[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Notices]
[Page 47652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19566]


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FEDERAL HOUSING FINANCE AGENCY

[No. 2012-N-11]


Use of Eminent Domain To Restructure Performing Loans

AGENCY: Federal Housing Finance Agency.

ACTION: Notice; input accepted.

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    The Federal Housing Finance Agency (FHFA) oversees the Federal 
National Mortgage Association (Fannie Mae), the Federal Home Loan 
Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks 
(Banks). Fannie Mae and Freddie Mac (the Enterprises) are operating in 
conservatorships with a core mission of supporting the housing market. 
FHFA's obligations, as conservator, are to preserve and conserve assets 
of the Enterprises and to minimize costs to taxpayers. The Enterprises 
purchase a large portion of the mortgages originated in the United 
States and they hold private label mortgage backed securities 
containing pools of non-Enterprise loans. The Banks likewise have 
important holdings of such securities. In addition, the Banks accept 
collateral that consists of mortgages of member financial firms pledged 
in exchange for advances of funds.

FHFA Concerns

    FHFA has significant concerns about the use of eminent domain to 
revise existing financial contracts and the alteration of the value of 
Enterprise or Bank securities holdings. In the case of the Enterprises, 
resulting losses from such a program would represent a cost ultimately 
borne by taxpayers. At the same time, FHFA has significant concerns 
with programs that could undermine and have a chilling effect on the 
extension of credit to borrowers seeking to become homeowners and on 
investors that support the housing market.
    FHFA has determined that action may be necessary on its part as 
conservator for the Enterprises and as regulator for the Banks to avoid 
a risk to safe and sound operations and to avoid taxpayer expense.
    Among questions raised regarding the proposed use of eminent domain 
are the constitutionality of such use; the application of federal and 
state consumer protection laws; the effects on holders of existing 
securities; the impact on millions of negotiated and performing 
mortgage contracts; the role of courts in administering or overseeing 
such a program, including available judicial resources; fees and costs 
attendant to such programs; and, in particular, critical issues 
surrounding the valuation by local governments of complex contractual 
arrangements that are traded in national and international markets.

Input

    FHFA will accept input from any person with views on this subject 
through its Office of General Counsel (OGC), no later than September 7, 
2012, as the agency moves forward with its deliberations on appropriate 
action. Communications may be addressed to FHFA OGC, 400 Seventh Street 
SW., Eighth Floor, Washington, DC 20024, or emailed to FHFA OGC at 
[email protected]. Communications to FHFA may be made public.

    Dated: August 6, 2012.
Richard Hornsby,
Chief Operating Officer, Federal Housing Finance Agency.
[FR Doc. 2012-19566 Filed 8-8-12; 8:45 am]
BILLING CODE 8070-01-P