 50
percent of area median income. See 12 U.S.C. 4502(24).
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D. Banks' and Enterprises' Differences
Section 1313 of the Safety and Soundness Act, as amended, 12 U.S.C.
4513(f), requires the Director of FHFA to consider the differences
between the Banks and the Enterprises whenever promulgating regulations
that affect the Banks. In preparing the final rule, pursuant to section
1313, the Director considered the differences between the Banks and the
Enterprises with respect to the Banks' cooperative ownership structure,
mission of providing liquidity to members, affordable housing and
community development mission, capital structure, and joint and several
liability, and determined that the final rule is appropriate. As
described below, there are significant differences between the
Enterprise housing goals and the Bank housing goals--including
[[Page 81098]]
establishing a volume threshold for the Banks to avoid adverse impact
on Bank AMA programs, particularly with respect to CFIs that are PFIs--
that recognize the significant differences between the Banks'
businesses and purposes and those of the Enterprises.
Each Bank is a cooperative owned by financial institution members
that act as both owners and customers of the cooperative. Members, as
owners, are entitled to receive shares of the cooperative's earnings
and access to the cooperative's products and services, including the
AMA programs. A Bank is authorized to serve only members of its
cooperative, and, as discussed above, its primary business is providing
advances to its members.
Fannie Mae and Freddie Mac have been owned by investors through
their holdings of preferred or common stock shares since 1968 and 1989,
respectively. An Enterprise's primary business is securitizing
mortgages originated by financial institutions, and guaranteeing the
timely payment of principal and interest on the mortgage-backed
securities (MBS). The Enterprises also purchase mortgages for their
mortgage portfolios. FHFA has instructed the Enterprises to
significantly reduce the size of their mortgage portfolios over time.
The Banks are restricted to purchasing loans from their members, most
of which are regulated depositories. By contrast, the Enterprises have
access to a broad, nationwide network of financial institutions from
which they purchase mortgages. Also, unlike the Banks, for which
participation in the AMA is an elective activity, the fundamental
statutory purpose of the Enterprises is to bring stability in the
secondary market for residential mortgages by purchasing and making
commitments to purchase residential mortgages. See 12 U.S.C. 1451 note;
12 U.S.C. 1716.
The Banks' and Enterprises' different ownership structures and
associated statutory restrictions in the Bank Act and the Federal
National Mortgage Association Charter Act and the Federal Home Loan
Mortgage Corporation Act (together, the Charter Acts), respectively,
have a significant impact on their respective mortgage purchase
activities. The Enterprises' mortgage purchase activities are
substantially greater than that of the Banks. In calendar year 2009,
the Banks' combined number of single-family mortgage purchases was
slightly over 48,000, while Fannie Mae purchased approximately 3.51
million single-family mortgages and Freddie Mac purchased approximately
2.42 million single-family mortgages. The disparity between the Banks'
and Enterprises' mortgage purchase businesses was great even during the
peak years of the AMA programs. In 2003, the Banks purchased
approximately 606,000 single-family mortgages, which was only 4.3
percent of the approximately 14.02 million single-family mortgages
purchased by the Enterprises in that year (see Figure 1).
[GRAPHIC] [TIFF OMITTED] TP27DE10.000
II. Proposed Rule
On May 28, 2010, FHFA published in the Federal Register a proposed
rule to establish new housing goals for the Banks. The 45-day comment
period closed July 12, 2010. See 75 FR 29947 (May 28, 2010). FHFA
received a total of 9 comment letters on the proposed rule. Five of the
comment letters were from Banks, one was from a not-for-profit
organization, two were from trade
[[Page 81099]]
associations, and one was from a corporation.
FHFA has considered all of the comments on the proposed rule and
has determined to adopt a final rule that is substantially the same as
the proposed rule. The comments are discussed below in the Analysis of
Final Rule section. Comments that raised issues beyond the scope of the
proposed rule are not addressed in this final rule, but may be
considered by FHFA at a future date.
III. Applicability of Bank Housing Goals to 2011 and Beyond
HERA requires FHFA to establish 2009 and 2010 interim target
housing goals for the Banks that facilitate an orderly transition and
are consistent with those of the Enterprises. In order to facilitate an
orderly transition, the final rule establishes housing goals for 2011
and beyond. The Banks' unique ownership structure and mission is such
that FHFA needed to add criteria to the Bank housing goals that are not
necessary for those of the Enterprises, and FHFA required additional
time to develop those criteria. The Banks' administrative and
monitoring challenges will be reduced by enabling the Banks to
establish policies and procedures to meet the housing goals
requirements with the knowledge that these requirements will not be
changed the following year. FHFA believes this approach will facilitate
an orderly transition to housing goals.
IV. Summary of Final Rule
A. Market-Based Housing Goals
Consistent with the proposed rule, the final rule establishes
market-based single-family housing goals for the Banks in a manner
largely consistent with the market-based single-family housing goals
for the Enterprises. Separate goals are established for AMA-approved
mortgages on owner-occupied single-family housing. The goals for
purchase money mortgages separately measure performance on purchase
money mortgages for low-income families, for families in low-income
areas, and for very low-income families. The goal for refinancing
mortgages measures performance on refinancing mortgages for low-income
families.
The final rule does not establish benchmark levels to measure the
Banks' housing goals performance. The Banks' performance under the
housing goals will be measured relative to the actual goals-qualifying
shares of the district-level primary mortgage market during the year in
their districts. FHFA will calculate the actual goals-qualifying shares
of the market using all mortgages originated in the geographic
boundaries of each Bank district (meaning that the properties securing
the mortgages are located in the district), including mortgages
originated both by members and non-members.
A Bank meets a housing goal if its annual performance meets or
exceeds the actual share of the market in that district that fits the
criteria for a particular housing goal for that year. A Bank fails to
meet a housing goal if it falls short of the actual market share for
that goal in that year. All mortgages purchased by a Bank that meet the
requirements of the final rule will count toward the Bank's goal
performance, regardless of where the properties securing the mortgages
are located, but the market share against which the Bank's performance
will be evaluated will be the market share of mortgages secured by
properties located in the district, as described above. The housing
goals do not apply to an individual Bank unless it has exceeded the
$2.5 billion volume threshold.
B. Volume Threshold
Consistent with the proposed rule, the final rule establishes a
dollar volume threshold of $2.5 billion that a Bank's total unpaid
principal balance (UPB) of AMA-approved mortgage purchases in a given
year must exceed before the Bank is subject to the housing goals. The
volume threshold recognizes the Banks' unique mission and ownership
structure and the current status of the AMA programs, specifically,
their mission to provide liquidity to their members.
V. Analysis of Final Rule
A. Definitions--Sec. 1281.1
The final rule sets forth definitions applicable to the Bank
housing goals provisions. A number of the definitions are the same as
those applicable to the Enterprise housing goals, and other definitions
were modified to reflect their applicability to the Banks' AMA
programs.
``Designated disaster area.'' The definition of ``families in low-
income areas'' includes families with incomes at or below 100 percent
of area median income (AMI) who reside in ``designated disaster
areas.'' The final rule defines ``designated disaster area'' as any
census tract that is located in a county designated by the Federal
Government as adversely affected by a declared major disaster
administered by the Federal Emergency Management Agency (FEMA), where
individual assistance payments were authorized by FEMA. In order to
remain consistent with the revised definition in the final 2010-2011
Enterprise housing goals rule, the final Bank housing goals rule
definition does not include the proposed requirement that average
damage severity, as reported by FEMA, exceed $1,000 per household in a
census tract.
Disaster areas are declared when an area is adversely affected by
some unforeseen event. However, not all disasters impact housing to the
same degree, and the severity of the impact varies within the declared
area. Presidential Major Disaster Declarations are defined by FEMA at
the county level in the area affected by the major disaster and can be
declared to be eligible for public assistance, individual assistance,
or both. Public assistance is available to local governments for the
repair, replacement, or clean-up of public infrastructure. Individual
assistance is broken down further into two categories, housing needs
and ``other than housing needs.'' \7\ Housing needs include repair,
replacement, and construction of homeowner residences. Consistent with
the proposed rule and with the Community Reinvestment Act (CRA), the
final rule limits the definition of ``designated disaster areas'' to
those counties eligible for individual assistance.
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\7\ Federally declared disaster areas are managed by FEMA and
can be tracked at FEMA's Web site. See http://www.fema.gov/news/disasters.fema.
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For purposes of complying with CRA, regulators have made the
determination that ``[e]xaminers will consider institution activities
related to disaster recovery that revitalize or stabilize a designated
disaster area for 36 months following the date of designation. Where
there is a demonstrable community need to extend the period for
recognizing revitalization or stabilization activities in a particular
disaster area to assist in long-term recovery efforts, this time period
may be extended.'' \8\ To accommodate the Banks' business planning
requirements, for purposes of the low-income areas housing goal, the
final rule, consistent with the proposed rule, will treat a designated
disaster area as effective beginning on the January 1 after the FEMA
designation of the county and continuing through December 31 of the
third full calendar year following the FEMA designation. If data are
available in a particular case to support treatment as a designated
disaster area from an earlier date or for a longer period of
[[Page 81100]]
time, FHFA may provide for such treatment by notice to the Banks.
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\8\ The Department of the Treasury, the Federal Reserve Board
and the Federal Deposit Insurance Corporation, Community
Reinvestment Act; Interagency Questions and Answers Regarding
Community Reinvestment; Notice, 74 FR 498, 509 (Jan. 6, 2009).
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``Families in low-income areas.'' Consistent with the proposed
rule, the definition of ``families in low-income areas'' in the final
rule includes families with incomes at or below 100 percent of AMI who
reside in ``minority census tracts,'' which is defined by the Safety
and Soundness Act to mean a census tract that has a minority population
of at least 30 percent and a median family income of less than 100
percent of AMI. 12 U.S.C. 4502(29). In addition, the definition of
``families in low-income areas'' includes families with incomes at or
below 100 percent of AMI who reside in ``designated disaster areas.''
``Mortgage.'' Consistent with the proposed rule and the final
Enterprise 2010-2011 housing goals rule, the definition of ``mortgage''
in the final rule does not include personal property manufactured
housing loans. Therefore, any purchases of personal property
manufactured housing loans will not qualify for credit under the Bank
housing goals.
``Mortgage purchase.'' Consistent with the proposed rule, the final
rule defines ``mortgage purchase'' as a transaction in which a Bank
bought or otherwise acquired a mortgage. The Banks commented that the
phrase ``otherwise acquired a mortgage'' is overly broad and could be
read to include the Banks' Affordable Housing Program (AHP) and
collateral received from members. The Banks requested that FHFA clarify
the definition to mean a transaction in which a Bank bought or
otherwise acquired a mortgage pursuant to the Bank's authority under
the AMA regulation. The final rule does not limit the definition of
``mortgage purchase'' to mean only purchases of AMA-approved mortgages,
because the types of mortgage purchases that are covered by the Bank
housing goals are set out in Sec. 1281.11. That section provides that
the Bank housing goals are limited to purchases of AMA-approved
mortgages.
``Refinancing mortgage.'' Consistent with the final Enterprise
2010-2011 housing goals rule, the definition of ``refinancing
mortgage'' in the final Bank housing goals rule provides that changes
to a loan as a result of a workout agreement generally will not be
treated as a separate refinancing mortgage. The proposed Bank housing
goals rule did not address workout agreements in the definition
``refinancing mortgage,'' but the provision is included in the final
rule to maintain consistency with the long-standing definition of
``refinancing'' under the Enterprise housing goals.
B. Housing Goals--Proposed Sec. Sec. 1281.10 and 1281.11
General. Consistent with the proposed rule, Sec. 1281.10 of the
final rule provides an overview of the contents of this subpart. FHFA
will evaluate Bank performance under the housing goals established for
2010 on a calendar year basis.
Volume Threshold. Consistent with the proposed rule, Sec.
1281.11(a) of the final rule establishes a volume threshold that will
trigger application of the housing goals to a Bank. Specifically, a
Bank that in a calendar year purchased AMA-approved mortgages with a
total UPB greater than $2.5 billion will be subject to the housing
goals for that year, a threshold that FHFA selected as one which would
result in goals being applied to substantial AMA programs, of a size
that a number of Banks have operated in the past, while enabling small
programs, which might serve as mortgage sales outlets for CFIs, to
operate without compliance burdens that might cause them to be
abandoned. To illustrate the magnitude of this volume threshold, it is
currently equal to approximately 0.25 percent of the overall single-
family market, which equaled $986 billion (approximately $1.0
trillion). (FHFA arrived at this estimate of the size of the market by
using 2008 HMDA mortgage origination data to calculate the total UPB of
conforming, first lien mortgages originated in 2008 that were secured
by owner-occupied, single-family residences. Mortgages for home
improvement and Home Ownership and Equity Protection Act (HOEPA)
mortgages were excluded to be consistent with the market estimate
approach for the Enterprise housing goals.) Looking at this threshold
another way, assuming that the average UPB of the mortgages a Bank
purchases equals $200,000, a Bank would need to purchase only 12,500
mortgages in a given year to meet the volume threshold. In FHFA's view,
below this threshold it would be challenging for Banks to ensure that
the small numbers of AMA mortgages purchased--in transactions that the
Banks do not themselves initiate--are representative of the market and
include sufficient affordable mortgages to meet housing goals.
FHFA requested comment on whether a volume threshold should apply,
whether the proposed volume threshold of $2.5 billion is appropriate,
whether a higher or lower threshold should apply, and whether the
volume threshold alternatives discussed in the proposed rule or any
other alternatives might be used. The Banks recommended establishing a
volume threshold at $5.0 billion, or on a sliding scale up to $5
billion, if the Bank met specified qualitative factors that serve the
Banks' housing mission, such as a Bank's purchase of Federal Housing
Administration (FHA) or U.S. Department of Veterans Affairs (VA)
mortgages and its use of Bank AHP funds in conjunction with AMA
mortgage purchases. The Banks stated that applying a higher threshold
to Banks that met such qualitative measures would encourage the Banks
to be accountable to their housing mission. The Banks also recommended
that mortgages purchased from CFIs be excluded when determining whether
a Bank exceeded the volume threshold. Finally, the Banks commented that
because a Bank may not know until the fourth quarter whether it will
exceed the volume threshold that year, the housing goals should apply
to a Bank only in the year following the year for which the Bank
exceeded the volume threshold.
A trade association recommended establishing a volume threshold of
6,000 AMA-approved mortgages purchased annually. Assuming that the
average UPB of the mortgages a Bank purchases equals $200,000, the
volume threshold would be equivalent to $1.2 billion. A not-for-profit
organization recommended that there be no volume threshold.
FHFA has considered the comments on the proposed $2.5 billion
volume threshold and concluded that this volume threshold will
adequately balance the Banks' missions to support affordable housing
and to provide liquidity to CFIs. The volume threshold is intended in
part to ensure that Banks with significant AMA volume in any year are
subject to the housing goals. For that reason, the Bank housing goals
will apply in the same calendar year for which a Bank exceeded the
volume threshold. In determining whether the proposed $2.5 billion is
an appropriate level for the volume threshold, FHFA considered the
volume of mortgages purchased by the Banks over the past decade. From
2002 to 2004, when the Banks had their largest presence in the national
market, a number of Banks had annual volumes of AMA-approved mortgages
greater than $2.5 billion: seven Banks in 2002, eight Banks in 2003 and
four Banks in 2004. A significant percentage of Banks' annual volume of
AMA-approved mortgage purchases exceeded $5.0 billion in 2002 and 2003:
four Banks in 2002 and seven Banks in 2003. Annual volumes of AMA-
approved mortgages were significantly lower from 2005 to 2009.
[[Page 81101]]
Although a few Banks had annual volumes exceeding $2.5 billion during
that period, none of the Banks exceeded an annual volume of $5.0
billion. (See Table 1.)
Based on this analysis of the volume of the Banks' AMA-approved
mortgage purchases, a volume threshold of $2.5 billion is mid-way
between the higher volume threshold of $5.0 billion and housing goals
that would apply without regard to the volume of mortgages purchased by
the Bank. Increasing the volume threshold above $2.5 billion would
unnecessarily reduce the likelihood that a Bank would be subject to
housing goals in the future and would not meet the intent of Congress
that the Banks be subject to housing goals, as reflected in HERA.
[GRAPHIC] [TIFF OMITTED] TP27DE10.001
The volume threshold is also intended to ensure that Banks with a
relatively low annual volume of purchases of AMA-approved mortgages,
i.e., $2.5 billion or less, can continue to serve CFIs without being
subject to the housing goals. Several Banks offer their AMA programs as
a service to CFIs, which is consistent with their mission to provide
liquidity to their members. FHFA set the volume threshold at an amount
that would ensure that the housing goals would not cause the Banks that
offer AMA programs primarily to service CFIs to discontinue their
programs. The AMA programs are an important source of liquidity for
such CFIs, and the discontinuance of an AMA program could adversely
impact CFIs, such as those in rural areas, that may have limited or no
access to the secondary market because of the higher per-mortgage sales
cost associated with delivering a relatively small number of mortgages
to purchasers, or the inability of these CFIs to meet purchasers'
mortgage servicing requirements. Because the volume threshold already
limits the impact of the housing goals on a Bank with an AMA program
focused on its small members, the final rule does not exclude mortgages
purchased from CFIs from counting for purposes of the volume threshold.
Market-Based Housing Goals. Consistent with the proposed rule,
Sec. 1281.11(b) of the final rule provides that compliance with the
housing goals will be measured by comparing a Bank's performance with
the actual goals-qualifying shares of the primary market during the
year in the Bank's district. Under this retrospective, market-based
approach, FHFA will calculate the actual goals-qualifying shares of the
district-level primary mortgage market during the year using all
mortgages originated in the geographic boundaries of each Bank district
(meaning that the properties securing the mortgages are located in the
district), including mortgages originated both by members and non-
members. The Enterprise housing goals rule includes both this market-
based approach and specific benchmark housing goal levels for the
Enterprises. Under the Bank housing goals rule, a Bank's performance
will not be measured against specific benchmark levels. Several
provisions in the Enterprise housing goals rule that relate to the
benchmark housing goal levels have been omitted from the Bank housing
goals rule as unnecessary in light of the retrospective, market-based
approach.
As noted in the proposed rule, FHFA believes that the advantages of
comparing the Bank's performance to actual market performance outweigh
the disadvantages. A more detailed discussion of the market-based
approach is included in the final Enterprise 2010-2011 housing goals
rule. See 75 FR at 55896-55898. The market size analysis used to
establish the benchmark levels for the Enterprise housing goals does
not reflect differences between the various Bank districts. The
difficulties in accurately predicting the size of the market for each
housing goal in each Bank district make it impractical to set
meaningful annual benchmark levels for each Bank.
A disadvantage of the market-based approach is that public
information on the goal-qualifying shares of the single-family primary
mortgage market is not available until the release of Home Mortgage
Disclosure Act (HMDA) data in late summer of the following year.
However, a Bank that is subject to the housing goals will be active in
the mortgage market in its district and hence positioned to understand
how its performance is likely to compare to the overall market in its
district.
In the proposed rule, FHFA discussed other possible alternatives
for measuring market size that had been considered and rejected. The
Banks recommended using a market measurement that is limited to
mortgages that are similar to the types of mortgages a Bank might
purchase under its AMA program, namely, prime, fixed rate, fully
amortizing mortgage loans that are originated by regulated depository
institutions in the member's district and that are intended for sale in
the secondary market. However, FHFA has determined that a more
inclusive measurement of the market will provide a better basis for
evaluating the extent
[[Page 81102]]
to which a Bank's purchases under its AMA program address mortgage
credit needs in the Bank's district.
The Banks also recommended that mortgages purchased from CFIs be
excluded from consideration under the Bank housing goals because such
mortgages are not represented in the HMDA data used to measure the size
of the market. The Banks recommended that such loans also be excluded
when determining whether a Bank exceeded the volume threshold and when
measuring a Bank's actual performance under the housing goals. The
final rule does not exclude mortgages purchased from CFIs from
consideration under the housing goals. As discussed above, the volume
threshold already limits the impact of the housing goals on a Bank with
an AMA program focused on its small members. In addition, removing all
mortgages purchased from CFIs from consideration under the housing
goals would lead to an inaccurate measure of the extent to which a
Bank's purchases of AMA-approved mortgages meet the housing goals.
Consistent with the proposed rule, the final rule does not
establish benchmark levels to measure the Banks' performance under the
housing goals. FHFA requested comment on whether it would be
appropriate to establish benchmark levels as a means of measuring the
Banks' housing goals performance, in addition to measuring performance
based on a Bank's actual share of goal-qualifying mortgages relative to
its district-level market share, and if so, whether it would be
appropriate to set benchmark levels for the Bank housing goals equal to
the benchmark levels for the Enterprise housing goals. The comments did
not specifically address establishing benchmark levels for the Banks,
although a trade association suggested that the Banks should be
encouraged to exceed the market share.
FHFA has concluded that it would be inappropriate to set benchmark
levels for the Banks equal to the benchmark levels for the
corresponding Enterprise housing goals, because the Enterprise
benchmarks are based on national mortgage market estimates and no Bank
has an AMA program with a national scope. In addition, FHFA has
concluded that setting benchmark levels based on district-level market
size estimates would be inappropriate because the market sizes cannot
be reliably estimated in advance.
Section 1281.11(b) establishes criteria for determining the size of
the market for each Bank district based on HMDA data on mortgages
secured by property located in that Bank district. The criteria for
establishing the size of the market reflect the types of mortgages that
will count for purposes of the housing goals and that are typically
eligible for purchase by a Bank. The criteria are the same as those in
the proposed rule except for the definition of higher-priced loan to be
used in the measurement of market size. The proposed rule would have
excluded from the measurement of the market any mortgages with rate
spreads of 300 basis points or more above the applicable Average Prime
Offer Rate (APOR) reported under HMDA. Consistent with the definition
in the final Enterprise 2010-2011 housing goals rule, for purposes of
measuring the market for each Bank district, mortgages with rate
spreads of 150 basis points above the applicable APOR reported under
HMDA will be excluded. The 150 basis point rate spread is consistent
with the definition of higher-priced loan used by the Federal Reserve
Board.
Bank Housing Goals. Consistent with the proposed rule, Sec.
1281.11(c) through 1281.11(f) of the final rule establishes four
single-family housing goals applicable to any Bank that exceeds the
volume threshold in a particular year. Goals are established for
purchase money mortgages for low-income families, for families in low-
income areas, and for very low-income families. In addition, a goal is
established for refinancing mortgages for low-income families. The
single-family housing goals will be based on an evaluation of the
Bank's performance relative to the market for each housing goal in each
year. The Banks have not been approved to purchase multifamily loans
under the AMA programs. Accordingly, unlike the new Enterprise housing
goals, the Bank housing goals do not include a multifamily special
affordable housing goal or multifamily special affordable housing
subgoal.
Two commenters recommended expanding the coverage of the Bank
housing goals beyond the scope of the Enterprise housing goals. A not-
for-profit organization recommended that FHFA give Bank housing goals
credit for rental units in single-family properties, stating that such
units provide an important source of affordable housing. A trade
association suggested that FHFA consider adding a neighborhood goal for
refinance lending, in addition to the borrower goal. In order to remain
consistent with the Enterprise housing goals, the final rule does not
alter the basic structure of the proposed Bank housing goals. The Bank
housing goals do not include any investor-owned single-family
properties, and they do not provide additional credit for any rental
units in owner-occupied single-family properties. The Bank housing
goals also do not include a separate goal for refinancing mortgages in
low-income areas.
In contrast to the new Enterprise housing goals, the Bank housing
goals also do not include a low-income areas subgoal. Because the Bank
housing goals do not include benchmark levels set prospectively, there
is no need for a separate subgoal to address the unpredictable impact
designated disaster areas may have from year to year.
C. General Counting Requirements--Sec. 1281.12
Consistent with the proposed rule, Sec. 1281.12 of the final rule
sets forth general requirements for the counting of Bank AMA-approved
mortgage purchases toward the achievement of the housing goals.
Performance under the housing goals will be evaluated based on the
percentage of all AMA-approved mortgages on single-family, owner-
occupied properties purchased by a Bank that meet a particular goal.
As proposed, Sec. 1281.12(a) of the final rule provides that
performance under each of the single-family housing goals shall be
measured using a fraction that is converted into a percentage. Neither
the numerator nor the denominator shall include Bank transactions or
activities that are not AMA-approved mortgage purchases as defined by
FHFA or that are specifically excluded as ineligible under Sec.
1281.13(b). The numerator is the number of AMA-approved mortgage
purchases of a Bank in a particular year that finance owner-occupied
single-family properties that count toward achievement of a particular
housing goal. The denominator is the total number of AMA-approved
mortgage purchases of a Bank in a particular year that finance owner-
occupied, single-family properties.
As proposed, Sec. 1281.12(b) of the final rule provides that when
a Bank lacks sufficient data or information, e.g., income of mortgagor,
to determine whether the purchase of a mortgage counts toward
achievement of a particular housing goal, that mortgage purchase shall
be included in the denominator for that housing goal, but may not be
included in the numerator. The Banks may not use missing data
estimation methodologies, as used by the Enterprises, in light of the
complexity of developing an estimation methodology suitable for the
Banks. FHFA invited comment on whether a method for estimating missing
affordability data would be feasible for
[[Page 81103]]
the Bank housing goals but did not receive comments on this issue.
The provisions in Sec. 1281.12(c) through (f), which address
credit toward multiple goals, application of median income, sampling
and newly available data, respectively, are consistent with the
provisions in the proposed rule and the final Enterprise 2010-2011
housing goals rule.
The MPF program allows Banks to purchase a percentage of a mortgage
or mortgage pool initially acquired by another Bank under the program.
As discussed in the proposed rule, for purposes of receiving credit
under one of the housing goals, each mortgage will be assigned to the
Bank that initially acquired the mortgage regardless of whether an
interest in the mortgage was later sold to another Bank.
In September 2008, FHFA approved the Chicago Bank's request to
establish the MPF Xtra program, under which the Bank would buy certain
qualified, conforming mortgages from eligible members for immediate
sale to Fannie Mae. As discussed in the proposed rule, the MPF Xtra
program is not an AMA program authorized under 12 CFR part 955.\9\
Under the MPF Xtra program, the Bank serves essentially as a conduit or
intermediary with respect to the sale of the mortgages to Fannie Mae.
The mortgages may be counted by Fannie Mae toward compliance with its
housing goals. If the mortgages were also to be considered for purposes
of the Bank housing goals, double-counting of the mortgages could
occur. Avoiding double-counting of mortgage purchases is consistent
with the Enterprise housing goals. An Enterprise cannot receive credit
towards a housing goal for a mortgage purchase if the other Enterprise
received credit for that mortgage. Additionally, under the Enterprise
housing goals, credit towards a housing goal is only awarded for a
mortgage where the Enterprise purchases the mortgage or assumes the
credit risks associated with the mortgage. The Bank does not fund MPF
Xtra mortgages or assume any credit risks in MPF Xtra transactions. For
these reasons, under the final rule, mortgages purchased by a Bank
pursuant to the MPF Xtra program will not be considered for purposes of
the Bank housing goals.
---------------------------------------------------------------------------
\9\ In May 2007, FHFB also approved the Atlanta Bank's request
to offer the Global Mortgage Alliance Program (GMAP), under which
the Bank would facilitate the sale of certain qualified conforming
mortgage loans from eligible members to another of its members--
Global Mortgage Alliance, LLC, which would then securitize those
loans. To date, no transactions have occurred under GMAP. The GMAP
is not an AMA program authorized under part 955. Both the MPF Xtra
and GMAP programs were separately authorized under the Banks'
incidental authority contained in sections 11(a) and 11(e)(1) of the
Bank Act. See 12 U.S.C. 1431(a), 1431(e)(1).
---------------------------------------------------------------------------
D. Special Counting Requirements--Sec. 1281.13
Consistent with the proposed rule, Sec. 1281.13 of the final rule
sets forth special counting requirements for the receipt of full,
partial or no credit for a transaction toward achievement of the
housing goals, a number of which are discussed further below.
Section 1281.13(b) specifies the types of transactions that shall
not be counted for purposes of the housing goals and shall not be
included in the numerator or the denominator in calculating a Bank's
performance under the housing goals. The intent of this section is to
specify the counting treatment for transactions in which the Banks are
authorized to engage under the approved AMA programs. The counting
rules do not purport to authorize the purchase of any types of
mortgages, but are intended solely to indicate whether such mortgages
shall receive full, partial or no credit toward the housing goals.
Accordingly, transactions in which the Banks are not authorized to
engage under the approved AMA programs are not included in paragraph
(b). The Bank counting rules differ in some respects from the counting
rules for the Enterprise housing goals. For example, the Banks are not
authorized to purchase private label securities (PLS) under the AMA
programs; therefore it is not necessary to exclude PLS from counting
under the Bank housing goals. On the other hand, while the Banks are
authorized to purchase non-conventional loans under the AMA authority,
such loans are excluded from counting under the Enterprise housing
goals and, therefore, have been excluded from counting under the Bank
housing goals as well.
Section 1281.13(b) of the final rule makes clear that where a
mortgage falls within one of the categories excluded from consideration
under the housing goals, the mortgage shall be excluded even if it
otherwise falls within one of the special counting rules in Sec.
1281.13(c). For example, a non-conventional mortgage that would be
excluded from consideration pursuant to Sec. 1281.13(b)(1) cannot be
counted even if it otherwise counts as a seasoned mortgage under Sec.
1281.13(c)(2).
Home Equity Conversion Mortgages. Section 1281.13(b)(1) of the
final rule excludes the purchases of all non-conventional single-family
mortgages, including Home Equity Conversion Mortgages (HECMs), from
counting towards the Banks' housing goals--that is, such purchases
shall be excluded from both the numerator and denominator in
calculating goal performance. This is consistent with the counting
treatment for the new Enterprise housing goals, as HERA amended section
1332(a) of the Safety and Soundness Act to restrict the Enterprise
single-family housing goals to include only conventional mortgages. See
12 U.S.C. 4562(a).
Mortgages financing secondary residences. Section 1281.13(b)(6) of
the final rule prohibits the counting of mortgage purchases to the
extent they finance any dwelling units that are secondary residences.
This is consistent with the counting treatment for the new Enterprise
housing goals, as HERA amended section 1332(a) of the Safety and
Soundness Act to restrict the Enterprise single-family housing goals to
include only purchases of owner-occupied mortgages. See 12 U.S.C. 4562.
Subordinate liens. Section 1281.13(b)(8) of the final rule excludes
the purchases of subordinate lien mortgages (second mortgages) from
counting towards the Banks' housing goals. HERA amended section 1331 of
the Safety and Soundness Act to provide that the Enterprise single-
family housing goals are limited to purchase money or refinancing
mortgages. See 12 U.S.C. 4561. Consistent with the counting treatment
for the new Enterprise housing goals, the Bank housing goals exclude
home equity loans from counting for purposes of the housing goals. The
Bank housing goals also exclude other subordinate lien mortgages, such
as ``piggy-back'' loans that may be acquired by a Bank along with the
corresponding first lien mortgage. Subordinate lien mortgages are
excluded because it is difficult to determine whether such loans are
purchase money loans or home equity loans, and because first lien
mortgages provide a better measure of a Bank's support for residential
housing.
Previously counted mortgages. Section 1281.13(b)(9) of the final
rule prohibits the counting of mortgages toward performance under the
housing goals if the mortgages have previously been counted for
purposes of the performance of the Bank under the housing goals. In
order to limit excessively burdensome recordkeeping that could result,
the rule makes clear that this limitation only extends back for five
years. Although the Banks have not previously been subject to housing
goals, this language is included for applicability in future years.
Construction-to-permanent loans. Section 1281.13(b)(10) of the
final rule
[[Page 81104]]
excludes purchases of mortgages secured by properties that have not
been approved for occupancy from consideration for purposes of the
housing goals.
Housing goals credit for certain transactions. Section 1281.13(c)
of the final rule provides that certain types of transactions shall be
counted for purposes of the housing goals, including mortgages on
cooperative housing and condominium units, seasoned mortgages, and
refinancing mortgages. Section 1281.13(c) does not include certain
types of transactions that are eligible for housing goals credit under
the Enterprise housing goals, including credit enhancements for goal-
qualifying mortgages, entering into risk sharing agreements with
federal agencies to finance qualifying mortgages, and purchasing
mortgage revenue bonds backed by qualifying mortgages. Such
transactions are not eligible for Bank housing goals credit because of
the more limited scope of the approved AMA programs. Section 1281.13(c)
makes clear that where a transaction falls under more than one of the
special counting rules in Sec. 1281.13(c), all of the applicable
requirements must be satisfied in order for the loan to be counted for
purposes of the housing goals.
HOEPA mortgages and mortgages with unacceptable terms and
conditions. Consistent with the proposed rule, Sec. 1281.13(d) of the
final rule provides that HOEPA mortgages and mortgages with
unacceptable terms and conditions must be counted in the denominator as
mortgage purchases but may not be counted in the numerator, regardless
of whether the mortgages would otherwise qualify based on the
affordability and other counting criteria. This treatment is consistent
with past practice for the Enterprises and with section 1332(i) of the
Safety and Soundness Act, as amended by HERA, which provides that no
credit may be given for mortgages that FHFA determines are
``unacceptable or contrary to good lending practices.'' 12 U.S.C.
4562(i).
The proposed rule defined ``mortgages with unacceptable terms or
conditions'' to include mortgages with excessive fees or interest
rates, as well as mortgages with prepayment penalties, mortgages sold
with prepaid single-premium credit life insurance products, and
mortgages originated using practices that violate fair lending laws or
that are 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.
A trade association commented that FHFA should strengthen the terms
and conditions that constitute unacceptable mortgages, and recommended
the use of Regulation Z and HOEPA rather than interagency guidance to
determine whether a mortgage is eligible to be counted under the
housing goals. The final rule does not change the proposed definition
of ``mortgages with unacceptable terms or conditions.'' While the final
rule specifically references interagency guidance on subprime and
nontraditional loans, FHFA expects the Banks to ensure that mortgage
loans they acquire comply with Regulation Z and HOEPA, as well as any
federal law related to minimum standards for mortgages and predatory
lending. As markets and abusive practices evolve, FHFA may determine
additional terms and conditions to be unacceptable.
FHFA guidance. Section 1281.13(e) of the final rule provides that
FHFA may provide guidance on the treatment of any transactions under
the housing goals. The guidance may be provided in response to a
request from a Bank, or at the initiation of FHFA.
Private label securities. As discussed in the proposed rule,
because FHFA is counting only mortgages purchased through AMA programs
in determining each Bank's housing goal performance, and the Banks are
not authorized to purchase PLS through these programs, PLS will not be
counted in determining a Bank's housing goals performance.
Housing finance agency obligations and other transactions.
Consistent with the proposed rule, the final rule provides that only
mortgages purchased through AMA programs will count in determining each
Bank's housing goal performance. A trade association commenter
recommended giving the Banks housing goals credit for Bank advances and
investments, including transactions such as the purchase of housing
finance agency (HFA) bonds, investment in housing-related bonds and tax
credits, and advances to HFAs. The final rule does not expand the types
of transactions that will receive credit under the housing goals to
include transactions, such as purchases of HFA obligations, that are
not AMA-approved mortgage purchases. Expanding the types of Bank
transactions subject to housing goals beyond AMA-approved mortgage
purchases would impede the ability of the Banks to make an orderly
transition to the housing goals, because it would entail the Banks
collecting information they may not currently collect, and for some
Banks, modifying their activities involving HFAs.
E. Housing Goals Enforcement--Sec. Sec. 1281.14 and 1281.15
Consistent with the proposed rule, Sec. 1281.14 of the final rule
provides that the Director shall determine whether each Bank has
exceeded the volume threshold on an annual basis. For any Bank that has
exceeded the volume threshold, the Director will also determine whether
the Bank has met the housing goals, in accordance with the standards
established under the Safety and Soundness Act, as amended by HERA. If
the Director determines that a Bank has failed to meet any housing
goal, the Director shall provide notice to the Bank in writing of such
preliminary determination.
Consistent with the proposed rule, Sec. 1281.15 of the final rule
includes requirements for submission of a housing plan by a Bank for
failure to meet any housing goal that is determined to be feasible by
FHFA. The requirement to submit a housing plan is at the discretion of
the Director.
F. Reporting Requirements--Sec. Sec. 1281.20 Through 1281.23
As required for the Enterprises, and consistent with the proposed
rule, Sec. Sec. 1281.20 through 1281.23 of the final rule establish
reporting requirements for the Banks with respect to their housing
goals performance. Section 1281.21(a) requires the Banks to collect and
compile computerized loan-level data on each AMA-approved mortgage
purchased, as described in FHFA's Data Reporting Manual (DRM). These
reporting requirements apply to each Bank, regardless of whether in a
particular year the Bank expects to exceed the volume threshold and
thus be subject to the housing goals.
Section 1281.21(b) requires each Bank to submit to the Director, on
a semi-annual basis, a Mortgage Report containing aggregations of the
loan-level mortgage data for year-to-date AMA-approved mortgage
purchases, and year-to-date dollar volume, number of units, and number
of AMA-approved mortgages on owner-occupied properties purchased that
do, and do not, qualify under each housing goal. The loan-level data
that must be reported are currently collected by FHFA on a semi-annual
basis. As advances in technology have made more frequent submissions
less burdensome, FHFA will consider quarterly reporting for the Banks
in future years. Quarterly reporting would be consistent with the
current requirements for the Enterprises. The additional data provided
facilitates
[[Page 81105]]
FHFA's monitoring of Enterprise performance under the housing goals.
The Enterprises are also required to submit Annual Housing Activities
Reports (AHARs) to FHFA. The final rule does not require the Banks to
submit AHARs, but FHFA will consider requiring such reports in the
future.
Consistent with the proposed rule, Sec. 1281.22 of the final rule
requires each Bank to provide to the Director such reports, information
and data as the Director may request from time to time, or as may be
supplemented in the DRM.
As proposed, Sec. 1281.23 of the final rule sets forth the data
integrity process for Bank housing goals data. The final rule requires
the senior officer of each Bank who is responsible for submitting any
report, data or other information for which certification is requested
by the Director, to certify such report, data or information. FHFA will
determine on an annual basis the official housing goals performance
figures for any Bank that is subject to the housing goals, and may
resolve any error, omission or discrepancy by adjusting the Bank's
official housing goals performance figure. If the Director determines
that the year-end data reported by a Bank for a year preceding the
latest year for which data on housing goals performance was reported to
FHFA contained a material error, omission or discrepancy, the Director
may increase the corresponding housing goal for the current year by the
number of mortgages that the Director determines were overstated in the
prior year's goal performance.
FHFA will implement the data integrity process pursuant to its
general regulatory authority over the Banks. FHFA expects that the
Banks will work cooperatively with FHFA to identify and resolve any
discrepancies or errors in the housing goals data reported to FHFA.
VI. Paperwork Reduction Act
The final rule 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.).
VII. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the final
rule under the Regulatory Flexibility Act. The General Counsel of FHFA
certifies that the final rule is not likely to have a significant
economic impact on a substantial number of small business entities
because the regulation is applicable only to the Banks, which are not
small entities for purposes of the Regulatory Flexibility Act.
List of Subjects in 12 CFR Part 1281
Credit, Federal home loan banks, Housing, Mortgages, Reporting and
recordkeeping requirements.
0
Accordingly, for the reasons stated in the preamble, under the
authority of 12 U.S.C. 1430c, FHFA amends chapter XII of title 12 of
the Code of Federal Regulations, by adding new part 1281 to subchapter
E to read as follows:
SUBCHAPTER E--HOUSING GOALS AND MISSION
PART 1281--FEDERAL HOME LOAN BANK HOUSING GOALS
Sec.
Subpart A--General
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.
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 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.
[[Page 81106]]
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 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
[[Page 81107]]
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 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 area
median income.
Subpart B--Housing Goals
Sec. 1281.10 General.
Pursuant to the requirements of the Bank Act, as amended (12 U.S.C.
1430c), this subpart establishes:
(a) Three single-family owner-occupied purchase money mortgage
housing goals, and one single-family refinancing mortgage housing goal;
(b) A volume threshold for the application of the housing goals to
a Bank;
(c) Requirements for measuring performance under the housing goals;
and
(d) Procedures for monitoring and enforcing the housing goals.
Sec. 1281.11 Bank housing goals.
(a) Volume threshold. The housing goals established in this section
shall apply to a Bank for a calendar year only if the unpaid principal
balance (UPB) of the Bank's purchases of AMA-approved mortgages in that
year exceeds $2.5 billion.
(b) Market-based housing goals. A Bank that is subject to the
housing goals shall be in compliance with a housing goal if its
performance under the housing goal meets or exceeds the share of the
market that qualifies for the housing goal. The size of the market for
each housing goal shall be established annually by FHFA for each Bank
district based on data reported pursuant to the Home Mortgage
Disclosure Act for a given year. Unless otherwise adjusted by FHFA, the
size of the market for each Bank district shall be determined based on
the following criteria:
(1) Only owner-occupied, conventional loans secured by property
located in that Bank district shall be considered;
(2) Purchase money mortgages and refinancing mortgages shall be
counted only for the applicable housing goal or goals;
(3) All mortgages flagged as HOEPA loans or subordinate lien loans
shall be excluded;
(4) All mortgages with original principal balances above the
conforming loan limits for single unit properties for the year being
evaluated (rounded to the nearest $1,000) shall be excluded;
(5) All mortgages with rate spreads of 150 basis points or more
above the applicable average prime offer rate as reported in the Home
Mortgage Disclosure Act data shall be excluded; and
(6) All mortgages that are missing information necessary to
determine appropriate counting under the housing goals shall be
excluded.
(c) Low-income families housing goal. For a Bank that is subject to
the housing goals, the percentage share of such Bank's total purchases
of purchase money AMA-approved mortgages on owner-occupied single-
family housing that consists of mortgages for low-income families shall
meet or exceed the share of such mortgages in the market as defined in
paragraph (b) of this section.
(d) Low-income areas housing goal. For a Bank that is subject to
the housing goals, the percentage share of such Bank's total purchases
of purchase money AMA-approved mortgages on owner-occupied single-
family housing that consists of mortgages for families in low-income
areas shall meet or exceed the share of such mortgages in the market as
defined in paragraph (b) of this section.
(e) Very low-income families housing goal. For a Bank that is
subject to the housing goals, the percentage share of such Bank's total
purchases of purchase money AMA-approved mortgages on owner-occupied
single-family housing that consists of mortgages for very low-income
families shall meet or exceed the share of such mortgages in the market
as defined in paragraph (b) of this section.
(f) Refinancing housing goal. For a Bank that is subject to the
housing goals, the percentage share of such Bank's total purchases of
refinancing AMA-approved mortgages on owner-occupied single-family
housing that consists of refinancing mortgages for low-income families
shall meet or exceed the share of such mortgages in the market as
defined in paragraph (b) of this section.
Sec. 1281.12 General counting requirements.
(a) Calculating the numerator and denominator for the housing
goals. Performance under each of the housing goals shall be measured
using a fraction
[[Page 81108]]
that is converted into a percentage. Neither the numerator nor the
denominator shall include Bank transactions or activities that are not
AMA-approved mortgage purchases as defined by FHFA or that are
specifically excluded as ineligible under Sec. 1281.13(b).
(1) The numerator. The numerator of each fraction is the number of
AMA-approved mortgage purchases of a Bank in a particular year that
finance owner-occupied single-family properties that count toward
achievement of a particular housing goal.
(2) The denominator. The denominator of each fraction is the total
number of AMA-approved mortgage purchases of a Bank in a particular
year that finance owner-occupied, single-family properties. A separate
denominator shall be calculated for purchase money mortgages and for
refinancing mortgages.
(b) Missing data or information for the housing goals.--(1) When a
Bank lacks sufficient data or information to determine whether the
purchase of a mortgage originated after 1992 counts toward achievement
of a particular housing goal, that mortgage purchase shall be included
in the denominator for that housing goal and shall not be included in
the numerator for that housing goal.
(2) Mortgage purchases financing owner-occupied single-family
properties shall be evaluated based on the income of the mortgagors and
the area median income at the time the mortgage was originated. To
determine whether mortgages may be counted under a particular family
income level (i.e., low- or very low-income), the income of the
mortgagors is compared to the median income for the area at the time of
the mortgage application, using the appropriate percentage factor
provided under Sec. 1281.1.
(c) Credit toward multiple goals. A mortgage purchase by a Bank in
a particular year shall count toward the achievement of each housing
goal for which such purchase qualifies in that year.
(d) Application of median income. For purposes of determining an
area's median income under Sec. 1281.1, the area is:
(1) The metropolitan area, if the property which is the subject of
the mortgage is in a metropolitan area; and
(2) In all other areas, the county in which the property is
located, except that where the State nonmetropolitan median income is
higher than the county's median income, the area is the State
nonmetropolitan area.
(e) Sampling not permitted. Performance under the housing goals for
each year shall be based on a complete tabulation of mortgage purchases
for that year; a sampling of such purchases is not acceptable.
(f) Newly available data. When a Bank uses data to determine
whether a mortgage purchase counts toward achievement of any housing
goal, and new data is released after the start of a calendar quarter,
the Bank need not use the new data until the start of the following
quarter.
Sec. 1281.13 Special counting requirements.
(a) General. FHFA shall determine whether a Bank shall receive
full, partial, or no credit toward achievement of any of the housing
goals for a transaction that otherwise qualifies under this part.
(b) Not counted. The following transactions or activities shall not
be counted for purposes of the housing goals and shall not be included
in the numerator or the denominator in calculating a Bank's performance
under the housing goals, even if the transaction or activity would
otherwise be counted under paragraph (c) of this section:
(1) Purchases of non-conventional single-family mortgages;
(2) Commitments to buy mortgages at a later date or time;
(3) Options to acquire mortgages;
(4) Rights of first refusal to acquire mortgages;
(5) Any interests in mortgages that the Director determines, in
writing, shall not be treated as interests in mortgages;
(6) Mortgage purchases to the extent they finance any dwelling
units that are secondary residences;
(7) Single-family refinancing mortgages that result from conversion
of balloon notes to fully amortizing notes, if a Bank already owns, or
has an interest in, the balloon note at the time conversion occurs;
(8) Purchases of subordinate lien mortgages (second mortgages);
(9) Purchases of mortgages that were previously counted by a Bank
under any current or previous housing goal within the five years
immediately preceding the current performance year;
(10) Purchases of mortgages where the property has not been
approved for occupancy; and
(11) Any combination of factors in paragraphs (b)(1) through
(b)(10) of this section.
(c) Other special rules. Subject to FHFA's determination of whether
a Bank shall receive full, partial, or no credit for a transaction
toward achievement of any of the housing goals as provided in paragraph
(a) of this section, the transactions and activities identified in this
paragraph (c) shall be treated as mortgage purchases as described. A
transaction or activity that is covered by more than one paragraph
below must satisfy the requirements of each such paragraph. The
mortgages from each such transaction or activity shall be included in
the denominator in calculating a Bank's performance under the housing
goals, and shall be included in the numerator, as appropriate.
(1) Cooperative housing and condominiums. The purchase by a Bank of
a mortgage on a cooperative housing unit (``a share loan'') or a
mortgage on a condominium unit shall be treated as a mortgage purchase
for purposes of the housing goals.
(2) Seasoned mortgages. The purchase of a seasoned mortgage by a
Bank shall be treated as a mortgage purchase for purposes of the
housing goals, except where the Bank has already counted the mortgage
under any current or previous housing goal within the five years
immediately preceding the current performance year.
(3) Purchase of refinancing mortgages. The purchase of a
refinancing mortgage by a Bank shall be treated as a mortgage purchase
for purposes of the housing goals only if the refinancing is an arms-
length transaction that is borrower-driven.
(d) HOEPA mortgages and mortgages with unacceptable terms or
conditions. The purchase by a Bank of HOEPA mortgages and mortgages
with unacceptable terms or conditions, as defined in Sec. 1281.1,
shall be treated as mortgage purchases for purposes of the housing
goals and shall be included in the denominator for each applicable
housing goal, but such mortgages shall not be counted in the numerator
for any housing goal.
(e) FHFA review of transactions. FHFA may determine whether and how
any transaction or class of transactions shall be counted for purposes
of the housing goals. FHFA will notify each Bank in writing of any
determination regarding the treatment of any transaction or class of
transactions under the housing goals.
Sec. 1281.14 Determination of compliance with housing goals; notice
of determination.
(a) Determination of compliance with housing goals. On an annual
basis, the Director shall determine whether each Bank has exceeded the
volume threshold. For each Bank that has exceeded the volume threshold
in a year, the Director shall determine the Bank's performance under
each housing goal.
[[Page 81109]]
(b) Failure to meet a housing goal. If the Director determines that
a Bank has failed to meet any housing goal, the Director shall notify
the Bank in writing of such preliminary determination. Any notification
to a Bank of a preliminary determination under this section shall
provide the Bank with an opportunity to respond in writing in
accordance with the following procedures:
(1) Notice. The Director shall provide written notice to a Bank of
a preliminary determination under this section, the reasons for such
determination, and the information on which the Director based the
determination.
(2) Response period.--(i) In general. During the 30-day period
beginning on the date on which notice is provided under paragraph
(b)(1) of this section, the Bank may submit to the Director any written
information that the Bank considers appropriate for consideration by
the Director in finally determining whether such failure has occurred
or whether the achievement of such goal was feasible.
(ii) Extended period. The Director may extend the period under
paragraph (b)(2)(i) of this section for good cause for not more than 30
additional days.
(iii) Shortened period. The Director may shorten the period under
paragraph (b)(2)(i) of this section for good cause.
(iv) Failure to respond. The failure of a Bank to provide
information during the 30-day period under this paragraph (b)(2), as
extended or shortened, shall waive any right of the Bank to comment on
the proposed determination or action of the Director.
(3) Consideration of information and final determination. (i) In
general. After the expiration of the response period under paragraph
(b)(2) of this section or receipt of information provided during such
period by a Bank, the Director shall issue a final determination on:
(A) Whether the Bank has failed to meet the housing goal; and
(B) Whether, taking into consideration market and economic
conditions and the financial condition of the Bank, the achievement of
the housing goal was feasible.
(ii) Considerations. In making a final determination under
paragraph (b)(3)(i) of this section, the Director shall take into
consideration any relevant information submitted by a Bank during the
response period.
Sec. 1281.15 Housing plans.
(a) Housing plan requirement. If the Director determines that a
Bank has failed to meet any housing goal and that the achievement of
the housing goal was feasible, the Director may require the Bank to
submit a housing plan for approval by the Director.
(b) Nature of plan. If the Director requires a housing plan, the
housing plan shall:
(1) Be feasible;
(2) Be sufficiently specific to enable the Director to monitor
compliance periodically;
(3) Describe the specific actions that the Bank will take to
achieve the housing goal for the next calendar year; and
(4) Address any additional matters relevant to the plan as
required, in writing, by the Director.
(c) Deadline for submission. The Bank shall submit the housing plan
to the Director within 45 days after issuance of a notice requiring the
Bank to submit a housing plan. The Director may extend the deadline for
submission of a plan, in writing and for a time certain, to the extent
the Director determines an extension is necessary.
(d) Review of housing plan. The Director shall review and approve
or disapprove a housing plan as follows:
(1) Approval. The Director shall review each submission by a Bank,
including a housing plan submitted under this section and, not later
than 30 days after submission, approve or disapprove the plan or other
action. The Director may extend the period for approval or disapproval
for a single additional 30-day period if the Director determines it
necessary. The Director shall approve any plan that the Director
determines is likely to succeed, and conforms with the Bank Act, this
part, and any other applicable provision of law.
(2) Notice of approval and disapproval. The Director shall provide
written notice to a Bank submitting a housing plan of the approval or
disapproval of the plan, which shall include the reasons for any
disapproval of the plan, and of any extension of the period for
approval or disapproval.
(e) Resubmission. If the Director disapproves an initial housing
plan submitted by a Bank, the Bank shall submit an amended plan
acceptable to the Director not later than 15 days after the Director's
disapproval of the initial plan; the Director may extend the deadline
if the Director determines an extension is in the public interest. If
the amended plan is not acceptable to the Director, the Director may
afford the Bank 15 days to submit a new plan.
(f) Enforcement of housing plan. If the Director finds that a Bank
has failed to meet any housing goal, and that the achievement of the
housing goal was feasible, and has required the Bank to submit a
housing plan under this section, the Director may issue a cease and
desist order, or impose civil money penalties, if the Bank refuses to
submit such a plan, fails to submit an acceptable plan, or fails to
comply with the approved plan. In taking such action, the Director
shall follow procedures consistent with those provided in 12 U.S.C.
4581 through 4588 with respect to actions to enforce the housing goals.
Subpart C--Reporting Requirements
Sec. 1281.20 General.
This subpart establishes data submission and reporting requirements
to provide the Director with mortgage and other information relating to
the Banks' performance in connection with the housing goals, as
supplemented from time to time in the Banks' Data Reporting Manual
(DRM).
Sec. 1281.21 Mortgage Reports.
(a) Loan-level data elements. To implement the data collection and
submission requirements for mortgage data, and to assist the Director
in monitoring the Banks' housing goal activities, each Bank shall
collect and compile computerized loan-level data on each AMA-approved
mortgage purchase, as described in the DRM. The Director may, from time
to time, issue a list in the DRM specifying the loan-level data
elements to be collected and maintained by the Banks and provided to
the Director. The Director may revise the DRM list by written notice to
the Banks.
(b) Semi-annual Mortgage Reports. Each Bank shall submit to the
Director, on a semi-annual basis, a Mortgage Report. The second semi-
annual Mortgage Report each year shall serve as the annual Mortgage
Report and shall be designated as such. Each Mortgage Report shall
include:
(1) Aggregations of the loan-level mortgage data compiled by each
Bank under paragraph (a) of this section for year-to-date AMA-approved
mortgage purchases, in the format specified in writing by the Director;
(2) Year-to-date dollar volume, number of units, and number of AMA-
approved mortgages on owner-occupied properties purchased by each Bank
that do, and do not, qualify under each housing goal as set forth in
this part; and
(3) Year-to-date computerized loan-level data consisting of the
data elements required under paragraph (a) of this section.
(c) Timing of Reports. Each Bank shall submit its first semi-annual
Mortgage Report within 45 days of the end of the
[[Page 81110]]
second quarter. Each Bank shall submit its annual Mortgage Report
within 60 days after the end of the calendar year.
(d) Revisions to Reports. At any time before submission of its
annual Mortgage Report, a Bank may revise its first semi-annual
Mortgage Report for that year.
(e) Format. The Banks shall submit to the Director computerized
loan-level data with the Mortgage Report, in the format specified in
writing by the Director.
Sec. 1281.22 Periodic reports.
Each Bank shall provide to the Director such reports, information
and data as the Director may request from time to time, or as may be
supplemented in the DRM.
Sec. 1281.23 Bank data integrity.
(a) Certification. (1) The senior officer of each Bank who is
responsible for submitting the annual Mortgage Report, or for
submitting any other report(s), data or other information for which
certification is requested in writing by the Director, shall certify
such report(s), data or information.
(2) The certification shall state as follows: ``To the best of my
knowledge and belief, the information provided herein is true, correct
and complete.''
(b) Adjustment to correct errors, omissions or discrepancies. FHFA
shall determine on an annual basis the official housing goals
performance figures for a Bank that is subject to the housing goals.
FHFA may resolve any error, omission or discrepancy by adjusting the
Bank's official housing goals performance figure. If the Director
determines that the year-end data reported by a Bank for a year
preceding the latest year for which data on housing goals performance
was reported to FHFA contained a material error, omission or
discrepancy, the Director may increase the corresponding housing goal
for the current year by the number of mortgages that the Director
determines were overstated in the prior year's goal performance.
Dated: December 20, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2010-32350 Filed 12-23-10; 8:45 am]
BILLING CODE 8070-01-P