[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