[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 12

Banks and Banking


________________________

Part 1100 to End

                         Revised as of January 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 12:
          Chapter XI--Federal Financial Institutions 
          Examination Council                                        3
          Chapter XII--Federal Housing Finance Agency               41
          Chapter XIII--Financial Stability Oversight Council      469
          Chapter XIV--Farm Credit System Insurance 
          Corporation                                              511
          Chapter XV--Department of the Treasury                   549
          Chapter XVI--Office of Financial Research, 
          Department of the Treasury                               571
          Chapter XVII--Office of Federal Housing Enterprise 
          Oversight, Department of Housing and Urban 
          Development                                              577
          Chapter XVIII--Community Development Financial 
          Institutions Fund, Department of the Treasury            711
  Finding Aids:
      Table of CFR Titles and Chapters........................     801
      Alphabetical List of Agencies Appearing in the CFR......     821
      List of CFR Sections Affected...........................     831

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

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

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

[[Page v]]



                               EXPLANATION

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

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

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

LEGAL STATUS

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

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2017), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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

OMB CONTROL NUMBERS

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

[[Page vi]]

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

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

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

INCORPORATION BY REFERENCE

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

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

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

INQUIRIES

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

SALES

    The Government Publishing Office (GPO) processes all sales and 
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write to: US Government Publishing Office - New Orders, P.O. Box 979050, 
St. Louis, MO 63197-9000.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.ofr.gov. For more 
information, contact the GPO Customer Contact Center, U.S. Government 
Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-
mail, [email protected]
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    January 1, 2017.

                                
                                      
                            

  

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                               THIS TITLE

    Title 12--Banks and Banking is composed of ten volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-219, 
220-229, 230-299, 300-499, 500-599, 600-899, 900-1025, 1026-1099, and 
1100-end. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of January 1, 2017.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains part 1100 to end)

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

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

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

chapter xiii--Financial Stability Oversight Council.........        1301

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

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

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

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

[[Page 3]]



     CHAPTER XI--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL




  --------------------------------------------------------------------
Part                                                                Page
1100            [Reserved]

1101            Description of office, procedures, public 
                    information.............................           5
1102            Appraiser regulation........................          12
1103-1199       [Reserved]

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                          PART 1100 [RESERVED]



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



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

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

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



Sec. 1101.1  Scope and purpose.

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



Sec. 1101.2  Authority and functions.

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



Sec. 1101.3  Organization and methods of operation.

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

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



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

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

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public are available for public inspection in an electronic format at 
the office of the Executive Secretary of the Council, 3501 Fairfax 
Drive, Room B-7081a, Arlington, VA, 22226-3550, during regular business 
hours. Policies and interpretations of the Council may be withheld from 
disclosure under the principles stated in paragraph (b)(1) of this 
section.
    (3) Copies of all records, regardless of form or format, are 
available for public inspection in an electronic format if they--
    (i) Have been released to any person under paragraph (b) of this 
section; and
    (ii)(A) Because of the nature of their subject matter, the Council 
determines that they have become or are likely to become the subject of 
subsequent requests for substantially the same records; or
    (B) They have been requested three or more times.
    (4) An index of the records referred to in paragraphs (a)(1) through 
(3) of this section is available for public inspection in an electronic 
format..
    (b) Other records of the Council available to the public upon 
request; procedures--
    (1) General rule and exemptions. Under 5 U.S.C. 552(a)(3), all other 
records of the Council are available to the public upon request, except 
to the extent exempted from disclosure as provided in 5 U.S.C. 552(b) 
and described of this paragraph (b)(1), or if disclosure is prohibited 
by law. Unless specifically authorized by the Council, or as set forth 
in paragraph (b)(2) of this section, the following records, and portions 
thereof, are not available to the public:
    (i) A record, or portion thereof, which is specifically authorized 
under criteria established by an Executive Order to be kept secret in 
the interest of national defense or foreign policy and which is, in 
fact, properly classified pursuant to such Executive Order.
    (ii) A record, or portion thereof, relating solely to the internal 
personnel rules and practices of an agency.
    (iii) A record, or portion thereof, specifically exempted from 
disclosure by statute (other than 5 U.S.C. 552b), provided that such 
statute (A) requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or (B) establishes 
particular criteria for withholding or refers to particular types of 
matters to be withheld.
    (iv) A record, or portion thereof, containing trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential.
    (v) An intra-agency or interagency memorandum or letter that would 
not be routinely available by law to a private party in litigation, 
including, but not limited to, memoranda, reports, and other documents 
prepared by the personnel of the Council or its constituent agencies, 
and records of deliberations of the Council and discussions of meetings 
of the Council, any Council Committee, or Council staff, that are not 
subject to 5 U.S.C. 552b (the Government in the Sunshine Act). In 
applying this exemption, the Council will not withhold records based on 
the deliberative process privilege if the records were created 25 years 
or more before the date on which the records were requested.
    (vi) A personnel, medical, or similar record, including a financial 
record, or any portion thereof, the disclosure of which would constitute 
a clearly unwarranted invasion of personal privacy.
    (vii) Records or information compiled for law enforcement purposes, 
to the extent permitted under 5 U.S.C. 552(b)(7), including records 
relating to a proceeding by a financial institution's state or federal 
regulatory agency for the issuance of a cease-and-desist order, or order 
of suspension or removal, or assessment of a civil money penalty and the 
granting, withholding, or revocation of any approval, permission, or 
authority.
    (viii) A record, or portion thereof, containing, relating to, or 
derived from an examination, operating, or condition report prepared by, 
or on behalf of, or for the use of any state or federal agency directly 
or indirectly responsible for the regulation or supervision of financial 
institutions.
    (ix) A record, or portion thereof, which contains or is related to 
geological and geophysical information and data, including maps, 
concerning wells.
    (2) Discretionary release of exempt information. Notwithstanding the 
applicability of an exemption, the Council will

[[Page 7]]

only withhold records requested under this paragraph (b) if the Council 
reasonably foresees that disclosure would harm an interest protected by 
an exemption listed in 5 U.S.C. 552(b) and described in paragraph (b)(1) 
of this section. In addition, whenever the Council determines that full 
disclosure of a requested record is not possible, the Council will 
consider whether partial disclosure is possible and will take reasonable 
steps necessary to segregate and release the nonexempt portion of a 
record. The Council or the Council's designee may elect, under the 
circumstances of a particular request, to disclose all or a portion of 
any requested record where permitted by law. Such disclosure has no 
precedential significance.
    (3) Procedure for records request--(i) Initial request. Requests for 
records shall be submitted in writing to the Executive Secretary of the 
Council:
    (A) By sending a letter to: FFIEC, Attn: Executive Secretary, 3501 
Fairfax Drive, Room B-7081a, Arlington, VA 22226-3550. Both the mailing 
envelope and the request should be marked ``Freedom of Information 
Request,'' ``FOIA Request,'' or the like; or
    (B) By facsimile clearly marked ``Freedom of Information Act 
Request,'' ``FOIA Request,'' or the like to the Executive Secretary at 
(703) 562-6446; or
    (C) By e-mail to the address provided on the FFIEC's World Wide Web 
page, found at: http://www.ffiec.gov. Requests must reasonably describe 
the records sought.
    (ii) Contents of request. All requests should contain the following 
information:
    (A) The name and mailing address of the requester, an electronic 
mail address, if available, and the telephone number at which the 
requester may be reached during normal business hours;
    (B) A statement as to whether the information is intended for 
commercial use, and whether the requester is an educational or 
noncommercial scientific institution, or news media representative;
    (C) A statement agreeing to pay all applicable fees, or a statement 
identifying any desired fee limitation, or a request for a waiver or 
reduction of fees that satisfies paragraph (b)(5)(ii)(H) of this 
section.
    (iii) Defective requests. The Council need not accept or process a 
request that does not reasonably describe the records requested or that 
does not otherwise comply with the requirements of this section. The 
Executive Secretary may return a defective request specifying the 
deficiency. The requester may submit a corrected request, which will be 
treated as an initial request.
    (iv) Expedited processing. (A) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the Executive Secretary has determined to expedite the response, 
the Executive Secretary shall process the request as soon as 
practicable. To show a compelling need for expedited processing, the 
requester shall provide a statement demonstrating that:
    (1) Failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (2) The requester is primarily engaged in information dissemination 
as a main professional occupation or activity, and there is urgency to 
inform the public of the government activity involved in the request.
    (B) The requester's statement must be certified to be true and 
correct to the best of the person's knowledge and belief and explain in 
detail the basis for requesting expedited processing.
    (C) The formality of the certification required to obtain expedited 
treatment may be waived by the Executive Secretary as a matter of 
administrative discretion.
    (v) Response to initial requests.
    (A) Except where the Executive Secretary has determined to expedite 
the processing of a request, the Executive Secretary will respond by 
mail or electronic mail to all properly submitted initial requests 
within 20 working days of receipt. The time for response may be extended 
up to 10 additional working days in unusual circumstances, as defined in 
5 U.S.C. 552(a)(6)(B), where the Council has provided written notice to 
the requester setting forth the reasons for the extension and the date 
on

[[Page 8]]

which a determination is expected to be dispatched. In addition, where 
the extension of the 20-day time limit exceeds 10 working days, as 
described by the FOIA, the requester shall be provided with an 
opportunity to modify the scope of the FOIA request so that it can be 
processed within that time frame or provided an opportunity to arrange 
an alternative time frame for processing the request or a modified 
request. To aid the requester, the Council's FOIA Public Liaison is 
available to assist the requester for this purpose and in the resolution 
of any disputes between the requester and the Council. The Council's 
FOIA Public Liaison's contact information is available at http://
www.ffiec.gov/foia.htm. The requester may also seek dispute resolution 
services from the Office of Government Information Services.
    (B) In response to a request that reasonably describes the records 
sought and otherwise satisfies the requirements of this section, a 
search shall be conducted of records in existence and maintained by the 
Council on the date of receipt of the request, and a review made of any 
responsive information located. The Executive Secretary shall notify the 
requester of:
    (1) The Executive Secretary's determination of the response to the 
request;
    (2) The reasons for the determination;
    (3) The right of the requester to seek assistance from the Council's 
FOIA Public Liaison; and
    (4) When an adverse determination is made (including a determination 
that the requested record is exempt, in whole or in part; the request 
does not reasonably describe the records sought; the information 
requested is not a record subject to the FOIA; the requested record does 
not exist, cannot be located, or has been destroyed; the requested 
record is not readily reproducible in the form or format sought by the 
requester; a fee waiver request or other fee categorization matter is 
denied; and a request for expedited processing is denied), the Executive 
Secretary will advise the requester in writing of that determination and 
will further advise the requester:
    (i) If the denial is in part or in whole;
    (ii) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (iii) The exemptions relied on for the denial; and
    (iv) The right of the requester to appeal any adverse determination 
to the Chairman of the Council within 90 days following the date of 
issuance of the notification, as specified in paragraph (b)(3)(vi) of 
this section; and
    (v) The right of the requester to seek dispute resolution services 
from the Council's FOIA Public Liaison or the Office of Government 
Information Services.
    (vi)(A) Appeals of responses to initial requests. A requester may 
appeal any adverse determination in writing, within 90 days of the date 
of issuance of the adverse determination. Appeals shall be submitted to 
the Chairman of the Council:
    (1) By sending a letter to: FFIEC, Attn: Executive Secretary, 3501 
Fairfax Drive, Room B-7081a, Arlington, VA, 22226-3550. Both the mailing 
envelope and the request should be marked ``Freedom of Information Act 
Appeal,'' ``FOIA Appeal,'' or the like; or
    (2) By facsimile clearly marked ``Freedom of Information Act 
Appeal,'' ``FOIA Appeal,'' or the like to the Executive Secretary at 
(703) 562-6446; or
    (3) By email with the subject line marked ``Freedom of Information 
Act Appeal,'' ``FOIA Appeal,'' or the like to [email protected]
    (B) Appeals should refer to the date and tracking number of the 
original request and the date of the Council's initial ruling. Appeals 
should include an explanation of the basis for the appeal.
    (vii) Council response to appeals. The Chairman of the Council, or 
another member designated by the Chairman, will respond to all properly 
submitted appeals within 20 working days of actual receipt of the appeal 
by the Executive Secretary. The time for response may be extended up to 
10 additional working days, as provided in 5 U.S.C. 552(a)(6)(B), or for 
other periods by agreement between the requester and the Chairman or the 
Chairman's designee.
    (4) Procedure for access to records if request is granted. (i) When 
a request for

[[Page 9]]

access to records is granted, in whole or in part, a copy of the records 
to be disclosed will be promptly delivered to the requester or made 
available for inspection in an electronic format, whichever was 
requested. Inspection of records, or duplication and delivery of copies 
of records will be arranged so as not to interfere with their use by the 
Council and other users of the records.
    (ii) When delivery to the requester is to be made, copies of 
requested records shall be sent to the requester by regular U.S. mail to 
the address indicated in the request, unless the Executive Secretary 
deems it appropriate to send the documents by another means.
    (iii) The Council shall provide a copy of the record in any form or 
format requested if the record is readily reproducible by the Council in 
that form or format, but the Council need not provide more than one copy 
of any record to a requester.
    (iv) By arrangement with the requester, the Executive Secretary may 
elect to send the responsive records electronically if a substantial 
portion of the records is in electronic format. If the information 
requested is subject to disclosure under the Privacy Act of 1974, 5 
U.S.C. 552a, it will not be sent by electronic means unless reasonable 
security measures can be established.
    (5) Fees for document search, review, and duplication; waiver and 
reduction of fees--(i) Definitions--(A) Direct costs means those 
expenditures which the Council actually incurs in searching for, 
duplicating, and reviewing documents to respond to a FOIA request.
    (B) Search means all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Searches may be done 
manually or by computer using existing programming.
    (C) Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request. Such copies can take the form of 
paper copy, microfilm, audiovisual records, or machine readable records 
(e.g., magnetic tape or computer disk).
    (D) Review means the process of examining documents located in 
response to a request that is for a commercial use (see paragraph 
(b)(5)(i)(E) of this section) to determine whether any portion of any 
document located is permitted to be withheld and processing such 
documents for disclosure.
    (E) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made. In determining whether a request falls 
within this category, the Executive Secretary will determine the use to 
which a requester will put the records requested and seek additional 
information as the Executive Secretary deems necessary.
    (F) Educational institution means a preschool, an elementary or 
secondary school, an institution of undergraduate higher education, an 
institution of graduate higher education, an institution of professional 
education, and an institution of vocational education, which operates a 
program or programs of scholarly research.
    (G) Noncommercial scientific institution means an institution that 
is not operated on a ``commercial'' basis as that term is referenced in 
paragraph (b)(5)(i)(E) of this section, and which is operated solely for 
the purposes of conducting scientific research, the results of which are 
not intended to promote any particular product or industry.
    (H) Representative of the news media means any person or entity that 
gathers information of potential interest to a segment of the public, 
uses its editorial skills to turn the raw materials into a distinct 
work, and distributes that work to an audience. In this clause, the term 
``news'' means information that is about current events or that would be 
of current interest to the public. Examples of news-media entities are 
television or radio stations broadcasting to the public at large and 
publishers of periodicals (but only if such entities qualify as 
disseminators of ``news'') who make their products available for 
purchase by or subscription by or free distribution to the general 
public. These examples are not all-inclusive. Moreover, as methods of 
news delivery evolve (for example, the

[[Page 10]]

adoption of the electronic dissemination of newspapers through 
telecommunications services), such alternative media shall be considered 
to be news-media entities. A freelance journalist shall be regarded as 
working for a news-media entity if the journalist can demonstrate a 
solid basis for expecting publication through that entity, whether or 
not the journalist is actually employed by the entity. A publication 
contract would present a solid basis for such an expectation; the 
Council may also consider the past publication record of the requester 
in making such a determination.
    (ii) Fees to be charged. The Council will charge fees that recoup 
the full allowable direct costs it incurs, except that the charging of 
search and/or duplication fees is subject to the restrictions of 
paragraph (b)(5)(ii)(G) of this section. The Council may contract with 
the private sector to locate, reproduce, and/or disseminate records. 
Provided, however, that the Council has ensured that the ultimate cost 
to the requester is no greater than it would be if the Council performed 
these tasks. Fees are subject to change as costs change. In no case will 
the Council contract out responsibilities which the FOIA provides that 
it alone may discharge, such as determining the applicability of an 
exemption, or determining whether to waive or reduce fees.
    (A) Manual searches and review. The Council will charge fees at the 
following rates for manual searches for and review of records:
    (1) If search/review is done by clerical staff, the hourly rate for 
GS-7, step 5, plus 16 percent of the rate to cover benefits;
    (2) If search/review is done by professional staff, the hourly rate 
for GS-13, step 5, plus 16 percent of the rate to cover benefits.
    (B) Computer searches. The Council will charge fees at the hourly 
rate for GS-13, step 5, plus 16 percent of the rate to cover benefits, 
plus the hourly cost of operating the computer for computer searches for 
records.
    (C) Duplication of records. (1) The per-page fee for paper copy 
reproduction of a document is $.25;
    (2) The fee for documents generated by computer is the hourly rate 
for the computer operator (at GS 7, step 5, plus 16 percent for benefits 
if clerical staff, and GS 13, step 5, plus 16 percent for benefits if 
professional staff) plus the cost of materials (computer paper, tapes, 
disks, labels, etc.).
    (3) If any other method of duplication is used, the Council will 
charge the actual direct cost of duplicating the documents.
    (D) If search, duplication and/or review is provided by personnel of 
member agencies of the Council, fees will reflect their actual hourly 
rates, plus 16 percent for benefits.
    (E) Fees to exceed $25. If the Council estimates that duplication 
and/or search fees are likely to exceed $25, it will notify the 
requester of the estimated amount of fees, unless the requester has 
indicated in advance his/her willingness to pay fees as high as those 
anticipated. In the case of such notification by the Council, the 
requester will then have the opportunity to confer with the Council's 
FOIA Public Liaison with the object of reformulating the request to meet 
his/her needs at a lower cost.
    (F) Other services. Complying with requests for special services 
such as certifying records as true copies or mailing records by express 
mail is entirely at the discretion of the Council. The Council will 
recover the full costs of providing such services to the extent it 
elects to provide them.
    (G) Restriction on assessing fees. (1) The Council will not charge 
fees to any requester, including commercial use requesters, if the cost 
of collecting a fee would be equal to or greater than the fee itself.
    (2)(i) If the Council fails to comply with the time limits specified 
in the FOIA in which to respond to a request, the Council will not 
charge search fees, or, in the case of a requester described in 
paragraph (b)(5)(iii)(B) of this section, will not charge duplication 
fees, except as described in paragraphs (b)(5)(ii)(G)(2)(ii) through 
(iv) of this section.
    (ii) If the Council has determined that unusual circumstances apply 
(as the term is defined in the FOIA) and the Council provided a timely 
written

[[Page 11]]

notice to the requester in accordance with the FOIA, a failure to comply 
with the time limit shall be excused for an additional 10 working days.
    (iii) If the Council has determined that unusual circumstances apply 
(as the term is defined in the FOIA) and more than 5,000 pages are 
necessary to respond to the request, the Council may charge search fees, 
or, in the case of requesters described in paragraph (b)(5)(iii)(B) of 
this section, may charge duplication fees, if the following steps are 
taken: The Council provided timely written notice of unusual 
circumstances to the requester in accordance with the FOIA; and The 
Council discussed with the requester via written mail, email message, or 
telephone (or made not less than three good-faith attempts to do so) how 
the requester could effectively limit the scope of the request in 
accordance with 5 U.S.C. 552(a)(6)(B)(ii). If this exception is 
satisfied, the Council may charge all applicable fees incurred in the 
processing of the request.
    (iv) If a court has determined that exceptional circumstances exist, 
as defined by the FOIA, a failure to comply with the time limits shall 
be excused for the length of time provided by the court order.
    (H) Waiving or reducing fees. As part of the initial request for 
records, a requester may ask that the Council waive or reduce fees if 
disclosure of the records is in the public interest because it is likely 
to contribute significantly to public understanding of the operations or 
activities of the Council and is not primarily in the commercial 
interest of the requester. The initial request for records must also 
state the justification for a waiver or reduction of fees. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Secretary of the Council and the requester will be notified in 
writing of his/her determination. A determination not to grant a request 
for a waiver or reduction of fees under this paragraph may be appealed 
to the Chairman of the Council pursuant to the procedure set forth in 
paragraph (b)(3)(vi) of this section.
    (iii) Categories of requesters--(A) Commercial use requesters. The 
Council will assess fees for commercial use requesters sufficient to 
recover the full direct costs of searching for, reviewing for release, 
and duplicating the records sought. Commercial use requesters are not 
entitled to two hours of free search time nor 100 free pages of 
reproduction of documents.
    (B) Requesters who are representatives of the news media, 
educational and noncommercial scientific institution requesters. The 
Council shall provide documents to requesters in these categories for 
the cost of reproduction alone, excluding fees for the first 100 pages.
    (C) All other requesters. The Council shall charge requesters who do 
not fit into any of the categories above fees which recover the full 
reasonable direct cost of searching for and reproducing records that are 
responsive to the request, except that the first 100 pages of 
reproduction and the first two hours of search time shall be furnished 
without a fee.
    (D) All requesters must specifically describe records sought.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.
    (v) Fees for unsuccessful search and review. The Council may assess 
fees for time spent searching and reviewing, even if it fails to locate 
the records or if records located are determined to be exempt from 
disclosure.
    (vi) Aggregating requests. A requester(s) may not file multiple 
requests each seeking portions of a document or documents, solely in 
order to avoid payment of fees. If this is done, the Council may 
aggregate any such requests and charge accordingly. In no case will the 
Council aggregate multiple requests on unrelated subjects from the same 
requester.
    (vii) Advance payment of fees. The Council will not require a 
requester to make an assurance of payment or an advance payment unless:
    (A) The Council estimates or determines that allowable charges that 
a requester may be required to pay are likely to exceed $250. The 
Council will

[[Page 12]]

notify the requester of the likely cost and obtain satisfactory 
assurance of full payment where the requester has a history of prompt 
payment of FOIA fees, or require an advance payment of an amount up to 
the full estimated charges in the case of requesters with no history of 
payment; or
    (B) A requester has previously failed to pay a fee charged in a 
timely fashion. The Council may require the requester to pay the full 
amount owed plus any applicable interest as provided in paragraph 
(b)(5)(iv) of this section or demonstrate that he/she has, in fact, paid 
the fee, and to make an advance payment of the full amount of the 
estimated fee before the Council begins to process a new request or a 
pending request from that requester.
    (C) When the Council acts under paragraph (b)(5)(vii) (A) or (B) of 
this section, the administrative time limits prescribed in subsection 
(a)(6) of the FOIA (i.e., 20 working days from receipt of initial 
requests, plus permissible extensions of these time limits) will begin 
only after the Council has received the fee payments described.
    (6) Records of another agency. If a requested record originated with 
or incorporates the information of another state or federal agency or 
department, upon receipt of a request for the record the Council will 
promptly inform the requester of this circumstance and immediately shall 
forward the request to the originating agency or department either for 
processing in accordance with the latter's regulations or for guidance 
with respect to disposition.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988; 75 
FR 71014, Nov. 22, 2010; 81 FR 94939, Dec. 27, 2016]



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

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



PART 1102_APPRAISER REGULATION--Table of Contents



                   Subpart A_Temporary Waiver Requests

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

               Subpart B_Rules of Practice for Proceedings

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

[[Page 13]]

1102.39  Duty to cooperate.

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

1102.100  Authority, purpose and scope.
1102.101  Definitions.
1102.102  Times, places and requirements for requests pertaining to 
          individual records in a record system and for the 
          identification of individuals making requests for access to 
          records pertaining to them.
1102.103  Disclosure of requested records.
1102.104  Special procedure: Medical records.
1102.105  Requests for amendment of records.
1102.106  Review of requests for amendment.
1102.107  Appeal of initial adverse agency determination regarding 
          access or amendment.
1102.108  General provisions.
1102.109  Fees.
1102.110  Penalties.

     Subpart D_Description of Office, Procedures, Public Information

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



                   Subpart A_Temporary Waiver Requests

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

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



Sec. 1102.1  Authority, purpose and scope.

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



Sec. 1102.2  Requirements for requests.

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



Sec. 1102.3  Other requests and information submissions.

    The federal financial institutions regulatory agencies and the 
Resolution Trust Corporation, their respective

[[Page 14]]

regulated financial institutions, and other persons or institutions with 
a demonstrable interest in appraiser regulation, may ask the ASC for a 
determination under Sec. 1102.2(a) of this subpart, and may ask that the 
ASC exercise its discretionary authority to initiate a temporary waiver 
proceeding. Such regulated financial institutions and other persons or 
institutions do not need to comply with Sec. 1102.2(g) of this subpart, 
but are strongly encouraged to include meaningful suggestions and 
recommendations for remedying the situation. A copy of the request or 
informational submission shall be forwarded promptly to the State 
Appraiser Regulatory Agency. The ASC shall consider these submissions 
and requests in exercising its authority to initiate a temporary waiver 
procedure. When the ASC initiates a temporary waiver proceeding, these 
documents shall correspond to a received request under Sec. 1102.4 of 
this subpart.



Sec. 1102.4  Notice and comment.

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



Sec. 1102.5  Subcommittee determination.

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



Sec. 1102.6  Waiver extension.

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



Sec. 1102.7  Waiver termination.

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



               Subpart B_Rules of Practice for Proceedings

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

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



Sec. 1102.20  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under sections 1103, 1106, 
1118 and 1119(c) of title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 3332, 3335, 
3347, and 3348(c)).

[[Page 15]]

    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing non-recognition proceedings under section 1118 of 
title XI (12 U.S.C. 3347); and other proceedings necessary to carry out 
the purposes of title XI under section 1119(c) of title XI (12 U.S.C. 
3348(c)).

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



Sec. 1102.21  Definitions.

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



Sec. 1102.22  Appearance and practice before the Subcommittee.

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



Sec. 1102.23  Formal requirements as to papers filed.

    (a) Form. All papers filed under this subpart must be double-spaced 
and printed or typewritten on 8\1/2\"  x  11" paper. All copies shall be 
clear and legible.
    (b) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the ASC and of the filing party, the title 
and/or docket number of the proceeding and the subject of the particular 
paper.
    (c) Party names, signatures, certificates of service. All papers 
filed must set forth the name, address and telephone number of the 
attorney or party making the filing, must be signed by the attorney or 
party, and must be accompanied by a certification setting forth when and 
how service has been made on all other parties.
    (d) Copies. Unless otherwise specifically provided in the notice of 
proceeding or by the ASC during the proceeding, an original and one copy 
of all documents and papers shall be furnished to the Secretary.



Sec. 1102.24  Filing requirements.

    (a) Filing. All papers filed with the ASC in any proceeding shall be 
filed with the Secretary, Appraisal Subcommittee, 2000 K Street, NW., 
Suite 310, Washington, DC 20006.
    (b) Manner of filing. Unless otherwise specified by the ASC, filing 
may be accomplished by:
    (1) Personal service;

[[Page 16]]

    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.

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



Sec. 1102.25  Service.

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



Sec. 1102.26  When papers are deemed filed or served.

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



Sec. 1102.27  Computing time.

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



Sec. 1102.28  Documents and exhibits in proceedings public.

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



Sec. 1102.29  Conduct of proceedings.

    (a) In general. Unless otherwise provided in the notice of 
proceedings, all

[[Page 17]]

proceedings under this subpart shall be conducted as hereinafter 
provided.
    (b) Written submissions. All aspects of the proceeding shall be 
conducted by written submissions only, with the exception of oral 
presentations allowed under Sec. 1102.36 of this subpart.
    (c) Disqualification. A Subcommittee member who deems himself or 
herself disqualified may at any time withdraw. Upon receipt of a timely 
and sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record and 
decision in the case.
    (d) User of ASC staff. Appropriate members of the ASC's staff who 
are not engaged in the performance of investigative or prosecuting 
functions in the proceeding may advise and assist the ASC in the 
consideration of the case and in the preparation of appropriate 
documents for its disposition.
    (e) Authority of Subcommittee Chairperson. The Chairperson of the 
ASC, in consultation with other members of the ASC whenever appropriate, 
shall have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings in accordance 
with this subpart.
    (f) Conferences. (1) The ASC may on its own initiative or at the 
request of any party, direct all parties or counsel to meet with one or 
more duly authorized ASC members or staff at a specified time and place, 
or to submit to the ASC or its designee, suggestions in writing for the 
purpose of considering any or all of the following:
    (i) Scheduling of matters, including a timetable for the 
information-gathering phase of the proceeding;
    (ii) Simplification and clarification of the issues;
    (iii) Stipulations and admissions of fact and of the content and 
authenticity of documents;
    (iv) Matters of which official notice will be taken; and
    (v) Such other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the names of persons submitting 
affidavits or other documents and exhibits which may be introduced into 
the public file of the proceeding.
    (2) Such conferences will not be recorded, but the Secretary shall 
place in the proceeding's public file a memorandum summarizing the 
results of the conference and shall provide a copy of the memorandum to 
each party. The memorandum shall control the subsequent course of the 
proceedings, unless the ASC for good cause shown by one or more parties 
to the conference, modifies those results and instructs the Secretary to 
place an amendatory memorandum to that effect in the public file.
    (g) Changes or extensions of time and changes of place of 
proceeding. The ASC, in connection with initiating a specific 
proceedings under Sec. 1102.32 of this subpart, may instruct the 
Secretary to publish in the Federal Register time limits different from 
those specified in this subpart, and may, on its own initiative or for 
good cause shown, issue an exemption changing the place of the 
proceeding or extending any time limit prescribed by this subpart, 
including the date for ending the information-gathering phase of the 
proceeding.
    (h) Call for further briefs, memoranda, statements; reopening of 
matters. The ASC may call for the production of further information upon 
any issue, the submission of briefs, memoranda and statements (together 
with written responses), and, upon appropriate notice, may reopen any 
aspect of the proceeding at any time prior to a decision on the matter.

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



Sec. 1102.30  Rules of evidence.

    (a) In general. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted under this subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may be deemed or ruled admissible in a proceeding conducted 
under

[[Page 18]]

this subpart if such evidence is relevant, material, reliable and not 
unduly repetitive.
    (b) Stipulations. Any party may stipulate in writing as to any 
relevant matters of fact, law, or the authenticity of any relevant 
documents. The Secretary shall place such stipulations in the public 
file, and they shall be binding on the parties.
    (c) Official notice. Every matter officially noticed by the ASC 
shall appear in the public file, unless the ASC determines that the 
matter must be withheld from public disclosure under applicable Federal 
law.



Sec. 1102.31  Burden of proof.

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



Sec. 1102.32  Notice of Intention to Commence a Proceeding.

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



Sec. 1102.33  Rebuttal or Notice Not To Contest.

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



Sec. 1102.34  Briefs, memoranda and statements.

    (a) By the parties. Until the end of the information-gathering phase 
of the proceeding, any party may file with the Secretary a written 
brief, memorandum or other statement providing

[[Page 19]]

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



Sec. 1102.35  Opportunity for informal settlement.

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



Sec. 1102.36  Oral presentations.

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

[[Page 20]]



Sec. 1102.37  Decision of the Subcommittee and judicial review.

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



Sec. 1102.38  Compliance activities.

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



Sec. 1102.39  Duty to cooperate.

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



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

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

[[Page 21]]


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



Sec. 1102.100  Authority, purpose and scope.

    (a) This subpart is issued under the Privacy Act of 1974, Public Law 
93-579, 88 Stat. 1896; 12 U.S.C. 552a, as amended.
    (b) The Privacy Act of 1974 is based, in part, on the finding by 
Congress that ``in order to protect the privacy of individuals 
identified in information systems maintained by Federal agencies, it is 
necessary and proper for the Congress to regulate the collection, 
maintenance, use, and dissemination of information by such agencies.'' 
To achieve this objective, the Act generally provides that Federal 
agencies must advise an individual upon request whether records 
maintained by the agency in a system of records pertain to the 
individual and must grant the individual access to such records. The Act 
further provides that individuals may request amendments to records 
pertaining to them that are maintained by the agency, and that the 
agency shall either grant the requested amendments or set forth fully 
its reasons for refusing to do so.
    (c) The Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC), pursuant to subsection (f) of the Privacy 
Act, adopts the following rules and procedures to implement the 
provisions of the Act summarized above and other provisions of the Act. 
These rules and procedures are applicable to all requests for 
information and access or amendment to records pertaining to an 
individual that are contained in any system of records that is 
maintained by the ASC.



Sec. 1102.101  Definitions.

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



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

    (a) Place to make request. Any request by an individual to be 
advised whether any system of records maintained by the ASC and named by 
the individual contains a record pertaining to him or her, or any 
request by an individual for access to a record pertaining to him or her 
that is contained in a system of records maintained by the ASC, shall be 
submitted in person at the ASC between 9 a.m. and 4:30 p.m., Monday 
through Friday, which is located at 1401 H Street, NW., Suite 
760,Washington, DC 20005, or by mail addressed to: Privacy Act Officer, 
ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005. All requests 
will be required to be put in writing and signed by the individual 
making the request. In the case of requests for access that are made by 
mail, the envelope should be clearly marked ``Privacy Act Request.''
    (1) Information to be included in requests. Each request by an 
individual concerning whether the ASC maintains in a system of records a 
record that pertains to the individual, or for access to any record 
pertaining to the individual that is maintained by the ASC in a system 
of records, shall include such information as will assist the ASC in 
identifying those records as to which the individual is seeking 
information or access. Where practicable, the individual should identify 
the system of records that is the subject of his or her request by 
reference to the ASC's notices of systems of records, which are 
published in the Federal Register, as required by section (e)(4) of the 
Privacy Act, 5 U.S.C. 552a(e)(4). Where a system of records is compiled 
on the basis of a specific identification scheme, the individual should 
include in his or her request the identification number or

[[Page 22]]

other identifier assigned to the individual. In the event the individual 
does not know that number or identifier, the individual shall provide 
other information, including his or her full name, address, date of 
birth and subject matter of the record, to aid in processing his or her 
request. If additional information is required before a request can be 
processed, the individual shall be so advised.
    (2) Verification of identity. When the fact of the existence of a 
record is not required to be disclosed under the Freedom of Information 
Act, 5 U.S.C. 552, as amended, or when a record as to which access has 
been requested is not required to be disclosed under that Act, the 
individual seeking the information or requesting access to the record 
shall be required to verify his or her identity before access will be 
granted or information given. For this purpose, individuals shall appear 
at the ASC located at 1401 H Street, NW., Suite 760,Washington, DC 
20005, between 9 a.m. to 4:30 p.m., Monday through Friday. The ASC's 
Office is not open on Saturdays, Sundays or Federal holidays.
    (3) Methods for verifying identity--appearance in person. For the 
purpose of verifying identity, an individual seeking information 
regarding pertinent records or access to those records shall furnish 
documentation that may reasonably be relied on to establish the 
individual's identity. Such documentation might include a valid birth 
certificate, driver's license, employee or military identification card, 
and medicare card.
    (4) Method for verifying identity--by mail. Where an individual 
cannot appear at the ASC's Office for the purpose of verifying identity, 
the individual shall submit, along with the request for information or 
access, a signed and notarized statement attesting to his or her 
identity. Where access is being sought, the sworn statement shall 
include a representation that the records being sought pertain to the 
individual and a stipulation that the individual is aware that knowingly 
and willfully requesting or obtaining records pertaining to an 
individual from the ASC under false pretenses is a criminal offense.
    (5) Additional procedures for verifying identity. When it appears 
appropriate to the Privacy Act Officer, other arrangements may be made 
for the verification of identity as are reasonable under the 
circumstances and appear to be effective to prevent unauthorized 
disclosure of, or access to, individual records.
    (b) Acknowledgement of requests for information pertaining to 
individual records in a record system or for access to individual 
records. (1) Except where an immediate acknowledgement is given for 
requests made in person, the receipt of a request for information 
pertaining to individual records in a record system will be acknowledged 
within 10 days, excluding Saturdays, Sundays and Federal holidays. 
Requests will be processed as promptly as possible and a response to 
such requests will be given within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) unless, within the 30 day period and for 
cause shown, the individual making the request is notified in writing 
that a longer period is necessary.

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



Sec. 1102.103  Disclosure of requested records.

    (a) Initial review. Requests by individuals for access to records 
pertaining to them will be referred to the ASC's Privacy Act Officer, 
who initially will determine whether access will be granted.
    (b) Grant of request for access. (1) If it is determined that a 
request for access to records pertaining to an individual will be 
granted, the individual will be advised by mail that access will be 
given at the ASC or a copy of the requested record will be provided by 
mail if the individual shall so indicate. Where the individual requests 
that copies of the record be mailed to or her or requests copies of a 
record upon reviewing it at the ASC, the individual shall pay the cost 
of making requested copies, as set forth in Sec. 1102.109 of this 
subpart.
    (2) In granting access to an individual to a record pertaining to 
him or her, the ASC staff shall take steps to prevent the unauthorized 
disclosure of

[[Page 23]]

information pertaining to other individuals.
    (c) Denial of request for access. If it is determined that access 
will not be granted, the individual making the request will be notified 
of that fact and given the reasons why access is being denied. The 
individual also will be advised of his or her right to seek review by 
the Executive Director of the initial decision to deny access, in 
accordance with the procedures set forth in Sec. 1102.107 of this 
subpart.
    (d) Time for acting on requests for access. Access to a record 
pertaining to an individual normally will be granted or denied within 30 
days (excluding Saturdays, Sundays, and Federal holidays) after the 
receipt of the request for access, unless the individual making the 
request is notified in writing within the 30 day period that, for good 
cause shown, a longer time is required. In such cases, the individual 
making the request shall be informed in writing of the difficulties 
encountered and an indication shall be given as to when it is 
anticipated that access may be granted or denied.
    (e) Authorization to allow designated person to review and discuss 
records pertaining to another individual. An individual, who is granted 
access to records pertaining to him or her and who appears at the ASC 
Office to review the records, may be accompanied by another person of 
his or her choosing. Where the records as to which access has been 
granted are not required to be disclosed under provisions of the Freedom 
of Information Act, 5 U.S.C. 552, as amended, the individual requesting 
the records, before being granted access, shall execute a written 
statement, signed by him or her, specifically authorizing the latter 
individual to review and discuss the records. If such authorization has 
not been given as described, the person who has accompanied the 
individual making the request will be excluded from any review or 
discussion of the records.
    (f) Exclusion for certain records. Nothing contained in these rules 
shall allow an individual access to any information compiled in 
reasonable anticipation of an administrative judicial or civil action or 
proceeding.



Sec. 1102.104  Special procedure: Medical records.

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



Sec. 1102.105  Requests for amendment of records.

    (a) Place to make requests. A request by an individual to amend 
records pertaining to him or her may be made in person during normal 
business hours at the ASC located at 2000 K Street, NW., Suite 310, 
Washington, DC , or by mail addressed to the Privacy Act Officer, ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005.
    (1) Information to be included in requests. Each request to amend an 
ASC record shall reasonably describe the record sought to be amended. 
Such description should include, for example, relevant names, dates and 
subject matter to permit the record to be located among the records 
maintained by the ASC. An individual who has requested that a record 
pertaining to the individual be amended will be advised promptly if the 
record cannot be located on the basis of the description

[[Page 24]]

given and that further identifying information is necessary before the 
request can be processed. An initial evaluation of a request presented 
in person will be made immediately to ensure that the request is 
complete and to indicate what, if any, additional information will be 
required. Verification of the individual's identity as set forth in 
Sec. 1102.102(a) (2), (3), (4) and (5) may also be required.
    (2) Basis for amendment. An individual requesting an amendment to a 
record pertaining to the individual shall specify the substance of the 
amendment and set forth facts and provide such materials that would 
support his or her contention that the record as maintained by the ASC 
is not accurate, timely or complete, or that the record is not necessary 
and relevant to accomplish a statutory purpose of the ASC as authorized 
by law or by Executive Order of the President.
    (b) Acknowledgement of requests for amendment. Receipt of a request 
to amend a record pertaining to an individual normally will be 
acknowledged in writing within 10 days after such request has been 
received, excluding Saturdays, Sundays and Federal holidays. When a 
request to amend is made in person, the individual making the request 
will be given a written acknowledgement when the request is presented. 
The acknowledgement will describe the request received and indicate when 
it is anticipated that action will be taken on the request. No 
acknowledgement will be sent when the request for amendment will be 
reviewed, and an initial decision made, within the 10 day period after 
such request has been received.

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



Sec. 1102.106  Review of requests for amendment.

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

[[Page 25]]

amend, including the name and address of the person to whom the appeal 
is to be addressed; and
    (4) Inform the individual that the Privacy Act Officer will provide 
information and assistance to the individual in perfecting an appeal of 
the initial decision.



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

    (a) Administrative review. Any person who has been notified pursuant 
to Sec. 1102.103(c) that a request for access to records pertaining to 
him or her has been denied in whole or in part, or pursuant to 
Sec. 1102.106(e) of this subpart that a request for amendment has been 
denied in whole or in part, or who has received no response to a request 
for access or to amend within 30 days (excluding Saturdays, Sundays and 
Federal holidays) after the request was received by the ASC's staff (or 
within such extended period as may be permitted in accordance with 
Secs. 1102.103(d) and 1102.106(c) of this subpart), may appeal the 
adverse determination or failure to respond by applying for an order of 
the Executive Director determining and directing that access to the 
record be granted or that the record be amended in accordance with his 
or her request.
    (1) The application shall be in writing and shall describe the 
record in issue and set forth the proposed amendment and the reasons 
therefor.
    (2) The application shall be delivered to the ASC, 2000 K Street, 
NW., Suite 310, Washington, DC, or by mail addressed to the Privacy Act 
Officer, ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005.
    (3) The applicant may state such facts and cite such legal or other 
authorities in support of the application.
    (4) The Executive Director will make a determination with respect to 
any appeal within 30 days after the receipt of such appeal (excluding 
Saturdays, Sundays, and Federal holidays), unless for good cause shown, 
the Executive Director shall extend that period. If such an extension is 
made, the individual who is appealing shall be advised in writing of the 
extension, the reasons therefor, and the anticipated date when the 
appeal will be decided.
    (5) In considering an appeal from a denial of a request to amend a 
record, the Executive Director shall apply the same standards as set 
forth in Sec. 1102.106(b).
    (6) If the Executive Director concludes that access should be 
granted, the Executive Director shall issue an order granting access and 
instructing the Privacy Act Officer to comply with Sec. 1102.103(b).
    (7) If the Executive Director concludes that the request to amend 
the record should be granted in whole or in part, the Executive Director 
shall issue an order granting the requested amendment in whole or in 
part and instructing the Privacy Act Officer to comply with the 
requirements of Sec. 1102.106(d) of this subpart, to the extent 
applicable.
    (8) If the Executive Director affirms the initial decision denying 
access, the Executive Director shall issue an order denying access and 
advising the individual seeking access of:
    (i) The order;
    (ii) The reasons for denying access; and
    (iii) The individual's right to obtain judicial review of the 
decision pursuant to 5 U.S.C. 552a(g)(1)(B).
    (9) If the Executive Director determines that the decision of the 
Privacy Act Officer denying a request to amend a record should be 
upheld, the Executive Director shall issue an order denying the request 
and the individual shall be advised of:
    (i) The order refusing to amend the record and the reasons therefor;
    (ii) The individual's right to file a concise statement setting 
forth his or her disagreement with the Executive Director's decision not 
to amend the record;
    (iii) The procedures for filing such a statement of disagreement 
with the Executive Director;
    (iv) The fact that any such statement of disagreement will be made 
available to anyone to whom the record is disclosed, together with, if 
the Executive Director deems it appropriate, a brief statement setting 
forth the Executive Director's reasons for refusing to amend;

[[Page 26]]

    (v) The fact that prior recipients of the record in issue will be 
provided with the statement of disagreement and the Executive Director's 
statement, if any, to the extent that an accounting of such disclosures 
has been maintained pursuant to 5 U.S.C. 552a(c); and
    (vi) The individual's right to seek judicial review of the Executive 
Director's refusal to amend, pursuant to 5 U.S.C. 552a(g)(1)(A).
    (b) Statement of disagreement. As noted in paragraph (a)(9)(ii) of 
this section, an individual may file with the Executive Director a 
statement setting forth his or her disagreement with the Executive 
Director's denial of his or her request to amend a record.
    (1) Such statement of disagreement shall be delivered to the ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005, within 30 days after 
receipt by the individual of the Executive Director's order denying the 
amendment, excluding Saturdays, Sundays and Federal holidays. For good 
cause shown, this period can be extended for a reasonable time.
    (2) Such statement of disagreement shall concisely state the basis 
for the individual's disagreement. Unduly lengthy or irrelevant 
materials will be returned to the individual by the Executive Director 
for appropriate revisions before they become a permanent part of the 
individual's record.
    (3) The record about which a statement of disagreement has been 
filed will clearly note which part of the record is disputed and the 
Executive Director will provide copies of the statement of disagreement 
and, if the Executive Director deems it appropriate, provide a concise 
statement of his or her reasons for refusing to amend the record, to 
persons or other agencies to whom the record has been or will be 
disclosed.

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



Sec. 1102.108  General provisions.

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

[[Page 27]]

will be made to make a record in use by a member of the ASC or its staff 
available when requested, it may occasionally be necessary to delay 
making such a record available when doing so at the time the request is 
made would seriously interfere with the work of the ASC or its staff.
    (d) Missing or lost records. Any person who has requested a record 
or a copy of a record pertaining to him or her will be notified if the 
record sought cannot be found. If the person so requests, he or she will 
be notified if the record subsequently is found.
    (e) Oral requests; misdirected written requests--(1) Telephone and 
other oral requests. Before responding to any request by an individual 
for information concerning whether records maintained by the ASC in a 
system of records pertain to the individual or to any request for access 
to records by an individual, such request must be in writing and signed 
by the individual making the request. The Executive Director will not 
entertain any appeal from an alleged denial of failure to comply with an 
oral request. Any person who has made an oral request for information or 
access to records who believes that the request has been improperly 
denied should resubmit the request in appropriate written form to obtain 
proper consideration and, if need be, administrative review.
    (2) Misdirected written requests. The ASC cannot assure that a 
timely or satisfactory response will be given to written requests for 
information, access or amendment by an individual with respect to 
records pertaining to him or her that are directed to the ASC other than 
in a manner prescribed in Secs. 1102.103(a), 1102.106(a), 
1102.108(a)(2), and 1102.110 of this subpart. Any staff member who 
receives a written request for information, access or amendment should 
promptly forward the request to the Privacy Act Officer. Misdirected 
requests for records will be considered to have been received by the ASC 
only when they have been actually received by the Privacy Act Officer in 
cases under Sec. 1102.108(a)(2). The Executive Director will not 
entertain any appeal from an alleged denial or failure to comply with a 
misdirected request, unless it is clearly shown that the request was in 
fact received by the Privacy Act Officer.



Sec. 1102.109  Fees.

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



Sec. 1102.110  Penalties.

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



     Subpart D_Description of Office, Procedures, Public Information

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

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



Sec. 1102.300  Purpose and scope.

    This part sets forth the basic policies of the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') regarding information it maintains and the procedures for 
obtaining access to such information. This part does not apply to

[[Page 28]]

the Federal Financial Institutions Examination Council. Section 1102.301 
sets forth definitions applicable to this part 1102, subpart D. Section 
1102.302 describes the ASC's statutory authority and functions. Section 
1102.303 describes the ASC's organization and methods of operation. 
Section 1102.304 describes the types of information and documents 
typically published in the Federal Register. Section 1102.305 explains 
how to access public records maintained on the ASC's World Wide Web site 
and at the ASC's office and describes the categories of records 
generally found there. Section 1102.306 implements the Freedom of 
Information Act (``FOIA'') (5 U.S.C. 552). Section 1102.307 authorizes 
the discretionary disclosure of exempt records under certain limited 
circumstances. Section 1102.308 provides anyone with the right to 
petition the ASC to issue, amend, and repeal rules of general 
application. Section 1102.309 sets out the ASC's confidential treatment 
procedures. Section 1102.310 outlines procedures for serving a subpoena 
or other legal process to obtain information maintained by the ASC.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.301  Definitions.

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

[[Page 29]]

or that would be of current interest to the general public.
    (k) Review means the process of examining documents located in a 
response to a request that is for a commercial use to determine whether 
any portion of any document located is permitted to be withheld. It also 
includes processing any documents for disclosure, e.g, doing all that is 
necessary to excise them and otherwise prepare them for release. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    (l) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.
    (m) State appraiser regulatory agency includes, but is not limited 
to, any board, commission, individual or other entity that is authorized 
by State law to license, certify, and supervise the activities or 
persons authorized to perform appraisals in connections with federally 
related transactions and real estate related financial transactions that 
require the services of a State licensed or certified appraiser.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.302  ASC authority and functions.

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



Sec. 1102.303  Organization and methods of operation.

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

[[Page 30]]

    (d) ASD Address ASC offices are located at 2000 K Street, NW., Suite 
310; Washington, DC 20006.

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



Sec. 1102.304  Federal Register publication.

    The ASC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Description of its organization and the established places at 
which, the officers from whom, and the methods whereby, the public may 
secure information, make submittals or re nests, or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the ASC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rulemaking.

[64 FR 72497, Dec. 28, 1999]



Sec. 1102.305  Publicly available records.

    (a) Records available on the ASCs World Wide Web site--(1) 
Discretionary release of documents. The ASC encourages the public to 
explore the wealth of resources available on the ASC's Internet World 
Wide Web site, located at: http://www.asc.gov. The ASC has elected to 
publish a broad range to materials on its Web site.
    (2) Documents required to be made available via computer 
telecommunications. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available through 
computer telecommunications, may be found on the ASC's Internet World 
Wide Web site located at: http://www.asc.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders, made in the adjudication of cases;
    (B) Statements of policy and interpretations adopted by the ASC that 
are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (D) Copies of all records (regardless of form or format), such as 
correspondence relating to field reviews or other regulatory subjects, 
released to any person under Sec. 1102.306 that, because of the nature 
of their subject matter, the ASC has determined are likely to be the 
subject of subsequent requests;
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the ASC may delete identifying 
details when it makes available or publishes any records. If reduction 
is necessary, the ASC will, to the extent technically feasible, indicate 
the amount of material deleted at the place in the record where such 
deletion is made unless that indication in and of itself will jeopardize 
the purpose for the redaction.
    (b) Types of written communications. The following types of written 
communications shall be subject to paragraph (a) of this section:
    (1) The ASC's annual report to Congress;
    (2) All final opinions and orders made in the adjudication of cases;
    (3) All statements of general policy not published in the Federal 
Register.
    (4) Requests for the ASC or its staff to provide interpretive advice 
with respect to the meaning or application of any statute administered 
by the ASC or any rule or regulation adopted thereunder and any ASC 
responses thereto;
    (5) Requests for a statement that, on the basis of the facts 
presented in such a request, the ASC would not take any enforcement 
action pertaining to the facts as represented and any ASC responses 
thereto: and

[[Page 31]]

    (6) Correspondence between the ASC and a State appraiser regulatory 
agency arising out of the ASC's field review of the State agency's 
appraiser regulatory program.
    (c) Applicable fees. (1) If applicable, fees for furnishing records 
under this section are as set forth in Sec. 1102.306(e).
    (2) Information on the ASC's World Wide Web site is available to the 
public without charge. If, however, information available on the ASC's 
World Wide Web site is provided pursuant to a Freedom of Information Act 
request processed under g 1102.306 then fees apply and will be assessed 
pursuant to Sec. 1102.306(e).

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



Sec. 1102.306  Procedures for requesting records.

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

[[Page 32]]

may be waived by the Executive Director as a matter of administrative 
discretion.
    (3) A requester seeking expedited processing will be notified 
whether expedited processing has been granted within ten (10) working 
days of the receipt of the request. If the request for expedited 
processing is denied, the requester may file an appeal pursuant to the 
procedures set forth in paragraph (g) of this section, and the ASC shall 
respond to the appeal within ten (10) working days after receipt of the 
appeal.
    (4) Priority of responses. Consistent with sound administrative 
process, the ASC processes requests in the order they are received. 
However, in the ASC's discretion, or upon a court order in a matter to 
which the ASC is a party, a particular request may be processed out of 
turn.
    (5) Notification. (i) The time for response to requests will be 
twenty (20) working days except:
    (A) In the case of expedited treatment under paragraph (c)(2) of 
this section;
    (B) Where the running of such time is suspended for the calculation 
of a cost estimate for the requester if the ASC determines that the 
processing of the request may exceed the requester's maximum fee 
provision or if the charges are likely to exceed $250 as provided for in 
paragraph (e)(1)(iv) of this section;
    (C) Where the running of such time is suspended for the payment of 
fees pursuant to the paragraph (c)(5)(i)(B) and (e)(1) of this section; 
or
    (D) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B) 
and further described in paragraph (c)(5)(iii) of this section.
    (ii) In unusual circumstances as referred to in paragraph 
(c)(5)(i)(D) of this section, the time limit may be extended for a 
period of:
    (A) Ten (10) working days as provided by written notice to the 
requester, setting forth the reasons for the extension and the date on 
which a determination is expected to be dispatched; or
    (B) Such alternative time period as agreed to by the requester or as 
reasonably determined by the ASC when the ASC notifies the requester 
that the request cannot be processed in the specified time limit.
    (iii) Unusual circumstances may arise when:
    (A) The records are in facilities that are not located at the ASC's 
Washington office;
    (B) The records requested are voluminous or are not in close 
proximity to one another; or
    (C) There is a need to consult with another agency or among two or 
more components of the ASC having a substantial interest in the 
determination.
    (6) Response to request. In response to a request that satisfies the 
requirements of paragraph (a) of this section, a search shall be 
conducted of records maintained by the ASC in existence on the date of 
receipt of the request, and a review made of any responsive information 
located. To the extent permitted by law, the ASC may redact identifying 
details when it makes available or publishes any records. If redaction 
is appropriate, the ASC will, to the extent technically feasible, 
indicate the amount of material deleted at the place in the record where 
such deletion is made unless that indication in and of itself will 
jeopardize the purpose for the redaction. The ASC shall notify the 
requester of:
    (i) The ASC's determination of the request;
    (ii) The reasons for the determination;
    (iii) If the response is a denial of an initial request or if any 
information is withheld, the ASC will advise the requester in writing:
    (A) If the denial is in part or in whole;
    (B) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (C) The exemptions relied on for the denial; and
    (D) The right of the requester to appeal the denial to the Chairman 
of the ASC within 30 business days following receipt of the 
notification, as specified in paragraph (h) of this section.
    (d) Providing responsive records. (1) Copies of requested records 
shall be sent to the requester by regular U.S. mail to the address 
indicated in the request, unless the requester elects to

[[Page 33]]

take delivery of the documents at the ASC or makes other acceptable 
arrangements, or the ASC deems it appropriate to send the documents by 
another means.
    (2) The ASC shall provide a copy of the record in any form or format 
requested if the record is readily reproducible by the ASC in that form 
or format, but the ASC need not provide more than one copy of any record 
to a requester.
    (3) By arrangement with the requester, the ASC may elect to send the 
responsive records electronically if a substantial portion of the 
request is in electronic format. If the information requested is made 
pursuant to the Privacy Act of 1974, 5 U.S.C. 552a, it will not be sent 
by electronic means unless reasonable security measures can be provided.
    (e) Fees--(1) General rules. (i) Persons requesting records of the 
ASC shall be charged for the direct costs of search, duplication, and 
review as set forth in paragraphs (e)(2) and (e)(3) of this section, 
unless such costs are less than the ASC's cost of processing the 
requester's remittance.
    (ii) Requesters will be charged for search and review costs even if 
responsive records are not located or, if located, are determined to be 
exempt from disclosure.
    (iii) Multiple requests seeking similar or related records from the 
same requester or group of requesters will be aggregated for the 
purposes of this section.
    (iv) If the ASC determines that the estimated costs of search, 
duplication, or review of requested records will exceed the dollar 
amount specified in the request, or if no dollar amount is specified, 
the ASC will advise the requester of the estimated costs. The requester 
must agree in writing to pay the costs of search, duplication, and 
review prior to the ASC initiating any records search.
    (v) If the ASC estimates that its search, duplication, and review 
costs will exceed $250, the requester must pay an amount equal to 20 
percent of the estimated costs prior to the ASC initiating any records 
search.
    (vi) The ASC ordinarily will collect all applicable fees under the 
final invoice before releasing copies of requested records to the 
requester.
    (vii) The ASC may require any requester who has previously failed to 
pay charges under this section within 30 calendar days of mailing of the 
invoice to pay in advance the total estimated costs of search, 
duplication, and review. The ASC also may require a requester who has 
any charges outstanding in excess of 30 calendar days following mailing 
of the invoice to pay the full amount due, or demonstrate that the fee 
has been paid in full, prior to the ASC initiating any additional 
records search.
    (viii) The ASC may begin assessing interest charges on unpaid bills 
on the 31st day following the day on which the invoice was sent. 
Interest will be at the rate prescribed in Sec. 3717 of title 31 of the 
United States Code and will accrue from the date of the invoice.
    (ix) The time limit for the ASC to respond to a request will not 
begin to run until the ASC has received the requester's written 
agreement under paragraph (e)(1)(iv) of this section, and advance 
payment under paragraph (e)(1)(v) or (vii) of this section, or payment 
of outstanding charges under paragraph (e)(1)(vii) or (viii) of this 
section.
    (x) As part of the initial request, a requester may ask that the ASC 
waive or reduce fees if disclosure of the records is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Director (or designee), and the requester will be notified in 
writing of his or her determination. A determination not to grant a 
request for a waiver or reduction of fees under this paragraph may be 
appealed to the ASC's Chairman pursuant to the procedure set forth in 
paragraph (g) of this section.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication, and review costs.
    (ii) Educational institutions, noncommercial scientific 
institutions, and

[[Page 34]]

news media representatives shall be charged duplication costs, except 
for the first 100 pages.
    (iii) Requesters not described in paragraph (e)(2)(i) or (ii) of 
this section shall be charged the full reasonable direct cost of search 
and duplication, except for the first two hours of search time and first 
100 pages of duplication.
    (3) Fee schedule. The dollar amount of fees which the ASC may charge 
to records requesters will be established by the Executive Director. The 
ASC may charge fees that recoup the full allowable direct costs it 
incurs. Fees are subject to change as costs change. The fee schedule 
will be published periodically on the ASC's Internet World Wide Web site 
(http://www.asc.gov) and will be effective on the date of publication. 
Copies of the fee schedule may be obtained by request at no charge by 
contacting the Executive Director by letter, Internet email or 
facsimile.
    (i) Manual searches for records. The ASC will charge for manual 
searches for records at the basic rate of pay of the employee making the 
search plus 16 percent to cover employee benefit costs.
    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the search, including 
computer time, computer runs, and the operator's time apportioned to the 
search multiplied by the operator's basic rate of pay plus 16 percent to 
cover employee benefit costs.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is $.25.
    (B) For other methods of reproduction or duplication, the ASC will 
charge the actual direct costs of reproducing or duplicating the 
documents, including each involved employee's basic rate of pay plus 16 
percent to cover employee benefit costs.
    (iv) Review of records. The ASC will charge commercial use 
requesters for the review of records at the time of processing the 
initial request to determine whether they are exempt from mandatory 
disclosure at the basic rate of pay of the employee making the search 
plus 16 percent to cover employee benefit costs. The ASC will not charge 
at the administrative appeal level for review of an exemption already 
applied. When records or portions of records are withheld in full under 
an exemption which is subsequently determined not to apply, the ASC may 
charge for a subsequent review to determine the applicability of other 
exemptions not previously considered.
    (v) Other services. Complying with requests for special services, 
other than a readily produced electronic form or format, is at the ASC's 
discretion. The ASC may recover the full costs of providing such 
services to the requester.
    (4) Use of contractors. The ASC may contact with independent 
contractors to locate, reproduce, and/or disseminate records; provided, 
however, that the ASC has determined that the ultimate cost to the 
requester will be no greater than it would be if the ASC performed these 
tasks itself. In no case will the ASC contract our responsibilities 
which FOIA provides that the ASC alone may discharge, such as 
determining the applicability of an exemption or whether to waive or 
reduce fees.
    (f) Exempt information. A request for records may be denied if the 
requested record contains information that falls into one or more of the 
following categories. \1\ If the requested record contains both exempt 
and nonexempt information, the nonexempt portions, which may reasonable 
be segregated from the exempt portions, will be released to the 
requester. If redaction is necessary, the ASC will, to the extent 
technically feasible, indicate the amount of material deleted at the 
place in the record where such deletion is made unless that indication 
in and of itself will jeopardize the purpose for the redaction. The 
categories of exempt records are as follows:
---------------------------------------------------------------------------

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

    (1) Records that are specifically authorized under criteria 
established by

[[Page 35]]

an Executive Order to be kept secret in the interest of national defense 
or foreign policy and are in fact properly classified pursuant to such 
Executive Order;
    (2) Records related solely to the internal personnel rules and 
practices of the ASC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters that would not 
be available by law to a private party in litigation with the ASC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trail or an 
impartial adjudication;
    (ii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Records that are contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the ASC or any agency responsible for the regulation or 
supervision of financial institutions; or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (g) Appeals. (1) Appeals should be addressed to the Executive 
Director; ASC; 2000 K Street, NW., Suite 310; Washington, DC 20006.
    (2) A person whose initial request for records under this section, 
or whose request for a waiver of fees under paragraph (e)(1)(x) of this 
section, has been denied, either in part or in whole, has the right to 
appeal the denial to the ASC's Chairman (or designee) within 30 business 
days after receipt of notification of the denial. Appeals of denials of 
initial requests or for a waiver of fees must be in writing and include 
any additional information relevant to consideration of the appeal.
    (3) Except in the case of an appeal for expedited treatment under 
paragraph (c)(3) of this section, the ASC will notify the appellant in 
writing within 20 business days after receipt of the appeal and will 
state:
    (i) Whether it is granted or denied in whole or in part;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (4) If a requester is appealing for denial of expedited treatment, 
the ASC will notify the appellant within ten business days after receipt 
of the appeal of the ASC's disposition.
    (5) Complete payment of any outstanding fee invoice will be required 
before an appeal is processed.
    (h) Records of another agency. If a requested record is the property 
of another Federal agency or department, and that agency or department, 
either in writing or by regulation, expressly

[[Page 36]]

retains ownership of such record, upon receipt of a request for the 
record the ASC will promptly inform the requester of this ownership and 
immediately shall forward the request to the proprietary agency or 
department either for processing in accordance with the latter's 
regulations or for guidance with respect to disposition.

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



Sec. 1102.307  Disclosure of exempt records.

    (a) Disclosure prohibited. Except as provided in paragraph (b) of 
this section or by 12 CFR part 1102, subpart C, no person shall disclose 
or permit the disclosure of any exempt records, or information contained 
therein, to any persons other than those officers, directors, employees, 
or agents of the ASC or a State appraiser regulatory agency who has a 
need for such records in the performance of their official duties. In 
any instance in which any person has possession, custody or control of 
ASC exempt records or information contained therein, all copies of such 
records shall remain the property of the ASC and under no circumstances 
shall any person, entity or agency disclose or make public in any manner 
the exempt records or information without written authorization from the 
Executive Director, after consultation with the ASC General Counsel.
    (b) Disclosure authorized. Exempt records or information of the ASC 
may be disclosed only in accordance with the conditions and requirements 
set forth in this paragraph (b). Requests for discretionary disclosure 
of exempt records of information pursuant to this paragraph (b) may be 
submitted directly to the Executive Director. Such administrative 
request must clearly state that it seeks discretionary disclosure of 
exempt records, clearly identify the records sought, provide sufficient 
information for the ASC to evaluate whether there is good cause for 
disclosure, and meet all other conditions set forth in paragraph (b)(1) 
through (3) of this section. Authority to disclose or authorize 
disclosure of exempt records of the ASC is delegated to the Executive 
Director, after consultation with the ASC General Counsel.
    (1) Disclosure by Executive Director. (i) The Executive Director, or 
designee, may disclose or authorize the disclosure of any exempt record 
in response to a valid judicial subpoena, court order, or other legal 
process, and authorize any current or former member, officer, employee, 
agent of the ASC, or third party, to appear and testify regarding an 
exempt record or any information obtained in the performance of such 
person's official duties, at any administrative or judicial hearing or 
proceeding where such person has been served with a valid subpoena, 
court order, or other legal process requiring him or her to testify. The 
Executive Director shall consider the relevancy of such exempt records 
or testimony to the ligation, and the interests of justice, in 
determining whether to disclose such records or testimony. Third parties 
seeking disclosure of exempt records or testimony in litigation to which 
the ASC is not a party shall submit a request for discretionary 
disclosure directly to the Executive Director. Such requests shall 
specify the information sought with reasonable particularity and shall 
be accompanied by a statement with supporting documentation showing in 
detail the relevance of such exempt information to the litigation, 
justifying good cause for disclosure, and a commitment to be bound by a 
protective order. Failure to exhaust such administration request prior 
to service of a subpoena or other legal process may, in the Executive 
Director's discretion, serve as a basis for objection to such subpoena 
or legal process.
    (ii) The Executive Director, or designee, may in his or her 
discretion and for good cause, disclose or authorize disclosure of any 
exempt record or testimony by a current or former member, officer, 
employee, agent of the ASC, or third party, sought in connection with 
any civil or criminal hearing, proceeding or investigation without the 
service of a judicial subpoena, or other legal process requiring such 
disclosure or testimony. If he or she determines that the records or 
testimony are relevant to the hearing, proceeding or investigation and 
that disclosure is in

[[Page 37]]

the best interests of justice and not otherwise prohibited by Federal 
statute. Where the Executive Director or designee authorizes a current 
or former member, officer, director, empl9oyee or agent of the ASC to 
testify or disclose exempt records pursuant to this paragraph (b)(1), he 
or she may, in his or her discretion, limit the authorization to so much 
of the record or testimony as is relevant to the issues at such hearing, 
proceeding or investigation, and he or she shall give authorization only 
upon fulfillment of such conditions as he or she deems necessary and 
practicable to protect the confidential nature of such records or 
testimony.
    (2) Authorization for disclosure by the Chairman of the ASC. Except 
where expressly prohibited by law, the Chairman of the ASC may, in his 
or her discretion, authorize the disclosure of any ASC records. Except 
where disclosure is required by law, the Chairman may direct any current 
or former member, officer, director, employee or agent of the ASC to 
refuse to disclose any record or to give testimony if the Chairman 
determines, in his or her discretion, that refusal to permit such 
disclosure is in the public interest.
    (3) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records and information. Any 
disclosure permitted by paragraph (b) of this section is discretionary 
and nothing in paragraph (b) of this section shall be construed as 
requiring the disclosure of information. Further, nothing in paragrah 
(b) of this section shall be construed as restricting, in any manner, 
the authority of the ASC, the Chairman of the ASC, the Executive 
Director, the ASC General Counsel, or their designees, in their 
discretion and in light of the facts and circumstances attendant in any 
given case, to require conditions upon, and to limit, the form, manner, 
and extent of any disclosure permitted by this section. Wherever 
practicable, disclosure of exempt records shall be made pursuant to a 
protective order and redacted to exclude all irrelevant or non-
responsive exempt information.

[64 FR 72500, Dec. 28, 1999]



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

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

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



Sec. 1102.309  Confidential treatment procedures.

    (a) In general. Any submitter of written information to the ASC who 
desires that some or all of his or her submission be afforded 
confidential treatment under 5 U.S.C. 552(b)(4) (i.e., trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential) shall file a request for confidential 
treatment with the Executive Director of the ASC at the time the written 
information is submitted to the ASC or within ten business days 
thereafter. Nothing in this section limits the authority of the ASC and 
its staff to make determinations regarding access to documents under 
this subpart.
    (b) Form of request. A request for confidential treatment shall be 
submitted in a separate letter or memorandum conspicuously entitled, 
``Request for Confidential Treatment.'' Each request shall state in 
reasonable detail the facts and arguments supporting the request and its 
legal justification. If the submitter had been required by the ASC to 
provide the particular information, conclusory statements that the

[[Page 38]]

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

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



Sec. 1102.310  Service of process.

    (a) Service. Any subpoena or other legal process to obtain 
information maintained by the ASC shall be duly issued by a court having 
jurisdiction over the ASC, and served upon the Chairman ASC; 2000 K 
Street, NW., Suite 310; Washington, DC 20006. Where the ASC is named as 
a party, service of process shall be made pursuant to the Federal Rules 
of Civil Procedure upon the Chairman at the above address. The Chairman 
shall immediately forward any subpoena, court order or legal process to 
the General Counsel. If consistent with the terms of the subpoena, court 
order or legal process, the

[[Page 39]]

ASC may require the payment of fees, in accordance with the fee schedule 
referred to in Sec. 1102.306(e) prior to the release of any records 
requested pursuant to any subpoena or other legal process.
    (b) Notification by person served. If any current or former member, 
officer, employee or agent of the ASC, or any other person who has 
custody of records belonging to the ASC, is served with a subpoena, 
court order, or other process requiring that person's attendance as a 
witness concerning any matter related to official duties, or the 
production of any exempt record of the ASC, such person shall promptly 
advise the Executive Director of such service, the testimony and records 
described in the subpoena, and all relevant facts that may assist the 
Executive Director, in consultation with the ASC General Counsel, in 
determining whether the individual in question should be authorized to 
testify or the records should be produced. Such person also should 
inform the court or tribunal that issued the process and the attorney 
for the party upon whose application the process was issued, if known, 
of the substance of this section.
    (c) Appearance by person served. Absent the written authorization of 
the Executive Director or designee to disclose the requested 
information, any current or former member, officer, employee, or agent 
of the ASC, and any other person having custody of records of the ASC, 
who is required to respond to a subpoena or other legal process, shall 
attend at the time and place therein specified and respectfully decline 
to produce any such record or give any testimony with respect thereto, 
basing such refusal on this section.

[64 FR 72501, Dec. 28, 1999]

                       PARTS 1103	1199 [RESERVED]

[[Page 41]]



               CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY




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

                SUBCHAPTER A--ORGANIZATION AND OPERATIONS
Part                                                                Page
1200            Organization and functions..................          43
1201            General definitions applying to all Federal 
                    Housing Finance Agency regulations......          46
1202            Freedom of Information Act..................          49
1203            Equal Access to Justice Act.................          59
1204            Privacy Act implementation..................          65
1206            Assessments.................................          74
1207            Minority and women inclusion................          77
1208            Debt collection.............................          83
1209            Rules of practice and procedure.............         104
1211            Procedures..................................         142
1212            Post-employment restriction for senior 
                    examiners...............................         144
1213            Office of the Ombudsman.....................         146
1214            Availability of non-public information......         148
1215            Production of FHFA records, information, and 
                    employee testimony in third-party legal 
                    proceedings.............................         150
1217            Program Fraud Civil Remedies Act............         156
                    SUBCHAPTER B--ENTITY REGULATIONS
1221            Margin and capital requirements for covered 
                    swap entities...........................         162
1222            Appraisals..................................         183
1225            Minimum capital--temporary increase.........         187
1227            Suspended Counterparty Program..............         189
1228            Restrictions on the acquisition of, or 
                    taking security interests in, mortgages 
                    on properties encumbered by certain 
                    private transfer fee covenants and 
                    related securities......................         195
1229            Capital classifications and prompt 
                    corrective action.......................         196
1230            Executive compensation......................         206
1231            Golden parachute and indemnification 
                    payments................................         209

[[Page 42]]

1233            Reporting of fraudulent financial 
                    instruments.............................         214
1234            Credit risk retention.......................         215
1235            Record retention for regulated entities and 
                    office of finance.......................         252
1236            Prudential management and operations 
                    standards...............................         255
1237            Conservatorship and receivership............         264
1238            Stress testing of regulated entities........         269
1239            Responsibilities of boards of directors, 
                    corporate practices, and corporate 
                    governance..............................         272
                        SUBCHAPTER C--ENTERPRISES
1249            Book-entry procedures.......................         281
1250            Flood insurance.............................         285
1251            Contributions to the housing trust and 
                    capital magnet funds....................         286
1252            Portfolio holdings..........................         286
1253            Prior approval for enterprise products......         287
                  SUBCHAPTER D--FEDERAL HOME LOAN BANKS
1260            Sharing of information among Federal Home 
                    Loan Banks..............................         302
1261            Federal Home Loan Bank directors............         304
1263            Members of the banks........................         317
1264            Federal Home Loan Bank housing associates...         336
1265            Core mission activities.....................         339
1266            Advances....................................         340
1267            Federal Home Loan Bank investments..........         351
1268            Acquired member assets (Eff. 1/18/17).......         354
1269            Standby letters of credit...................         357
1270            Liabilities.................................         360
1271            Miscellaneous Federal Home Loan Bank 
                    operations and authorities..............         369
1272            New business activities.....................         375
1273            Office of Finance...........................         379
1274            Financial statements of the banks...........         386
1277            Federal Home Loan Bank capital requirements, 
                    capital stock and capital plans.........         387
1278            Voluntary mergers of Federal Home Loan Banks         392
                 SUBCHAPTER E--HOUSING GOALS AND MISSION
1281            Federal Home Loan Bank housing goals........         398
1282            Enterprise housing goals and mission........         406
1290            Community support requirements..............         436
1291            Federal Home Loan Banks' Affordable Housing 
                    Program.................................         440
1292            Community Investment Cash Advance Programs..         463
1293-1299       [Reserved]

[[Page 43]]



                SUBCHAPTER A_ORGANIZATION AND OPERATIONS





PART 1200_ORGANIZATION AND FUNCTIONS--Table of Contents



Sec.
1200.1  Federal Housing Finance Agency.
1200.2  Organization of the Federal Housing Finance Agency.
1200.3  Official logo and seal.
1200.4  OMB control numbers assigned under the Paperwork Reduction Act.

    Authority: 5 U.S.C. 552, 12 U.S.C. 4512, 12 U.S.C. 4526, 44 U.S.C. 
3506.

    Source: 77 FR 73264, Dec. 10, 2012, unless otherwise noted.



Sec. 1200.1  Federal Housing Finance Agency.

    (a) Scope and authority. The Federal Housing Finance Agency (FHFA) 
is an independent agency of the Federal Government. Division A of the 
Housing and Economic Recovery Act of 2008, Public Law 110-289, 122 Stat. 
2654, titled the Federal Housing Finance Regulatory Reform Act of 2008, 
amended the Federal Housing Enterprises Financial Safety and Soundness 
Act of 1992 (12 U.S.C. 4501 et seq.) (Safety and Soundness Act) and the 
Federal Home Loan Bank Act (12 U.S.C. 1421-1449) to establish FHFA. FHFA 
administers the Safety and Soundness Act and the regulated entities' 
authorizing statutes: the Federal Home Loan Bank Act, the Federal 
National Mortgage Association Charter Act, and the Federal Home Loan 
Mortgage Corporation Act. FHFA is responsible for the supervision and 
regulation of the Federal National Mortgage Corporation (Fannie Mae), 
the Federal Home Loan Mortgage Corporation (Freddie Mac), (together, 
Enterprises), the Federal Home Loan Banks (Banks) (collectively, the 
``regulated entities''), and the Office of Finance (OF). FHFA is charged 
with ensuring that the regulated entities: Operate in a safe and sound 
manner, including maintaining adequate capital and internal controls; 
foster liquid, efficient, competitive, and resilient national housing 
finance markets; comply with the Safety and Soundness Act and their 
respective authorizing statutes, and rules, regulations and orders 
issued under the Safety and Soundness Act and the authorizing statutes; 
and carry out their respective statutory missions through activities and 
operations that are authorized and consistent with the Safety and 
Soundness Act, their respective authorizing statutes, and the public 
interest. FHFA's costs and expenses are funded by annual assessments 
paid by the regulated entities. FHFA is headed by a director, who is 
appointed by the President and confirmed by the Senate for a five-year 
term.
    (b) Location. FHFA's headquarters is located at 400 Seventh Street 
SW., Washington, DC 20219. FHFA's official hours of business are 8:00 
a.m.-5 p.m. (Eastern Time), Monday through Friday, excluding Federal 
holidays.

[77 FR 73264, Dec. 10, 2012, as amended at 80 FR 80233, Dec. 24, 2015]



Sec. 1200.2  Organization of the Federal Housing Finance Agency.

    (a) Director. The Director is responsible for overseeing the 
prudential operations of each regulated entity, and for ensuring that 
each regulated entity: Operates in a safe and sound manner; operates and 
acts to foster liquid, efficient, competitive, and resilient national 
housing financing markets; complies with the Safety and Soundness Act, 
its authorizing statute, and rules, regulations, guidelines, and orders 
issued under those statutes; carries out its mission only through 
activities that are authorized by statute; and acts and operates 
consistent with the public interest. The Director may delegate to FHFA 
officers and employees any of the functions, powers, and duties of the 
Director as the Director considers appropriate. The Director manages 
FHFA, including through authorities delegated to FHFA officers and 
employees.
    (b) Deputy Director of the Division of Enterprise Regulation. The 
Deputy Director is responsible for managing FHFA's program of prudential 
supervision of the Enterprises. The Deputy

[[Page 44]]

Director provides management oversight, direction, and support for all 
examination activity involving the Enterprises, the development of 
supervision findings, and preparation of the annual reports of 
examination. The Deputy Director provides support and advice to the 
Director and other senior executives and represents the division on 
significant and emerging supervisory issues and development of FHFA 
supervisory policy, and has such other responsibilities as the Director 
may prescribe.
    (c) Deputy Director of the Division of Housing Mission and Goals. 
The Deputy Director is responsible for FHFA policy development and 
analysis, oversight of housing and regulatory policy, and oversight of 
the mission and goals of the Enterprises. The Deputy Director oversees 
and coordinates FHFA activities regarding data analysis, market 
surveillance, policy development, policy research and analysis affecting 
housing finance and financial markets, and policy analysis and research 
in support of FHFA's mission and the Director's responsibilities as a 
member of the Federal Housing Finance Oversight board, the Financial 
Stability Oversight Board, and the Financial Stability Oversight 
Council, and has such other responsibilities as the Director may 
prescribe.
    (d) Deputy Director of the Division of Federal Home Loan Bank 
Regulation. The Deputy Director is responsible for managing FHFA's 
program of prudential supervision of the Banks and the OF. The Deputy 
Director provides management oversight, direction and support for all 
examination activity involving the Banks, the development of supervision 
findings, and preparation of the annual reports of examination. The 
Deputy Director provides support and advice to the Director and other 
senior executives and represents the division on significant and 
emerging supervisory issues and development of FHFA supervisory policy, 
and has such other responsibilities as the Director may prescribe.
    (e) Offices and functions--(1) Office of the Director. The Office of 
the Director supports the activities of the Director and includes 
Offices as the Director may create within the Office of the Director.
    (2) Division of Enterprise Regulation. The division supports and 
implements the responsibilities of the Deputy Director described in 
paragraph (b) of this section. The division oversees and directs all 
Enterprise supervisory activities, develops examination findings, 
prepares reports of examination, and prepares the sections of the Annual 
Report to Congress that describe the condition and performance of each 
Enterprise. The division monitors and assesses the financial condition 
and performance of the Enterprises. By means of annual examinations and 
a continuous on-site presence, the division monitors and assesses the 
amount of risk each Enterprise assumes, the quality of risk management, 
and compliance with regulations.
    (3) Division of Housing Mission and Goals. The division supports and 
implements the responsibilities of the Deputy Director described in 
paragraph (c) of this section. In support of FHFA's mission and the 
Director's responsibilities as a member of the Federal Housing Finance 
Oversight Board, the Financial Stability Oversight Board, and the 
Financial Stability Oversight Committee, the division also oversees and 
coordinates FHFA activities that involve certain data analysis, and 
analysis affecting housing finance and financial markets.
    (4) Division of Federal Home Loan Bank Regulation. The division 
supports and implements the responsibilities of the Deputy Director 
described in paragraph (d) of this section, including overseeing and 
directing all Bank supervisory activities, developing examination 
findings, preparing reports of examination, and preparing the sections 
of the annual report to Congress that describe the condition and 
performance of the Banks. The division monitors and assesses the 
financial condition and performance of the Banks and the OF and monitors 
and assesses their compliance with regulations, the amount of risk they 
assume, and the quality of their risk management through annual on-site 
examinations, periodic visits, and ongoing off-site monitoring and 
analysis.

[[Page 45]]

    (5) Office of Inspector General. The office is headed by a 
presidentially appointed and Senate-confirmed Inspector General who 
serves under the general supervision of the Director. The office carries 
out activities and responsibilities established in the Inspector General 
Act of 1978.
    (6) Office of General Counsel. The office advises and supports the 
Director and FHFA staff on legal matters related to the functions, 
activities, and operations of FHFA and the regulated entities; it 
supports supervision functions, development and promulgation of 
regulations and orders, and enforcement actions. The office manages the 
Freedom of Information, Privacy Act and ethics programs. The Designated 
Agency Ethics Official advises, counsels, and trains FHFA employees on 
ethical standards and conflicts of interest, and manages the agency's 
financial disclosure program.
    (7) Office of the Ombudsman. The office is responsible for 
considering complaints and appeals from the regulated entities, the OF 
and any person that has a business relationship with a regulated entity 
or the OF concerning any matter relating to FHFA's regulation and 
supervision of that entity or the OF.
    (8) Office of Minority and Women Inclusion. The office is 
responsible for all matters of FHFA relating to diversity in management, 
employment, and business activities, and for supervising the diversity 
requirements applicable to the regulated entities and the OF.
    (f) Other Offices and Departments. The Director may from time to 
time establish or terminate Offices and Divisions of the agency as the 
Director deems necessary or appropriate to carry out FHFA's mission. The 
Director may establish Offices and positions as the Director deems 
necessary and appropriate to support the operations of a federal agency, 
such as a Deputy Director for one or more specified areas of 
responsibility, a Chief Operating Officer, a Chief Financial Officer, an 
Office of Information Technology, and such other offices, departments, 
and positions as are necessary and appropriate or may be required by 
statute.
    (g) Additional information. Current information on the organization 
of FHFA may be obtained by mail from the Office of Congressional Affairs 
and Communications, 400 Seventh Street, SW., Washington, DC 20219. Such 
information, as well as other FHFA information, also may be obtained 
electronically by accessing FHFA's Web site located at www.FHFA.gov.

[77 FR 73264, Dec. 10, 2012, as amended at 80 FR 45599, July 31, 2015; 
80 FR 80233, Dec. 24, 2015]



Sec. 1200.3  Official logo and seal.

    This section describes and displays the logo adopted by the Director 
as the official symbol representing FHFA. It is displayed on 
correspondence, selected documents, and signage. The logo serves as the 
official seal to certify and authenticate official documents of the 
agency.
    (a) Description. The logo is a disc consisting of three polygons 
each drawn in a manner resembling a silhouette of a pitched roof house 
and with distinctive eaves under its roof. Each polygon is placed one in 
front of the other, two of which are diminished in size from the polygon 
behind it. Placed in the center of the smallest polygon is the acronym 
for the organization, ``FHFA.'' The polygons are encircled by a 
designation scroll having a solid background and containing the words 
``FEDERAL HOUSING FINANCE AGENCY'' in capital letters with serifs, with 
two mullets on the extreme left and right of the scroll. Upon approval 
by the Director, FHFA may employ variations of the color or shading of 
its logo and seal for specified purposes; these will be available for 
reference on the agency Web site at www.fhfa.gov.
    (b) Display. FHFA's official logo and seal appears below:

[[Page 46]]

[GRAPHIC] [TIFF OMITTED] TR31JY15.025


[77 FR 73264, Dec. 10, 2012, as amended at 80 FR 45599, July 31, 2015]



Sec. 1200.4  OMB control numbers assigned under the Paperwork 
Reduction Act.

    (a) Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3531) 
and the implementing regulations of the Office of Management and Budget 
(OMB) (5 CFR part 1320), an agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information unless 
it displays a currently valid OMB control number.
    (b) OMB has approved the collections of information contained in 
FHFA's regulations and has assigned each collection a control number. 
The following table displays the sections of FHFA's regulations (both 
those located in this chapter and those promulgated by the former 
Federal Housing Finance Board that appear in chapter IX of this title) 
containing collections of information, along with the applicable OMB 
control numbers and the expirations dates for those control numbers:

------------------------------------------------------------------------
  12 CFR part or section where identified and   OMB control   Expiration
                   described                        No.          date
------------------------------------------------------------------------
906.5.........................................    2590-0004   07/31/2017
955.4.........................................    2590-0008   02/29/2016
1207.23.......................................    2590-0014   07/31/2018
1222.22.......................................    2590-0013   07/31/2018
1222.23.......................................    2590-0013   07/31/2018
1222.24.......................................    2590-0013   07/31/2018
1222.25.......................................    2590-0013   07/31/2018
1222.26.......................................    2590-0013   07/31/2018
1261.7........................................    2590-0006   12/31/2017
1261.12.......................................    2590-0006   12/31/2017
1261.14.......................................    2590-0006   12/31/2017
1263.2........................................    2590-0003   12/31/2016
1263.4........................................    2590-0003   12/31/2016
1263.5........................................    2590-0003   12/31/2016
1263.6........................................    2590-0003   12/31/2016
1263.7........................................    2590-0003   12/31/2016
1263.8........................................    2590-0003   12/31/2016
1263.9........................................    2590-0003   12/31/2016
1263.11.......................................    2590-0003   12/31/2016
1263.12.......................................    2590-0003   12/31/2016
1263.13.......................................    2590-0003   12/31/2016
1263.14.......................................    2590-0003   12/31/2016
1263.15.......................................    2590-0003   12/31/2016
1263.16.......................................    2590-0003   12/31/2016
1263.17.......................................    2590-0003   12/31/2016
1263.18.......................................    2590-0003   12/31/2016
1263.24.......................................    2590-0003   12/31/2016
1263.26.......................................    2590-0003   12/31/2016
1263.31.......................................    2590-0003   12/31/2016
1264.4........................................    2590-0001   12/31/2018
1264.5........................................    2590-0001   12/31/2018
1264.6........................................    2590-0001   12/31/2018
1266.17.......................................    2590-0001   12/31/2018
1277.28.......................................    2590-0002   12/31/2016
1290.2........................................    2590-0005   02/29/2016
1290.3........................................    2590-0005   02/29/2016
1290.4........................................    2590-0005   02/29/2016
1290.5........................................    2590-0005   02/29/2016
1291.5........................................    2590-0007   11/30/2016
1291.6........................................    2590-0007   11/30/2016
1291.7........................................    2590-0007   11/30/2016
1291.8........................................    2590-0007   11/30/2016
1291.9........................................    2590-0007   11/30/2016
------------------------------------------------------------------------


[81 FR 76294, Nov. 2, 2016]



PART 1201_GENERAL DEFINITIONS APPLYING TO ALL FEDERAL HOUSING FINANCE
AGENCY REGULATIONS--Table of Contents



    Authority: 12 U.S.C. 4511(b), 4513(a), 4513(b).

    Source: 78 FR 2322, Jan. 11, 2013, unless otherwise noted.

[[Page 47]]



Sec. 1201.1  Definitions.

    As used throughout this chapter, the following basic terms relating 
to the Federal Housing Finance Agency, the Federal National Mortgage 
Association, the Federal Home Loan Mortgage Corporation, the Federal 
Home Loan Banks, the Office of Finance, and related entities have the 
meanings set forth below, unless otherwise indicated in a particular 
subchapter, part, section, or paragraph:
    1934 Act means the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.).
    Acquired member assets or AMA means those assets that may be 
acquired by a Bank under part 955 of this title, or any successor 
thereto.
    Advance means a loan from a Bank that is:
    (1) Provided pursuant to a written agreement;
    (2) Supported by a note or other written evidence of the borrower's 
obligation; and
    (3) Fully secured by collateral in accordance with the Bank Act and 
part 1266 of this chapter.
    Affordable Housing Program or AHP means the Affordable Housing 
Program that each Bank is required to establish pursuant to section 
10(j) of the Bank Act (12 U.S.C. 1430(j)) and part 1291 of this chapter.
    Appropriate Federal banking agency has the meaning set forth in 
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) 
and, for federally-insured credit unions, means the NCUA.
    Appropriate state regulator means any state officer, agency, 
supervisor or other entity that has regulatory authority over, or is 
empowered to institute enforcement action against, a particular 
institution.
    Authorizing Statutes means the Federal National Mortgage Association 
Charter Act, the Federal Home Loan Mortgage Corporation Act, and the 
Federal Home Loan Bank Act.
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 et seq.).
    Bank System means the Federal Home Loan Bank System, consisting of 
all of the Banks and the Office of Finance.
    Capital plan means the capital structure plan required for each Bank 
by section 6(b) of the Bank Act, as amended (12 U.S.C. 1426(b)).
    CIP means the Community Investment Program, an advance program under 
CICA required to be offered pursuant to section 10(i) of the Bank Act 
(12 U.S.C. 1430(i)).
    Community Investment Cash Advance or CICA means any advance made 
through a program offered by a Bank under section 10 of the Bank Act (12 
U.S.C. 1430) and parts 1291 and 1292 of this chapter to provide funding 
for targeted community lending and affordable housing, including 
advances made under a Bank's Rural Development Funding (RDF) program, 
offered under section 10(j)(10) of the Bank Act (12 U.S.C. 1430(j)(10)); 
a Bank's Urban Development Funding (UDF) program, offered under section 
10(j)(10) of the Bank Act (12 U.S.C. 1430(j)(10)); a Bank's Affordable 
Housing Program (AHP), offered under section 10(j) of the Bank Act (12 
U.S.C. 1430(j)); a Bank's Community Investment Program (CIP), offered 
under section 10(i) of the Bank Act (12 U.S.C. 1430(i)); or any other 
program offered by a Bank that meets the requirements of part 1292 of 
this chapter.
    Community lending means providing financing for economic development 
projects for targeted beneficiaries, and, for community financial 
institutions (as defined in Sec. 1263.1 of this chapter), purchasing or 
funding small business loans, small farm loans, small agri-business 
loans, or community development loans (as defined in Sec. 1266.1 of this 
chapter).
    Consolidated obligation or CO means any bond, debenture, or note on 
which the Banks are jointly and severally liable and which was issued 
under section 11 of the Bank Act (12 U.S.C. 1431) and any implementing 
regulations, whether or not such instrument was originally issued 
jointly by the Banks or by the Federal Housing Finance Board on behalf 
of the Banks.
    Data Reporting Manual or DRM means a manual issued by FHFA and 
amended from time to time containing reporting

[[Page 48]]

requirements for the Regulated Entities.
    Director, written in title case, means the Director of FHFA or his 
or her designee.
    Enterprise means Fannie Mae and Freddie Mac (collectively, 
Enterprises) and any affiliate thereof.
    Excess stock means that amount of a Bank's capital stock owned by a 
member or other institution in excess of that member's or other 
institution's minimum investment in capital stock required under the 
Bank's capital plan, the Bank Act, or FHFA's regulations, as applicable.
    Fannie Mae means the Federal National Mortgage Association and any 
affiliate thereof.
    FDIC means the Federal Deposit Insurance Corporation.
    FHFA means the Federal Housing Finance Agency established by Section 
1311(a) of the Safety and Soundness Act. (12 U.S.C. 4511(a)).
    Financing Corporation or FICO means the Financing Corporation 
established and supervised by the Director under section 21 of the Bank 
Act (12 U.S.C. 1441) and part 1271 of this chapter.
    FRB means the Board of Governors of the Federal Reserve System.
    Freddie Mac means the Federal Home Loan Mortgage Corporation and any 
affiliate thereof.
    Generally Accepted Accounting Principles or GAAP means accounting 
principles generally accepted in the United States.
    Ginnie Mae means the Government National Mortgage Association.
    GLB Act means the Gramm-Leach-Bliley Act (Pub. L. 106-102 (1999)).
    HERA means the Housing and Economic Recovery Act of 2008, Public Law 
No. 110-289, 122 Stat. 2654.
    Housing associate means an entity that has been approved as a 
housing associate pursuant to part 1264 of this chapter.
    HUD means the United States Department of Housing and Urban 
Development.
    Member means an institution that has been approved for membership in 
a Bank and has purchased capital stock in the Bank in accordance with 
Secs. 1263.20 or 1263.24(b) of this chapter.
    NCUA means the National Credit Union Administration.
    NRSRO means a credit rating organization registered with the SEC as 
a nationally recognized statistical rating organization by the 
Securities and Exchange Commission.
    OCC means the Office of the Comptroller of the Currency.
    Office of Finance or OF means the Office of Finance, a joint office 
of the Banks established under part 1273 of this chapter and referenced 
in the Bank Act and the Safety and Soundness Act.
    President, when referring to an officer of a Bank only, means a 
Bank's principal executive officer.
    Regulated Entity means the Federal Home Loan Mortgage Corporation 
and any affiliate thereof, the Federal National Mortgage Association and 
any affiliate thereof, and any Federal Home Loan Bank.
    Resolution Funding Corporation or REFCORP means the Resolution 
Funding Corporation established by section 21B of the Bank Act (12 
U.S.C. 1441b).
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4501 
et seq.).
    SBIC means a small business investment company formed pursuant to 
section 301 of the Small Business Investment Act (15 U.S.C. 681).
    SEC means the United States Securities and Exchange Commission.
    State means a state of the United States, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the District of Columbia, 
Guam, Puerto Rico, or the United States Virgin Islands.

[78 FR 2322, Jan. 11, 2013, as amended at 79 FR 64665, Oct. 31, 2014; 81 
FR 76295, Nov. 2, 2016]

    Effective Date Note: At 81 FR 91688, Dec. 19, 2016, Sec. 1201.1 was 
amended by revising the definition of ``Acquired member assets'', 
effective Jan. 18, 2017. For the convenience of the user, the revised 
text is set forth as follows:



Sec. 1201.1  Definitions.

                                * * * * *

[[Page 49]]

    Acquired member assets or AMA means assets acquired in accordance 
with, and satisfying the applicable requirements of, part 1268 of this 
chapter.



PART 1202_FREEDOM OF INFORMATION ACT--Table of Contents



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

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

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



Sec. 1202.1  Why did FHFA issue this regulation?

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

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012]



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

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

[[Page 50]]

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

[[Page 51]]

distinct records in order to process a single request; or
    (3) Consult with another agency or among two or more components of 
FHFA or FHFA-OIG that have a substantial interest in the determination 
of a request.

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012]



Sec. 1202.3  What information can I obtain through FOIA?

    (a) General. FHFA and FHFA-OIG prohibit employees from releasing or 
disclosing confidential or otherwise non-public information that FHFA or 
FHFA-OIG possesses, except as authorized by this regulation, by the 
Director of FHFA for FHFA records, or by the FHFA Inspector General for 
FHFA-OIG records, when the disclosure is necessary for the performance 
of official duties.
    (b) Records. You may request that FHFA or FHFA-OIG disclose to you 
its records on a subject of interest to you. FOIA only requires the 
disclosure of records. It does not require FHFA or FHFA-OIG to create 
compilations of information or to provide narrative responses to 
questions or queries. Some information is exempt from disclosure.
    (c) Reading rooms. (1) FHFA maintains electronic and physical 
reading rooms. FHFA's physical reading room is located at 400 Seventh 
Street, SW., Eighth Floor, Washington, DC 20219, and is open to the 
public by appointment from 9 a.m. to 3 p.m. each business day. For an 
appointment, contact the FOIA Officer by calling (202) 649-3803 or by e-
mail at [email protected] The electronic reading room is part of the FHFA 
Web site at http://www.fhfa.gov. FHFA-OIG also maintains electronic and 
physical reading rooms. FHFA-OIG's physical reading room is located at 
400 Seventh Street, SW., Third Floor, Washington, DC 20219, and is open 
to the public by appointment from 9 a.m. to 3 p.m. each business day. 
For an appointment, contact FHFA-OIG by calling (202) 730-2824 or by e-
mail at [email protected] The electronic reading room is part of 
the FHFA-OIG Web site at http://www.fhfaoig.gov.
    (2) Each reading room has the following records created after 
November 1, 1996, by FHFA or its predecessor agencies, or by FHFA-OIG, 
and current indices to the following records created by FHFA or its 
predecessor agencies or FHFA-OIG before or after November 1, 1996:
    (i) Final opinions or orders issued in adjudication;
    (ii) Statements of policy and interpretation that are not published 
in the Federal Register;
    (iii) Administrative staff manuals and instructions to staff that 
affect a member of the public and are not exempt from disclosure under 
FOIA; and
    (iv) Copies of records released under FOIA that FHFA or FHFA-OIG 
determines have become or are likely to become the subject of subsequent 
requests for substantially similar records.

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012; 80 
FR 80233, Dec. 24, 2015]



Sec. 1202.4  What information is exempt from disclosure?

    (a) General. Unless the Director of FHFA or his or her designee for 
FHFA records, the FHFA Inspector General or his or her designee for 
FHFA-OIG records, or any regulation or statute specifically authorizes 
disclosure, neither FHFA nor FHFA-OIG will release records that are--
    (1) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy, and in fact is properly classified pursuant to such 
Executive Order;
    (2) Related solely to FHFA's or FHFA-OIG's internal personnel rules 
and practices;
    (3) Specifically exempted from disclosure by statute (other than 5 
U.S.C. 552a), provided that such statute--
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential;
    (5) Contained in inter-agency or intra-agency memoranda or letters

[[Page 52]]

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



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

    (a) Where to send your request. FOIA requests must be in writing. 
You may make a request for FHFA or FHFA-OIG records by writing directly 
to FHFA's FOIA Office through electronic mail, mail, delivery service, 
or facsimile. The electronic mail address is: [email protected] For mail or 
delivery service, the mailing address is: FOIA Officer, Federal Housing 
Finance Agency, 400 Seventh Street, SW., Eighth Floor, Washington, DC 
20219. The facsimile number is: (202) 649-1073. Requests for FHFA-OIG 
records will be forwarded to FHFA-OIG for processing and direct 
response. You can help

[[Page 53]]

FHFA and FHFA-OIG process your request by marking electronic mail, 
letters, or facsimiles and the subject line, envelope, or facsimile 
cover sheet with ``FOIA Request.'' FHFA's ``Freedom of Information Act 
Reference Guide,'' which is available on FHFA's Web site, http://
www.fhfa.gov, provides additional information to assist you in making 
your request.
    (b) Provide your name and address. Your request must include your 
full name, your address and, if different, the address at which FHFA or 
FHFA-OIG is to notify you about your request, a telephone number at 
which you can be reached during normal business hours, and an electronic 
mail address, if any.
    (c) Request is under FOIA. Your request must have a statement 
identifying it as being made under FOIA.
    (d) Your FOIA status. If you are submitting your request as a 
``commercial use'' requester, an ``educational institution'' requester, 
a ``non-commercial scientific institution'' requester, or a 
``representative of the news media'' for the purposes of the fee 
provisions of FOIA, your request should include a statement specifically 
identifying your status.
    (e) Describing the records you request. You must describe the 
records that you seek in enough detail to enable FHFA or FHFA-OIG 
personnel to locate them with a reasonable amount of effort. Your 
request should include as much specific information as possible that you 
know about each record you request, such as the date, title, name, 
author, recipient, subject matter, or file designations, or the 
description of the record.
    (f) How you want the records produced to you. Your request must tell 
FHFA or FHFA-OIG whether you will inspect the records before duplication 
or want them duplicated and furnished without inspection.
    (g) Agreement to pay fees. In your FOIA request you must agree to 
pay all applicable fees charged under Sec. 1202.11, up to $100.00, 
unless you seek a fee waiver. When making a request, you may specify a 
higher or lower amount you will pay without consultation. Your inability 
to pay a fee does not justify granting a fee waiver.
    (h) Valid requests. FHFA and FHFA-OIG will only process valid 
requests. A valid request must meet all the requirements of this part.

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012; 80 
FR 80233, Dec. 24, 2015]



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

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



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

    (a) Authority to grant or deny requests. The FOIA Officer and the 
Chief FOIA Officer are authorized to grant or deny any request for FHFA 
records. For FHFA-OIG records, the designated FHFA-OIG FOIA Official is 
authorized to grant or deny any request for FHFA-OIG records.
    (b) Multi-Track request processing. FHFA and FHFA-OIG use a multi-
track system to process FOIA requests. This means that a FOIA request is 
processed based on its complexity. When FHFA or FHFA-OIG receives your 
request, it is assigned to a Standard Track or Complex Track. FHFA or

[[Page 54]]

FHFA-OIG will notify you if your request is assigned to the Complex 
Track as described in paragraph (f) of this section.
    (1) Standard Track. FHFA and FHFA-OIG assign FOIA requests that are 
routine and require little or no search time, review, or analysis to the 
Standard Track. FHFA and FHFA-OIG respond to these requests within 20 
days after receipt, in the order in which they are received. If FHFA or 
FHFA-OIG determines while processing your Standard Track request, that 
it is more appropriately a Complex Track request, it will be reassigned 
to the Complex Track and you will be notified as described in paragraph 
(f) of this section.
    (2) Complex Track. (i) FHFA and FHFA-OIG assign requests that are 
non-routine to the Complex Track. Complex Track requests are those to 
which FHFA or FHFA-OIG determines that the request and/or response may--
    (A) Be voluminous;
    (B) Involve two or more FHFA or FHFA-OIG units;
    (C) Require consultation with other agencies or entities;
    (D) Require searches of archived documents;
    (E) Seek confidential commercial information as described in 
Sec. 1202.8;
    (F) Require an unusually high level of effort to search for, review 
and/or duplicate records;
    (G) Cause undue disruption to the day-to-day activities of FHFA in 
regulating and supervising the regulated entities; or
    (H) Cause undue disruption to the day-to-day activities of FHFA-OIG 
in carrying out its statutory responsibilities.
    (ii) FHFA or FHFA-OIG will respond to Complex Track requests as soon 
as reasonably possible, regardless of the date of receipt.
    (c) Referrals to other agencies. If you submit a FOIA request that 
seeks records originating in another Federal Government agency, FHFA or 
FHFA-OIG will refer your request or a portion of your request, as 
applicable, to the other agency for response. FHFA or FHFA-OIG will 
provide you notice of the referral, what portion of the request was 
referred, and the name of the other agency and contact information.
    (d) Responses to FOIA requests. FHFA or FHFA-OIG will respond to 
your request by granting or denying it in full, or by granting and 
denying it in part. The response will be in writing. In determining 
which records are responsive to your request, FHFA and FHFA-OIG will 
conduct searches for records FHFA or FHFA-OIG possesses as of the date 
of your request.
    (1) Requests that FHFA or FHFA-OIG grants. If FHFA or FHFA-OIG 
grants your request, the response will include the requested records or 
details about how FHFA or FHFA-OIG will provide them to you and the 
amount of any fees charged.
    (2) Requests that FHFA or FHFA-OIG denies, or grants and denies in 
part. If FHFA or FHFA-OIG denies your request in whole or in part 
because a requested record does not exist or cannot be located, is not 
readily reproducible in the form or format you sought, is not subject to 
FOIA, or is exempt from disclosure, the written response will include 
the requested releasable records, if any, the amount of any fees 
charged, the reasons for denial, and a notice and description of your 
right to file an administrative appeal under Sec. 1202.9.
    (e) Format and delivery of disclosed records. If FHFA or FHFA-OIG 
grants, in whole or in part, your request for disclosure of records 
under FOIA, the records may be made available to you in the form or 
format you requested, if they are readily reproducible in that form or 
format. The records will be sent to the address you provided by regular 
U.S. Mail or by electronic mail unless alternate arrangements are made 
by mutual agreement, such as your agreement to pay express or expedited 
delivery service fees or to pick up records at FHFA or FHFA-OIG offices.
    (f) Extensions of time. (1) In unusual circumstances, FHFA or FHFA-
OIG may extend the Standard Track time limit in paragraph (b)(1) of this 
section for no more than 10 days and notify you of--
    (i) The reason for the extension; and
    (ii) The date on which the determination is expected.

[[Page 55]]

    (2) For requests in the Complex Track, FHFA or FHFA-OIG will provide 
you with an opportunity to modify or reformulate your request so that it 
may be processed on the Standard Track. If the request cannot be 
modified or reformulated to permit processing on the Standard Track, 
FHFA or FHFA-OIG will notify you regarding an alternative time period 
for processing the request.

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012]



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

    (a) General. FHFA or FHFA-OIG will not disclose confidential 
commercial information in response to your FOIA request except as 
described in this section.
    (b) Designation of confidential commercial information. Submitters 
of commercial information must use good-faith efforts to designate, by 
appropriate markings, either at the time of submission or at a 
reasonable time thereafter, those portions of the information they deem 
to be protected under 5 U.S.C. 552(b)(4) and Sec. 1202.4(a)(4). Any such 
designation will expire 10 years after the records are submitted to the 
Federal Government, unless the submitter requests, and provides 
reasonable justification for, a designation period of longer duration.
    (c) Pre-disclosure notification. Except as provided in paragraph (e) 
of this section, if your FOIA request encompasses confidential 
commercial information, FHFA or FHFA-OIG will, prior to disclosure of 
the information and to the extent permitted by law, provide prompt 
written notice to a submitter that confidential commercial information 
was requested when--
    (1) The submitter has in good faith designated the information as 
confidential commercial information protected from disclosure under 5 
U.S.C. 552(b)(4) and Sec. 1202.4(a)(4); or
    (2) FHFA or FHFA-OIG has reason to believe that the request seeks 
confidential commercial information, the disclosure of which may result 
in substantial competitive harm to the submitter.
    (d) Content of pre-disclosure notification. When FHFA or FHFA-OIG 
sends a pre-disclosure notification to a submitter, it will contain--
    (1) A description of the confidential commercial information 
requested or copies of the records or portions thereof containing the 
confidential business information; and
    (2) An opportunity to object to disclosure within 10 days or such 
other time period that FHFA or FHFA-OIG may allow, by providing to FHFA 
or FHFA-OIG a detailed written statement demonstrating all reasons the 
submitter opposes disclosure.
    (e) Exceptions to pre-disclosure notification. FHFA or FHFA-OIG is 
not required to send a pre-disclosure notification if--
    (1) FHFA or FHFA-OIG determines that information should not be 
disclosed;
    (2) The information has been published lawfully or has been made 
officially available to the public;
    (3) Disclosure of the information is required by law, other than 
FOIA;
    (4) The information requested is not designated by the submitter as 
confidential commercial information pursuant to this section; or
    (5) The submitter's designation, under paragraph (b) of this 
section, appears on its face to be frivolous; except that FHFA or FHFA-
OIG will provide the submitter with written notice of any final decision 
to disclose the designated confidential commercial information within a 
reasonable number of days prior to a specified disclosure date.
    (f) Submitter's objection to disclosure. A submitter may object to 
disclosure within 10 days after date of the Pre-disclosure Notification, 
or such other time period that FHFA or FHFA-OIG may allow, by delivering 
to FHFA or FHFA-OIG a statement demonstrating all grounds on which it 
opposes disclosure, and all reasons supporting its contention that the 
information should not be disclosed. The submitter's objection must 
contain a certification by the submitter, or an officer or authorized 
representative of the submitter, that the grounds and reasons presented 
are true and correct to the best of the

[[Page 56]]

submitter's knowledge. The submitter's objection may itself be subject 
to disclosure under FOIA.
    (g) Notice of intent to disclose information. FHFA or FHFA-OIG will 
carefully consider all grounds and reasons provided by a submitter 
objecting to disclosure. If FHFA or FHFA-OIG decides to disclose the 
information over the submitter's objection, the submitter will be 
provided with a written notice of intent to disclose at least 10 days 
before the date of disclosure. The written notice will contain--
    (1) A statement of the reasons why the information will be 
disclosed;
    (2) A description of the information to be disclosed; and
    (3) A specific disclosure date.
    (h) Notice to requester. FHFA or FHFA-OIG will give a requester 
whose request encompasses confidential commercial information--
    (1) A written notice that the request encompasses confidential 
commercial information that may be exempt from disclosure under 5 U.S.C. 
552(b)(4) and Sec. 1202.4(a)(4) and that the submitter of the 
information has been given a pre-disclosure notification with the 
opportunity to comment on the proposed disclosure of the information; 
and
    (2) A written notice that a notice of intent to disclose has been 
provided to the submitter, and that the submitter has 10 days, or such 
other time period that FHFA or FHFA-OIG may allow, to respond.
    (i) Notice of FOIA lawsuit. FHFA or FHFA-OIG will promptly notify 
the submitter whenever a requester files suit seeking to compel 
disclosure of the submitter's confidential commercial information. FHFA 
or FHFA-OIG will promptly notify the requester whenever a submitter 
files suit seeking to prevent disclosure of information.



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

    (a) Right of appeal. If FHFA or FHFA-OIG denied your request in 
whole or in part, you may appeal the denial by writing directly to the 
FOIA Appeals Officer through electronic mail, mail, delivery service, or 
facsimile. The electronic mail address is: [email protected] For mail or 
delivery service, the mailing address is: FOIA Appeals Officer, Federal 
Housing Finance Agency, 400 Seventh Street, SW., Eighth Floor, 
Washington, DC 20219. The facsimile number is: (202) 649-1073. You can 
help FHFA and FHFA-OIG process your appeal by marking electronic mail, 
letters, or facsimiles and the subject line, envelope, or facsimile 
cover sheet with ``FOIA Appeal.'' For appeals of denials, whether in 
whole or in part, made by FHFA-OIG, the appeal must be clearly marked by 
adding ``FHFA-OIG'' after ``FOIA Appeal.'' All appeals from denials, in 
whole or in part, made by FHFA-OIG will be forwarded to the FHFA-OIG 
FOIA Appeals Officer for processing and direct response. FHFA's 
``Freedom of Information Act Reference Guide,'' which is available on 
FHFA's Web site, http://www.fhfa.gov, provides additional information to 
assist you in making your appeal.
    (b) Timing, form, content, and receipt of an appeal. Your appeal 
must be written and submitted within 30 calendar days of the date of the 
decision by FHFA or FHFA-OIG denying, in whole or in part, your request. 
Your appeal must include a copy of the initial request, a copy of the 
letter denying the request in whole or in part, and a statement of the 
circumstances, reasons, or arguments you believe support disclosure of 
the requested record(s). FHFA and FHFA-OIG will not consider an 
improperly addressed appeal to have been received for the purposes of 
the 20-day time period of paragraph (d) of this section until it is 
actually received by FHFA.
    (c) Extensions of time to appeal. If you need more time to file your 
appeal, you may request, in writing, an extension of time of no more 
than 10 calendar days in which to file your appeal, but only if your 
request is made within the original 30-calendar day time period for 
filing the appeal. Granting such an extension is in the sole discretion 
of the FHFA or FHFA-OIG FOIA Appeals Officer.
    (d) Final action on appeal. FHFA's or FHFA-OIG's determination on 
your appeal will be in writing, signed by the FHFA or FHFA-OIG FOIA 
Appeals Officer, and sent to you within 20 days after the appeal is 
received, or by the last day of the last extension under

[[Page 57]]

paragraph (e) of this section. The determination of an appeal is the 
final action of FHFA or FHFA-OIG on a FOIA request. A determination 
may--
    (1) Affirm, in whole or in part, the initial denial of the request 
and may include a brief statement of the reason or reasons for the 
decision, including each FOIA exemption relied upon;
    (2) Reverse, in whole or in part, the denial of a request in whole 
or in part, and require the request to be processed promptly in 
accordance with the decision; or
    (3) Remand a request to FHFA or FHFA-OIG, as appropriate, for re-
processing, stating the time limits for responding to the remanded 
request.
    (e) Notice of delayed determinations on appeal. If FHFA or FHFA-OIG 
cannot send a determination on your appeal within the 20-day time limit, 
the designated Appeals Officer will continue to process the appeal and 
upon expiration of the time limit, will inform you of the reason(s) for 
the delay and the date on which a determination may be expected. In this 
notice of delay, the FHFA or FHFA-OIG FOIA Appeals Officer may request 
that you forebear seeking judicial review until a final determination is 
made.
    (f) Judicial review. If the denial of your request for records is 
upheld in whole or in part, or if a determination on your appeal has not 
been sent at the end of the 20-day period in paragraph (d) of this 
section, or the last extension thereof, you may seek judicial review 
under 5 U.S.C. 552(a)(4).
    (g) Additional Resource. The National Archives and Records 
Administration (NARA), Office of Government Information Services (OGIS) 
offers non-compulsory, non-binding mediation services to resolve FOIA 
disputes. If you seek information regarding the OGIS and/or the services 
it offers, please contact the OGIS directly at Office of Government 
Information Services, National Archives and Records Administration, Room 
2510, 8601 Adelphi Road, College Park, MD 20740-6001, Email: 
[email protected], Phone: (301) 837-1996, Fax: (301) 837-0348, Toll-free: 1-
(877) 684-6448. This information is provided as a public service only. 
By providing this information, FHFA and FHFA-OIG do not commit to refer 
disputes to OGIS, or to defer to OGIS' mediation decisions in particular 
cases.

[76 FR 29634, May 23, 2011, as amended at 77 FR 4645, Jan. 31, 2012; 80 
FR 80233, Dec. 24, 2015]



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

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



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

    (a) Assessment of fees, generally. FHFA or FHFA-OIG will assess you 
for fees covering the direct costs of responding

[[Page 58]]

to your request and costs for duplicating records, except as otherwise 
provided in a statute with respect to the determination of fees that may 
be assessed for disclosure, search time, or review of particular 
records.
    (b) Assessment of fees, categories of requesters. The fees that FHFA 
or FHFA-OIG may assess vary depending on the type of request or the type 
of requester you are--
    (1) Commercial use. If you request records for a commercial use, the 
fees that FHFA or FHFA-OIG may assess are limited to FHFA's or FHFA-
OIG's operating costs incurred for document search, review, and 
duplication.
    (2) Educational institution, noncommercial scientific institution, 
or representative of the news media. If you are not requesting records 
for commercial use and you are an educational institution or a 
noncommercial scientific institution, whose purpose is scholarly or 
scientific research, or a representative of the news media, the fees 
that may be assessed are limited to standard reasonable charges for 
duplication in excess of 100 pages or an electronic equivalent of 100 
pages.
    (3) Other. If neither paragraph (b)(1) nor paragraph (b)(2) of this 
section applies, the fees assessed are limited to the costs for document 
searching in excess of two hours and duplication in excess of 100 pages, 
or an electronic equivalent of 100 pages.
    (c) Fee schedule. The current schedule of fees is maintained on 
FHFA's Web site at: http://www.fhfa.gov.
    (d) Notice of anticipated fees in excess of $100.00. When FHFA or 
FHFA-OIG determines or estimates that the fees chargeable to you will 
exceed $100.00, you will be notified of the actual or estimated amount 
of fees you will incur, unless you earlier indicated your willingness to 
pay fees as high as those anticipated. When you are notified that the 
actual or estimated fees exceed $100.00, your FOIA request will not be 
considered received by FHFA or FHFA-OIG until you agree to pay the 
anticipated total fee.
    (e) Advance payment of fees. FHFA or FHFA-OIG may request that you 
pay estimated fees or a deposit in advance of responding to your 
request. If FHFA or FHFA-OIG requests advance payment or a deposit, your 
request will not be considered received by FHFA or FHFA-OIG until the 
advance payment or deposit is received. FHFA or FHFA-OIG will request 
advance payment or a deposit if--
    (1) The fees are likely to exceed $500.00. FHFA or FHFA-OIG will 
notify you of the likely cost and obtain from you satisfactory assurance 
of full payment if you have a history of prompt payment of FOIA fees to 
FHFA or FHFA-OIG;
    (2) You do not have a history of payment, or if the estimate of fees 
exceeds $1,000.00, FHFA or FHFA-OIG may require an advance payment of 
fees in an amount up to the full estimated charge that will be incurred;
    (3) You previously failed to pay a fee to FHFA or FHFA-OIG in a 
timely fashion, i.e., within 30 calendar days of the date of a billing, 
FHFA or FHFA-OIG may require you to make advance payment of the full 
amount of the fees anticipated before processing a new request or 
finishing processing of a pending request; or
    (4) You have an outstanding balance due from a prior request. FHFA 
or FHFA-OIG may require you to pay the full amount owed plus any 
applicable interest, as provided in paragraph (f) of this section, or 
demonstrate that the fee owed has been paid, as well as payment of the 
full amount of anticipated fees before processing your request.
    (f) Interest. FHFA or FHFA-OIG may charge you interest on an unpaid 
bill starting on the 31st calendar day following the day on which the 
bill was sent. Once a fee payment has been received by FHFA or FHFA-OIG, 
even if not processed, FHFA or FHFA-OIG will stay the accrual of 
interest. Interest charges will be assessed at the rate prescribed by 31 
U.S.C. 3717 and will accrue from the date of the billing.
    (g) FHFA or FHFA-OIG assistance to reduce costs. If FHFA or FHFA-OIG 
notifies you of estimated fees exceeding $100.00 or requests advance 
payment or a deposit, you will have an opportunity to consult with FHFA 
or FHFA-OIG FOIA staff to modify or reformulate your request to meet 
your needs at a lower cost.
    (h) Fee waiver requests. You may request a fee waiver in accordance 
with

[[Page 59]]

FOIA and this regulation. FHFA or FHFA-OIG may grant your fee waiver 
request if disclosure of the information is in the public interest 
because it is likely to contribute significantly to public understanding 
of the operations or activities of the Federal Government and is not 
primarily in the commercial interest of the requester. In submitting a 
fee waiver request, you must address the following six factors--
    (1) Whether the subject of the requested records concerns the 
operations or activities of the Federal Government;
    (2) Whether the disclosure is likely to contribute to an 
understanding of Federal Government operations or activities;
    (3) Whether disclosure of the requested information will contribute 
to public understanding;
    (4) Whether the disclosure is likely to contribute significantly to 
public understanding of Federal Government operations or activities;
    (5) Whether the requester has a commercial interest that would be 
furthered by the requested disclosure; and
    (6) Whether the magnitude of the identified commercial interest of 
the requester is sufficiently large, in comparison with the public 
interest in disclosure, that disclosure is primarily in the commercial 
interest of the requester.
    (i) Determination on request. FHFA or FHFA-OIG will notify you 
within 20 days of receipt of your request whether the fee waiver has 
been granted. A request for fee waiver that is denied may only be 
appealed when a final decision has been made on the initial FOIA 
request.



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

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



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



                      Subpart A_General Provisions

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

             Subpart B_Information Required From Applicants

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

Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award

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

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

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



                      Subpart A_General Provisions



Sec. 1203.1  Purpose and scope.

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

[[Page 60]]

other expenses may be made only pursuant to 28 U.S.C. 2412(d)(3).



Sec. 1203.2  Definitions.

    As used in this part:
    Adjudicative officer means the official who presided at the 
underlying adversary adjudication, without regard to whether the 
official is designated as a hearing examiner, administrative law judge, 
administrative judge, or otherwise.
    Adversary adjudication means an administrative proceeding conducted 
by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other 
agency of the United States is represented by counsel or otherwise, 
including but not limited to an adjudication conducted under the Safety 
and Soundness Act, as amended, and any implementing regulations. Any 
issue as to whether an administrative proceeding is an adversary 
adjudication for purposes of this part will be an issue for resolution 
in the proceeding on the application for award.
    Affiliate means an individual, corporation, or other entity that 
directly or indirectly controls or owns a majority of the voting shares 
or other interests of the party, or any corporation or other entity of 
which the party directly or indirectly owns or controls a majority of 
the voting shares or other interest, unless the adjudicative officer 
determines that it would be unjust and contrary to the purpose of the 
Equal Access to Justice Act in light of the actual relationship between 
the affiliated entities to consider them to be affiliates for purposes 
of this part.
    Agency counsel means the attorney or attorneys designated by the 
General Counsel of FHFA to represent FHFA in an adversary adjudication 
covered by this part.
    Demand of FHFA means the express demand of FHFA that led to the 
adversary adjudication, but does not include a recitation by FHFA of the 
maximum statutory penalty when accompanied by an express demand for a 
lesser amount.
    Director means the Director of the Federal Housing Finance Agency.
    Fees and other expenses means reasonable attorney or agent fees, the 
reasonable expenses of expert witnesses, and the reasonable cost of any 
study, analysis, engineering report, or test, which the agency finds 
necessary for the preparation of the eligible party's case.
    FHFA means the Federal Housing Finance Agency.
    Final disposition date means the date on which a decision or order 
disposing of the merits of the adversary adjudication or any other 
complete resolution of the adversary adjudication, such as a settlement 
or voluntary dismissal, becomes final and unappealable, both within the 
agency and to the courts.
    Party means an individual, partnership, corporation, association, or 
public or private organization that is named or admitted as a party, 
that is admitted as a party for limited purposes, or that is properly 
seeking and entitled as of right to be admitted as a party in an 
adversary adjudication.
    Position of FHFA means the position taken by FHFA in the adversary 
adjudication, including the action or failure to act by FHFA upon which 
the adversary adjudication was based.



Sec. 1203.3  Eligible parties.

    (a) To be eligible for an award of fees and other expenses under the 
Equal Access to Justice Act, the applicant must show that it meets all 
conditions of eligibility set out in this paragraph and has complied 
with all the requirements in subpart B of this part. The applicant must 
also be a party to the adversary adjudication for which it seeks an 
award.
    (b) To be eligible for an award of fees and other expenses for 
prevailing parties, a party must be one of the following:
    (1) An individual who has a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interest, and not more than 500 employees; however, a party who owns an 
unincorporated business will be considered to be an ``individual'' 
rather than the ``sole owner of an unincorporated business'' if the 
issues on which the party prevails are related primarily to personal 
interests rather than to business interests;

[[Page 61]]

    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees;
    (5) Any other partnership, corporation, association, unit of local 
government, or organization that has a net worth of not more than $7 
million and not more than 500 employees; or
    (6) For the purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (c) For purposes of eligibility under this section:
    (1) The employees of a party must include all persons who regularly 
perform services for remuneration for the party, under the party's 
direction and control. Part-time employees must be included on a 
proportional basis.
    (2) The net worth and number of employees of the party and its 
affiliates must be aggregated to determine eligibility.
    (3) The net worth and number of employees of a party will be 
determined as of the date the underlying adversary adjudication was 
initiated.
    (4) A party that participates in an adversary adjudication primarily 
on behalf of one or more entities that would be ineligible for an award 
is not itself eligible for an award.



Sec. 1203.4  Standards for awards.

    (a) An eligible party that files an application for award of fees 
and other expenses in accordance with this part will receive an award of 
fees and other expenses related to defending against a demand of FHFA if 
the demand was in excess of the decision in the underlying adversary 
adjudication and was unreasonable when compared with the decision under 
the facts and circumstances of the case, unless the party has committed 
a willful violation of law or otherwise acted in bad faith, or unless 
special circumstances make an award unjust. The burden of proof that the 
demand of FHFA was substantially in excess of the decision and is 
unreasonable when compared with the decision is on the eligible party.
    (b) An eligible party that submits an application for award in 
accordance with this part will receive an award of fees and other 
expenses incurred in connection with an adversary adjudication in which 
it prevailed or in a significant and discrete substantive portion of the 
adversary adjudication in which it prevailed, unless the position of 
FHFA in the adversary adjudication was substantially justified or 
special circumstances make an award unjust. FHFA has the burden of proof 
to show that its position was substantially justified and may do so by 
showing that its position was reasonable in law and in fact.



Sec. 1203.5  Allowable fees and expenses.

    (a) Awards of fees and other expenses will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents, and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the party. However, 
except as provided in Sec. 1203.6, an award for the fee of an attorney 
or agent may not exceed $125 per hour and an award to compensate an 
expert witness may not exceed the highest rate at which FHFA pays expert 
witnesses. However, an award may also include the reasonable expenses of 
the attorney, agent, or expert witness as a separate item if he or she 
ordinarily charges clients separately for such expenses.
    (b) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the adjudicative officer will 
consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fees for similar services; or, if the 
attorney, agent, or expert witness is an employee of the eligible party, 
the fully allocated costs of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the eligible 
party;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the adversary adjudication; and

[[Page 62]]

    (5) Such other factors as may bear on the value of the services 
provided.
    (c) In determining the reasonable cost of any study, analysis, 
engineering report, test, project, or similar matter prepared on behalf 
of a party, the adjudicative officer will consider the prevailing rate 
for similar services in the community in which the services were 
performed.
    (d) Fees and other expenses incurred before the date on which an 
adversary adjudication was initiated will be awarded only if the 
eligible party can demonstrate that they were reasonably incurred in 
preparation for the adversary adjudication.



Sec. 1203.6  Rulemaking on maximum rate for fees.

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



Sec. 1203.7  Awards against other agencies.

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



Secs. 1203.8-1203.9  [Reserved]



             Subpart B_Information Required From Applicants



Sec. 1203.10  Contents of the application for award.

    (a) An application for award of fees and other expenses under either 
Sec. 1203.4(a) and Sec. 1203.4(b) must:
    (1) Identify the applicant and the adversary adjudication for which 
an award is sought;
    (2) State the amount of fees and other expenses for which an award 
is sought;
    (3) Provide the statements and documentation required by paragraph 
(b) or (c) of this section and Sec. 1203.12 and any additional 
information required by the adjudicative officer; and
    (4) Be signed by the applicant or an authorized officer or attorney 
of the applicant and contain or be accompanied by a written verification 
under oath or under penalty of perjury that the information provided in 
the application is true and correct.
    (b) An application for award under Sec. 1203.4(a) must show that the 
demand of FHFA was substantially in excess of, and was unreasonable when 
compared to, the decision in the underlying adversary adjudication under 
the facts and circumstances of the case. It must also show that the 
applicant is a small entity as defined in 5 U.S.C. 601.
    (c) An application for award under Sec. 1203.4(b) must:
    (1) Show that the applicant has prevailed in a significant and 
discrete substantive portion of the underlying adversary adjudication 
and identify the position of FHFA in the adversary adjudication that the 
applicant alleges was not substantially justified;
    (2) State the number of employees of the applicant and describe 
briefly the type and purposes of its organization or business (if the 
applicant is not an individual);
    (3) State that the net worth of the applicant does not exceed $2 
million, if the applicant is an individual; or for all other applicants, 
state that the net worth of the applicant and its affiliates, if any, 
does not exceed $7 million; and
    (4) Include one of the following:
    (i) A detailed exhibit showing the net worth (net worth exhibit) of 
the applicant and its affiliates, if any, when the underlying adversary 
adjudication was initiated. The net worth exhibit may be in any form 
convenient to the applicant as long as the net worth exhibit provides 
full disclosure of the assets and liabilities of the applicant and its 
affiliates, if any, and is sufficient to

[[Page 63]]

determine whether the applicant qualifies as an eligible party;
    (ii) A copy of a ruling by the Internal Revenue Service that shows 
that the applicant qualifies as an organization described in section 
501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the 
case of a tax-exempt organization not required to obtain a ruling from 
the Internal Revenue Service on its exempt status, a statement that 
describes the basis for the belief that the applicant qualifies under 
such section; or
    (iii) A statement that the applicant is a cooperative association as 
defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 
1141j(a).



Sec. 1203.11  Confidentiality of net worth exhibit.

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



Sec. 1203.12  Documentation for fees and expenses.

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



Secs. 1203.13-1203.19  [Reserved]



Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award



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

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



Sec. 1203.21  Response to the application for award.

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

[[Page 64]]

agency counsel does not respond or otherwise does not contest or settle 
the application for award within the 30-day period or the extended time 
period, the adjudicative officer may make an award of fees and other 
expenses upon a satisfactory showing of entitlement by the applicant.



Sec. 1203.22  Reply to the response.

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



Sec. 1203.23  Comments by other parties.

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



Sec. 1203.24  Settlement.

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



Sec. 1203.25  Further proceedings on the application for award.

    (a) On request of either the applicant or agency counsel, on the 
adjudicative officer's own initiative, or as requested by the Director 
under Sec. 1203.27, the adjudicative officer may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions, or, as to issues other than substantial 
justification (such as the applicant's eligibility or substantiation of 
fees and expenses), pertinent discovery or an evidential hearing. Such 
further proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application for award and will 
be conducted as promptly as possible. The issue as to whether the 
position of FHFA in the underlying adversary adjudication was 
substantially justified will be determined on the basis of the whole 
administrative record that was made in the underlying adversary 
adjudication.
    (b) A request that the adjudicative officer order further 
proceedings under this section must specifically identify the 
information sought on the disputed issues and must explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 1203.26  Decision of the adjudicative officer.

    (a) The adjudicative officer must make the initial decision on the 
basis of the written record, except if further proceedings are ordered 
under Sec. 1203.25.
    (b) The adjudicative officer must issue a written initial decision 
on the application for award within 30 days after completion of 
proceedings on the application. The initial decision will become the 
final decision of FHFA after 30 days from the day it was issued, unless 
review is ordered under Sec. 1203.27.
    (c) In all initial decisions, the adjudicative officer must include 
findings and conclusions with respect to the applicant's eligibility and 
an explanation of the reasons for any difference between the amount 
requested by the applicant and the amount awarded. If the applicant has 
sought an award against more than one agency, the adjudicative officer 
must also include findings and conclusions with respect to the 
allocation of payment of any award made.
    (d) In initial decisions on applications filed pursuant to 
Sec. 1203.4(a), the adjudicative officer must include findings and 
conclusions as to whether FHFA made a demand that was substantially in 
excess of the decision in

[[Page 65]]

the underlying adversary adjudication and that was unreasonable when 
compared with that decision; and, if at issue, whether the applicant has 
committed a willful violation of the law or otherwise acted in bad 
faith, or whether special circumstances would make the award unjust.
    (e) In decisions on applications filed pursuant to Sec. 1203.4(b), 
the adjudicative officer must include written findings and conclusions 
as to whether the applicant is a prevailing party and whether the 
position of FHFA was substantially justified; and, if at issue, whether 
the applicant unduly protracted or delayed the underlying adversary 
adjudication or whether special circumstance make the award unjust.



Sec. 1203.27  Review by FHFA.

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



Sec. 1203.28  Judicial review.

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



Sec. 1203.29  Payment of award.

    To receive payment of an award of fees and other expenses granted 
under this part, the applicant must submit a copy of the final decision 
that grants the award and a certification that the applicant will not 
seek review of the decision in the United States courts to the Director, 
Federal Housing Finance Agency, 400 7th Street SW., Washington, DC 
20219. FHFA must pay the amount awarded to the applicant within 60 days 
of receipt of the submission of the copy of the final decision and the 
certification, unless judicial review of the award has been sought by 
any party to the proceedings.

[75 FR 65219, Oct. 22, 2010, as amended at 80 FR 80233, Dec. 24, 2015]



PART 1204_PRIVACY ACT IMPLEMENTATION--Table of Contents



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

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

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

    Editorial Note: Nomenclature changes to part 1204 appear at 77 FR 
4646, Jan. 31, 2012.



Sec. 1204.1  Why did FHFA issue this part?

    The Federal Housing Finance Agency (FHFA) issued this part to--
    (a) Implement the Privacy Act, a Federal law that helps protect 
private information about individuals that Federal agencies collect or 
maintain. You should read this part together with the Privacy Act, which 
provides additional information about records maintained on individuals;
    (b) Establish rules that apply to all FHFA and FHFA Office of 
Inspector General (FHFA-OIG) maintained systems of records retrievable 
by an individual's name or other personal identifier;
    (c) Describe procedures through which you may request access to 
records, request amendment or correction of those records, or request an 
accounting of disclosures of those records by FHFA or FHFA-OIG;

[[Page 66]]

    (d) Inform you, that when it is appropriate to do so, FHFA or FHFA-
OIG automatically processes a Privacy Act request for access to records 
under both the Privacy Act and FOIA, following the rules contained in 
this part and in FHFA's Freedom of Information Act regulation at part 
1202 of this title so that you will receive the maximum amount of 
information available to you by law;
    (e) Notify you that this part does not entitle you to any service or 
to the disclosure of any record to which you are not entitled under the 
Privacy Act. It also does not, and may not be relied upon, to create any 
substantive or procedural right or benefit enforceable against FHFA or 
FHFA-OIG; and
    (f) Notify you that this part applies to both FHFA and FHFA-OIG.



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

    The following definitions apply to the terms used in this part--
    Access means making a record available to a subject individual.
    Amendment means any correction of, addition to, or deletion from a 
record.
    Court means any entity conducting a legal proceeding.
    Days, unless stated as ``calendar days,'' are working days and do 
not include Saturdays, Sundays, and federal holidays. If the last day of 
any period prescribed herein falls on a Saturday, Sunday, or federal 
holiday, the last day of the period will be the next working day that is 
not a Saturday, Sunday, or federal holiday.
    FHFA means the Federal Housing Finance Agency and includes its 
predecessor agencies, the Office of Federal Housing Enterprise Oversight 
(OFHEO) and the Federal Housing Finance Board (FHFB).
    FHFA-OIG means the Office of Inspector General for FHFA.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Individual means a natural person who is either a citizen of the 
United States of America or an alien lawfully admitted for permanent 
residence.
    Maintain includes collect, use, disseminate, or control.
    Privacy Act means the Privacy Act of 1974, as amended (5 U.S.C. 
552a).
    Privacy Act Appeals Officer means a person designated by the FHFA 
Director to process appeals of denials of requests for or seeking 
amendment of records maintained by FHFA under the Privacy Act. For 
appeals pertaining to records maintained by FHFA-OIG, Privacy Act 
Appeals Officer means a person designated by the FHFA Inspector General 
to process appeals of denials of requests for or seeking amendment of 
records maintained by FHFA-OIG under the Privacy Act.
    Privacy Act Officer means a person designated by the FHFA Director 
who has primary responsibility for privacy and data protection policy 
and is authorized to process requests for or amendment of records 
maintained by FHFA under the Privacy Act. For requests pertaining to 
records maintained by FHFA-OIG, Privacy Act Officer means a person 
designated by the FHFA Inspector General to process requests for or 
amendment of records maintained by FHFA-OIG under the Privacy Act.
    Record means any item, collection, or grouping of information about 
an individual that FHFA or FHFA-OIG maintains within a system of 
records, including, but not limited to, the individual's name, an 
identifying number, symbol, or other identifying particular assigned to 
the individual, such as a finger or voice print, or photograph.
    Routine use means the purposes for which records and information 
contained in a system of records may be disclosed by FHFA or FHFA-OIG 
without the consent of the subject of the record. Routine uses for 
records are identified in each system of records notice. Routine use 
does not include disclosure that subsection (b) of the Privacy Act (5 
U.S.C. 552a(b)) otherwise permits.
    Senior Agency Official for Privacy means a person designated by the 
FHFA Director who has the authority and responsibility to oversee and 
supervise the FHFA privacy program and implementation of the Privacy 
Act.
    System of Records means a group of records FHFA or FHFA-OIG 
maintains or controls from which information is retrieved by the name of 
an individual

[[Page 67]]

or by some identifying number, symbol, or other identifying particular 
assigned to the individual. Single records or groups of records that are 
not retrieved by a personal identifier are not part of a system of 
records.
    System of Records Notice means a notice published in the Federal 
Register which announces the creation, deletion, or amendment of one or 
more system of records. System of records notices are also used to 
identify a system of records' routine uses.



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

    (a) What is a valid request? In general, a Privacy Act request can 
be made on your own behalf for records or information about you. You can 
make a Privacy Act request on behalf of another individual as the parent 
or guardian of a minor, or as the guardian of someone determined by a 
court to be incompetent. You also may request access to another 
individual's record or information if you have that individual's written 
consent, unless other conditions of disclosure apply.
    (b) How and where do I make a request? Your request must be in 
writing. Regardless of whether your request seeks records from FHFA, 
FHFA-OIG, or both, you may appear in person to submit your written 
request to the FHFA Privacy Act Officer, or send your written request to 
the FHFA Privacy Act Officer by electronic mail, mail, delivery service, 
or facsimile. The electronic mail address is: [email protected] For mail 
or delivery service, the address is: FHFA Privacy Act Officer, Federal 
Housing Finance Agency, 400 Seventh Street, SW., Eighth Floor, 
Washington, DC 20219. The facsimile number is (202) 649-1073. Requests 
for FHFA-OIG maintained records will be forwarded to FHFA-OIG for 
processing and direct response. You can help FHFA and FHFA-OIG process 
your request by marking electronic mail, letters, or facsimiles and the 
subject line, envelope, or facsimile cover sheet with ``Privacy Act 
Request.'' FHFA's ``Privacy Act Reference Guide,'' which is available on 
FHFA's Web site, http://www.fhfa.gov, provides additional information to 
assist you in making your request.
    (c) What must the request include? You must describe the record that 
you want in enough detail to enable either the FHFA or FHFA-OIG Privacy 
Act Officer to locate the system of records containing it with a 
reasonable amount of effort. Include specific information about each 
record sought, such as the time period in which you believe it was 
compiled, the name or identifying number of each system of records in 
which you believe it is kept, and the date, title or name, author, 
recipient, or subject matter of the record. As a general rule, the more 
specific you are about the record that you want, the more likely FHFA or 
FHFA-OIG will be able to locate it in response to your request.
    (d) How do I request amendment or correction of a record? If you are 
requesting an amendment or correction of any FHFA or FHFA-OIG record, 
identify each particular record in question and the system of records in 
which the record is located, describe the amendment or correction that 
you want, and state why you believe that the record is not accurate, 
relevant, timely, or complete. You may submit any documentation that you 
think would be helpful, including an annotated copy of the record.
    (e) How do I request for an accounting of disclosures? If you are 
requesting an accounting of disclosures by FHFA or FHFA-OIG of a record 
to another person, organization, or Federal agency, you must identify 
each particular record in question. An accounting generally includes the 
date, nature, and purpose of each disclosure, as well as the name and 
address of the person, organization, or Federal agency to which the 
disclosure was made, subject to Sec. 1204.7.
    (f) Must I verify my identity? Yes. When making requests under the 
Privacy Act, your request must verify your identity to protect your 
privacy or the privacy of the individual on whose behalf you are acting. 
If you make a Privacy Act request and you do not follow these identity 
verification procedures, FHFA or FHFA-OIG cannot and will not process 
your request.
    (1) How do I verify my identity? To verify your identity, you must 
state your full name, current address, and

[[Page 68]]

date and place of birth. In order to help identify and locate the 
records you request, you also may, at your option, include your Social 
Security number. If you make your request in person and your identity is 
not known to either the FHFA or FHFA-OIG Privacy Act Officer, you must 
provide either two forms of unexpired identification with photographs 
issued by a federal, state, or local government agency or entity (i.e. 
passport, passport card, driver's license, ID card, etc.), or one form 
of unexpired identification with a photograph issued by a federal, 
state, or local government agency or entity (i.e. passport, passport 
card, driver's license, ID card, etc.) and a properly authenticated 
birth certificate. If you make your request by mail, your signature 
either must be notarized or submitted under 28 U.S.C. 1746, a law that 
permits statements to be made under penalty of perjury as a substitute 
for notarization. You may fulfill this requirement by having your 
signature on your request letter witnessed by a notary or by including 
the following statement just before the signature on your request 
letter: ``I declare (or certify, verify, or state) under penalty of 
perjury that the foregoing is true and correct. Executed on [date]. 
[Signature].''
    (2) How do I verify parentage or guardianship? If you make a Privacy 
Act request as the parent or guardian of a minor, or as the guardian of 
someone determined by a court to be incompetent, with respect to records 
or information about that individual, you must establish--
    (i) The identity of the individual who is the subject of the record, 
by stating the individual's name, current address, date and place of 
birth, and, at your option, the Social Security number of the 
individual;
    (ii) Your own identity, as required in paragraph (f)(1) of this 
section;
    (iii) That you are the parent or guardian of the individual, which 
you may prove by providing a properly authenticated copy of the 
individual's birth certificate showing your parentage or a properly 
authenticated court order establishing your guardianship; and
    (iv) That you are acting on behalf of the individual in making the 
request.

[76 FR 51871, Aug. 19, 2011, as amended at 77 FR 4646, Jan. 31, 2012; 80 
FR 80233, Dec. 24, 2015]



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

    (a) How will FHFA or FHFA-OIG locate the requested records? FHFA or 
FHFA-OIG will search to determine if requested records exist in the 
system of records it owns or controls. You can find FHFA and FHFA-OIG 
system of records notices on our Web site at http://www.fhfa.gov. You 
can also find descriptions of OFHEO and FHFB system of records that have 
not yet been superseded on the FHFA Web site. A description of the 
system of records also is available in the ``Privacy Act Issuances'' 
compilation published by the Office of the Federal Register of the 
National Archives and Records Administration. You can access the 
``Privacy Act Issuances'' compilation in most large reference and 
university libraries or electronically at the Government Printing Office 
Web site at: http://www.gpoaccess.gov/privacyact/index.html. You also 
can request a copy of FHFA or FHFA-OIG system of records from the 
Privacy Act Officer.
    (b) How long does FHFA or FHFA-OIG have to respond? Either the FHFA 
or FHFA-OIG Privacy Act Officer generally will respond to your request 
in writing within 20 days after receiving it, if it meets the 
Sec. 1204.3 requirements. For requests to amend a record, either the 
FHFA or FHFA-OIG Privacy Act Officer will respond within 10 days after 
receipt of the request to amend. FHFA or FHFA-OIG may extend the 
response time in unusual circumstances, such as when consultation is 
needed with another Federal agency (if that agency is subject to the 
Privacy Act) about a record or to retrieve a record shipped offsite for 
storage. If you submit your written request in person, either the FHFA 
or FHFA-OIG Privacy Act Officer may disclose records or information to 
you directly and create a written record of the grant of the request. If 
you are to be accompanied by another person when accessing your record 
or any information pertaining to you, FHFA or

[[Page 69]]

FHFA-OIG may require your written authorization before permitting access 
or discussing the record in the presence of the other person.
    (c) What will the FHFA or FHFA-OIG response include? The written 
response will include a determination to grant or deny your request in 
whole or in part, a brief explanation of the reasons for the 
determination, and the amount of the fee charged, if any, under 
Sec. 1204.6. If you are granted a request to access a record, FHFA or 
FHFA-OIG will make the record available to you. If you are granted a 
request to amend or correct a record, the response will describe any 
amendments or corrections made and advise you of your right to obtain a 
copy of the amended or corrected record.
    (d) What is an adverse determination? An adverse determination is a 
determination on a Privacy Act request that--
    (1) Withholds any requested record in whole or in part;
    (2) Denies a request for an amendment or correction of a record in 
whole or in part;
    (3) Declines to provide a requested accounting of disclosures;
    (4) Advises that a requested record does not exist or cannot be 
located; or
    (5) Finds what has been requested is not a record subject to the 
Privacy Act.
    (e) What will be stated in a response that includes an adverse 
determination? If an adverse determination is made with respect to your 
request, either the FHFA or FHFA-OIG Privacy Act Officer's written 
response under this section will identify the person responsible for the 
adverse determination, state that the adverse determination is not a 
final action of FHFA or FHFA-OIG, and state that you may appeal the 
adverse determination under Sec. 1204.5.



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

    (a) May I appeal the response? You may appeal any adverse 
determination made in response to your Privacy Act request. If you wish 
to seek review by a court of any adverse determination or denial of a 
request, you must first appeal it under this section.
    (b) How do I appeal the response?--(1) You may appeal by submitting 
in writing, a statement of the reasons you believe the adverse 
determination should be overturned. FHFA or FHFA-OIG must receive your 
written appeal within 30 calendar days of the date of the adverse 
determination under Sec. 1204.4. Your written appeal may include as much 
or as little related information as you wish, as long as it clearly 
identifies the determination (including the request number, if known) 
that you are appealing.
    (2) If FHFA or FHFA-OIG denied your request in whole or in part, you 
may appeal the denial by writing directly to the FHFA Privacy Act 
Appeals Officer through electronic mail, mail, delivery service, or 
facsimile. The electronic mail address is: [email protected] For mail or 
express mail, the address is: FHFA Privacy Act Appeals Officer, Federal 
Housing Finance Agency, 400 Seventh Street, SW., Eighth Floor, 
Washington, DC 20219. The facsimile number is: (202) 649-1073. For 
appeals of FHFA-OIG denials, whether in whole or in part, the appeal 
must be clearly marked by adding ``FHFA-OIG'' after ``Privacy Act 
Appeal.'' All appeals from denials, in whole or part, made by FHFA-OIG 
will be forwarded to the FHFA-OIG Privacy Act Appeals Officer for 
processing and direct response. You can help FHFA and FHFA-OIG process 
your appeal by marking electronic mail, letters, or facsimiles and the 
subject line, envelope, or facsimile cover sheet with ``Privacy Act 
Appeal.'' FHFA's ``Privacy Act Reference Guide,'' which is available on 
FHFA's Web site, http://www.fhfa.gov, provides additional information to 
assist you in making your appeal. FHFA or FHFA-OIG ordinarily will not 
act on an appeal if the Privacy Act request becomes a matter of 
litigation.
    (3) If you need more time to file your appeal, you may request an 
extension of time of no more than ten (10) calendar days in which to 
file your appeal, but only if your request is made within the original 
30-calendar day time period for filing the appeal. Granting an extension 
is in the sole discretion of either the FHFA or FHFA-OIG Privacy Act 
Appeals Officer.

[[Page 70]]

    (c) Who has the authority to grant or deny appeals? For appeals from 
the FHFA Privacy Act Officer, the FHFA Privacy Act Appeals Officer is 
authorized to act on your appeal. For appeals from the FHFA-OIG Privacy 
Act Officer, the FHFA-OIG Privacy Act Appeals Officer is authorized to 
act on your appeal.
    (d) When will FHFA or FHFA-OIG respond to my appeal? FHFA or FHFA-
OIG generally will respond to you in writing within 30 days of receipt 
of an appeal that meets the requirements of paragraph (b) of this 
section, unless for good cause shown, the FHFA or FHFA-OIG Privacy Act 
Appeals Officer extends the response time.
    (e) What will the FHFA or FHFA-OIG response include? The written 
response will include the determination of either the FHFA or FHFA-OIG 
Privacy Act Appeals Officer, whether to grant or deny your appeal in 
whole or in part, a brief explanation of the reasons for the 
determination, and information about the Privacy Act provisions for 
court review of the determination.
    (1) If your appeal concerns a request for access to records or 
information and the appeal determination grants your access, the records 
or information, if any, will be made available to you.
    (2)(i) If your appeal concerns an amendment or correction of a 
record and the appeal determination grants your request for an amendment 
or correction, the response will describe any amendment or correction 
made to the record and advise you of your right to obtain a copy of the 
amended or corrected record under this part. FHFA or FHFA-OIG will 
notify all persons, organizations, or Federal agencies to which it 
previously disclosed the record, if an accounting of that disclosure was 
made, that the record has been amended or corrected. Whenever the record 
is subsequently disclosed, the record will be disclosed as amended or 
corrected.
    (ii) If the response to your appeal denies your request for an 
amendment or correction to a record, the response will advise you of 
your right to file a Statement of Disagreement under paragraph (f) of 
this section.
    (f) What is a Statement of Disagreement?--(1) A Statement of 
Disagreement is a concise written statement in which you clearly 
identify each part of any record that you dispute and explain your 
reason(s) for disagreeing with either the FHFA or FHFA-OIG Privacy Act 
Appeals Officer's denial, in whole or in part, of your appeal requesting 
amendment or correction. Your Statement of Disagreement must be received 
by either the FHFA or FHFA-OIG Privacy Act Officer within 30 calendar 
days of either the FHFA or FHFA-OIG Privacy Act Appeals Officer's 
denial, in whole or in part, of your appeal concerning amendment or 
correction of a record. FHFA and FHFA-OIG will place your Statement of 
Disagreement in the system of records in which the disputed record is 
maintained. FHFA and FHFA-OIG may also append a concise statement of its 
reason(s) for denying the request for an amendment or correction of the 
record.
    (2) FHFA and FHFA-OIG will notify all persons, organizations, and 
Federal agencies to which it previously disclosed the disputed record, 
if an accounting of that disclosure was made, that the record is 
disputed and provide your Statement of Disagreement and the FHFA or 
FHFA-OIG concise statement, if any. Whenever the disputed record is 
subsequently disclosed, a copy of your Statement of Disagreement and the 
FHFA or FHFA-OIG concise statement, if any, will also be disclosed.

[76 FR 51871, Aug. 19, 2011, as amended at 77 FR 4646, Jan. 31, 2012; 80 
FR 80233, Dec. 24, 2015]



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

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

[[Page 71]]



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

    (a) What is a Privacy Act exemption? The Privacy Act authorizes the 
Director and the FHFA Inspector General to exempt records or information 
in a system of records from some of the Privacy Act requirements, if the 
Director or the FHFA Inspector General, as appropriate, determines that 
the exemption is necessary.
    (b) How do I know if the records or information I want are exempt?--
(1) Each system of records notice will advise you if the Director or the 
FHFA Inspector General has determined records or information in records 
are exempt from Privacy Act requirements. If the Director or the FHFA 
Inspector General has claimed an exemption for a system of records, the 
system of records notice will identify the exemption and the provisions 
of the Privacy Act from which the system is exempt.
    (2) Until superseded by FHFA or FHFA-OIG systems of records, the 
following OFHEO and FHFB systems of records are, under 5 U.S.C. 
552a(k)(2) or (k)(5), exempt from the Privacy Act requirements of 5 
U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I), and 
(f)--
    (i) OFHEO-11 Litigation and Enforcement Information System; and
    (ii) FHFB-5 Agency Personnel Investigative Records.
    (c) What exemptions potentially apply to FHFA-OIG records? Unless 
the FHFA Inspector General, his or her designee, or a statute 
specifically authorizes disclosure, FHFA-OIG will not release records of 
matters that are subject to the following exemptions--
    (1) To the extent that the systems of records entitled ``FHFA-OIG 
Audit Files Database,'' ``FHFA-OIG Investigative & Evaluative Files 
Database,'' ``FHFA-OIG Investigative & Evaluative MIS Database,'' 
``FHFA-OIG Hotline Database,'' and ``FHFA-OIG Correspondence Database'' 
contain any information compiled by FHFA-OIG for the purpose of criminal 
law enforcement investigations, such information falls within the scope 
of exemption (j)(2) of the Privacy Act, 5 U.S.C. 552a(j)(2), and 
therefore these systems of records are exempt from the requirements of 
the following subsections of the Privacy Act to that extent, for the 
reasons stated in paragraphs (1)(i) through (vi) of this section.
    (i) From 5 U.S.C. 552a(c)(3), because release of an accounting of 
disclosures to an individual who is the subject of an investigation or 
evaluation could reveal the nature and scope of the investigation or 
evaluation and could result in the altering or destruction of evidence, 
improper influencing of witnesses, and other evasive actions that could 
impede or compromise the investigation or evaluation.
    (ii) From 5 U.S.C. 552a(d)(1), because release of investigative or 
evaluative records to an individual who is the subject of an 
investigation or evaluation could interfere with pending or prospective 
law enforcement proceedings, constitute an unwarranted invasion of the 
personal privacy of third parties, reveal the identity of confidential 
sources, or reveal sensitive investigative or evaluative techniques and 
procedures.
    (iii) From 5 U.S.C. 552a(d)(2), because amendment or correction of 
investigative or evaluative records could interfere with pending or 
prospective law enforcement proceedings, or could impose an impossible 
administrative and investigative or evaluative burden by requiring FHFA-
OIG to continuously retrograde its investigations or evaluations 
attempting to resolve questions of accuracy, relevance, timeliness, and 
completeness.
    (iv) From 5 U.S.C. 552a(e)(1), because it is often impossible to 
determine relevance or necessity of information in the early stages of 
an investigation or evaluation. The value of such information is a 
question of judgment and timing; what appears relevant and necessary 
when collected may ultimately be evaluated and viewed as irrelevant and 
unnecessary to an investigation or evaluation. In addition, FHFA-OIG may 
obtain information concerning the violation of laws other than those 
within the scope of its jurisdiction. In the interest of effective law 
enforcement, FHFA-OIG should retain this information because it may aid 
in establishing patterns of unlawful activity and provide leads for 
other law enforcement agencies. Further, in obtaining evidence during an 
investigation or

[[Page 72]]

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

[[Page 73]]

another agency. Such information cannot readily be identified.
    (3) To the extent that the systems of records entitled ``FHFA-OIG 
Audit Files Database,'' ``FHFA-OIG Investigative & Evaluative Files 
Database,'' ``FHFA-OIG Investigative & Evaluative MIS Database,'' 
``FHFA-OIG Hotline Database,'' and ``FHFA-OIG Correspondence Database'' 
contain any investigatory material compiled by FHFA-OIG for the purpose 
of determining suitability, eligibility, or qualifications for Federal 
civilian employment or Federal contracts, the release of which would 
reveal the identity of a source who furnished information to the 
Government under an express promise that the identity of the source 
would be held in confidence, such information falls within the scope of 
exemption (k)(5) of the Privacy Act, 5 U.S.C. 552a(k)(5), and therefore 
these systems of records are exempt from the requirements of subsection 
(d)(1) of the Privacy Act to that extent, because release would reveal 
the identity of a source who furnished information to the Government 
under an express promise of confidentiality. Revealing the identity of a 
confidential source could impede future cooperation by sources, and 
could result in harassment or harm to such sources.



Sec. 1204.8  How are records secured?

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



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

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



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

    At least annually, the FHFA Privacy Act Officer or the Senior Agency 
Official for Privacy will inform employees about the provisions of the 
Privacy Act, including the Privacy Act's civil liability and criminal 
penalty provisions. Unless otherwise permitted by law, an authorized 
FHFA or FHFA-OIG employee shall--
    (a) Collect from individuals only information that is relevant and 
necessary to discharge FHFA or FHFA-OIG responsibilities;
    (b) Collect information about an individual directly from that 
individual whenever practicable;
    (c) Inform each individual from whom information is collected of--
    (1) The legal authority to collect the information and whether 
providing it is mandatory or voluntary;

[[Page 74]]

    (2) The principal purpose for which FHFA or FHFA-OIG intends to use 
the information;
    (3) The routine uses FHFA or FHFA-OIG may make of the information; 
and
    (4) The effects on the individual, if any, of not providing the 
information.
    (d) Ensure that the employee's office does not maintain a system of 
records without public notice and notify appropriate officials of the 
existence or development of any system of records that is not the 
subject of a current or planned public notice;
    (e) Maintain all records that are used in making any determination 
about an individual with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to ensure fairness to the 
individual in the determination;
    (f) Except for disclosures made under FOIA, make reasonable efforts, 
prior to disseminating any record about an individual, to ensure that 
the record is accurate, relevant, timely, and complete;
    (g) When required by the Privacy Act, maintain an accounting in the 
specified form of all disclosures of records by FHFA or FHFA-OIG to 
persons, organizations, or Federal agencies;
    (h) Maintain and use records with care to prevent the unauthorized 
or inadvertent disclosure of a record to anyone; and
    (i) Notify the appropriate official of any record that contains 
information that the Privacy Act does not permit FHFA or FHFA-OIG to 
maintain.



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

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



PART 1206_ASSESSMENTS--Table of Contents



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

    Authority: 12 U.S.C. 4516.

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



Sec. 1206.1  Purpose.

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



Sec. 1206.2  Definitions.

    As used in this part:
    Act means the Federal Housing Finance Regulatory Reform Act of 2008.
    Adequately capitalized means the adequately capitalized capital 
classification under 12 U.S.C. 1364 and related regulations.
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Enterprise means the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation; and ``Enterprises'' means, 
collectively, the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation.

[[Page 75]]

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



Sec. 1206.3  Annual assessments.

    (a) Establishing assessments. The Director shall establish annual 
assessments on the Regulated Entities in an amount sufficient to 
maintain a working capital fund and provide for the payment of the 
FHFA's costs and expenses, including, but not limited to:
    (1) Expenses of any examinations under 12 U.S.C. 4517 and section 20 
of the Federal Home Loan Bank Act (12 U.S.C. 1440);
    (2) Expenses of obtaining any reviews and credit assessments under 
12 U.S.C. 4519;
    (3) Expenses of any enforcement activities under 12 U.S.C. 3645;
    (4) Expenses of other FHFA litigation under 12 U.S.C. 4513;
    (5) Expenses relating to the maintenance of the FHFA records 
relating to examinations and other reviews of the Regulated Entities;
    (6) Such amounts in excess of actual expenses for any given year 
deemed necessary to maintain a working capital fund;
    (7) Expenses relating to monitoring and ensuring compliance with 
housing goals;
    (8) Expenses relating to conducting reviews of new products;
    (9) Expenses related to affordable housing and community programs;
    (10) Other administrative expenses of the FHFA;
    (11) Expenses related to preparing reports and studies;
    (12) Expenses relating to the collection of data and development of 
systems to calculate the House Price Index (HPI) and the conforming loan 
limit;
    (13) Amounts deemed necessary by the Director to wind up the affairs 
of the Office of Federal Housing Enterprise Oversight and the Federal 
Housing Finance Board; and
    (14) Expenses relating to other responsibilities of the FHFA under 
the Safety and Soundness Act, the Federal Home Loan Bank Act and the 
Act.
    (b) Allocating assessments. The Director shall allocate the annual 
assessments as follows:
    (1) Enterprises. Assessments collected from the Enterprises shall 
not exceed amounts sufficient to provide for payment of the costs and 
expenses relating to the Enterprises as determined by the Director. Each 
Enterprise shall pay a proportional share that bears the same ratio to 
the total portion of the annual assessment allocated to the Enterprises 
that the total exposure of each Enterprise bears to the total exposure 
of both Enterprises.
    (2) Federal Home Loan Banks. Assessments collected from the Banks 
shall not exceed amounts sufficient to provide for payment of the costs 
and expenses relating to the Banks as determined by the Director. Each 
Bank shall pay a pro rata share of the annual

[[Page 76]]

assessments based on the ratio between its minimum required regulatory 
capital and the aggregate minimum required regulatory capital of every 
Bank.
    (c) Timing and amount of semiannual payment. Each Regulated Entity 
shall pay on or before October 1 and April 1 an amount equal to one-half 
of its annual assessment.
    (d) Surplus funds. Surplus funds shall be credited to the annual 
assessment by reducing the amount collected in the following semiannual 
period by the amount of the surplus funds. Surplus funds shall be 
allocated to all Regulated Entities in the same proportion in which they 
were collected, except as determined by the Director.



Sec. 1206.4  Increased costs of regulation.

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



Sec. 1206.5  Working capital fund.

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



Sec. 1206.6  Notice and review.

    (a) Written notice of budget. The Director shall provide to each 
Regulated Entity written notice of the projected budget for the Agency 
for the upcoming fiscal year. Such notice shall be provided at least 30 
days before the beginning of the applicable fiscal year.
    (b) Written notice of assessments. The Director shall provide each 
Regulated Entity with written notice of assessments as follows:
    (1) Annual assessments. The Director shall provide each Regulated 
Entity with written notice of the annual assessment and the semiannual 
payments to be collected under this part. Notice of the annual 
assessment and semiannual payments shall be provided before the start of 
the new fiscal year.
    (2) Immediate assessments. The Director shall provide each Regulated 
Entity with written notice of any immediate assessments to be collected 
under Sec. 1206.4 of this chapter. Notice of any immediate assessment 
and the required payments shall be provided at such reasonable time as 
determined by the Director.
    (3) Changes to assessments. The Director shall provide each 
Regulated Entity with written notice of any changes in the assessment 
procedures that the Director, in his or her sole discretion,

[[Page 77]]

deems necessary under the circumstances.
    (c) Request for review. At the written request of a Regulated 
Entity, the Director, in his or her discretion, may review the 
calculation of the proportional share of the annual assessment, the 
semiannual payments, and any partial payments to be collected under this 
part. The determination of the Director upon such review is final. 
Except as provided by the Director, review by the Director does not 
suspend the requirement that the Regulated Entity make the semiannual 
payment or partial payment on or before the date it is due. Any 
adjustments determined appropriate shall be credited or otherwise 
addressed by the following year's assessment for that entity.



Sec. 1206.7  Delinquent payment.

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



Sec. 1206.8  Enforcement of payment.

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



PART 1207_MINORITY AND WOMEN INCLUSION--Table of Contents



                            Subpart A_General

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

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

1207.10-1207.19  [Reserved]

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

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

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

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



                            Subpart A_General



Sec. 1207.1  Definitions.

    The following definitions apply to the terms used in this part:
    Business and activities means operational, commercial, and economic 
endeavors of any kind, whether for profit or not for profit and whether 
regularly or irregularly engaged in by a regulated entity or the Office 
of Finance, and includes, but is not limited to, management of the 
regulated entity or the Office of Finance, employment, procurement, 
insurance, and all types of contracts, including contracts for the 
issuance or guarantee of any debt, equity, or mortgage-related 
securities, the management of mortgage and securities portfolios, the 
making of equity investments, the purchase, sale and servicing of 
single- and multi-family mortgage loans, and the implementation of 
affordable housing or community investment programs and initiatives.
    Director means the Director of FHFA or his or her designee.
    Disability has the same meaning as defined in 29 CFR 1630.2(g) and 
1630.3 and Appendix to Part 1630--Interpretive Guidance on title I of 
the Americans with Disabilities Act.
    Disabled-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-
dealers, and providers of legal services--
    (1) Qualified as a Service-Disabled Veteran-Owned Small Business 
Concern as defined in 13 CFR 125.8 through 125.13; or

[[Page 78]]

    (2) More than fifty percent (50%) of the ownership or control of 
which is held by one or more persons with a disability; and
    (3) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more persons with a disability.
    FHFA means the Federal Housing Finance Agency.
    Minority means any Black (or African) American, Native American (or 
American Indian), Hispanic (or Latino) American, or Asian American.
    Minority-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is held by one or more minority individuals; and
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more minority individuals.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Reasonable accommodation has the same meaning as defined in 29 CFR 
1630.2(o) and Appendix to Part 1630--Interpretive Guidance on title I of 
the Americans with Disabilities Act.
    Regulated entity means the Federal Home Loan Mortgage Corporation, 
the Federal National Mortgage Association, any Federal Home Loan Bank 
and/or any affiliate thereof that is subject to the regulatory authority 
of FHFA. The term ``regulated entities'' means (collectively) the 
Federal Home Loan Mortgage Corporation, the Federal National Mortgage 
Association, and/or any affiliate Federal Home Loan Bank and/or any 
affiliate thereof that is subject to the regulatory authority of FHFA.
    Women-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is held by one or more women;
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more women; and
    (3) A significant percentage of senior management positions of which 
are held by women.



Sec. 1207.2  Policy, purpose, and scope.

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



Sec. 1207.3  Limitations.

    (a) Except as expressly provided herein for enforcement by FHFA, the 
regulations in this part do not, are not intended to, and should not be 
construed to create any right or benefit, substantive or procedural, 
enforceable at law, in equity, or through administrative proceeding, by 
any party against the United States, its departments,

[[Page 79]]

agencies, or entities, its officers, employees, or agents, a regulated 
entity or the Office of Finance, their officers, employees or agents, or 
any other person.
    (b) The contract clause required by section 1207.21(b)(6) and the 
itemized data reporting on numbers of contracts and amounts involved 
required under Secs. 1207.22 and 1207.23(b)(11) through 
Sec. 1207.23(b)(13) apply only to contracts for services in any amount 
and to contracts for goods that equal or exceed $10,000 in annual value, 
whether in a single contract, multiple contracts, a series of contracts 
or renewals of contracts, with a single vendor.



Secs. Sec. 1207.4-1207.9  [Reserved]



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



Sec. 1207.10-1207.19  [Reserved]



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



Sec. 1207.20  Office of Minority and Women Inclusion.

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



Sec. 1207.21  Equal opportunity in employment and contracting.

    (a) Equal opportunity notice. Each regulated entity and the Office 
of Finance shall publish a statement, endorsed by its Chief Executive 
Officer and approved by its Board of Directors, confirming its 
commitment to the principles of equal opportunity in employment and in 
contracting, at a minimum regardless of color, national origin, sex, 
religion, age, disability status, or genetic information. The notice 
also shall confirm commitment against retaliation or reprisal. 
Publication shall include, at a minimum, conspicuous posting in all 
regulated entity and Office of Finance physical facilities, including 
through alternative media formats, as necessary, and accessible posting 
on the regulated entity's and the Office of Finance's Web site. The 
notice shall be updated and re-published, re-endorsed by the Chief 
Executive Officer and re-approved by the Board of Directors annually.
    (b) Policies and procedures. Each regulated entity and the Office of 
Finance shall develop, implement, and maintain policies and procedures 
to ensure, to the maximum extent possible in balance with financially 
safe and sound business practices, the inclusion and utilization of 
minorities, women, individuals with disabilities, and minority-, women-, 
and disabled-owned businesses in all business and activities and at all 
levels of the regulated entity and the Office of Finance, including in 
management, employment, procurement, insurance, and all types of 
contracts. The policies and procedures of each regulated entity and the 
Office of Finance at a minimum shall:
    (1) Confirm its adherence to the principles of equal opportunity and 
non-discrimination in employment and in contracting;

[[Page 80]]

    (2) Describe its policy against discrimination in employment and 
contracting;
    (3) Establish internal procedures to receive and attempt to resolve 
complaints of discrimination in employment and in contracting. 
Publication will include at a minimum making the procedure conspicuously 
accessible to employees and applicants through print, electronic, or 
alternative media formats, as necessary, and through the regulated 
entity's or the Office of Finance's Web site;
    (4) Establish an effective procedure for accepting, reviewing and 
granting or denying requests for reasonable accommodations of 
disabilities from employees or applicants for employment;
    (5) Encourage the consideration of diversity in nominating or 
soliciting nominees for positions on boards of directors and engage in 
recruiting and outreach directed at encouraging individuals who are 
minorities, women and individuals with disabilities to seek or apply for 
employment with the regulated entity or the Office of Finance;
    (6) Except as limited by Sec. 1207.3(b), require that each contract 
it enters contains a material clause committing the contractor to 
practice the principles of equal employment opportunity and non-
discrimination in all its business activities and requiring each such 
contractor to include the clause in each subcontract it enters for 
services or goods provided to the regulated entity or the Office of 
Finance;
    (7) Identify the types of contracts the regulated entity considers 
exempt under Sec. 1207.3(b) and any commercially reasonable thresholds, 
exceptions, and limitations the regulated entity establishes for the 
implementation of Sec. 1207.21(c)(2). The policies and procedures must 
address the rationale and need for implementing the thresholds, 
exceptions, or limitations;
    (8) Be published and accessible to employees, applicants for 
employment, contractors, potential contractors, and members of the 
public through print, electronic, or alternative media formats, as 
necessary, and through the regulated entity's or the Office of Finance's 
Web site; and
    (9) Be reviewed at the direction of the officer immediately 
responsible for directing the Office of Minority and Women Inclusion, or 
other office designated to perform the responsibilities of this part, at 
least annually to assess their effectiveness and to incorporate 
appropriate changes.
    (c) Outreach for contracting. Each regulated entity and the Office 
of Finance shall establish a program for outreach designed to ensure to 
the maximum extent possible the inclusion in contracting opportunities 
of minorities, women, individuals with disabilities, and minority-, 
women-, and disabled-owned businesses. The program at a minimum shall:
    (1) Apply to all contracts entered into by the regulated entity or 
the Office of Finance, including contracts with financial institutions, 
investment banking firms, investment consultants or advisors, financial 
services entities, mortgage banking firms, asset management entities, 
underwriters, accountants, brokers, brokers-dealers, and providers of 
legal services;
    (2) Establish policies, procedures and standards requiring the 
publication of contracting opportunities designed to encourage 
contractors that are minorities, women, individuals with disabilities, 
and minority-, women-, and disabled-owned businesses to submit offers or 
bid for the award of such contracts; and
    (3) Ensure the consideration of the diversity of a contractor when 
the regulated entity or the Office of Finance reviews and evaluates 
offers from contractors.



Sec. 1207.22  Regulated entity and Office of Finance reports.

    (a) General. Each regulated entity and the Office of Finance, 
through its Office of Minority and Women Inclusion, or other office 
designated to perform the responsibilities of this part, shall report in 
writing, in such format as the Director may require, to the Director 
describing its efforts to promote diversity and ensure the inclusion and 
utilization of minorities, women, individuals with disabilities, and 
minority-, women-, and disabled-owned businesses at all levels, in 
management and employment, in all business and activities, and in all 
contracts for services and the results of such efforts.

[[Page 81]]

    (1) Within 180 days after the effective date of this regulation each 
regulated entity and the Office of Finance shall submit to the Director 
or his or her designee a preliminary status report describing actions 
taken, plans for and progress toward implementing the provisions of 12 
U.S.C. 4520 and this part; and including to the extent available the 
data and information required by this part to be included in an annual 
report.
    (2) FHFA intends to use the preliminary status report solely for the 
purpose of examining the submitting regulated entity or the Office of 
Finance and reporting to the institution on its operations and the 
condition of its program.
    (b) FHFA use of reports. The data and information reported to FHFA 
under this part (except for the initial report under paragraph (a)(1) of 
this section) are intended to be used for any permissible supervisory 
and regulatory purpose, including examinations, enforcement actions, 
identification of matters requiring attention, and production of FHFA 
examination, operating and condition reports related to one or more of 
the regulated entities and the Office of Finance. FHFA may use the 
information and data submitted to issue aggregate reports and data 
summaries that each regulated entity and the Office of Finance may use 
to assess its own progress and accomplishments, or to the public as it 
deems necessary. FHFA is not requiring, and does not desire, that 
reports under this part contain personally identifiable information.
    (c) Frequency of reports. Each regulated entity and the Office of 
Finance shall submit an annual report on or before March 1 of each year, 
beginning in 2012, reporting on the period of January 1 through December 
31 of the preceding year, and such other reports as the Director may 
require. If the date for submission falls on a Saturday, Sunday, or 
Federal holiday, the report is due no later than the next day that is 
not a Saturday, Sunday, or Federal holiday. The data required to be 
reported by Sec. 1207.23(b)(9) shall be submitted no later than 
September 30, 2015, and thereafter included in each annual report.
    (d) Annual summary. Each regulated entity and the Office of Finance 
shall include in its annual report to the Director (pursuant to 12 
U.S.C. 1723a(k), 1456(c), or 1440, with respect to the regulated 
entities) a summary of its activities under this part during the 
previous year, including at a minimum, detailed information describing 
the actions taken by the regulated entity or the Office of Finance 
pursuant to 12 U.S.C. 4520 and a statement of the total amounts paid by 
the regulated entity or the Office of Finance to contractors during the 
previous year and the percentage of such amounts paid to contractors 
that are minorities or minority-owned businesses, women or women-owned 
businesses, and individuals with disabilities and disabled-owned 
businesses respectively, as limited by Sec. 1207.3(b).

[75 FR 81402, Dec. 28, 2010, as amended at 80 FR 25215, May 4, 2015]



Sec. 1207.23  Annual reports--format and contents.

    (a) Format. Each annual report shall consist of a detailed summary 
of the regulated entity's or the Office of Finance's activities during 
the reporting year to carry out the requirements of this part, which 
report may also be made a part of the regulated entity's or the Office 
of Finance's annual report to the Director. The report shall contain a 
table of contents and conclude with a certification by the regulated 
entity's or the Office of Finance's officer responsible for the annual 
report that the data and information presented in the report are 
accurate, and are approved for submission.
    (b) Contents. The annual report shall contain the information 
provided in the regulated entity's or the Office of Finance's annual 
summary pursuant to Sec. 1207.22(d) and, in addition to any other 
information or data the Director may require, shall include:
    (1) The EEO-1 Employer Information Report (Form EEO-1 used by the 
Equal Employment Opportunity Commission (EEOC) and the Office of Federal 
Contract Compliance Programs (OFCCP) to collect certain demographic 
information) or similar reports filed by the regulated entity or the 
Office of Finance during the reporting year. If the

[[Page 82]]

regulated entity or the Office of Finance does not file Form EEO-1 or 
similar reports, the regulated entity or the Office of Finance shall 
submit to FHFA a completed Form EEO-1;
    (2) All other reports or plans the regulated entity or the Office of 
Finance submitted to the EEOC, the Department of Labor, OFCCP or 
Congress (``reports or plans'' is not intended to include separate 
complaints or charges of discrimination or responses thereto) during the 
reporting year;
    (3) Data showing by minority and gender the number of individuals 
applying for employment with the regulated entity or the Office of 
Finance in each occupational or job category identified on the Form EEO-
1 during the reporting year;
    (4) Data showing by minority and gender the number of individuals 
hired for employment with the regulated entity or the Office of Finance 
in each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (5) Data showing by minority, gender and disability classification, 
and categorized as voluntary or involuntary, the number of separations 
from employment with the regulated entity or the Office of Finance in 
each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (6) Data showing the number of requests for reasonable accommodation 
received from employees and applicants for employment, the number of 
requests granted, and the disabilities accommodated and the types of 
accommodation granted during the reporting year;
    (7) Data showing for the reporting year by minority, gender, and 
disability classification the number of individuals applying for 
promotion at the regulated entity or the Office of Finance--
    (i) Within each occupational or job category identified on the Form 
EEO-1; and
    (ii) From one such occupational or job category to another;
    (8) Data showing by minority, gender, and disability classification 
the number of individuals--
    (i) Promoted at the regulated entity or the Office of Finance within 
each occupational or job category identified on the Form EEO-1, after 
applying for such a promotion;
    (ii) Promoted at the regulated entity or the Office of Finance 
within each occupational or job category identified on the Form EEO-1, 
without applying for such a promotion; and
    (iii) Promoted at the regulated entity or the Office of Finance from 
one occupational or job category identified on the Form EEO-1 to another 
such category, after applying for such a promotion;
    (9)(i) Data showing for the reporting year by minority and gender 
classification, the number of individuals on the board of directors of 
each Bank and the Office of Finance--
    (A) Using data collected by each Bank and the Office of Finance 
through an information collection requesting each director's voluntary 
self-identification of his or her minority and gender classification 
without personally identifiable information;
    (B) Using the same classifications as those on the Form EEO-1; and
    (ii) A description of the outreach activities and strategies 
executed during the preceding year to promote diversity in nominating or 
soliciting nominees for positions on boards of directors of the Banks 
(consistent with 12 CFR 1261.9) and the Office of Finance;
    (10) A comparison of the data reported by Fannie Mae and Freddie Mac 
under paragraphs (b)(1) through (8) of this section, and by the Banks 
and the Office of Finance under paragraphs (b)(1) through (9) of this 
section, to such data as reported in the previous year together with a 
narrative analysis;
    (11) Descriptions of all regulated entity or Office of Finance 
outreach activity during the reporting year to recruit individuals who 
are minorities, women, or persons with disabilities for employment, to 
solicit or advertise for minority or minority-owned, women or women-
owned, and disabled-owned contractors or contractors who are individuals 
with disabilities to offer proposals or bids to enter into business with 
the regulated entity or Office of Finance, or to inform such contractors 
of the regulated entity's or Office of Finance's contracting process, 
including

[[Page 83]]

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

[75 FR 81402, Dec. 28, 2010, as amended at 80 FR 25215, May 4, 2015]



Sec. 1207.24  Enforcement.

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



PART 1208_DEBT COLLECTION--Table of Contents



                            Subpart A_General

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

[[Page 84]]

                         Subpart B_Salary Offset

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

                     Subpart C_Administrative Offset

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

                       Subpart D_Tax Refund Offset

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

                Subpart E_Administrative Wage Garnishment

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

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



                            Subpart A_General

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



Sec. 1208.1  Authority and scope.

    (a) Authority. FHFA issues this part 1208 under the authority of 5 
U.S.C. 5514 and 31 U.S.C. 3701-3720D, and in conformity with the Federal 
Claims Collection Standards (FCCS) at 31 CFR chapter IX; the regulations 
on salary offset issued by the Office of Personnel Management (OPM) at 5 
CFR part 550, subpart K; the regulations on tax refund offset issued by 
the United States Department of the Treasury (Treasury) at 31 CFR 285.2; 
and the regulations on administrative wage garnishment issued by 
Treasury at 31 CFR 285.11.
    (b) Scope--(1) This part applies to debts that are owed to the 
Federal Government by Federal employees; other persons, organizations, 
or entities that are indebted to FHFA; and by Federal employees of FHFA 
who are indebted to other agencies, except for those debts listed in 
paragraph (b)(2) of this section.
    (2) Subparts B and C of this part 1208 do not apply to--
    (i) Debts or claims arising under the Internal Revenue Code (26 
U.S.C. 1 et seq.), the Social Security Act (42 U.S.C. 301 et seq.) or 
the tariff laws of the United States;
    (ii) Any case to which the Contract Disputes Act (41 U.S.C. 601 et 
seq.) applies;

[[Page 85]]

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



Sec. 1208.2  Definitions.

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

[[Page 86]]

by the Inspector General of the agency administering the program;
    (4) Any amount the Federal Government is authorized by statute to 
collect for the benefit of any person;
    (5) The unpaid share of any non-Federal partner in a program 
involving a Federal payment, and a matching or cost-sharing payment by 
the non-Federal partner;
    (6) Any fine or penalty assessed by an agency; and
    (7) Other amounts of money or property owed to the Federal 
Government.
    Compromise means the settlement or forgiveness of a debt under 31 
U.S.C. 3711, in accordance with standards set forth in the FCCS and 
applicable Federal law.
    Creditor agency means the agency to which the debt is owed, 
including a debt collection center when acting on behalf of a creditor 
agency in matters pertaining to the collection of a debt.
    Debt See the definition of the terms ``Claim or debt'' of this 
section.
    Debt collection center means the Department of the Treasury or any 
other agency or division designated by the Secretary of the Treasury 
with authority to collect debts on behalf of creditor agencies in 
accordance with 31 U.S.C. 3711(g).
    Debtor means the person, organization, or entity owing money to the 
Federal Government.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement) unless other satisfactory payment arrangements have been 
made.
    Director means the Director of FHFA or Director's designee.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, or retainer pay (or in the case of an 
employee not entitled to basic pay, other authorized pay) remaining 
after the deduction of any amount required by law to be withheld (other 
than deductions to execute garnishment orders in accordance with 5 CFR 
parts 581 and 582). FHFA will apply the order of precedence contained in 
OPM guidance (PPM-2008-01; Order Of Precedence When Gross Pay Is Not 
Sufficient To Permit All Deductions), as follows--
    (1) Retirement deductions for defined benefit plan (including Civil 
Service Retirement System, Federal Employees Retirement System, or other 
similar defined benefit plan);
    (2) Social security (OASDI) tax;
    (3) Medicare tax;
    (4) Federal income tax;
    (5) Basic health insurance premium (including Federal Employees 
Health Benefits premium, pre-tax or post-tax, or premium for similar 
benefit under another authority but not including amounts deducted for 
supplementary coverage);
    (6) Basic life insurance premium (including Federal Employees' Group 
Life Insurance--FEGLI--Basic premium or premium for similar benefit 
under another authority);
    (7) State income tax;
    (8) Local income tax;
    (9) Collection of debts owed to the U.S. Government (e.g., tax debt, 
salary overpayment, failure to withhold proper amount of deductions, 
advance of salary or travel expenses, etc.; debts which may or may not 
be delinquent; debts which may be collected through the Treasury's 
Financial Management Services Treasury Offset Program, an automated 
centralized debt collection program for collecting Federal debt from 
Federal payments):
    (i) Continuous levy under the Federal Payment Levy Program (tax 
debt); and
    (ii) Salary offsets (whether involuntary under 5 U.S.C. 5514 or 
similar authority or required by a voluntarily signed written agreement; 
if multiple debts are subject to salary offset, the order is based on 
when each offset commenced--with earliest commencing offset at the top 
of the order--unless there are special circumstances, as determined by 
the paying agency).
    (10) Court-Ordered collection/debt:
    (i) Child support (may include attorney and other fees as provided 
for in 5 CFR 581.102(d)). If there are multiple child support orders, 
the priority of orders is governed by 42 U.S.C. 666(b) and implementing 
regulations, as required by 42 U.S.C. 659(d)(2);
    (ii) Alimony (may include attorney and other fees as provided for in 
5 CFR

[[Page 87]]

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

[[Page 88]]



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

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



Sec. 1208.4  Reporting delinquent debts to credit bureaus.

    (a) FHFA may report delinquent debts to consumer reporting agencies 
(31 U.S.C. 3701(a)(3), 3711). Sixty calendar days prior to release of 
information to a consumer reporting agency, the debtor shall be 
notified, in writing, of the intent to disclose the existence of the 
debt to a consumer reporting agency. Such notice of intent may be a 
separate correspondence or included in correspondence demanding direct 
payment. The notice shall be in conformance with 31 U.S.C. 3711(e) and 
the FCCS. In the notice, FHFA shall provide the debtor with:
    (1) An opportunity to inspect and copy agency records pertaining to 
the debt;
    (2) An opportunity for an administrative review of the legal 
enforceability or past due status of the debt;
    (3) An opportunity to enter into a repayment agreement on terms 
satisfactory to FHFA to prevent FHFA from reporting the debt as overdue 
to consumer reporting agencies, and provide deadlines and method for 
requesting this relief;
    (4) An explanation of the rate of interest that will accrue on the 
debt, that all costs incurred to collect the debt will be charged to the 
debtor, the authority for assessing these costs, and

[[Page 89]]

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



Secs. 1208.5-1208.19  [Reserved]



                         Subpart B_Salary Offset



Sec. 1208.20  Authority and scope.

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



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

    (a) Notice of Intent. Deductions from an employee's salary may not 
be made unless FHFA provides the employee with a Notice of Intent at 
least 30 calendar days before the salary offset is initiated.
    (b) Contents of Notice of Intent. The Notice of Intent shall advise 
the employee of the following:
    (1) That FHFA has reviewed the records relating to the claim and has 
determined that the employee owes the debt;
    (2) That FHFA intends to collect the debt by deductions from the 
employee's current disposable pay account;

[[Page 90]]

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



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

    (a) Request for review. An employee who desires to inspect or copy 
FHFA records related to a debt owed by the employee to FHFA must send a 
letter to the individual designated in the Notice of Intent requesting 
access to the relevant records. The letter must be received in the 
office of that individual within 15 calendar days after the employee's 
receipt of the Notice of Intent.

[[Page 91]]

    (b) Review location and time. In response to a timely request 
submitted by the employee, the employee shall be notified of the 
location and time when the employee may inspect and copy records related 
to his or her debt that are not exempt from disclosure. If the employee 
is unable personally to inspect such records as the result of 
geographical or other constraints, FHFA shall arrange to send copies of 
such records to the employee. The debtor shall pay copying costs unless 
they are waived by FHFA. Copying costs shall be assessed pursuant to 
FHFA's Freedom of Information Act Regulation, 12 CFR part 1202.



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

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

[[Page 92]]

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



Sec. 1208.24  Certification where FHFA is the creditor agency.

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



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

    (a) Proposed repayment schedule. In response to a Notice of Intent, 
an employee may propose to repay the debt voluntarily in lieu of salary 
offset by submitting a written proposed repayment schedule to FHFA. Any 
proposal under this section must be received by FHFA within 30 calendar 
days after receipt of the Notice of Intent.
    (b) Notification of decision. In response to a timely proposal by 
the employee, FHFA shall notify the employee whether the employee's 
proposed repayment schedule is acceptable. FHFA

[[Page 93]]

has the discretion to accept, reject, or propose to the employee a 
modification of the proposed repayment schedule.
    (1) If FHFA decides that the proposed repayment schedule is 
unacceptable, the employee shall have 30 calendar days from the date he 
or she received notice of the decision in which to file a request for a 
hearing.
    (2) If FHFA decides that the proposed repayment schedule is 
acceptable or the employee agrees to a modification proposed by FHFA, an 
agreement shall be put in writing and signed by both the employee and 
FHFA.



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

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



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

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



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

    (a) Generally. FHFA shall coordinate salary deductions under this 
section and shall determine the amount of an employee's disposable pay 
and the amount of the salary offset subject to the requirements in this 
section. Deductions shall begin the pay period following the issuance of 
the certification by FHFA or the receipt by FHFA of the certification 
from another agency, or as soon thereafter as possible.
    (b) Upon issuance of a proper certification by FHFA for debts owed 
to FHFA, or upon receipt of a proper certification from a creditor 
agency, FHFA shall send the employee a written notice of salary offset. 
Such notice shall advise the employee:
    (1) That certification has been issued by FHFA or received from 
another creditor agency;
    (2) Of the amount of the debt and of the deductions to be made; and 
provided for in the certification, and
    (3) Of the initiation of salary offset at the next officially 
established pay

[[Page 94]]

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



Sec. 1208.29  Coordinating salary offset with other agencies.

    (a) Responsibility of FHFA as the creditor agency. (1) FHFA shall be 
responsible for:
    (i) Arranging for a hearing upon proper request by a Federal 
employee;
    (ii) Preparing the Notice of Intent consistent with the requirements 
of Sec. 1208.21;
    (iii) Obtaining hearing officials from other agencies pursuant to 
Sec. 1208.23(b); and
    (iv) Ensuring that each certification of debt pursuant to 
Sec. 1208.24(b) is sent to a paying agency.
    (2) Upon completion of the procedures set forth in Secs. 1208.24 
through 1208.26, FHFA shall submit to the employee's paying agency, if 
applicable, a certified debt claim and an installment agreement or other 
instruction on the payment schedule.
    (i) If the employee is in the process of separating from the Federal 
Government, FHFA shall submit its debt claim to the employee's paying 
agency for collection by lump-sum deduction from the employee's final 
check. The paying agency shall certify the total amount of its 
collection and furnish a copy of the certification to FHFA and to the 
employee.
    (ii) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, FHFA may, unless 
otherwise prohibited, request that money due and payable to the employee 
from the Federal Government, including payments from the Civil Service 
Retirement and Disability Fund (5 CFR 831.1801) or other similar funds, 
be administratively offset to collect the debt.

[[Page 95]]

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



Sec. 1208.30  Interest, penalties, and administrative costs.

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



Sec. 1208.31  Refunds.

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



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

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



Sec. 1208.33  Non-waiver of rights by payments.

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

[[Page 96]]



                     Subpart C_Administrative Offset



Sec. 1208.40  Authority and scope.

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



Sec. 1208.41  Collection.

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



Sec. 1208.42  Administrative offset prior to completion of procedures.

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



Sec. 1208.43  Procedures.

    Unless the procedures described in Sec. 1208.42 are used, prior to 
collecting any debt by administrative offset or referring such claim to 
another agency for collection through administrative offset, FHFA shall 
provide the debtor with the following:
    (a) Written notification of the nature and amount of the debt, the 
intention

[[Page 97]]

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



Sec. 1208.44  Interest, penalties, and administrative costs.

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



Sec. 1208.45  Refunds.

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



Sec. 1208.46  No requirement for duplicate notice.

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



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

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



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

    (a) Any agency may request that funds due and payable to a debtor by 
FHFA be administratively offset in order to collect a debt owed to such 
agency by the debtor.
    (b) FHFA shall initiate the requested administrative offset only 
upon:
    (1) Receipt of written certification from the creditor agency that:
    (i) The debtor owes the debt, including the amount and basis of the 
debt;
    (ii) The agency has prescribed regulations for the exercise of 
administrative offset; and

[[Page 98]]

    (iii) The agency has complied with its own administrative offset 
regulations and with the applicable provisions of the FCCS, including 
providing any required hearing or review.
    (2) A determination by FHFA that collection by administrative offset 
against funds payable by FHFA would be in the best interest of the 
Federal Government as determined by the facts and circumstances of the 
particular case and that such administrative offset would not otherwise 
be contrary to law.



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

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



                       Subpart D_Tax Refund Offset



Sec. 1208.50  Authority and scope.

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



Sec. 1208.51  Definitions.

    The following terms apply to this subpart D--
    Debt or claim means an amount of money, funds or property which has 
been determined by FHFA to be due to the Federal Government from any 
person, organization, or entity, except another Federal agency.
    (1) A debt becomes eligible for tax refund offset procedures if:
    (i) It cannot currently be collected pursuant to the salary offset 
procedures of 5 U.S.C. 5514(a)(1);
    (ii) The debt is ineligible for administrative offset or cannot be 
collected currently by administrative offset; and
    (iii) The requirements of this section are otherwise satisfied.
    (2) All judgment debts are past due for purposes of this subpart D. 
Judgment debts remain past due until paid in full.
    Debtor means a person who owes a debt or a claim. The term 
``person'' includes any individual, organization or entity, except 
another Federal agency.

[[Page 99]]

    Dispute means a written statement supported by documentation or 
other evidence that all or part of an alleged debt is not past due or 
legally enforceable, that the amount is not the amount currently owed, 
that the outstanding debt has been satisfied, or in the case of a debt 
reduced to judgment, that the judgment has been satisfied or stayed.
    Notice means the information sent to the debtor pursuant to 
Sec. 1208.53. The date of the notice is that date shown on the notice 
letter as its date of issuance.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the Internal Revenue 
Service (IRS) makes the appropriate credits.



Sec. 1208.52  Procedures.

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

[[Page 100]]

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



Sec. 1208.53  No requirement for duplicate notice.

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



Secs. 1208.54-1208.59  [Reserved]



                Subpart E_Administrative Wage Garnishment



Sec. 1208.60  Scope and purpose.

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



Sec. 1208.61  Notice.

    At least 30 days before the initiation of garnishment proceedings, 
FHFA will send, by first class mail to the debtor's last known address, 
a written notice informing the debtor of:
    (a) The nature and amount of the debt;
    (b) FHFA's intention to initiate proceedings to collect the debt 
through deductions from the debtor's pay until the debt and all 
accumulated interest penalties and administrative costs are paid in 
full;
    (c) An explanation of the debtor's rights as set forth in 
Sec. 1208.62(c); and
    (d) The time frame within which the debtor may exercise these 
rights. FHFA shall retain a stamped copy of the notice indicating the 
date the notice was mailed.



Sec. 1208.62  Debtor's rights.

    FHFA shall afford the debtor the opportunity:
    (a) To inspect and copy records related to the debt;

[[Page 101]]

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



Sec. 1208.63  Form of hearing.

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



Sec. 1208.64  Effect of timely request.

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



Sec. 1208.65  Failure to timely request a hearing.

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



Sec. 1208.66  Hearing official.

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



Sec. 1208.67  Procedure.

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



Sec. 1208.68  Format of hearing.

    FHFA will have the burden of proof to establish the existence or 
amount of the debt. Thereafter, if the debtor disputes the existence or 
amount of the debt, the debtor must prove by a preponderance of the 
evidence that no debt exists, or that the amount of the debt is 
incorrect. In addition, the debtor may present evidence that the terms 
of the repayment schedule are unlawful, would cause a financial hardship 
to the debtor, or that collection of the debt may not be pursued due to 
operation of law. The hearing official shall maintain a record of any 
hearing held under this section. Hearings are not required to be formal, 
and evidence may be offered without regard to formal rules of evidence. 
Witnesses who testify in oral hearings shall do so under oath or 
affirmation.

[[Page 102]]



Sec. 1208.69  Date of decision.

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



Sec. 1208.70  Content of decision.

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



Sec. 1208.71  Finality of agency action.

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



Sec. 1208.72  Failure to appear.

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



Sec. 1208.73  Wage garnishment order.

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



Sec. 1208.74  Certification by employer.

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



Sec. 1208.75  Amounts withheld.

    (a) Upon receipt of the garnishment order issued under this section, 
the employer shall deduct from all disposable pay paid to the debtor 
during each pay period the amount of garnishment described in paragraphs 
(b) through (d) of this section.
    (b) Subject to the provisions of paragraphs (c) and (d) of this 
section, the amount of garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15 percent 
of the debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2). The amount set 
forth at 15 U.S.C. 1673(a)(2) is the amount by which the debtor's 
disposable pay exceeds an amount equivalent to thirty times the minimum 
wage.
    (c) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (1) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (b) of this section and shall have priority over other 
withholding orders which

[[Page 103]]

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



Sec. 1208.76  Exclusions from garnishment.

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



Sec. 1208.77  Financial hardship.

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



Sec. 1208.78  Ending garnishment.

    (a) Once FHFA has fully recovered the amounts owed by the debtor, 
including interest, penalties, and administrative costs consistent with 
the Federal Claims Collection Standards, FHFA will send the debtor's 
employer notification to discontinue wage withholding.
    (b) At least annually, FHFA will review its debtors' accounts to 
ensure that garnishment has been terminated for accounts that have been 
paid in full.



Sec. 1208.79  Prohibited actions by employer.

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

[[Page 104]]



Sec. 1208.80  Refunds.

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



Sec. 1208.81  Right of action.

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



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



                      Subpart A_Scope and Authority

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

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

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

                Subpart C_Rules of Practice and Procedure

1209.10  Authority of the Director.
1209.11  Authority of the Presiding Officer.
1209.12  Public hearings; closed hearings.
1209.13  Good faith certification.
1209.14  Ex parte communications.
1209.15  Filing of papers.
1209.16  Service of papers.
1209.17  Time computations.
1209.18  Change of time limits.
1209.19  Witness fees and expenses.
1209.20  Opportunity for informal settlement.
1209.21  Conduct of examination.
1209.22  Collateral attacks on adjudicatory proceeding.
1209.23  Commencement of proceeding and contents of notice of charges.
1209.24  Answer.
1209.25  Amended pleadings.
1209.26  Failure to appear.
1209.27  Consolidation and severance of actions.
1209.28  Motions.
1209.29  Discovery.
1209.30  Request for document discovery from parties.
1209.31  Document discovery subpoenas to non-parties.
1209.32  Deposition of witness unavailable for hearing.
1209.33  Interlocutory review.
1209.34  Summary disposition.
1209.35  Partial summary disposition.
1209.36  Scheduling and pre-hearing conferences.
1209.37  Pre-hearing submissions.
1209.38  Hearing subpoenas.
1209.39-1209.49  [Reserved]
1209.50  Conduct of hearings.
1209.51  Evidence.
1209.52  Post-hearing filings.
1209.53  Recommended decision and filing of record.
1209.54  Exceptions to recommended decision.
1209.55  Review by Director.
1209.56  Exhaustion of administrative remedies.
1209.57  Judicial review; no automatic stay.
1209.58-1209.69  [Reserved]

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

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

           Subpart E_Civil Money Penalty Inflation Adjustments

1209.80  Inflation adjustments.

[[Page 105]]

1209.81  Applicability.
1209.82-1209.99  [Reserved]

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

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

    Authority: 5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C. 
1430c(d); 12 U.S.C. 4501, 4502, 4503, 4511, 4513, 4513b, 4517, 4526, 
4566(c)(1) and (c)(7), 4581-4588, 4631-4641; and 28 U.S.C. 2461 note.

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



                      Subpart A_Scope and Authority



Sec. 1209.1  Scope.

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

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

    (b) Enforcement Proceedings. Subpart B of this part (Enforcement 
Proceedings Under sections 1371 through 1379D of the Safety and 
Soundness Act) sets forth the statutory authority for enforcement 
proceedings under sections 1371 through 1379D of the Safety and 
Soundness Act (12 U.S.C. 4631 through 4641) (Enforcement Proceedings).
    (c) Rules of Practice and Procedure. Subpart C of this part (Rules 
of Practice and Procedure) prescribes the general rules of practice and 
procedure applicable to adjudicatory proceedings that the Director is 
required by statute to conduct on the record after opportunity for a 
hearing under the Administrative Procedure Act, 5 U.S.C. 554, 556, and 
557, under the following statutory provisions:
    (1) Enforcement proceedings under sections 1371 through 1379D of the 
Safety and Soundness Act, as amended (12 U.S.C. 4631 through 4641);
    (2) Removal, prohibition, and civil money penalty proceedings for 
violations of post-employment restrictions imposed by applicable law;
    (3) Proceedings under section 102 of the Flood Disaster Protection 
Act of 1973, as amended (42 U.S.C. 4012a) to assess civil money 
penalties; and
    (4) Enforcement proceedings under sections 1341 through 1348 of the 
Safety and Soundness Act, as amended (12 U.S.C. 4581 through 4588), and 
section 10C of the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1430c), except where the Rules of Practice and Procedure in Subpart C 
are inconsistent with such statutory provisions, in which case the 
statutory provisions shall apply.
    (d) Representation and conduct. Subpart D of this part (Parties and 
Representational Practice before the Federal Housing Finance Agency; 
Standards of Conduct) sets out the rules of representation and conduct 
that shall govern any appearance by any person, party, or representative 
of any person or party, before a presiding officer, the Director of 
FHFA, or a designated representative of the Director or FHFA staff, in 
any proceeding or matter pending before the Director.
    (e) Civil money penalty inflation adjustments. Subpart E of this 
part (Civil Money Penalty Inflation Adjustments) sets out the 
requirements for the periodic adjustment of maximum civil money penalty 
amounts under the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended (Inflation

[[Page 106]]

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

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

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

[76 FR 53607, Aug. 26, 2011, as amended at 78 FR 37103, June 20, 2013]



Sec. 1209.2  Rules of construction.

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



Sec. 1209.3  Definitions.

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

[[Page 107]]

    Entity-affiliated party has the meaning defined in section 1303(11) 
of the Safety and Soundness Act (12 U.S.C. 4502(11)), and may include an 
executive officer, any director, or management of the Office of Finance, 
as applicable under relevant provisions of the Safety and Soundness Act 
or FHFA regulations.
    Executive officer has the meaning defined in section 1303(12) of the 
Safety and Soundness Act (12 U.S.C. 4502(12)), and may include an 
executive officer of the Office of Finance, as applicable under relevant 
provisions of the Safety and Soundness Act or FHFA regulations.
    FHFA means the Federal Housing Finance Agency as defined in section 
1303(2) of the Safety and Soundness Act (12 U.S.C. 4502(2)).
    Notice of charges means the charging document served by FHFA to 
commence an enforcement proceeding under this part for the issuance of a 
cease and desist order; removal, suspension, or prohibition order; or an 
order to assess a civil money penalty, under 12 U.S.C. 4631 through 4641 
and Sec. 1209.23. A ``notice of charges,'' as used or referred to as 
such in this part, is not an ``effective notice'' under section 1375(a) 
of the Safety and Soundness Act (12 U.S.C. 4635(a)).
    Office of Finance has the meaning defined in section 1303(19) of the 
Safety and Soundness Act (12 U.S.C. 4502(19)).
    Party means any person named as a respondent in any notice of 
charges, or FHFA, as the context requires in this part.
    Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, organization, regulated entity, entity-affiliated party, or 
other entity.
    Presiding officer means an administrative law judge or any other 
person appointed by or at the request of the Director under applicable 
law to conduct an adjudicatory proceeding under this part.
    Regulated entity has the meaning defined in section 1303(20) of the 
Safety and Soundness Act (12 U.S.C. 4502(20)).
    Representative of record means an individual who is authorized to 
represent a person or is representing himself and who has filed a notice 
of appearance and otherwise has complied with the requirements under 
Sec. 1209.72. FHFA's representative of record may be referred to as FHFA 
counsel of record, agency counsel or enforcement counsel.
    Respondent means any party that is the subject of a notice of 
charges under this part.
    Safety and Soundness Act means title XIII of the Housing and 
Community Development Act of 1992, Public Law 102-550, known as the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended (12 U.S.C. 4501 et seq.)
    Violation has the meaning defined in section 1303(25) of the Safety 
and Soundness Act (12 U.S.C. 4502(25)).



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



Sec. 1209.4  Scope and authority.

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



Sec. 1209.5  Cease and desist proceedings.

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

[[Page 108]]

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

[[Page 109]]

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



Sec. 1209.6  Temporary cease and desist orders.

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

[[Page 110]]

(12 U.S.C. 4632(d)), as provided by section 1372(c)(2) of the Safety and 
Soundness Act (12 U.S.C. 4632(c)(2)).
    (d) Judicial review. Section 1372(d) of the Safety and Soundness Act 
(12 U.S.C. 4632(d)), authorizes a regulated entity, executive officer, 
director, or entity-affiliated party that has been served with a 
temporary order pursuant to section 1372(a) or (b) of the Safety and 
Soundness Act (12 U.S.C. 4632(a), (b)) to apply to the United States 
District Court for the District of Columbia within 10 days after service 
of the temporary order for an injunction setting aside, limiting, or 
suspending the enforcement, operation, or effectiveness of the temporary 
order, pending the completion of the administrative enforcement 
proceeding. The district court has jurisdiction to issue such 
injunction.
    (e) Enforcement of temporary order. As provided by section 1372(e) 
of the Safety and Soundness Act (12 U.S.C. 4632(e)), in the case of any 
violation, threatened violation, or failure to obey a temporary order 
issued pursuant to this section, the Director may bring an action in the 
United States District Court for the District of Columbia for an 
injunction to enforce a temporary order, and the district court is to 
issue such injunction upon a finding made in accordance with section 
1372(e) of the Safety and Soundness Act (12 U.S.C. 4632(e)).



Sec. 1209.7  Civil money penalties.

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

[[Page 111]]

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



Sec. 1209.8  Removal and prohibition proceedings.

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

[[Page 112]]

    (iii) The violation, practice, or breach described in subparagraph 
(i) of this section--
    (A) Involves personal dishonesty on the part of such party; or
    (B) Demonstrates willful or continuing disregard by such party for 
the safety or soundness of such regulated entity or business 
institution.
    (3) Applicability to business entities. Under section 1377(f) of the 
Safety and Soundness Act (12 U.S.C. 4636a(f)), this remedy applies only 
to a person who is an individual, unless the Director specifically finds 
that it should apply to a corporation, firm, or other business entity.
    (b) Suspension order--(1) Suspension or prohibition authorized. If 
the Director serves written notice under section 1377(a) of the Safety 
and Soundness Act (12 U.S.C. 4636a(a)) upon a party subject to that 
section, the Director may, by order, suspend or remove such party from 
office, or prohibit such party from further participation in any manner 
in the conduct of the affairs of the regulated entity or the Office of 
Finance, if the Director:
    (i) Determines that such action is necessary for the protection of 
the regulated entity or the Office of Finance; and
    (ii) Serves such party with written notice of the order.
    (2) Effective period. The effective period of any order under 
section 1377(b)(1) of the Safety and Soundness Act (12 U.S.C. 
4636a(b)(1)) is specified in section 1377(b)(2) of the Safety and 
Soundness Act (12 U.S.C. 4636a(b)(2)). An order of suspension shall 
become effective upon service and, absent a court-ordered stay, remains 
effective and enforceable until the date the Director dismisses the 
charges or the effective date of an order issued by the Director under 
section 1377(c)(4) of the Safety and Soundness Act (12 U.S.C. 
4636a(c)(4),(5)).
    (3) Copy of order to be served on regulated entity. In accordance 
with section 1377(b)(3) of the Safety and Soundness Act (12 U.S.C. 
4636a(b)(3)), the Director will serve a copy of any order to suspend, 
remove, or prohibit participation in the conduct of the affairs on the 
Office of Finance or any regulated entity with which such party is 
affiliated at the time such order is issued.
    (c) Notice; hearing and order--(1) Written notice. A notice of the 
intention of the Director to issue an order under sections 1377(a) and 
(c) of the Safety and Soundness Act, (12 U.S.C. 4636a(a), (c)), shall 
conform with Sec. 1209.23, and may include any such additional 
information as the Director may require.
    (2) Hearing. A hearing on the record shall be held in the District 
of Columbia in accordance with sections 1373(a)(1) and 1377(c)(2) of the 
Safety and Soundness Act. See 12 U.S.C. 4633(a)(1), 4636a(c)(2).
    (3) Consent. As provided by section 1377(c)(3) of the Safety and 
Soundness Act (12 U.S.C. 4636a(c)(3)), unless the party that is the 
subject of a notice delivered under paragraph (a) of this section 
appears in person or by a duly authorized representative of record, in 
the adjudicatory proceeding, such party shall be deemed to have 
consented to the issuance of an order under this section.
    (4) Issuance of order of suspension or removal. As provided by 
section 1377(c)(4) of the Safety and Soundness Act (12 U.S.C. 
4636a(c)(4)), the Director may issue an order under this part, as the 
Director may deem appropriate, if:
    (i) A party is deemed to have consented to the issuance of an order 
under paragraph (d); or
    (ii) Upon the record made at the hearing, the Director finds that 
any of the grounds specified in the notice have been established.
    (5) Effectiveness of order. As provided by section 1377(c)(5) of the 
Safety and Soundness Act (12 U.S.C. 4636a(c)(5)), any order issued and 
served upon a party in accordance with this section shall become 
effective at the expiration of 30 days after the date of service upon 
such party and any regulated entity or entity-affiliated party. An order 
issued upon consent under paragraph (c)(3) of this section, however, 
shall become effective at the time specified therein. Any such order 
shall remain effective and enforceable except to such extent as it is 
stayed, modified, terminated, or set aside by action of the Director or 
a reviewing court.
    (d) Prohibition of certain activities and industry-wide 
prohibition--(1) Prohibition

[[Page 113]]

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



Sec. 1209.9  Supervisory actions not affected.

    As provided by section 1311(c) of the Safety and Soundness Act (12 
U.S.C.

[[Page 114]]

4511(c)), the authority of the Director to take action under subtitle A 
of the Safety and Soundness Act (12 U.S.C. 4611 et seq.) (e.g., the 
appointment of a conservator or receiver for a regulated entity; 
entering into a written agreement or pursuing an informal agreement with 
a regulated entity as the Director deems appropriate; and undertaking 
other such actions as may be applicable to undercapitalized, 
significantly undercapitalized or critically undercapitalized regulated 
entities), or to initiate enforcement proceedings under subtitle C of 
the Safety and Soundness Act (12 U.S.C. 4631 et seq.), shall not in any 
way limit the general supervisory or regulatory authority granted the 
Director under section 1311(b) of the Safety and Soundness Act (12 
U.S.C. 4511(b)). The selection and form of regulatory or supervisory 
action under the Safety and Soundness Act is committed to the discretion 
of the Director, and the selection of one form of action or a 
combination of actions does not foreclose the Director from pursuing any 
other supervisory action authorized by law.



                Subpart C_Rules of Practice and Procedure



Sec. 1209.10  Authority of the Director.

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



Sec. 1209.11  Authority of the Presiding Officer.

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

[[Page 115]]

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



Sec. 1209.12  Public hearings; closed hearings.

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



Sec. 1209.13  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice of charges by the Director shall be 
signed by at least one representative of record in his individual name 
and shall state that representative's business contact information, 
which shall include his address, electronic mail address, and telephone 
number; and the names, addresses and telephone numbers of all other 
representatives of record for the person making the filing or 
submission.
    (b) Effect of signature. (1) By signing a document, a representative 
of record or party appearing pro se certifies that:
    (i) The representative of record or party has read the filing or 
submission of record;
    (ii) To the best of his knowledge, information and belief formed 
after reasonable inquiry, the filing or submission of record is well-
grounded in fact and is warranted by existing law or a good faith, non-
frivolous argument for the extension, modification, or reversal

[[Page 116]]

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



Sec. 1209.14  Ex parte communications.

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

[[Page 117]]

review under Sec. 1209.55 of the recommended decision, or the Director's 
final determination on the merits based upon his review of the 
recommended decision, except as a witness or counsel in the adjudicatory 
proceedings. This section shall not prohibit FHFA counsel of record from 
providing necessary and appropriate legal advice to the Director on 
supervisory (including information or legal advice as to settlement 
issues) or regulatory matters.



Sec. 1209.15  Filing of papers.

    (a) Filing. All pleadings, motions, memoranda, and any other 
submissions or papers required to be filed in the proceeding shall be 
addressed to the presiding officer and filed with FHFA, 400 7th Street 
SW., Eighth Floor, Washington, DC 20219, in accordance with paragraphs 
(b) and (c) of this section.
    (b) Manner of filing. Unless otherwise specified by the Director or 
the presiding officer, filing shall be accomplished by:
    (1) Overnight delivery. Overnight U.S. Postal Service delivery or 
delivery by a reliable commercial delivery service for same day or 
overnight delivery to the address stated above; or
    (2) U.S. Mail. First class, registered, or certified mail via the 
U.S. Postal Service; and
    (3) Electronic media. Transmission by electronic media shall be 
required by and upon any conditions specified by the Director or the 
presiding officer. FHFA shall provide a designated site for the 
electronic filing of all papers in a proceeding in accordance with any 
conditions specified by the presiding officer. All papers filed by 
electronic media shall be filed concurrently in a manner set out above 
and in accordance with paragraph (c) of this section.
    (c) Formal requirements as to papers filed--(1) Form. To be filed, 
all papers must set forth the name, address, telephone number, and 
electronic mail address of the representative or party seeking to make 
the filing. Additionally, all such papers must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced on 8\1/2\  x  11-
inch paper and must be clear, legible, and formatted as required by 
paragraph (c)(5) of this section.
    (2) Signature. All papers filed must be dated and signed as provided 
in Sec. 1209.13.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the FHFA caption, title and docket number of the 
proceeding, the name of the filing party, and the subject of the 
particular paper.
    (4) Number of copies. Unless otherwise specified by the Director or 
the presiding officer, an original and one copy of all pleadings, 
motions and memoranda, or other such papers shall be filed, except that 
only one copy of transcripts of testimony and exhibits shall be filed.
    (5) Content format. All papers filed shall be formatted in such 
program(s) (e.g., MS WORD (copyright), MS Excel 
(copyright), or WordPerfect (copyright)) as the 
presiding officer or Director shall specify.

[76 FR 53607, Aug. 26, 2011, as amended at 80 FR 80233, Dec. 24, 2015]



Sec. 1209.16  Service of papers.

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

[[Page 118]]

    (5) Service of pleadings or other papers made by facsimile may not 
exceed a total page count of 30 pages. Any paper served by facsimile 
transmission shall meet the requirements of Sec. 1209.15(c).
    (6) Any party serving a pleading or other paper by electronic media 
under paragraph (4) of this section also shall concurrently serve that 
pleading or paper by one of the methods specified in paragraphs (1) 
through (5) of this section.
    (c) By the Director or the presiding officer. (1) All papers 
required to be served by the Director or the presiding officer upon a 
party who has appeared in the proceeding in accordance with Sec. 1209.72 
shall be served by the means specified in paragraph (b) of this section.
    (2) If a notice of appearance has not been filed in the proceeding 
for a party in accordance with Sec. 1209.72, the Director or the 
presiding officer shall make service upon the party by any of the 
following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the person's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.
    (d) Subpoenas. Service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) By any other method reasonably calculated to give actual notice.
    (e) Area of service. Service in any State or the District of 
Columbia, or any commonwealth, possession, territory or other place 
subject to the jurisdiction of the United States, or on any person doing 
business in any State or the District of Columbia, or any commonwealth, 
possession, territory or other place subject to the jurisdiction of the 
United States, or on any person as otherwise permitted by law, is 
effective without regard to the place where the hearing is held.
    (f) Proof of service. Proof of service of papers filed by a party 
shall be filed before action is taken thereon. The proof of service, 
which shall serve as prima facie evidence of the fact and date of 
service, shall show the date and manner of service and may be by written 
acknowledgment of service, by declaration of the person making service, 
or by certificate of a representative of record. However, failure to 
file proof of service contemporaneously with the papers shall not affect 
the validity of actual service. The presiding officer may allow the 
proof to be amended or supplied, unless to do so would result in 
material prejudice to a party.



Sec. 1209.17  Time computations.

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

[[Page 119]]

is 10 days or less, not including any additional time allowed for in 
paragraph (c) of this section, intermediate Saturdays, Sundays and 
Federal holidays are not included.
    (b) When papers are deemed to be filed or served. (1) Filing or 
service are deemed to be effective:
    (i) In the case of personal service or same day reliable commercial 
delivery service, upon actual service;
    (ii) In the case of U.S. Postal Service or reliable commercial 
overnight delivery service, or first class, registered, or certified 
mail, upon deposit in or delivery to an appropriate point of collection;
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing, in the case of filing; or
    (iv) In the case of transmission by electronic media or facsimile, 
when the device through which the document was sent provides a reliable 
indicator that the document has been received by the opposing party, in 
the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Director or the presiding 
officer, or by agreement of the parties in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice, pleading or paper, the applicable time limits 
shall be calculated as follows:
    (1) If service was made by delivery to the U.S. Postal Service for 
longer than overnight delivery service by first class, registered, or 
certified mail, add three calendar days to the prescribed period for the 
responsive pleading or other filing.
    (2) If service was personal, or was made by delivery to the U.S. 
Postal Service or any reliable commercial delivery service for overnight 
delivery, add one calendar-day to the prescribed period for the 
responsive pleading or other filing.
    (3) If service was made by electronic media transmission or 
facsimile, add one calendar-day to the prescribed period for the 
responsive pleading or other filing--unless otherwise determined by the 
Director or the presiding officer sua sponte, or upon motion of a party 
in the case of filing or by prior agreement among the parties in the 
case of service.



Sec. 1209.18  Change of time limits.

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



Sec. 1209.19  Witness fees and expenses.

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



Sec. 1209.20  Opportunity for informal settlement.

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

[[Page 120]]

proceeding under this part. No settlement offer or proposal, or any 
subsequent negotiation or resolution, is admissible as evidence in any 
proceeding.



Sec. 1209.21  Conduct of examination.

    Nothing in this part limits or constrains in any manner any duty, 
authority, or right of FHFA to conduct or to continue any examination, 
investigation, inspection, or visitation of any regulated entity or 
entity-affiliated party.



Sec. 1209.22  Collateral attacks on adjudicatory proceeding.

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



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

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



Sec. 1209.24  Answer.

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

[[Page 121]]

notice. Any final order issued by the Director based upon a respondent's 
failure to answer is deemed to be an order issued upon consent.



Sec. 1209.25  Amended pleadings.

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



Sec. 1209.26  Failure to appear.

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



Sec. 1209.27  Consolidation and severance of actions.

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



Sec. 1209.28  Motions.

    (a) In writing. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the presiding officer. Written memoranda, briefs, 
affidavits, or other relevant material or documents may be filed in 
support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally on the record, unless 
the presiding officer directs that such motion be reduced to writing, in 
which case the motion will be subject to the requirements of this 
section.
    (c) Filing of motions. Motions must be filed with the presiding 
officer and served on all parties; except that following the filing of a 
recommended decision, motions must be filed with the

[[Page 122]]

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



Sec. 1209.29  Discovery.

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

[[Page 123]]

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



Sec. 1209.30  Request for document discovery from parties.

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

[[Page 124]]

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

[[Page 125]]

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

[[Page 126]]

shall not operate as a stay of the proceedings, unless the presiding 
officer or the Director orders a stay of such duration as the presiding 
officer or Director may find reasonable and in the best interest of the 
parties or as justice may require. A party's right to seek judicial 
enforcement of a subpoena shall not in any manner limit the sanctions 
that may be imposed by the presiding officer or Director against a party 
who fails to produce or induces another to fail to produce subpoenaed 
documents.



Sec. 1209.31  Document discovery subpoenas to non-parties.

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

[[Page 127]]

compliance with all or any portion of a document subpoena issued 
pursuant to this section, the subpoenaing party or any other aggrieved 
party to the proceeding may, to the extent authorized by section 
1379D(c) of the Safety and Soundness Act (12 U.S.C. 4641(c)), apply to 
an appropriate United States district court for an order requiring 
compliance with the subpoena.
    (2) No stay. A party's right to seek district court enforcement of a 
non-party document production subpoena under this section shall not 
automatically stay an enforcement proceeding under of the Safety and 
Soundness Act.
    (3) Sanctions. A party's right to seek district court enforcement of 
a non-party document subpoena shall in no way limit the sanctions that 
may be imposed by the presiding officer on a party who induces another 
to fail to comply with any subpoena issued under this section.



Sec. 1209.32  Deposition of witness unavailable for hearing.

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

[[Page 128]]

    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena must be duly sworn and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or documents is not deemed a waiver except where the 
ground for objection might have been avoided if the objection had been 
presented timely. All questions, answers, and objections must be 
recorded and transcribed. Videotaped depositions must be transcribed for 
the record; copies and transcriptions must be supplied to each party.
    (2) Any party may move before the presiding officer for an order 
compelling the witness to answer any questions the witness has refused 
to answer or submit any evidence that, during the deposition, the 
witness has refused to submit.
    (3) The deposition transcript must be subscribed by the witness, 
unless the parties and the witness, by stipulation, have waived the 
signing, or the witness is ill, cannot be found, or has refused to sign. 
If the deposition is not subscribed by the witness, the court reporter 
taking the deposition shall certify that the transcript is a true and 
complete transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or with any order of the 
presiding officer made upon motion under paragraph (c)(2) of this 
section, the subpoenaing party or other aggrieved party may, to the 
extent authorized by section 1379D(c) of the Safety and Soundness Act 
(12 U.S.C. 4641(c)), apply to an appropriate United States district 
court for an order requiring compliance with the portions of the 
subpoena that the presiding officer has ordered enforced. A party's 
right to seek court enforcement of a deposition subpoena in no way 
limits the sanctions that may be imposed by the presiding officer on a 
party who fails to comply with or induces a failure to comply with a 
subpoena issued under this section.



Sec. 1209.33  Interlocutory review.

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



Sec. 1209.34  Summary disposition.

    (a) In general. The presiding officer shall recommend that the 
Director issue a final order granting a motion for summary disposition 
if the undisputed pleaded facts, admissions, affidavits, stipulations, 
documentary evidence, matters as to which official notice may be taken, 
and any other evidentiary materials properly submitted in connection 
with a motion for summary disposition show that:
    (1) There is no genuine issue as to any material fact; and

[[Page 129]]

    (2) The movant is entitled to a decision in its favor as a matter of 
law.
    (b) Filing of motions and responses. (1) Any party who believes 
there is no genuine issue of material fact to be determined and that 
such party is entitled to a decision as a matter of law may move at any 
time for summary disposition in its favor of all or any part of the 
proceeding. Any party, within 30 days after service of such motion or 
within such time period as allowed by the presiding officer, may file a 
response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of material facts as to which the movant contends there is no 
genuine issue. Such motion must be supported by documentary evidence, 
which may take the form of admissions in pleadings, stipulations, 
depositions, investigatory depositions, transcripts, affidavits, and any 
other evidentiary materials that the movant contends support its 
position. The motion must also be accompanied by a brief containing the 
points and authorities in support of the contention of the movant. Any 
party opposing a motion for summary disposition must file a statement 
setting forth those material facts as to which the party contends a 
genuine dispute exists. Such opposition must be supported by evidence of 
the same type as that submitted with the motion for summary disposition 
and a brief containing the points and authorities in support of the 
contention that summary disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his or her 
own motion, the presiding officer may hear oral argument on the motion 
for summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the presiding officer shall 
determine whether the movant is entitled to summary disposition. If the 
presiding officer determines that summary disposition is warranted, the 
presiding officer shall submit a recommended decision to that effect to 
the Director, under Sec. 1209.53. If the presiding officer finds that 
the moving party is not entitled to summary disposition, the presiding 
officer shall make a ruling denying the motion.



Sec. 1209.35  Partial summary disposition.

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



Sec. 1209.36  Scheduling and pre-hearing conferences.

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

[[Page 130]]

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



Sec. 1209.37  Pre-hearing submissions.

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



Sec. 1209.38  Hearing subpoenas.

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

[[Page 131]]

subpoenaing party or any other aggrieved party may seek enforcement of 
the subpoena pursuant to Sec. 1209.31. A party's right to seek court 
enforcement of a hearing subpoena shall in no way limit the sanctions 
that may be imposed by the presiding officer on a party who induces a 
failure to comply with subpoenas issued under this section.



Secs. 1209.39-1209.49  [Reserved]



Sec. 1209.50  Conduct of hearings.

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



Sec. 1209.51  Evidence.

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

[[Page 132]]

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



Sec. 1209.52  Post-hearing filings.

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

[[Page 133]]



Sec. 1209.53  Recommended decision and filing of record.

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



Sec. 1209.54  Exceptions to recommended decision.

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



Sec. 1209.55  Review by Director.

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

[[Page 134]]

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



Sec. 1209.56  Exhaustion of administrative remedies.

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



Sec. 1209.57  Judicial review; no automatic stay.

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



Secs. 1209.58-1209.69  [Reserved]



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



Sec. 1209.70  Scope.

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



Sec. 1209.71  Definitions.

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

[[Page 135]]

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



Sec. 1209.72  Appearance and practice in adjudicatory proceedings.

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



Sec. 1209.73  Conflicts of interest.

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



Sec. 1209.74  Sanctions.

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

[[Page 136]]

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



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

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

[[Page 137]]

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

[[Page 138]]

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



Secs. 1209.76-1209.79  [Reserved]



           Subpart E_Civil Money Penalty Inflation Adjustments



Sec. 1209.80  Inflation adjustments.

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

------------------------------------------------------------------------
                                                           New adjusted
        U.S. Code citation               Description          maximum
                                                          penalty amount
------------------------------------------------------------------------
12 U.S.C. 4636(b)(1)..............  First Tier..........         $10,982
12 U.S.C. 4636(b)(2)..............  Second Tier.........          54,910
12 U.S.C. 4636(b)(4)..............  Third Tier                 2,196,380
                                     (Regulated Entity
                                     or Entity-
                                     Affiliated party).
------------------------------------------------------------------------


[81 FR 43030, July 1, 2016]



Sec. 1209.81  Applicability.

    The inflation adjustments set out in Sec. 1209.80 shall apply to 
civil money penalties assessed in accordance with the provisions of the 
Safety and Soundness Act, 12 U.S.C. 4636, and subparts B and C of this 
part, for violations occurring after August 1, 2016.

[81 FR 43030, July 1, 2016]



Secs. 1209.82-1209.99  [Reserved]



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



Sec. 1209.100  Scope.

    Subpart F of this part applies to informal hearings afforded to any 
entity-affiliated party who has been suspended, removed, or prohibited 
from

[[Page 139]]

further participation in the business affairs of a regulated entity by a 
notice or order issued by the Director under section 1377(h) of the 
Safety and Soundness Act (12 U.S.C. 4636a(h)).



Sec. 1209.101  Suspension, removal, or prohibition.

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



Sec. 1209.102  Hearing on removal or suspension.

    (a) Hearing requests--(1) Deadline. An entity-affiliated party 
served with a notice of suspension or prohibition or an order of removal 
or prohibition, within 30 days of service of such notice or order, may 
submit to the Director a written request to appear before the

[[Page 140]]

Director to show that his or her continued service or participation in 
the affairs of the regulated entity will not pose a threat to the 
interests of, or threaten to impair public confidence in, the 
Enterprises or the Banks. The request must be addressed to the Director 
and sent to the Federal Housing Finance Agency at 400 Seventh Street, 
SW., Eighth Floor, Washington, DC 20219, by:
    (i) Overnight U.S. Postal Service delivery or delivery by a reliable 
commercial delivery service for same day or overnight delivery to the 
address stated above; or
    (ii) First class, registered, or certified mail via the U.S. Postal 
Service.
    (2) Waiver of appearance. An entity-affiliated party may elect in 
writing to waive his or her right to appear to make a statement in 
person or through counsel and have the matter determined solely on the 
basis of his or her written submission.
    (b) Form and timing of hearing. (1) Informal hearing. Hearings under 
subpart F of this part are not subject to the formal adjudication 
provisions of the Administrative Procedure Act (5 U.S.C. 554 through 
557), and are not conducted under subpart C of this part.
    (2) Setting of the hearing. Upon receipt of a timely request for a 
hearing, the Director will give written notice and set a date within 30 
days for the entity-affiliated party to appear, personally, or through 
counsel, before the Director or his or her designee(s) to submit written 
materials (or, at the discretion of the Director, oral testimony and 
oral argument) to make the necessary showing under paragraph (a) of this 
section. The entity-affiliated party may submit a written request for 
additional time for the hearing to commence, without undue delay, and 
the Director may extend the hearing date for a specified time.
    (3) Oral testimony. The Director or his or her designee, in his or 
her discretion, may deny, permit, or limit oral testimony in the 
hearing.
    (c) Conduct of the hearing--(1) Hearing officer. A hearing under 
this section may be presided over by the Director or one or more 
designated FHFA employees, except that an officer designated by the 
Director (hearing officer) to conduct the hearing may not have been 
involved in an underlying criminal proceeding, a factually related 
proceeding, or an enforcement proceeding in a prosecutorial or 
investigative role. This provision does not preclude the Director 
otherwise from seeking information on the matters at issue from 
appropriate FHFA staff on an as needed basis consistent with 
Sec. 1209.101(d)(2).
    (2) Submissions. All submissions of the requestor and FHFA's counsel 
of record must be received by the Director or his or her designee no 
later than 10 days prior to the date set for the hearing. FHFA may 
respond in writing to the requestor's submission and serve the requestor 
(and any other interested party such as the regulated entity) not later 
than the date fixed by the hearing officer for submissions or other time 
period as the hearing officer may require.
    (3) Procedures. (i) Fact finding authority of the hearing officer. 
The hearing officer shall determine all procedural matters under subpart 
F of this part, permit or limit the appearance of witnesses in 
accordance with paragraph (b)(3) of this section, and impose time limits 
as he or she deems reasonable. All oral statements, witness testimony, 
if permitted, and documents submitted that are found by the hearing 
officer to be materially relevant to the proceeding and not unduly 
repetitious may be considered. The hearing officer may question any 
person appearing in the proceeding, and may make any ruling reasonably 
necessary to ensure the full and fair presentation of evidence and to 
facilitate the efficient and effective operation of the proceeding.
    (ii) Statements to an officer. Any oral or written statement made to 
the Director, a hearing officer, or any FHFA employee under subpart F of 
this part is deemed to be a statement made to a Federal officer or 
agency within the meaning of 18 U.S.C. 1006.
    (iii) Oral testimony. If either the requestor or FHFA counsel of 
record desires to present oral testimony to supplement the party's 
written submission he or she must make a request in writing to the 
hearing officer not later than 10 days prior to the hearing, as

[[Page 141]]

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

[76 FR 53607, Aug. 26, 2011,, as amended at 80 FR 80233, Dec. 24, 2015]



Sec. 1209.103  Recommended and final decisions.

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

[[Page 142]]

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



PART 1211_PROCEDURES--Table of Contents



                          Subpart A_Definitions

Sec.
1211.1  Definitions.

  Subpart B_Waivers, Approvals, Non-Objection Letters, and Regulatory 
                             Interpretations

1211.2  Waivers.
1211.3  Approvals.
1211.4  Non-Objection Letters.
1211.5  Regulatory Interpretations.
1211.6  Submission requirements.

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

    Source: 79 FR 64665, Oct. 31, 2014, unless otherwise noted.



                          Subpart A_Definitions



Sec. 1211.1  Definitions.

    As used in this part:
    Approval means a written statement issued to a regulated entity or 
the Office of Finance approving a transaction, activity, or item that 
requires FHFA approval under a statute, rule, regulation, policy, or 
order.
    Non-Objection Letter means a written statement issued to a regulated 
entity or the Office of Finance providing that FHFA does not object to a 
proposed transaction or activity.
    Regulatory Interpretation means a written interpretation issued by 
the FHFA General Counsel with respect to the application of a statute, 
rule, regulation, or order to a proposed transaction or activity.
    Requester means an entity that has submitted an application for a 
Waiver or Approval or a request for a Non-Objection Letter or Regulatory 
Interpretation.
    Waiver means a written statement issued by the Director to a 
regulated entity or the Office of Finance that waives a provision, 
restriction, or requirement of an FHFA rule, regulation, policy, or 
order, or a required submission of information, not otherwise required 
by law, in connection with a particular transaction or activity.



  Subpart B_Waivers, Approvals, Non-Objection Letters, and Regulatory 
                             Interpretations



Sec. 1211.2  Waivers.

    (a) Authority. The Director reserves the right, in his or her 
discretion and in connection with a particular transaction or activity, 
to waive any provision, restriction, or requirement of this chapter (or 
of any Office of Federal Housing Enterprise Oversight or Federal Housing 
Finance Board regulation), or any required submission of information, 
not otherwise required by law, if such Waiver is not inconsistent with 
the law and does not adversely affect any substantial existing rights, 
upon a determination that application of the provision, restriction, or 
requirement would adversely affect achievement of the purposes of the 
Authorizing Statutes or the Safety and Soundness Act, or upon a 
requester's showing of good cause. The Director also reserves the right 
to modify, rescind, or supersede any previously issued Waiver, with such 
action being effective only on a prospective basis.

[[Page 143]]

    (b) Application. A regulated entity or the Office of Finance may 
apply for a Waiver in accordance with Sec. 1211.6.



Sec. 1211.3  Approvals.

    (a) Authority. The Deputy Directors for Enterprise Regulation and 
for Federal Home Loan Bank Regulation, or their designees, may grant 
requests submitted by an Enterprise or by a Bank or the Office of 
Finance, respectively, seeking approval of any transaction, activity, or 
item that requires FHFA approval under any applicable statute, rule, 
regulation, policy, or order. The Director reserves the right to modify, 
rescind, or supersede an Approval, with such action being effective only 
on a prospective basis.
    (b) Requests. A regulated entity or the Office of Finance may apply 
for an Approval in accordance with Sec. 1211.6, unless alternative 
application procedures are prescribed by the applicable statute, rule, 
regulation, policy, or order for the transaction, activity, or item at 
issue.
    (c) Reservation. The Deputy Directors for Enterprise Regulation and 
for Federal Home Loan Bank Regulation, as appropriate, may, in their 
discretion, prescribe additional or alternative procedures for any 
application for approval of a transaction, activity, or item.



Sec. 1211.4  Non-Objection Letters.

    (a) Authority. The Deputy Directors for Enterprise Regulation and 
for Federal Home Loan Bank Regulation, or their designees, may, in their 
discretion, issue to an Enterprise or to a Bank or the Office of 
Finance, respectively, a Non-Objection Letter stating that FHFA does not 
object to a proposed transaction or activity for supervisory, 
regulatory, or policy reasons. The Director reserves the right to 
modify, rescind, or supersede a Non-Objection Letter, with such action 
being effective only on a prospective basis.
    (b) Requests. A regulated entity or the Office of Finance may 
request a Non-Objection Letter in accordance with Sec. 1211.6.



Sec. 1211.5  Regulatory Interpretations.

    (a) Authority. The General Counsel may, in his or her discretion, 
issue a Regulatory Interpretation to a regulated entity or the Office of 
Finance, providing guidance with respect to the application of any 
applicable statute, rule, regulation, or order to a proposed transaction 
or activity. The Director reserves the right to modify, rescind, or 
supersede a Regulatory Interpretation, with such action being effective 
only on a prospective basis.
    (b) Requests. A regulated entity or the Office of Finance may 
request a Regulatory Interpretation in accordance with Sec. 1211.6.



Sec. 1211.6  Submission requirements.

    Applications for a Waiver or Approval and requests for a Non-
Objection Letter or Regulatory Interpretation shall comply with the 
requirements of this section and shall pertain to regulatory matters 
relating to the Banks or Enterprises, and not to conservatorship 
matters.
    (a) Filing. Each application or request shall be in writing. A Bank 
or the Office of Finance shall submit its filing to the Deputy Director 
for the Division of Federal Home Loan Bank Regulation, and an Enterprise 
shall submit its filing to the Deputy Director for Enterprise 
Regulation. Applications for regulatory interpretations shall be 
submitted also to the General Counsel.
    (b) Authorization. An application for a Waiver or Approval and a 
request for a Non-Objection Letter or Regulatory Interpretation shall be 
signed by the principal executive officer or other authorized executive 
officer of the regulated entity or by the chairperson of the board of 
directors or authorized executive officer of the Office of Finance, as 
appropriate.
    (c) Information requirements. Each application or request shall 
contain:
    (1) The name of the requester, and the name, title, business 
address, telephone number, and business electronic mail address, if any, 
of the official filing the application or request on its behalf;
    (2) The name, business address, telephone number, and business 
electronic mail address, if any, of a contact person from whom FHFA 
staff may seek additional information if necessary;
    (3) The section numbers of the particular provisions of the 
applicable

[[Page 144]]

statutes or rules, regulations, policies, or orders to which the 
application or request relates;
    (4) Identification of the determination or relief requested, 
including any alternative relief requested if the primary relief is 
denied, and a clear statement of why such relief is needed;
    (5) A statement of the particular facts and circumstances giving 
rise to the application or request and identifying all relevant legal 
and factual issues;
    (6) References to all other relevant authorities that the regulated 
entity or Office of Finance believes should be considered in evaluating 
the application or request, including the Authorizing Statutes, Safety 
and Soundness Act, FHFA rules, regulations, policies, orders, judicial 
decisions, administrative decisions, relevant statutory interpretations, 
and policy statements;
    (7) References to any Waivers, Non-Objection Letters, Approvals, or 
Regulatory Interpretations issued in the past in response to 
circumstances similar to those surrounding the request or application;
    (8) For any application or request involving interpretation of the 
Authorizing Statutes, Safety and Soundness Act, or FHFA regulations, a 
reasoned opinion of counsel supporting the relief or interpretation 
sought and distinguishing any adverse authority;
    (9) Any other non-duplicative, relevant supporting documentation; 
and
    (10) A certification by a person with knowledge of the facts that 
the representations made in the application or request are accurate and 
complete. The following form of certification is sufficient for this 
purpose: ``I hereby certify that the statements contained in the 
submission are true and complete to the best of my knowledge. [Name and 
Title].''
    (d) Exceptions. In any given matter or class of matters, the 
Director, the Deputy Director for Federal Home Loan Bank Regulation, the 
Deputy Director for Enterprise Regulation, or the General Counsel, as 
appropriate, may accept an application or request that does not comply 
with the requirements of this section, for supervisory reasons or 
administrative efficiency.
    (e) Withdrawal. Once filed, an application or request may be 
withdrawn only upon written request, and only if FHFA has not yet acted 
on the application or request.



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



Subpart A [Reserved]

       Subpart B_Post-Employment Restriction for Senior Examiners

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

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

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

Subpart A [Reserved]



       Subpart B_Post-Employment Restriction for Senior Examiners



Sec. 1212.1  Purpose and scope.

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



Sec. 1212.2  Definitions.

    For purposes of subpart B of this part, the term:
    Consultant means a person who works directly on matters for, or on 
behalf of, a regulated entity or the Office of Finance.
    Director means the Director of FHFA or his or her designee.
    Employee means an officer or employee of FHFA, including a special 
Government employee.
    Federal Home Loan Bank or Bank means a Bank established under the 
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.

[[Page 145]]

    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System, or any successor thereto.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, any Federal Home Loan Bank; the term ``regulated 
entities'' means, collectively, the Federal National Mortgage 
Association and any affiliate thereof, the Federal Home Loan Mortgage 
Corporation and any affiliate thereof, and the Federal Home Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Federal 
Housing Finance Regulatory Reform Act of 2008, Division A of the Housing 
and Economic Recovery Act of 2008, Public Law No. 110-289, 122 Stat. 
2654 (2008).
    Senior examiner means an employee of FHFA who has been:
    (1) Authorized by FHFA to conduct examinations or inspections on 
behalf of FHFA;
    (2) Assigned continuing, broad and lead responsibility for examining 
a regulated entity or the Office of Finance; and
    (3) Assigned responsibilities for examining, inspecting and 
supervising the regulated entity or the Office of Finance that--
    (i) Represents a substantial portion of the employee's assigned 
responsibilities; and
    (ii) Requires the employee to interact routinely with officers or 
employees of the regulated entity or the Office of Finance.



Sec. 1212.3  Post-employment restriction for senior examiners.

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



Sec. 1212.4  Waiver.

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



Sec. 1212.5  Penalties.

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

[[Page 146]]



PART 1213_OFFICE OF THE OMBUDSMAN--Table of Contents



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

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

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



Sec. 1213.1  Purpose and scope.

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



Sec. 1213.2  Definitions.

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



Sec. 1213.3  Authorities and duties of the Ombudsman.

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



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

    (a) Complaints. (1) General. Any regulated entity or the Office of 
Finance

[[Page 147]]

may submit a complaint in accordance with procedures established by the 
Ombudsman.
    (2) Matters subject to complaint. A regulated entity or the Office 
of Finance may submit a complaint regarding any matter relating to the 
regulation and supervision of a regulated entity or the Office of 
Finance by FHFA that is not subject to appeal or in litigation, 
arbitration, or mediation. The Ombudsman may further define what matters 
are subject to complaint.
    (b) Appeals. (1) General. Any regulated entity or the Office of 
Finance may submit an appeal in accordance with procedures established 
by the Ombudsman.
    (2) Matters subject to appeal. A regulated entity or the Office of 
Finance may submit an appeal regarding any final, written regulatory or 
supervisory conclusion, decision, or examination rating by FHFA. The 
Ombudsman may further define what matters are subject to appeal.
    (3) Matters not subject to appeal. Matters for which there is an 
existing avenue of appeal or for which there is another forum for 
appeal; non-final decisions or conclusions; and matters in ongoing 
litigation, arbitration, or mediation, unless there has been a breakdown 
in the process, may not be appealed. Matters not subject to appeal 
include, but are not limited to, appointments of conservators or 
receivers, preliminary examination conclusions, formal enforcement 
decisions, formal and informal rulemakings, Freedom of Information Act 
appeals, final FHFA decisions subject to judicial review, and matters 
within the jurisdiction of the FHFA Inspector General. The Ombudsman may 
further define what matters are not subject to appeal.
    (4) Effect of filing an appeal. An appeal under this section does 
not excuse a regulated entity or the Office of Finance from complying 
with any regulatory or supervisory decision while the appeal is pending. 
However, the Director, upon consideration of a written request, may 
waive compliance with a regulatory or supervisory decision during the 
pendency of the appeal.



Sec. 1213.5  Complaints from a person.

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



Sec. 1213.6  No retaliation.

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



Sec. 1213.7  Confidentiality.

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

[[Page 148]]



PART 1214_AVAILABILITY OF NON-PUBLIC INFORMATION--Table of Contents



Sec.
1214.1  Definitions.
1214.2  Purpose and scope.
1214.3  General rule.
1214.4  Exceptions.

    Authority: 5 U.S.C. 301, 552; 12 U.S.C. 4501, 4513, 4522, 4526, 
4639.

    Source: 78 FR 39958, July 3, 2013, unless otherwise noted.



Sec. 1214.1  Definitions.

    Confidential supervisory information means information prepared or 
received by FHFA that meets all of the following criteria:
    (1) The information is not a document prepared by a regulated entity 
or the Office of Finance for its own business purposes that is in its 
possession;
    (2) The information is exempt from the Freedom of Information Act, 5 
U.S.C. 552 (1966); and
    (3) The information--(i) Consists of reports of examination, 
inspection and visitation, confidential operating and condition reports, 
and any information derived from, related to, or contained in such 
reports, or
    (ii) Is gathered by FHFA in the course of any investigation, 
suspicious activity report, cease-and-desist order, civil money penalty 
enforcement order, suspension, removal or prohibition order, or other 
supervisory or enforcement orders or actions taken under the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992, Public 
Law 102-550, 122 Stat. 2654.
    Disclosure means release or divulgence of information by any person 
to a person outside of FHFA.
    FHFA employee means strictly for the purpose of this regulation, any 
person employed by FHFA, including any current or former officer, 
intern, agent, contractor or contractor personnel, or detailee of FHFA, 
and any person employed by the FHFA Office of the Inspector General 
(FHFA-OIG), including any current or former officer, intern, agent, 
contractor or contractor personnel, or detailee of FHFA-OIG.
    Non-public information means information that FHFA has not made 
public that is created by, obtained by, or communicated to an FHFA 
employee in connection with the performance of official duties, 
regardless of who is in possession of the information. This includes 
confidential supervisory information as defined above. It does not 
include information or documents that FHFA has disclosed under the 
Freedom of Information Act (5 U.S.C. 552; 12 CFR part 1202), or Privacy 
Act of 1974 (5 U.S.C. 552a; 12 CFR part 1204). It also does not include 
specific information or documents that were previously disclosed to the 
public at large or information or documents that are customarily 
furnished to the public at large in the course of the performance of 
official FHFA duties, including but not limited to: Disclosures made by 
the Director pursuant to 24 CFR subpart F, and any FHFA successor rules; 
the annual report that FHFA submits to Congress pursuant to the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4501 et seq.), press releases, FHFA blank forms, and materials 
published in the Federal Register.
    Person means individual or business entity.



Sec. 1214.2  Purpose and scope.

    (a) Purpose. The purpose of this part is to control the 
dissemination of non-public information, which includes confidential 
supervisory information, and maintain its controlled, sensitive, 
privileged, or proprietary nature, as appropriate.
    (b) Scope. This part imposes a broad-based prohibition against 
unauthorized disclosure of any non-public information. This part does 
not supersede the regulations at 12 CFR part 1202 (governing disclosure 
under the Freedom of Information Act); 12 CFR part 1204 (governing 
disclosure under the Privacy Act); and the sections describing permitted 
disclosures in any FHFA rules on Federal Home Loan Bank Information 
Sharing or on the FHFA Public Use Database.
    (c) These provisions also do not supersede or otherwise alter the 
rights or liabilities created by 5 U.S.C. 7211 (governing disclosures to 
Congress); 5 U.S.C. 2302(b)(8) (governing disclosures of illegality, 
waste, fraud, abuse, or public health or safety threats); or 12

[[Page 149]]

U.S.C. 3401 (governing disclosure of financial institution customer 
information).



Sec. 1214.3  General rule.

    (a) In general, Non-FHFA Employees. The Director makes available to 
each regulated entity a copy of FHFA's report of examination of that 
regulated entity. The report of examination and all other confidential 
supervisory information is the property of FHFA and is provided to the 
regulated entity for its confidential internal use only. Under no 
circumstance shall any person in possession or control of confidential 
supervisory information make public or disclose, in any manner, the 
confidential supervisory information, or any portion of the contents 
thereof, except as authorized in writing by the Director.
    (b) In general, FHFA Employees. Except as authorized in writing by 
the Director, no FHFA employee in possession or control of non-public 
information may disclose or permit the use or disclosure of such 
information in any manner or for any purpose.
    (c) Persons possessing confidential supervisory information. All 
confidential supervisory information, for which the Director authorizes 
disclosure, remains the property of FHFA and may not be used or 
disclosed for any purpose other than that authorized under this part 
without the prior written permission of the Director.
    (d) No Waiver. FHFA's disclosure of non-public information to any 
person does not constitute a waiver by FHFA of any privilege or FHFA's 
right to control, supervise, or impose limitations on, the subsequent 
use and disclosure of the non-public information.
    (e) Penalties, Confidential Supervisory Information. Any person that 
discloses or uses confidential supervisory information except as 
authorized under this part may be subject to the penalties provided in 
18 U.S.C. 641 and other applicable laws. In addition to those penalties, 
FHFA, regulated entity, Office of Finance, affiliate (as defined in 12 
U.S.C. 4502(20)), or entity-affiliated party (as defined in 12 U.S.C. 
4502(11)) employees may be subject to appropriate administrative, 
enforcement, or disciplinary proceedings.
    (f) Penalties, Non-Public Information. Any FHFA employee that 
discloses or uses non-public information except as authorized under this 
part may be subject to the penalties provided in 18 U.S.C. 641, other 
applicable laws, and appropriate administrative, enforcement, or 
disciplinary proceedings.



Sec. 1214.4  Exceptions.

    (a) FHFA Employees. Current FHFA employees may disclose or permit 
the disclosure of non-public information to another FHFA employee or 
regulated entity or the Office of Finance, when necessary and 
appropriate, for the performance of their official duties.
    (b) Regulated Entity Agents and Consultants. (1) When necessary and 
appropriate for regulated entity or Office of Finance business purposes, 
a regulated entity, the Office of Finance, or any director, officer, or 
employee thereof may disclose confidential supervisory information to 
any person currently engaged by the regulated entity or the Office of 
Finance, as officer, director, employee, attorney, auditor, or 
independent auditor (``regulated entity agents'').
    (2) A regulated entity, the Office of Finance, or a director, 
officer, employee, or agent thereof, also may disclose confidential 
supervisory information to a consultant under this paragraph if the 
consultant is under a written contract to provide services to the 
regulated entity or the Office of Finance and the consultant has agreed 
in writing:
    (i) To abide by the prohibition on the disclosure of confidential 
supervisory information contained in this section; and
    (ii) That it will not use the confidential supervisory information 
for any purposes other than those stated in its contract to provide 
services to the regulated entity or the Office of Finance.
    (c) Law Enforcement Proceedings. Notwithstanding the general 
prohibition of disclosure of non-public information, to the minimum 
extent required by the Inspector General Act, Public Law 95-452, 92 
Stat. 1101 (1978), FHFA's Office of Inspector General is permitted under 
this section to disclose non-public FHFA information without Director 
approval.

[[Page 150]]

    (d) Privilege. FHFA retains all privilege claims for non-public 
information shared under Sec. 1214.4, including, but not limited to 
attorney-client, attorney-work product, deliberative process, and 
examination privileges.



PART 1215_PRODUCTION OF FHFA RECORDS, INFORMATION, AND EMPLOYEE
TESTIMONY IN THIRD-PARTY LEGAL PROCEEDINGS--Table of Contents



Sec.
1215.1  Scope and purpose.
1215.2  Applicability.
1215.3  Definitions.
1215.4  General prohibition.
1215.5  Delegation.
1215.6  Factors FHFA may consider.
1215.7  Serving demands and submitting requests.
1215.8  Timing and form of demands and requests.
1215.9  Failure to meet this part's requirements.
1215.10  Processing demands and requests.
1215.11  FHFA determination.
1215.12  Restrictions that apply to testimony.
1215.13  Restrictions that apply to records and information.
1215.14  Procedure in the event of an adverse FHFA determination.
1215.15  Conflicting court order.
1215.16  Fees.
1215.17  Responses to demands served on nonemployees.
1215.18  Inspector General.

    Authority: 5 U.S.C. 301; 12 U.S.C. 4526.

    Source: 78 FR 39961, July 3, 2013, unless otherwise noted.



Sec. 1215.1  Scope and purpose.

    (a) This regulation sets forth the policies and procedures that must 
be followed in order to compel an employee of the Federal Housing 
Finance Agency (FHFA) to produce records or information, or to provide 
testimony relating to the employee's official duties, in the context of 
a legal proceeding. Parties seeking records, information, or testimony 
must comply with these requirements when submitting demands or requests:
    (b) FHFA intends these provisions to:
    (1) Promote economy and efficiency in its programs and operations;
    (2) Minimize the possibility of involving FHFA in controversial 
issues not related to its mission and functions;
    (3) Maintain FHFA's impartiality;
    (4) Protect employees from being compelled to serve as involuntary 
witnesses for wholly private interests, or as inappropriate expert 
witnesses regarding current law or the activities of FHFA; and
    (5) Protect sensitive, confidential information and FHFA's 
deliberative processes.
    (c) By providing these policies and procedures, FHFA does not waive 
the sovereign immunity of the United States.
    (d) This part provides guidance for FHFA's internal operations. This 
part does not create any right or benefit, substantive or procedural, 
that a party may rely upon in any legal proceeding against the United 
States.
    (e) The production of records, information, or testimony pursuant to 
this part, does not constitute a waiver by FHFA of any privilege.



Sec. 1215.2  Applicability.

    (a) This regulation applies to demands or requests for records, 
information, or testimony, in legal proceedings in which FHFA is not a 
named party.
    (b) This regulation does not apply to:
    (1) Demands or requests for an FHFA employee to testify as to facts 
or events that are unrelated to his or her official duties or that are 
unrelated to the functions of FHFA;
    (2) Requests for the release of non-exempt records under the Freedom 
of Information Act, 5 U.S.C. 552, or the Privacy Act, 5 U.S.C. 552a; or
    (3) Congressional demands or requests for records or testimony.



Sec. 1215.3  Definitions.

    As used in this part:
    Confidential supervisory information means information prepared or 
received by FHFA that meets all of the following criteria:
    (1) The information is not a document prepared by a regulated entity 
or the Office of Finance for its own business purposes that is in its 
possession;
    (2) The information is exempt from the Freedom of Information Act, 5 
U.S.C. 552 (1966); and
    (3) The information:

[[Page 151]]

    (i) Consists of reports of examination, inspection and visitation, 
confidential operating and condition reports, and any information 
derived from, related to, or contained in such reports, or
    (ii) Is gathered by FHFA in the course of any investigation, 
suspicious activity report, cease-and-desist order, civil money penalty 
enforcement order, suspension, removal or prohibition order, or other 
supervisory or enforcement orders or actions taken under the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992, as 
amended, 12 U.S.C. 4501 et seq.
    (4) The inclusion of the term ``confidential'' within the definition 
of ``confidential supervisory information'' is not intended to invoke 
the meaning of ``confidential,'' as that term is used in Executive Order 
No. 13526, December 29, 2009 (75 FR 707 (Jan. 5, 2010) (President's 
order on the classification of National Security Information). 
Confidential supervisory information is used in part 1215 to refer to 
the distinct category of information defined in Sec. 1215.3. FHFA used 
the word ``confidential'' within the label for this category of 
information simply to be consistent with the manner in which federal 
banking agencies refer to similar or identical types of information.
    Demand means a subpoena, or an order or other command of a court or 
other competent authority, for the production of records, information, 
or testimony that is issued in a legal proceeding.
    Employee means:
    (1) Any current or former officer or employee of FHFA or of FHFA-
OIG;
    (2) Any other individual hired through contractual agreement by or 
on behalf of FHFA who has performed or is performing services under such 
an agreement for FHFA; and
    (3) Any individual who has served or is serving in any consulting or 
advisory capacity to FHFA, whether formal or informal.
    Federal Home Loan Bank means a bank established under the authority 
of 12 U.S.C. 1423(a).
    FHFA means the Federal Housing Finance Agency including the FHFA-
OIG.
    FHFA Counsel means an attorney in FHFA's Office of General Counsel.
    General Counsel means FHFA's General Counsel or a person within 
FHFA's Office of General Counsel to whom the General Counsel has 
delegated responsibilities under this part.
    Legal proceeding means any matter before a court of law, 
administrative board or tribunal, commission, administrative law judge, 
hearing officer, or other body that conducts a legal or administrative 
proceeding. Legal proceeding includes all phases of litigation.
    Produce means provide, disclose, expose, or grant access to.
    Records or information means, regardless of the person or entity in 
possession:
    (1) All documents and materials that are FHFA agency records under 
the Freedom of Information Act, 5 U.S.C. 552;
    (2) All other documents and materials contained in FHFA files; and
    (3) All other information or materials acquired by an FHFA employee 
in the performance of his or her official duties or because of his or 
her official status, including confidential supervisory information.
    Regulated entity has the same meaning as set forth in 12 U.S.C. 
4502(20). For this regulation's purposes, ``regulated entity'' also 
includes:
    (1) The Office of Finance; and
    (2) Any current or former director, officer, employee, contractor or 
agent of a regulated entity.
    Request means any informal request, by whatever method, in 
connection with a legal proceeding, seeking production of records, 
information, or testimony that has not been ordered by a court or other 
competent authority.
    Testimony means any written or oral statements, including 
depositions, answers to interrogatories, affidavits, declarations, and 
recorded interviews made by an individual about FHFA information in 
connection with a legal proceeding.



Sec. 1215.4  General prohibition.

    (a) No employee may produce records or information, or provide any 
testimony related to the records or information, in response to any 
demand or

[[Page 152]]

request without prior written approval to do so from the Director or the 
Director's designee.
    (b) Any person or entity that fails to comply with this part may be 
subject to the penalties provided in 18 U.S.C. 641 and other applicable 
laws. A current employee also may be subject to administrative or 
disciplinary proceedings.



Sec. 1215.5  Delegation.

    To the extent permissible by statute, the Director may delegate his 
or her authority under this part to any FHFA employee and the General 
Counsel may delegate his or her authority under this part to any FHFA 
Counsel.



Sec. 1215.6  Factors FHFA may consider.

    The Director may grant an employee permission to testify regarding 
agency matters, and to produce records and information, in response to a 
demand or request. Among the relevant factors that the Director may 
consider in making this determination are whether:
    (a) This part's purposes are met;
    (b) FHFA has an interest in the decision that may be rendered in the 
legal proceeding;
    (c) Approving the demand or request would assist or hinder FHFA in 
performing statutory duties or use FHFA resources;
    (d) Production might assist or hinder employees in doing their work;
    (e) The records, information, or testimony can be obtained from 
other sources. (Concerning testimony, ``other sources'' means a non-
agency employee, or an agency employee other than the employee named).
    (f) The demand or request is unduly burdensome or otherwise 
inappropriate under the rules of discovery or procedure governing the 
case or matter in which the demand or request arose;
    (g) Production of the records, information, or testimony might 
violate or be inconsistent with a statute, Executive Order, regulation, 
or other legal authority;
    (h) Production of the records, information, or testimony might 
reveal confidential or privileged information, trade secrets, or 
confidential commercial or financial information;
    (i) Production of the records, information, or testimony might 
impede or interfere with an ongoing law enforcement investigation or 
proceedings, or compromise constitutional rights;
    (j) Production of the records, information, or testimony might 
result in FHFA appearing to favor one litigant over another;
    (k) The demand or request pertains to documents that were produced 
by another agency;
    (l) The demand or request complies with all other applicable rules;
    (m) The demand or request is sufficiently specific to be answered;
    (n) The relevance of the records, information, or testimony to the 
purposes for which they are sought, and for which they may be used for 
substantive evidence;
    (o) Production of the records, information, or employee testimony 
may implicate a substantial government interest; and
    (p) Any other good cause.



Sec. 1215.7  Serving demands and submitting requests.

    (a) All demands and requests must be in writing.
    (b) Demands must be served and requests must be submitted to the 
FHFA General Counsel at the following address: General Counsel, Federal 
Housing Finance Agency, Constitution Center, Eighth Floor, 400 Seventh 
Street SW., Washington, DC 20219.
    (c) Demands must not be served upon, nor requests submitted to any 
regulated entity for records, information, or testimony regardless of 
whether the records, information, or testimony sought are in the 
possession of, or known by, the regulated entity. If a regulated entity 
receives a request or demand for records, information, or testimony, the 
regulated entity must immediately notify the General Counsel and provide 
FHFA an opportunity to object to the demand or request before responding 
to the demand or request. Submitting a demand or request to a regulated 
entity may result in rejection of the demand or request under 
Sec. 1215.9.
    (d) If an employee receives a request or demand that is not properly 
routed through FHFA's General Counsel, as

[[Page 153]]

required under this section, the employee must promptly notify the 
General Counsel. An employee's failure to notify the General Counsel is 
grounds for discipline or other adverse action.

[78 FR 39961, July 3, 2013, as amended at 80 FR 80233, Dec. 24, 2015]



Sec. 1215.8  Timing and form of demands and requests.

    (a) A party seeking records, information, or testimony must submit a 
request and receive a rejection before making a demand for records, 
information, or testimony.
    (b) A demand or request to FHFA must include a detailed description 
of the basis for the demand or request and comply with the requirements 
in Sec. 1215.7.
    (c) Demands and requests must be submitted at least 60 days in 
advance of the date on which the records, information, or testimony is 
needed. Exceptions to this requirement may be granted upon a showing of 
compelling need.
    (d) A demand or request for testimony also must include an estimate 
of the amount of time that the employee will need to devote to the 
process of testifying (including anticipated travel time and anticipated 
duration of round trip travel), plus a showing that no document or the 
testimony of non-agency persons, including retained experts, could 
suffice in lieu of the employee's testimony.
    (e) Upon submitting a demand or request seeking employee testimony, 
the requesting party must notify all other parties to the legal 
proceeding.
    (f) After receiving notice of a demand or request for testimony, but 
before the testimony occurs, a party to the legal proceeding who did not 
join in the demand or request and who wishes to question the witness 
beyond the scope of the testimony sought must submit a separate demand 
or request within 60 days of receiving the notice required under 
paragraph (e) of this section and must then comply with paragraph (c) of 
this section.
    (g) Every demand or request must include the legal proceeding's 
caption and docket number, the forum; the name, address, phone number, 
State Bar number, and, if available, electronic mail address of counsel 
to all parties to the legal proceeding (in the case of pro-se parties, 
substitute the name, address, phone number, and electronic mail address 
of the pro-se party); and a statement of the demanding or requesting 
party's interest in the case. In addition, the demanding or requesting 
party must submit a clear and concise written statement that includes: a 
summary of the legal and factual issues in the proceeding and a detailed 
explanation as to how the records, information or testimony will 
contribute substantially to the resolution of one or more specially 
identified issues in the legal proceeding. A copy of the complaint or 
charging document may accompany--but must not be substituted for--the 
required statement.



Sec. 1215.9  Failure to meet this part's requirements.

    FHFA may oppose any demand or request that does not meet the 
requirements set forth in this part.



Sec. 1215.10  Processing demands and requests.

    (a) The Director will review every demand or request received and, 
in accordance with this regulation, determine whether, and under what 
conditions, to authorize an employee to produce records, information, or 
testimony.
    (b) The Director will process demands and requests in the order in 
which they are received. The Director will ordinarily respond within 60 
days from the date that the agency receives all information necessary to 
evaluate the demand or request. However, the time for response will 
depend upon the scope of the demand or request. The Director may respond 
outside of the 60-day period:
    (1) Under exigent or unusual circumstances; or
    (2) When FHFA must receive and process records or information in the 
possession, custody, or control of a third party.
    (c) The Director may confer with counsel to parties to a legal 
proceeding about demands or requests made pursuant to this part. The 
conference may be ex-parte. Failure to confer in good faith, in order to 
enable the Director to

[[Page 154]]

make an informed determination, may justify rejection of the demand or 
request.
    (d) The Director may rely on sources of information other than those 
provided by the demanding or requesting parties as bases for making a 
determination.
    (e) The Director may grant a waiver of any requirement in this 
section to promote a significant interest of FHFA or the United States, 
or for other good cause.



Sec. 1215.11  FHFA determination.

    (a) The Director makes FHFA's determinations regarding demands and 
requests.
    (b) The Director will notify the demanding or requesting party of 
FHFA's determination, the reasons for the approval or rejection of the 
demand or request, and any conditions that the Director may impose on 
the release of records, information, or testimony.



Sec. 1215.12  Restrictions that apply to testimony.

    (a) The Director may impose conditions or restrictions on testimony, 
including but not limited to limiting the scope of testimony or 
requiring the demanding or requesting party and other parties to the 
legal proceeding to agree that the testimony transcript will be kept 
under seal or will only be used or made available in the particular 
legal proceeding for which testimony was requested. The Director may 
also require a copy of the transcript of testimony to be provided to 
FHFA at the demanding or requesting party's expense.
    (b) The Director may offer an employee's written declaration in lieu 
of testimony.
    (c) If authorized to testify pursuant to this part, an employee may 
testify as to facts within his or her personal knowledge, but, unless 
specifically authorized to do so by the Director, the employee must not:
    (1) Disclose confidential or privileged information; or
    (2) Testify as an expert or opinion witness with regard to any 
matter arising out of the employee's official duties or FHFA's mission 
or functions. This provision does not apply to requests from the United 
States for expert or opinion testimony.
    (d) The Director may assign FHFA Counsel to be present for an 
employee's testimony.



Sec. 1215.13  Restrictions that apply to records and information.

    (a) The Director may impose conditions or restrictions on the 
release of records and information, including but not limited to 
requiring that parties to the legal proceeding obtain a protective order 
or execute a confidentiality agreement to limit access and further 
disclosure, or that parties take other appropriate steps to comply with 
applicable privacy requirements. The terms of a protective order or 
confidentiality agreement must be acceptable to the Director. In cases 
where protective orders or confidentiality agreements have already been 
executed, the Director may condition the release of records and 
information on an amendment to the existing protective order or 
confidentiality agreement.
    (b) If the Director so determines, original agency records may be 
presented for examination in response to a demand or request, but they 
are not to be presented as evidence or otherwise used in a manner by 
which they could lose their status as original records, nor are they to 
be marked or altered. In lieu of the original records, certified copies 
will be presented for evidentiary purposes.
    (c) The scope of permissible production is limited to that set forth 
in the prior, written authorization granted by the Director.
    (d) If records or information are produced in connection with a 
legal proceeding, the demanding or requesting party must:
    (1) Promptly notify all other parties to the legal proceeding that 
the records or information are FHFA records or information and are 
subject to this part and any applicable confidentiality agreement or 
protective order;
    (2) Provide copies of any confidentiality agreement or protective 
order to all other parties; and
    (3) Retrieve the records or information from the court or other 
competent authority's file when the court or other competent authority 
no longer requires

[[Page 155]]

the records or information and certify that every party covered by a 
confidentiality agreement, protective order, or other privacy protection 
has destroyed all copies of the records or information.



Sec. 1215.14  Procedure in the event of an adverse FHFA determination.

    (a) Procedure for seeking reconsideration of FHFA's determination. A 
demanding or requesting party seeking reconsideration of FHFA's 
rejection of a demand or request, or of any restrictions on receiving 
records, information, or testimony, may seek reconsideration of the 
rejection or restrictions as follows:
    (1) Notice of Intention to Petition for Reconsideration. The 
aggrieved demanding or requesting party may seek reconsideration by 
filing a written Notice of Intention to Petition for Reconsideration 
(Notice) within 10 business days of the date of FHFA's determination. 
The Notice must identify the petitioner, the determination for which 
reconsideration is being petitioned, and any dates (such as deposition, 
hearing, or court dates) that are significant to petitioner. The Notice 
must be served in accordance with Sec. 1215.7.
    (2) Petition for Reconsideration. Within five business days of 
filing Notice, the petitioner must file a Petition for Reconsideration 
(Petition) in accordance with Sec. 1215.7. The Petition must contain a 
clear and concise statement of the basis for the reconsideration with 
supporting authorities. Determinations about petitions for 
reconsideration are within the discretion of the FHFA Director, and are 
final.
    (b) Prerequisite to judicial review. Pursuant to section 704 of the 
Administrative Procedure Act, 5 U.S.C. 704, a petition to FHFA for 
reconsideration of a final determination made under the authority of 
this part is a prerequisite to judicial review.



Sec. 1215.15  Conflicting court order.

    Notwithstanding FHFA's rejection of a demand for records, 
information, or testimony, if a court or other competent authority 
orders an FHFA employee to comply with the demand, the employee must 
promptly notify FHFA's General Counsel of the order, and the employee 
must respectfully decline to comply, citing United States ex rel. Touhy 
v. Ragen, 340 U.S. 462 (1951). An employee's failure to notify the 
General Counsel of a court or other authority's order is grounds for 
discipline or other adverse action.



Sec. 1215.16  Fees.

    (a) The Director may condition the production of records, 
information, or an employee's appearance on advance payment of 
reasonable costs to FHFA, which may include but are not limited to those 
associated with employee search time, copying, computer usage, and 
certifications.
    (b) Witness fees will include fees, expenses, and allowances 
prescribed by the rules applicable to the particular legal proceeding. 
If no fees are prescribed, FHFA will base fees on the rule of the 
federal district court closest to the location where the witness will 
appear. Such fees may include but are not limited to time for 
preparation, travel, and attendance at the legal proceeding.



Sec. 1215.17  Responses to demands served on nonemployees.

    (a) FHFA confidential supervisory information is the property of 
FHFA, and is not to be disclosed to any person without the Director's 
prior written consent.
    (b) If any person in possession of FHFA confidential supervisory 
information, is served with a demand in a legal proceeding directing 
that person to produce FHFA's confidential supervisory information or to 
testify with respect thereto, such person shall immediately notify the 
General Counsel of such service, of the testimony requested and 
confidential supervisory information described in the demand, and of all 
relevant facts. Such person shall also object to the production of such 
confidential supervisory information on the basis that the confidential 
supervisory information is the property of FHFA and cannot be released 
without FHFA's consent and that production must be sought from FHFA 
following the procedures set forth in Secs. 1215.7, 1215.8, and 1215.14 
of this part.

[[Page 156]]



Sec. 1215.18  Inspector General.

    Notwithstanding the general prohibition of disclosure of records and 
information, to the minimum extent required by the Inspector General 
Act, Public Law 9-452 (1978), FHFA's Office of Inspector General is 
permitted under this section to disclose records and information and 
permit FHFA-OIG employee testimony without Director approval.



PART 1217_PROGRAM FRAUD CIVIL REMEDIES ACT--Table of Contents



Sec.
1217.1  Purpose and scope.
1217.2  Definitions.
1217.3  Basis for civil penalties and assessments.
1217.4  Investigation.
1217.5  Request for approval by the Department of Justice.
1217.6  Notice.
1217.7  Response.
1217.8  Statute of limitations.
1217.9  Hearings.
1217.10  Settlements.

    Authority: 12 U.S.C. 4501; 12 U.S.C. 4526, 28 U.S.C. 2461 note; 31 
U.S.C. 3801-3812.

    Source: 81 FR 43034, July 1, 2016, unless otherwise noted.



Sec. 1217.1  Purpose and scope.

    (a) Purpose. This part:
    (1) Establishes administrative procedures for imposing civil 
penalties and assessments against persons who make, submit, or present, 
or cause to be made, submitted, or presented, false, fictitious, or 
fraudulent claims or written statements to FHFA or to its agents; and
    (2) Specifies the hearing and appeal rights of persons subject to 
allegations of liability for such penalties and assessments. Hearings 
under this part shall be conducted in accordance with the Administrative 
Procedure Act pursuant to part 1209, subpart C, of this chapter.
    (b) Scope. This part applies only to persons who make, submit, or 
present or cause to be made, submitted, or presented false, fictitious, 
or fraudulent claims or written statements to FHFA or to those acting on 
its behalf in connection with FHFA employment matters and FHFA 
contracting activities. It does not apply to false claims or statements 
made in connection with matters or activities related to FHFA's 
supervisory, regulatory, enforcement, conservatorship, or receivership 
responsibilities, as other civil and administrative actions available to 
FHFA to redress fraud in such areas provide for remedies that are equal 
to or exceed those available through this part.



Sec. 1217.2  Definitions.

    As used in this part:
    Ability to pay is determined based on a review of the respondent's 
resources available both currently and prospectively, from which FHFA 
could ultimately recover the total penalty, and as appropriate, 
assessment, which may be predicted based on historical evidence.
    Assessment means a monetary penalty that is in addition to a civil 
penalty and may be imposed if FHFA has made any payment, transferred 
property, or provided services for a claim that is determined to be in 
violation of paragraph (a)(1) of Sec. 1217.3. An assessment may not 
exceed an amount that is twice the amount of the claim or portion of the 
claim determined to be in violation of paragraph (a)(1) of Sec. 1217.3. 
A civil penalty other than an assessment may be imposed whether or not 
FHFA has made a payment, transferred property, or provided services in 
response to the false claim or statement.
    Benefit means anything of value, including, but not limited to, any 
advantage, preference, privilege, license, permit, favorable decision, 
ruling, or status.
    Claim means any request, demand, or submission:
    (1) Made to FHFA for property, services, or money (including money 
representing benefits);
    (2) Made to a recipient of property, services, or money from FHFA or 
to a party to a contract with FHFA:
    (i) For property or services, if FHFA:
    (A) Provided such property or services;
    (B) Provided any portion of the funds for the purchase of such 
property or services; or
    (C) Will reimburse such recipient or party for the purchase of such 
property or services; or

[[Page 157]]

    (ii) For the payment of money (including money representing 
benefits) if the United States:
    (A) Provided any portion of the money requested or demanded; or
    (B) Will reimburse such recipient or party for any portion of the 
money paid on such request or demand; or
    (3) Made to FHFA, which has the effect of decreasing an obligation 
to pay or account for property, services, or money.
    Investigating official means the FHFA Inspector General, or an 
officer or employee of the FHFA Office of Inspector General designated 
by the FHFA Inspector General.
    Knows or has reason to know. (1) For purposes of establishing 
liability under 31 U.S.C. 3802 and this part, means that a person, with 
respect to a claim or statement:
    (i) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (ii) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (iii) Acts in reckless disregard of the truth or falsity of the 
claim or statement.
    (2) No proof of specific intent to defraud is required for purposes 
of establishing liability under 31 U.S.C. 3802 or this part.
    Makes a claim or statement includes making, presenting, or 
submitting the claim or statement and causing the claim or statement to 
be made, presented, or submitted.
    Notice means the charging document served by FHFA to commence an 
administrative proceeding to impose a civil penalty and, if appropriate, 
an assessment under chapter 38 of subtitle III of title 31, U.S.C., and 
this part.
    Person means any individual, partnership, corporation, association, 
or private organization.
    Presiding officer means an administrative law judge appointed under 
5 U.S.C. 3105 or detailed to FHFA under 5 U.S.C. 3344.
    Reasonable prospect of collecting an appropriate amount of penalties 
and assessments is determined based on a generalized analysis made by 
the reviewing official, based on the limited information available in 
the report of investigation for purposes of determining whether the 
allocation of FHFA's resources to any particular action is appropriate.
    Report of investigation means a report containing the findings and 
conclusions of an investigation under chapter 38 of subtitle III of 
title 31, U.S.C., by the investigating official, as described in 
Sec. 1217.4.
    Respondent means any person alleged to be liable for a civil penalty 
or assessment under Sec. 1217.3.
    Reviewing official means the General Counsel of FHFA, as so 
designated by the Director pursuant to 31 U.S.C. 3801(a)(8)(A).
    Statement means, unless the context indicates otherwise, any 
representation, certification, affirmation, document, record, or 
accounting or bookkeeping entry made:
    (1) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (2) With respect to (including relating to eligibility for) a 
contract with, or a bid or proposal for a contract with, or benefit 
from, FHFA or any State, political subdivision of a State, or other 
party, if FHFA provides any portion of the money or property under such 
contract or benefit, or if FHFA will reimburse such State, political 
subdivision, or party for any portion of the money or property under 
such contract or for such benefit.



Sec. 1217.3  Basis for civil penalties and assessments.

    (a) False, fictitious or fraudulent claims. (1) A civil penalty of 
not more than $10,781 may be imposed upon a person who makes a claim to 
FHFA for property, services, or money where the person knows or has 
reason to know that the claim:
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes or is supported by a written statement that:
    (A) Asserts a material fact which is false, fictitious, or 
fraudulent; or
    (B) Omits a material fact and, as a result of the omission, is 
false, fictitious, or fraudulent, where the person making, presenting, 
or submitting such statement has a duty to include such material fact; 
or

[[Page 158]]

    (iii) Is for payment for the provision of property or services to 
FHFA which the person has not provided as claimed.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim 
for purposes of this part.
    (3) A claim shall be considered made to FHFA, a recipient, or party 
when the claim is actually made to an agent, fiscal intermediary, or 
other entity, acting for or on behalf of FHFA, the recipient, or the 
party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty, without regard to whether the property, services, or 
money actually is delivered or paid.
    (5) There is no liability under this part if the amount of money or 
value of property or services claimed exceeds $150,000 as to each claim 
that a person submits. For purposes of this paragraph (a), a group of 
claims submitted simultaneously as part of a single transaction shall be 
considered a single claim.
    (6) If the FHFA has made any payment, transferred property, or 
provided services for a claim, then FHFA may make an assessment against 
a person found liable in an amount of up to twice the amount of the 
claim or portion of the claim that is determined to be in violation of 
paragraph (a)(1) of this section. This assessment is in addition to the 
amount of any civil penalty imposed.
    (b) False, fictitious or fraudulent statements. (1) A civil penalty 
of up to $10,781 may be imposed upon a person who makes a written 
statement to FHFA with respect to a claim, contract, bid or proposal for 
a contract, or benefit from FHFA that:
    (i) The person knows or has reason to know:
    (A) Asserts a material fact which is false, fictitious, or 
fraudulent; or
    (B) Omits a material fact and is false, fictitious, or fraudulent as 
a result of such omission, where the person making, presenting, or 
submitting such statement has a duty to include such material fact; and
    (ii) Contains or is accompanied by an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement shall be considered made to FHFA when the statement 
is actually made to an agent, fiscal intermediary, or other entity 
acting for or on behalf of FHFA.
    (c) Joint and several liability. A civil penalty or assessment may 
be imposed jointly and severally if more than one person is determined 
to be liable.



Sec. 1217.4  Investigation.

    (a) General. FHFA may initiate an action under chapter 38 of 
subtitle III of title 31, U.S.C., and this part against a respondent 
only upon an investigation by the investigating official.
    (b) Subpoena. Pursuant to 31 U.S.C. 3804(a), the investigating 
official may require by subpoena the production of records and other 
documents. The subpoena shall state the authority under which it is 
issued, identify the records sought, and name the person designated to 
receive the records. The recipient of the subpoena shall provide a 
certification that the documents sought have been produced, that the 
documents are not available and the reasons they are not available, or 
that the documents, suitably identified, have been withheld based upon 
the assertion of an identified privilege.
    (c) Investigation report. If the investigating official concludes 
that an action under chapter 38 of subtitle III of title 31, U.S.C., and 
this part may be warranted, the investigating official shall prepare a 
report containing the findings and conclusions of the investigation, 
including:
    (1) A description of the claim or statement at issue;
    (2) The evidence supporting the allegations;
    (3) An estimate of the amount of money or the value of property, 
services, or other benefits requested or demanded in violation of 
Sec. 1217.3; and
    (4) Any exculpatory or mitigating circumstances that may relate to 
the claim or statement.
    (d) Referrals to the Attorney General. The investigating official 
may refer allegations directly to the Department of

[[Page 159]]

Justice for civil relief under other applicable law, as appropriate, or 
may defer or postpone submitting a report to the reviewing official to 
avoid interference with a criminal investigation or prosecution.



Sec. 1217.5  Request for approval by the Department of Justice.

    (a) General. If the reviewing official determines that the report of 
investigation supports an action under this part, the reviewing official 
must submit a written request to the Department of Justice for approval 
to issue a notice under Sec. 1217.6.
    (b) Content of request. A request under this section shall include:
    (1) A description of the claim or statement at issue;
    (2) The evidence supporting the allegations;
    (3) An estimate of the amount of money or the value of property, 
services, or other benefits requested or demanded in violation of 
Sec. 1217.3;
    (4) Any exculpatory or mitigating circumstances that may relate to 
the claim or statement; and
    (5) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments. Determining there is a 
reasonable prospect of collecting an appropriate amount of penalties and 
assessments is separate from determining ability to pay, and may not be 
considered in determining the amount of any penalty or assessment in any 
particular case.



Sec. 1217.6  Notice.

    (a) Commencement of action; notice. Upon obtaining approval from the 
Department of Justice, the reviewing official may commence an action to 
establish liability of the respondent under the Program Fraud Civil 
Remedies Act of 1986 (31 U.S.C. 3801 et seq.) and this part. To commence 
an action, the reviewing official must issue a notice to the respondent 
of the allegations of liability against the respondent. The notice shall 
be mailed, by registered or certified mail, or shall be delivered 
through such other means by which delivery may be confirmed.
    (b) Notice contents. The notice required under this section shall 
include:
    (1) The allegations of liability against the respondent, including 
the statutory basis for liability, the claim or statement at issue, and 
the reasons why liability arises from that claim or statement;
    (2) A statement that the required approval to issue the notice was 
received from the Department of Justice;
    (3) The amount of the penalty and, if applicable, any assessment for 
which the respondent may be held liable;
    (4) A statement that the respondent may request a hearing by 
submitting a written response to the notice;
    (5) The addresses to which a response must be sent in accordance 
with Sec. 1209.15 of this chapter;
    (6) A statement that failure to submit an answer within 30 days of 
receipt of the notice may result in the imposition of the maximum amount 
of penalties and assessments sought, without right of appeal;
    (7) A statement that the respondent must preserve and maintain all 
documents and data, including electronically stored data, within the 
possession or control of the respondent that may relate to the 
allegations; and
    (8) A copy of this part 1217 and part 1209, subpart C of this 
chapter.
    (c) Obligation to preserve documents. Upon the issuance of a notice 
under this section, FHFA and the respondent shall each preserve and 
maintain all documents and data, including electronically stored data, 
within their respective possession or control that may relate to the 
allegations in the complaint.



Sec. 1217.7  Response.

    (a) General. (1) To obtain a hearing, the respondent must file a 
written response to a notice under Sec. 1217.6:
    (i) In accordance with Sec. 1209.24 of this chapter; and
    (ii) Not later than 30 days after the date of service of the notice.
    (2) A timely filed response to a notice under Sec. 1217.6 shall be 
deemed to be a request for a hearing.
    (3) A response to a notice under Sec. 1217.6 must include:
    (i) The admission or denial of each allegation of liability made in 
the notice;

[[Page 160]]

    (ii) Any defense on which the respondent intends to rely;
    (iii) Any reasons why the penalty and, if appropriate, any 
assessment should be less than the amount set forth in the notice; and
    (iv) The name, address, and telephone number of the person who will 
act as the respondent's representative, if any.
    (b) Failure to respond. If no response to a notice under this part 
is timely submitted, FHFA may file a motion for default judgment in 
accordance with Sec. 1209.24(c) of this part.



Sec. 1217.8  Statute of limitations.

    The statute of limitations for commencing a hearing under this part 
shall be tolled:
    (a) If the hearing is commenced in accordance with 31 U.S.C. 
3803(d)(2)(B) within 6 years after the date on which the claim or 
statement is made; or
    (b) If the parties agree to such tolling.



Sec. 1217.9  Hearings.

    (a) General. Hearings under this part shall be conducted in 
accordance with the procedures in subpart C of part 1209 of this 
chapter, governing actions in accordance with subchapter II of chapter 
5, U.S.C. (commonly known as the Administrative Procedure Act).
    (b) Factors to consider in determining amount of penalties and 
assessments. In determining an appropriate amount of any civil penalty 
and, if appropriate, any assessment, the presiding officer and, upon 
appeal, the Director or designee thereof, shall consider and state in 
his or her opinion any mitigating or aggravating circumstances. The 
amount of penalties and assessments imposed shall be based on the 
presiding officer's and the Director's or designee's consideration of 
evidence in support of one or more of the following factors:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the respondent's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;
    (5) The value of the actual loss to FHFA as a result of the 
misconduct, including foreseeable consequential damages and the cost of 
investigation;
    (6) The relationship of the civil penalties to the amount of the 
loss to FHFA;
    (7) The potential or actual impact of the misconduct upon public 
health or safety or public confidence in the management of FHFA programs 
and operations, including particularly the impact on the intended 
beneficiaries of such programs;
    (8) Whether the respondent has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the respondent attempted to conceal the misconduct;
    (10) The degree to which the respondent has involved others in the 
misconduct or in concealing it;
    (11) If the misconduct of employees or agents is imputed to the 
respondent, the extent to which the respondent's practices fostered or 
attempted to preclude the misconduct;
    (12) Whether the respondent cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the respondent assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the respondent's sophistication with respect to it, including the extent 
of the respondent's prior participation in the program or in similar 
transactions;
    (15) Whether the respondent has been found, in any criminal, civil, 
or administrative proceeding, to have engaged in similar misconduct or 
to have dealt dishonestly with the Government of the United States or of 
a State, directly or indirectly;
    (16) The need to deter the respondent and others from engaging in 
the same or similar misconduct;
    (17) The respondent's ability to pay; and
    (18) Any other factors that in any given case may mitigate or 
aggravate the seriousness of the false claim or statement.
    (c) Stays ordered by the Department of Justice. If at any time the 
Attorney

[[Page 161]]

General or an Assistant Attorney General designated by the Attorney 
General notifies the Director in writing that continuation of FHFA's 
action may adversely affect any pending or potential criminal or civil 
action related to the claim or statement at issue, the presiding officer 
or the Director shall stay the FHFA action immediately. The FHFA action 
may be resumed only upon receipt of the written authorization of the 
Attorney General.



Sec. 1217.10  Settlements.

    (a) General. The reviewing official, on behalf of FHFA, and the 
respondent may enter into a settlement agreement under Sec. 1209.20 of 
this chapter at any time prior to the issuing of a notice of final 
decision under Sec. 1209.55 of this chapter.
    (b) Failure to comply. Failure of the respondent to comply with a 
settlement agreement shall be sufficient cause for resuming an action 
under this part, or for any other judicial or administrative action.

[[Page 162]]



                     SUBCHAPTER B_ENTITY REGULATIONS





PART 1221_MARGIN AND CAPITAL REQUIREMENTS FOR COVERED SWAP ENTITIES
--Table of Contents



Sec.
1221.1  Authority, purpose, scope, exemptions and compliance dates.
1221.2  Definitions.
1221.3  Initial margin.
1221.4  Variation margin.
1221.5  Netting arrangements, minimum transfer amount and satisfaction 
          of collecting and posting requirements.
1221.6  Eligible collateral.
1221.7  Segregation of collateral.
1221.8  Initial margin models and standardized amounts.
1221.9  Cross-border application of margin requirements.
1221.10  Documentation of margin matters.
1221.11  Special rules for affiliates.
1221.12  Capital.

Appendix A to Part 1221--Standardized Minimum Initial Margin 
          Requirements for Non-Cleared Swaps and Non-Cleared Security-
          Based Swaps
Appendix B to Part 1221--Margin Values for Cash and Eligible Noncash 
          Margin Collateral

    Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 4513 and 
12 U.S.C. 4526(a).

    Source: 80 FR 74913, Nov. 30, 2015, unless otherwise noted.



Sec. 1221.1  Authority, purpose, scope, exemptions and compliance dates.

    (a) Authority. This part is issued by FHFA under section 4s(e) of 
the Commodity Exchange Act (7 U.S.C. 6s(e)), section 15F(e) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)), 12 U.S.C. 4513 
and 12 U.S.C. 4526(a)).
    (b) Purpose. Section 4(s) of the Commodity Exchange Act (7 U.S.C. 
6s) and section 15F of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-10) require FHFA to establish capital and margin requirements for 
any regulated entity that is registered as a swap dealer, major swap 
participant, security-based swap dealer, or major security-based swap 
participant with respect to all non-cleared swaps and non-cleared 
security-based swaps. This regulation implements section 4s of the 
Commodity Exchange Act and section 15F of the Securities Exchange Act of 
1934 by defining terms used in the statute and related terms, 
establishing capital and margin requirements, and explaining the 
statute's requirements.
    (c) Scope. This part establishes minimum capital and margin 
requirements for each covered swap entity subject to this part with 
respect to all non-cleared swaps and non-cleared security-based swaps. 
This part applies to any non-cleared swap or non-cleared security-based 
swap entered into by a covered swap entity on or after the related 
compliance date set forth in paragraph (e) of this section. Nothing in 
this part is intended to prevent a covered swap entity from collecting 
margin in amounts greater than are required under this part.
    (d) Exemptions--(1) Swaps. The requirements of this part (except for 
Sec. 45.12) shall not apply to a non-cleared swap if the counterparty:
    (i) Qualifies for an exception from clearing under section 
2(h)(7)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(A)) 
and implementing regulations;
    (ii) Qualifies for an exemption from clearing under a rule, 
regulation, or order that the Commodity Futures Trading Commission 
issued pursuant to its authority under section 4(c)(1) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 6(c)(1)) concerning cooperative entities 
that would otherwise be subject to the requirements of section 
2(h)(1)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(1)(A)); 
or
    (iii) Satisfies the criteria in section 2(h)(7)(D) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 2(h)(7)(D)) and implementing regulations.
    (2) Security-based swaps. The requirements of this part (except for 
Sec. 1221.12) shall not apply to a non-cleared security-based swap if 
the counterparty:
    (i) Qualifies for an exception from clearing under section 3C(g)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(1)) and 
implementing regulations; or
    (ii) Satisfies the criteria in section 3C(g)(4) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) and implementing 
regulations.

[[Page 163]]

    (e) Compliance dates. Covered swap entities shall comply with the 
minimum margin requirements of this part on or before the following 
dates for non-cleared swaps and non-cleared security-based swaps entered 
into on or after the following dates:
    (1) September 1, 2016 with respect to the requirements in 
Sec. 1221.3 for initial margin and Sec. 1221.4 for variation margin for 
any non-cleared swaps and non-cleared security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2016 that exceeds $3 trillion, 
where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(1)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (2) March 1, 2017 with respect to the requirements in Sec. 1221.4 
for variation margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into with 
any other counterparty.
    (3) September 1, 2017 with respect to the requirements in 
Sec. 1221.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2017 that exceeds $2.25 
trillion, where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(3)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (4) September 1, 2018 with respect to the requirements in 
Sec. 1221.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2018 that exceeds $1.5 trillion, 
where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(4)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (5) September 1, 2019 with respect to the requirements in 
Sec. 1221.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2019 that exceeds $0.75 
trillion, where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(5)(i) and (ii) of 
this section, an entity shall count the average

[[Page 164]]

daily aggregate notional amount of a non-cleared swap, a non-cleared 
security-based swap, a foreign exchange forward or a foreign exchange 
swap between the entity and an affiliate only one time, and shall not 
count a swap or security-based swap that is exempt pursuant to paragraph 
(d) of this section.
    (6) September 1, 2020 with respect to the requirements in 
Sec. 1221.3 for initial margin for any other covered swap entity with 
respect to non-cleared swaps and non-cleared security-based swaps 
entered into with any other counterparty.
    (f) Once a covered swap entity must comply with the margin 
requirements for non-cleared swaps and non-cleared security-based swaps 
with respect to a particular counterparty based on the compliance dates 
in paragraph (e) of this section, the covered swap entity shall remain 
subject to the requirements of this part with respect to that 
counterparty.
    (g)(1) If a covered swap entity's counterparty changes its status 
such that a non-cleared swap or non-cleared security-based swap with 
that counterparty becomes subject to stricter margin requirements under 
this part (such as if the counterparty's status changes from a financial 
end user without material swaps exposure to a financial end user with 
material swaps exposure), then the covered swap entity shall comply with 
the stricter margin requirements for any non-cleared swap or non-cleared 
security-based swap entered into with that counterparty after the 
counterparty changes its status.
    (2) If a covered swap entity's counterparty changes its status such 
that a non-cleared swap or non-cleared security-based swap with that 
counterparty becomes subject to less strict margin requirements under 
this part (such as if the counterparty's status changes from a financial 
end user with material swaps exposure to a financial end user without 
material swaps exposure), then the covered swap entity may comply with 
the less strict margin requirements for any non-cleared swap or non-
cleared security-based swap entered into with that counterparty after 
the counterparty changes its status as well as for any outstanding non-
cleared swap or non-cleared security-based swap entered into after the 
applicable compliance date in paragraph (e) of this section and before 
the counterparty changed its status.

[80 FR 74913, 74914, Nov. 13, 2015]



Sec. 1221.2  Definitions.

    Affiliate. A company is an affiliate of another company if:
    (1) Either company consolidates the other on financial statements 
prepared in accordance with U.S. Generally Accepted Accounting 
Principles, the International Financial Reporting Standards, or other 
similar standards;
    (2) Both companies are consolidated with a third company on a 
financial statement prepared in accordance with such principles or 
standards;
    (3) For a company that is not subject to such principles or 
standards, if consolidation as described in paragraph (1) or (2) of this 
definition would have occurred if such principles or standards had 
applied; or
    (4) FHFA has determined that a company is an affiliate of another 
company, based on the FHFA's conclusion that either company provides 
significant support to, or is materially subject to the risks or losses 
of, the other company.
    Bank holding company has the meaning specified in section 2 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841).
    Broker has the meaning specified in section 3(a)(4) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)).
    Business day means any day other than a Saturday, Sunday, or legal 
holiday.
    Clearing agency has the meaning specified in section 3(a)(23) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(23)).
    Company means a corporation, partnership, limited liability company, 
business trust, special purpose entity, association, or similar 
organization.
    Counterparty means, with respect to any non-cleared swap or non-
cleared security-based swap to which a person is a party, each other 
party to such non-cleared swap or non-cleared security-based swap.

[[Page 165]]

    Covered swap entity means any regulated entity that is a swap entity 
or any other entity that FHFA determines.
    Cross-currency swap means a swap in which one party exchanges with 
another party principal and interest rate payments in one currency for 
principal and interest rate payments in another currency, and the 
exchange of principal occurs on the date the swap is entered into, with 
a reversal of the exchange of principal at a later date that is agreed 
upon when the swap is entered into.
    Currency of settlement means a currency in which a party has agreed 
to discharge payment obligations related to a non-cleared swap, a non-
cleared security-based swap, a group of non-cleared swaps, or a group of 
non-cleared security-based swaps subject to a master agreement at the 
regularly occurring dates on which such payments are due in the ordinary 
course.
    Day of execution means the calendar day at the time the parties 
enter into a non-cleared swap or non-cleared security-based swap, 
provided:
    (1) If each party is in a different calendar day at the time the 
parties enter into the non-cleared swap or non-cleared security-based 
swap, the day of execution is deemed the latter of the two dates; and
    (2) If a non-cleared swap or non-cleared security-based swap is:
    (i) Entered into after 4:00 p.m. in the location of a party; or
    (ii) Entered into on a day that is not a business day in the 
location of a party, then the non-cleared swap or non-cleared security-
based swap is deemed to have been entered into on the immediately 
succeeding day that is a business day for both parties, and both parties 
shall determine the day of execution with reference to that business 
day.
    Dealer has the meaning specified in section 3(a)(5) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(5)).
    Depository institution has the meaning specified in section 3(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    Derivatives clearing organization has the meaning specified in 
section 1a(15) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(15)).
    Eligible collateral means collateral described in Sec. 1221.6.
    Eligible master netting agreement means a written, legally 
enforceable agreement provided that:
    (1) The agreement creates a single legal obligation for all 
individual transactions covered by the agreement upon an event of 
default following any stay permitted by paragraph (2) of this 
definition, including upon an event of receivership, conservatorship, 
insolvency, liquidation, or similar proceeding, of the counterparty;
    (2) The agreement provides the covered swap entity the right to 
accelerate, terminate, and close-out on a net basis all transactions 
under the agreement and to liquidate or set-off collateral promptly upon 
an event of default, including upon an event of receivership, 
conservatorship, insolvency, liquidation, or similar proceeding, of the 
counterparty, provided that, in any such case, any exercise of rights 
under the agreement will not be stayed or avoided under applicable law 
in the relevant jurisdictions, other than:
    (i) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5381 et seq.), the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, as amended (12 U.S.C. 4617), or the Farm Credit 
Act of 1971, as amended (12 U.S.C. 2183 and 2279cc), or laws of foreign 
jurisdictions that are substantially similar to the U.S. laws referenced 
in this paragraph (2)(i) in order to facilitate the orderly resolution 
of the defaulting counterparty; or
    (ii) Where the agreement is subject by its terms to, or 
incorporates, any of the laws referenced in paragraph (2)(i) of this 
definition;
    (3) The agreement does not contain a walkaway clause (that is, a 
provision that permits a non-defaulting counterparty to make a lower 
payment than it otherwise would make under the agreement, or no payment 
at all, to a defaulter or the estate of a defaulter, even if the 
defaulter or the estate of the defaulter is a net creditor under the 
agreement); and

[[Page 166]]

    (4) A covered swap entity that relies on the agreement for purposes 
of calculating the margin required by this part must:
    (i) Conduct sufficient legal review to conclude with a well-founded 
basis (and maintain sufficient written documentation of that legal 
review) that:
    (A) The agreement meets the requirements of paragraph (2) of this 
definition; and
    (B) In the event of a legal challenge (including one resulting from 
default or from receivership, conservatorship, insolvency, liquidation, 
or similar proceeding), the relevant court and administrative 
authorities would find the agreement to be legal, valid, binding, and 
enforceable under the law of the relevant jurisdictions; and
    (ii) Establish and maintain written procedures to monitor possible 
changes in relevant law and to ensure that the agreement continues to 
satisfy the requirements of this definition.
    Financial end user means:
    (1) Any counterparty that is not a swap entity and that is:
    (i) A bank holding company or an affiliate thereof; a savings and 
loan holding company; a U.S. intermediate holding company established or 
designated for purposes of compliance with 12 CFR 252.153; or a nonbank 
financial institution supervised by the Board of Governors of the 
Federal Reserve System under Title I of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (12 U.S.C. 5323);
    (ii) A depository institution; a foreign bank; a Federal credit 
union or State credit union as defined in section 2 of the Federal 
Credit Union Act (12 U.S.C. 1752(1) & (6)); an institution that 
functions solely in a trust or fiduciary capacity as described in 
section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 
1841(c)(2)(D)); an industrial loan company, an industrial bank, or other 
similar institution described in section 2(c)(2)(H) of the Bank Holding 
Company Act (12 U.S.C. 1841(c)(2)(H));
    (iii) An entity that is state-licensed or registered as:
    (A) A credit or lending entity, including a finance company; money 
lender; installment lender; consumer lender or lending company; mortgage 
lender, broker, or bank; motor vehicle title pledge lender; payday or 
deferred deposit lender; premium finance company; commercial finance or 
lending company; or commercial mortgage company; except entities 
registered or licensed solely on account of financing the entity's 
direct sales of goods or services to customers;
    (B) A money services business, including a check casher; money 
transmitter; currency dealer or exchange; or money order or traveler's 
check issuer;
    (iv) A regulated entity as defined in section 1303(20) of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended (12 U.S.C. 4502(20)) or any entity for which the Federal 
Housing Finance Agency or its successor is the primary federal 
regulator;
    (v) Any institution chartered in accordance with the Farm Credit Act 
of 1971, as amended, 12 U.S.C. 2001 et seq., that is regulated by the 
Farm Credit Administration;
    (vi) A securities holding company; a broker or dealer; an investment 
adviser as defined in section 202(a) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-2(a)); an investment company registered with the 
U.S. Securities and Exchange Commission under the Investment Company Act 
of 1940 (15 U.S.C. 80a-1 et seq.); or a company that has elected to be 
regulated as a business development company pursuant to section 54(a) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-53(a));
    (vii) A private fund as defined in section 202(a) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an 
investment company under section 3 of the Investment Company Act of 1940 
(15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is 
deemed not to be an investment company under section 3 of the Investment 
Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 (17 CFR 
270.3a-7) of the U.S. Securities and Exchange Commission;
    (viii) A commodity pool, a commodity pool operator, or a commodity 
trading advisor as defined, respectively, in section 1a(10), 1a(11), and 
1a(12) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(10), 1a(11), 
and 1a(12)); a floor broker, a floor trader, or

[[Page 167]]

introducing broker as defined, respectively, in 1a(22), 1a(23) and 
1a(31) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(22), 1a(23), 
and 1a(31)); or a futures commission merchant as defined in 1a(28) of 
the Commodity Exchange Act of 1936 (7 U.S.C. 1a(28));
    (ix) An employee benefit plan as defined in paragraphs (3) and (32) 
of section 3 of the Employee Retirement Income and Security Act of 1974 
(29 U.S.C. 1002);
    (x) An entity that is organized as an insurance company, primarily 
engaged in writing insurance or reinsuring risks underwritten by 
insurance companies, or is subject to supervision as such by a State 
insurance regulator or foreign insurance regulator;
    (xi) An entity, person or arrangement that is, or holds itself out 
as being, an entity, person, or arrangement that raises money from 
investors, accepts money from clients, or uses its own money primarily 
for the purpose of investing or trading or facilitating the investing or 
trading in loans, securities, swaps, funds or other assets for resale or 
other disposition or otherwise trading in loans, securities, swaps, 
funds or other assets; or
    (xii) An entity that would be a financial end user described in 
paragraph (1) of this definition or a swap entity, if it were organized 
under the laws of the United States or any State thereof.
    (2) The term ``financial end user'' does not include any 
counterparty that is:
    (i) A sovereign entity;
    (ii) A multilateral development bank;
    (iii) The Bank for International Settlements;
    (iv) An entity that is exempt from the definition of financial 
entity pursuant to section 2(h)(7)(C)(iii) of the Commodity Exchange Act 
of 1936 (7 U.S.C. 2(h)(7)(C)(iii)) and implementing regulations; or
    (v) An affiliate that qualifies for the exemption from clearing 
pursuant to section 2(h)(7)(D) of the Commodity Exchange Act of 1936 (7 
U.S.C. 2(h)(7)(D)) or section 3C(g)(4) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c-3(g)(4)) and implementing regulations.
    Foreign bank means an organization that is organized under the laws 
of a foreign country and that engages directly in the business of 
banking outside the United States.
    Foreign exchange forward has the meaning specified in section 1a(24) 
of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(24)).
    Foreign exchange swap has the meaning specified in section 1a(25) of 
the Commodity Exchange Act of 1936 (7 U.S.C. 1a(25)).
    Initial margin means the collateral as calculated in accordance with 
Sec. 1221.8 that is posted or collected in connection with a non-cleared 
swap or non-cleared security-based swap.
    Initial margin collection amount means:
    (1) In the case of a covered swap entity that does not use an 
initial margin model, the amount of initial margin with respect to a 
non-cleared swap or non-cleared security-based swap that is required 
under appendix A of this part; and
    (2) In the case of a covered swap entity that uses an initial margin 
model pursuant to Sec. 1221.8, the amount of initial margin with respect 
to a non-cleared swap or non-cleared security-based swap that is 
required under the initial margin model.
    Initial margin model means an internal risk management model that:
    (1) Has been developed and designed to identify an appropriate, 
risk-based amount of initial margin that the covered swap entity must 
collect with respect to one or more non-cleared swaps or non-cleared 
security-based swaps to which the covered swap entity is a party; and
    (2) Has been approved by FHFA pursuant to Sec. 1221.8.
    Initial margin threshold amount means an aggregate credit exposure 
of $50 million resulting from all non-cleared swaps and non-cleared 
security-based swaps between a covered swap entity and its affiliates, 
and a counterparty and its affiliates. For purposes of this calculation, 
an entity shall not count a swap or security-based swap that is exempt 
pursuant to Sec. 1221.1(d).
    Major currency means:
    (1) United States Dollar (USD);
    (2) Canadian Dollar (CAD);
    (3) Euro (EUR);
    (4) United Kingdom Pound (GBP);

[[Page 168]]

    (5) Japanese Yen (JPY);
    (6) Swiss Franc (CHF);
    (7) New Zealand Dollar (NZD);
    (8) Australian Dollar (AUD);
    (9) Swedish Kronor (SEK);
    (10) Danish Kroner (DKK);
    (11) Norwegian Krone (NOK); or
    (12) Any other currency as determined by FHFA.
    Margin means initial margin and variation margin.
    Market intermediary means a securities holding company; a broker or 
dealer; a futures commission merchant as defined in 1a(28) of the 
Commodity Exchange Act of 1936 (7 U.S.C. 1a(28)); a swap dealer as 
defined in section 1a(49) of the Commodity Exchange Act of 1936 (7 
U.S.C. 1a(49)); or a security-based swap dealer as defined in section 
3(a)(71) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(71)).
    Material swaps exposure for an entity means that an entity and its 
affiliates have an average daily aggregate notional amount of non-
cleared swaps, non-cleared security-based swaps, foreign exchange 
forwards, and foreign exchange swaps with all counterparties for June, 
July, and August of the previous calendar year that exceeds $8 billion, 
where such amount is calculated only for business days. An entity shall 
count the average daily aggregate notional amount of a non-cleared swap, 
a non-cleared security-based swap, a foreign exchange forward or a 
foreign exchange swap between the entity and an affiliate only one time. 
For purposes of this calculation, an entity shall not count a swap or 
security-based swap that is exempt pursuant to Sec. 1221.1(d).
    Multilateral development bank means the International Bank for 
Reconstruction and Development, the Multilateral Investment Guarantee 
Agency, the International Finance Corporation, the Inter-American 
Development Bank, the Asian Development Bank, the African Development 
Bank, the European Bank for Reconstruction and Development, the European 
Investment Bank, the European Investment Fund, the Nordic Investment 
Bank, the Caribbean Development Bank, the Islamic Development Bank, the 
Council of Europe Development Bank, and any other entity that provides 
financing for national or regional development in which the U.S. 
government is a shareholder or contributing member or which FHFA 
determines poses comparable credit risk.
    Non-cleared swap means a swap that is not cleared by a derivatives 
clearing organization registered with the Commodity Futures Trading 
Commission pursuant to section 5b(a) of the Commodity Exchange Act of 
1936 (7 U.S.C. 7a-1(a)) or by a clearing organization that the Commodity 
Futures Trading Commission has exempted from registration by rule or 
order pursuant to section 5b(h) of the Commodity Exchange Act of 1936 (7 
U.S.C. 7a-1(h)).
    Non-cleared security-based swap means a security-based swap that is 
not, directly or indirectly, submitted to and cleared by a clearing 
agency registered with the U.S. Securities and Exchange Commission 
pursuant to section 17A of the Securities Exchange Act of 1934 (15 
U.S.C. 78q-1) or by a clearing agency that the U.S. Securities and 
Exchange Commission has exempted from registration by rule or order 
pursuant to section 17A of the Securities Exchange Act of 1934 (15 
U.S.C. 78q-1).
    Prudential regulator has the meaning specified in section 1a(39) of 
the Commodity Exchange Act of 1936 (7 U.S.C. 1a(39)).
    Regulated entity means any regulated entity as defined in section 
1303(20) of the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, as amended (12 U.S.C. 4502(20)).
    Savings and loan holding company has the meaning specified in 
section 10(n) of the Home Owners' Loan Act (12 U.S.C. 1467a(n)).
    Securities holding company has the meaning specified in section 618 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 1850a).
    Security-based swap has the meaning specified in section 3(a)(68) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)).
    Sovereign entity means a central government (including the U.S. 
government) or an agency, department, ministry, or central bank of a 
central government.
    State means any State, commonwealth, territory, or possession of the

[[Page 169]]

United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, 
Guam, or the United States Virgin Islands.
    Subsidiary. A company is a subsidiary of another company if:
    (1) The company is consolidated by the other company on financial 
statements prepared in accordance with U.S. Generally Accepted 
Accounting Principles, the International Financial Reporting Standards, 
or other similar standards;
    (2) For a company that is not subject to such principles or 
standards, if consolidation as described in paragraph (1) of this 
definition would have occurred if such principles or standards had 
applied; or
    (3) FHFA has determined that the company is a subsidiary of another 
company, based on FHFA's conclusion that either company provides 
significant support to, or is materially subject to the risks of loss 
of, the other company.
    Swap has the meaning specified in section 1a(47) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 1a(47)).
    Swap entity means a person that is registered with the Commodity 
Futures Trading Commission as a swap dealer or major swap participant 
pursuant to the Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.), or 
a person that is registered with the U.S. Securities and Exchange 
Commission as a security-based swap dealer or a major security-based 
swap participant pursuant to the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.).
    U.S. Government-sponsored enterprise means an entity established or 
chartered by the U.S. government to serve public purposes specified by 
federal statute but whose debt obligations are not explicitly guaranteed 
by the full faith and credit of the U.S. government.
    Variation margin means collateral provided by one party to its 
counterparty to meet the performance of its obligations under one or 
more non-cleared swaps or non-cleared security-based swaps between the 
parties as a result of a change in value of such obligations since the 
last time such collateral was provided.
    Variation margin amount means the cumulative mark-to-market change 
in value to a covered swap entity of a non-cleared swap or non-cleared 
security-based swap, as measured from the date it is entered into (or, 
in the case of a non-cleared swap or non-cleared security-based swap 
that has a positive or negative value to a covered swap entity on the 
date it is entered into, such positive or negative value plus any 
cumulative mark-to-market change in value to the covered swap entity of 
a non-cleared swap or non-cleared security-based swap after such date), 
less the value of all variation margin previously collected, plus the 
value of all variation margin previously posted with respect to such 
non-cleared swap or non-cleared security-based swap.

[80 FR 74913, 74914, Nov. 30, 2015]



Sec. 1221.3  Initial margin.

    (a) Collection of margin. A covered swap entity shall collect 
initial margin with respect to any non-cleared swap or non-cleared 
security-based swap from a counterparty that is a financial end user 
with material swaps exposure or that is a swap entity in an amount that 
is no less than the greater of:
    (1) Zero; or
    (2) The initial margin collection amount for such non-cleared swap 
or non-cleared security-based swap less the initial margin threshold 
amount (not including any portion of the initial margin threshold amount 
already applied by the covered swap entity or its affiliates to other 
non-cleared swaps or non-cleared security-based swaps with the 
counterparty or its affiliates), as applicable.
    (b) Posting of margin. A covered swap entity shall post initial 
margin with respect to any non-cleared swap or non-cleared security-
based swap to a counterparty that is a financial end user with material 
swaps exposure. Such initial margin shall be in an amount at least as 
large as the covered swap entity would be required to collect under 
paragraph (a) of this section if it were in the place of the 
counterparty.
    (c) Timing. A covered swap entity shall comply with the initial 
margin

[[Page 170]]

requirements described in paragraphs (a) and (b) of this section on each 
business day, for a period beginning on or before the business day 
following the day of execution and ending on the date the non-cleared 
swap or non-cleared security-based swap terminates or expires.
    (d) Other counterparties. A covered swap entity is not required to 
collect or post initial margin with respect to any non-cleared swap or 
non-cleared security-based swap described in Sec. 1221.1(d). For any 
other non-cleared swap or non-cleared security-based swap between a 
covered swap entity and a counterparty that is neither a financial end 
user with a material swaps exposure nor a swap entity, the covered swap 
entity shall collect initial margin at such times and in such forms and 
such amounts (if any), that the covered swap entity determines 
appropriately addresses the credit risk posed by the counterparty and 
the risks of such non-cleared swap or non-cleared security-based swap.



Sec. 1221.4  Variation margin.

    (a) General. After the date on which a covered swap entity enters 
into a non-cleared swap or non-cleared security-based swap with a swap 
entity or financial end user, the covered swap entity shall collect 
variation margin equal to the variation margin amount from the 
counterparty to such non-cleared swap or non-cleared security-based swap 
when the amount is positive and post variation margin equal to the 
variation margin amount to the counterparty to such non-cleared swap or 
non-cleared security-based swap when the amount is negative.
    (b) Timing. A covered swap entity shall comply with the variation 
margin requirements described in paragraph (a) of this section on each 
business day, for a period beginning on or before the business day 
following the day of execution and ending on the date the non-cleared 
swap or non-cleared security based swap terminates or expires.
    (c) Other counterparties. A covered swap entity is not required to 
collect or post variation margin with respect to any non-cleared swap or 
non-cleared security-based swap described in Sec. 1221.1(d). For any 
other non-cleared swap or non-cleared security-based swap between a 
covered swap entity and a counterparty that is neither a financial end 
user nor a swap entity, the covered swap entity shall collect variation 
margin at such times and in such forms and such amounts (if any), that 
the covered swap entity determines appropriately addresses the credit 
risk posed by the counterparty and the risks of such non-cleared swap or 
non-cleared security-based swap.



Sec. 1221.5  Netting arrangements, minimum transfer amount, and
satisfaction of collecting and posting requirements.

    (a) Netting arrangements. (1) For purposes of calculating and 
complying with the initial margin requirements of Sec. .3 using an 
initial margin model as described in Sec. 1221.8, or with the variation 
margin requirements of Sec. 1221.4, a covered swap entity may net non-
cleared swaps or non-cleared security-based swaps in accordance with 
this subsection.
    (2) To the extent that one or more non-cleared swaps or non-cleared 
security-based swaps are executed pursuant to an eligible master netting 
agreement between a covered swap entity and its counterparty that is a 
swap entity or financial end user, a covered swap entity may calculate 
and comply with the applicable requirements of this part on an aggregate 
net basis with respect to all non-cleared swaps and non-cleared 
security-based swaps governed by such agreement, subject to paragraph 
(a)(3) of this section.
    (3)(i) Except as permitted in paragraph (a)(3)(ii) of this section, 
if an eligible master netting agreement covers non-cleared swaps and 
non-cleared security-based swaps entered into on or after the applicable 
compliance date set forth in Sec. 1221.1(e) or (g), all the non-cleared 
swaps and non-cleared security-based swaps covered by that agreement are 
subject to the requirements of this part and included in the aggregate 
netting portfolio for the purposes of calculating and complying with the 
margin requirements of this part.

[[Page 171]]

    (ii) An eligible master netting agreement may identify one or more 
separate netting portfolios that independently meet the requirements in 
paragraph (1) of the definition of ``Eligible master netting agreement'' 
in Sec. 1221.2 and to which collection and posting of margin applies on 
an aggregate net basis separate from and exclusive of any other non-
cleared swaps or non-cleared security-based swaps covered by the 
eligible master netting agreement. Any such netting portfolio that 
contains any non-cleared swap or non-cleared security-based swap entered 
into on or after the applicable compliance date set forth in 
Sec. 1221.1(e) or (g) is subject to the requirements of this part. Any 
such netting portfolio that contains only non-cleared swaps or non-
cleared security-based swaps entered into before the applicable 
compliance date is not subject to the requirements of this part.
    (4) If a covered swap entity cannot conclude after sufficient legal 
review with a well-founded basis that the netting agreement described in 
this section meets the definition of eligible master netting agreement 
set forth in Sec. 1221.2, the covered swap entity must treat the non-
cleared swaps and non-cleared security based swaps covered by the 
agreement on a gross basis for the purposes of calculating and complying 
with the requirements of this part to collect margin, but the covered 
swap entity may net those non-cleared swaps and non-cleared security-
based swaps in accordance with paragraphs (a)(1) through (3) of this 
section for the purposes of calculating and complying with the 
requirements of this part to post margin.
    (b) Minimum transfer amount. Notwithstanding Sec. 1221.3 or 
Sec. 1221.4, a covered swap entity is not required to collect or post 
margin pursuant to this part with respect to a particular counterparty 
unless and until the combined amount of initial margin and variation 
margin that is required pursuant to this part to be collected or posted 
and that has not yet been collected or posted with respect to the 
counterparty is greater than $500,000.
    (c) Satisfaction of collecting and posting requirements. A covered 
swap entity shall not be deemed to have violated its obligation to 
collect or post margin from or to a counterparty under Sec. 1221.3, 
Sec. 1221.4, or Sec. 1221.6(e) if:
    (1) The counterparty has refused or otherwise failed to provide or 
accept the required margin to or from the covered swap entity; and
    (2) The covered swap entity has:
    (i) Made the necessary efforts to collect or post the required 
margin, including the timely initiation and continued pursuit of formal 
dispute resolution mechanisms, or has otherwise demonstrated upon 
request to the satisfaction of FHFA that it has made appropriate efforts 
to collect or post the required margin; or
    (ii) Commenced termination of the non-cleared swap or non-cleared 
security-based swap with the counterparty promptly following the 
applicable cure period and notification requirements.



Sec. 1221.6  Eligible collateral.

    (a) Non-cleared swaps and non-cleared security-based swaps with a 
swap entity. For a non-cleared swap or non-cleared security-based swap 
with a swap entity, a covered swap entity shall collect initial margin 
and variation margin required pursuant to this part solely in the form 
of the following types of collateral:
    (1) Immediately available cash funds that are denominated in:
    (i) U.S. dollars or another major currency; or
    (ii) The currency of settlement for the non-cleared swap or non-
cleared security-based swap;
    (2) With respect to initial margin only:
    (i) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury;
    (ii) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a U.S. government 
agency (other than the U.S. Department of Treasury) whose obligations 
are fully guaranteed by the full faith and credit of the United States 
government;
    (iii) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the European Central Bank or a 
sovereign entity

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that is assigned no higher than a 20 percent risk weight under 12 CFR 
part 324;
    (iv) A publicly traded debt security issued by, or an asset-backed 
security fully guaranteed as to the payment of principal and interest 
by, a U.S. Government-sponsored enterprise that is operating with 
capital support or another form of direct financial assistance received 
from the U.S. government that enables the repayments of the U.S. 
Government-sponsored enterprise's eligible securities;
    (v) A publicly traded debt security that meets the definition of 
``Investment quality'' in Sec. 1267.1 of this chapter and is issued by a 
U.S. Government-sponsored enterprise not operating with capital support 
or another form of direct financial assistance from the U.S. government, 
and is not an asset-backed security;
    (vi) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the Bank for International 
Settlements, the International Monetary Fund, or a multilateral 
development bank;
    (vii) A security solely in the form of:
    (A) Publicly traded debt not otherwise described in paragraph (a)(2) 
of this section that meets the definition of ``Investment quality'' in 
Sec. 1267.1 of this chapter and is not an asset-backed security;
    (B) Publicly traded common equity that is included in:
    (1) The Standard & Poor's Composite 1500 Index or any other similar 
index of liquid and readily marketable equity securities as determined 
by FHFA; or
    (2) An index that a covered swap entity's supervisor in a foreign 
jurisdiction recognizes for purposes of including publicly traded common 
equity as initial margin under applicable regulatory policy, if held in 
that foreign jurisdiction;
    (viii) Securities in the form of redeemable securities in a pooled 
investment fund representing the security-holder's proportional interest 
in the fund's net assets and that are issued and redeemed only on the 
basis of the market value of the fund's net assets prepared each 
business day after the security-holder makes its investment commitment 
or redemption request to the fund, if:
    (A) The fund's investments are limited to the following:
    (1) Securities that are issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury, and immediately-available cash funds denominated in 
U.S. dollars; or
    (2) Securities denominated in a common currency and issued by, or 
fully guaranteed as to the payment of principal and interest by, the 
European Central Bank or a sovereign entity that is assigned no higher 
than a 20 percent risk weight under 12 CFR part 324, and immediately-
available cash funds denominated in the same currency; and
    (B) Assets of the fund may not be transferred through securities 
lending, securities borrowing, repurchase agreements, reverse repurchase 
agreements, or other means that involve the fund having rights to 
acquire the same or similar assets from the transferee; or
    (ix) Gold.
    (b) Non-cleared swaps and non-cleared security-based swaps with a 
financial end user. For a non-cleared swap or non-cleared security-based 
swap with a financial end user, a covered swap entity shall collect and 
post initial margin and variation margin required pursuant to this part 
solely in the form of the following types of collateral:
    (1) Immediately available cash funds that are denominated in:
    (i) U.S. dollars or another major currency; or
    (ii) The currency of settlement for the non-cleared swap or non-
cleared security-based swap;
    (2) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury;
    (3) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a U.S. government 
agency (other than the U.S. Department of Treasury) whose obligations 
are fully guaranteed by the full faith and credit of the United States 
government;

[[Page 173]]

    (4) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the European Central Bank or a 
sovereign entity that is assigned no higher than a 20 percent risk 
weight under 12 CFR part 324;
    (5) A publicly traded debt security issued by, or an asset-backed 
security fully guaranteed as to the payment of principal and interest 
by, a U.S. Government-sponsored enterprise that is operating with 
capital support or another form of direct financial assistance received 
from the U.S. government that enables the repayments of the U.S. 
Government-sponsored enterprise's eligible securities;
    (6) A publicly traded debt security that meets the definition of 
``Investment quality'' in Sec. 1267.1 of this chapter and is issued by a 
U.S. Government-sponsored enterprise not operating with capital support 
or another form of direct financial assistance from the U.S. government, 
and is not an asset-backed security;
    (7) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the Bank for International 
Settlements, the International Monetary Fund, or a multilateral 
development bank;
    (8) A security solely in the form of:
    (i) Publicly traded debt not otherwise described in this paragraph 
(b) that meets the definition of ``Investment quality'' in Sec. 1267.1 
of this chapter and is not an asset-backed security;
    (ii) Publicly traded common equity that is included in:
    (A) The Standard & Poor's Composite 1500 Index or any other similar 
index of liquid and readily marketable equity securities as determined 
by FHFA; or
    (B) An index that a covered swap entity's supervisor in a foreign 
jurisdiction recognizes for purposes of including publicly traded common 
equity as initial margin under applicable regulatory policy, if held in 
that foreign jurisdiction;
    (9) Securities in the form of redeemable securities in a pooled 
investment fund representing the security-holder's proportional interest 
in the fund's net assets and that are issued and redeemed only on the 
basis of the market value of the fund's net assets prepared each 
business day after the security-holder makes its investment commitment 
or redemption request to the fund, if:
    (i) The fund's investments are limited to the following:
    (A) Securities that are issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury, and immediately-available cash funds denominated in 
U.S. dollars; or
    (B) Securities denominated in a common currency and issued by, or 
fully guaranteed as to the payment of principal and interest by, the 
European Central Bank or a sovereign entity that is assigned no higher 
than a 20 percent risk weight under 12 CFR part 324, and immediately-
available cash funds denominated in the same currency; and
    (ii) Assets of the fund may not be transferred through securities 
lending, securities borrowing, repurchase agreements, reverse repurchase 
agreements, or other means that involve the fund having rights to 
acquire the same or similar assets from the transferee; or
    (10) Gold.
    (c)(1) The value of any eligible collateral collected or posted to 
satisfy margin requirements pursuant to this part is subject to the sum 
of the following discounts, as applicable:
    (i) An 8 percent discount for variation margin collateral 
denominated in a currency that is not the currency of settlement for the 
non-cleared swap or non-cleared security-based swap, except for 
immediately available cash funds denominated in U.S. dollars or another 
major currency;
    (ii) An 8 percent discount for initial margin collateral denominated 
in a currency that is not the currency of settlement for the non-cleared 
swap or non-cleared security-based swap, except for eligible types of 
collateral denominated in a single termination currency designated as 
payable to the non-posting counterparty as part of the eligible master 
netting agreement; and
    (iii) For variation and initial margin non-cash collateral, the 
discounts described in appendix B of this part.
    (2) The value of variation margin or initial margin collateral is 
computed

[[Page 174]]

as the product of the cash or market value of the eligible collateral 
asset times one minus the applicable discounts pursuant to paragraph 
(c)(1) of this section expressed in percentage terms. The total value of 
all variation margin or initial margin collateral is calculated as the 
sum of those values for each eligible collateral asset.
    (d) Notwithstanding paragraphs (a) and (b) of this section, eligible 
collateral for initial margin and variation margin required by this part 
does not include a security issued by:
    (1) The party or an affiliate of the party pledging such collateral;
    (2) A bank holding company, a savings and loan holding company, a 
U.S. intermediate holding company established or designated for purposes 
of compliance with 12 CFR 252.153, a foreign bank, a depository 
institution, a market intermediary, a company that would be any of the 
foregoing if it were organized under the laws of the United States or 
any State, or an affiliate of any of the foregoing institutions; or
    (3) A nonbank financial institution supervised by the Board of 
Governors of the Federal Reserve System under Title I of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323).
    (e) A covered swap entity shall monitor the market value and 
eligibility of all collateral collected and posted to satisfy the 
minimum initial margin and minimum variation margin requirements of this 
part. To the extent that the market value of such collateral has 
declined, the covered swap entity shall promptly collect or post such 
additional eligible collateral as is necessary to maintain compliance 
with the margin requirements of this part. To the extent that the 
collateral is no longer eligible, the covered swap entity shall promptly 
collect or post sufficient eligible replacement collateral to comply 
with the margin requirements of this part.
    (f) A covered swap entity may collect or post initial margin and 
variation margin that is required by Sec. 1221.3(d) or Sec. 1221.4(c) or 
that is not required pursuant to this part in any form of collateral.

[80 FR 74914, Nov. 30, 2015]



Sec. 1221.7  Segregation of collateral.

    (a) A covered swap entity that posts any collateral other than for 
variation margin with respect to a non-cleared swap or a non-cleared 
security-based swap shall require that all funds or other property other 
than variation margin provided by the covered swap entity be held by one 
or more custodians that are not the covered swap entity or counterparty 
and not affiliates of the covered swap entity or the counterparty.
    (b) A covered swap entity that collects initial margin required by 
Sec. 1221.3(a) with respect to a non-cleared swap or a non-cleared 
security-based swap shall require that such initial margin be held by 
one or more custodians that are not the covered swap entity or 
counterparty and not affiliates of the covered swap entity or the 
counterparty.
    (c) For purposes of paragraphs (a) and (b) of this section, the 
custodian must act pursuant to a custody agreement that:
    (1) Prohibits the custodian from rehypothecating, repledging, 
reusing, or otherwise transferring (through securities lending, 
securities borrowing, repurchase agreement, reverse repurchase agreement 
or other means) the collateral held by the custodian, except that cash 
collateral may be held in a general deposit account with the custodian 
if the funds in the account are used to purchase an asset described in 
Sec. 1221.6(a)(2) or (b), such asset is held in compliance with this 
Sec. 1221.7, and such purchase takes place within a time period 
reasonably necessary to consummate such purchase after the cash 
collateral is posted as initial margin; and
    (2) Is a legal, valid, binding, and enforceable agreement under the 
laws of all relevant jurisdictions, including in the event of 
bankruptcy, insolvency, or a similar proceeding.
    (d) Notwithstanding paragraph (c)(1) of this section, a custody 
agreement may permit the posting party to substitute or direct any 
reinvestment of posted collateral held by the custodian, provided that, 
with respect to collateral collected by a covered swap entity pursuant 
to Sec. 1221.3(a) or posted by a covered swap entity pursuant to

[[Page 175]]

Sec. 1221.3(b), the agreement requires the posting party to:
    (1) Substitute only funds or other property that would qualify as 
eligible collateral under Sec. 1221.6, and for which the amount net of 
applicable discounts described in appendix B of this part would be 
sufficient to meet the requirements of Sec. 1221.3; and
    (2) Direct reinvestment of funds only in assets that would qualify 
as eligible collateral under Sec. 1221.6, and for which the amount net 
of applicable discounts described in appendix B of this part would be 
sufficient to meet the requirements of Sec. 1221.3.



Sec. 1221.8  Initial margin models and standardized amounts.

    (a) Standardized amounts. Unless a covered swap entity's initial 
margin model conforms to the requirements of this section, the covered 
swap entity shall calculate the amount of initial margin required to be 
collected or posted for one or more non-cleared swaps or non-cleared 
security-based swaps with a given counterparty pursuant to Sec. 1221.3 
on a daily basis pursuant to appendix A of this part.
    (b) Use of initial margin models. A covered swap entity may 
calculate the amount of initial margin required to be collected or 
posted for one or more non-cleared swaps or non-cleared security-based 
swaps with a given counterparty pursuant to Sec. 1221.3 on a daily basis 
using an initial margin model only if the initial margin model meets the 
requirements of this section.
    (c) Requirements for initial margin model. (1) A covered swap entity 
must obtain the prior written approval of FHFA before using any initial 
margin model to calculate the initial margin required in this part.
    (2) A covered swap entity must demonstrate that the initial margin 
model satisfies all of the requirements of this section on an ongoing 
basis.
    (3) A covered swap entity must notify FHFA in writing 60 days prior 
to:
    (i) Extending the use of an initial margin model that FHFA has 
approved under this section to an additional product type;
    (ii) Making any change to any initial margin model approved by FHFA 
under this section that would result in a material change in the covered 
swap entity's assessment of initial margin requirements; or
    (iii) Making any material change to modeling assumptions used by the 
initial margin model.
    (4) FHFA may rescind its approval of the use of any initial margin 
model, in whole or in part, or may impose additional conditions or 
requirements if FHFA determines, in its sole discretion, that the 
initial margin model no longer complies with this section.
    (d) Quantitative requirements. (1) The covered swap entity's initial 
margin model must calculate an amount of initial margin that is equal to 
the potential future exposure of the non-cleared swap, non-cleared 
security-based swap or netting portfolio of non-cleared swaps or non-
cleared security-based swaps covered by an eligible master netting 
agreement. Potential future exposure is an estimate of the one-tailed 99 
percent confidence interval for an increase in the value of the non-
cleared swap, non-cleared security-based swap or netting portfolio of 
non-cleared swaps or non-cleared security-based swaps due to an 
instantaneous price shock that is equivalent to a movement in all 
material underlying risk factors, including prices, rates, and spreads, 
over a holding period equal to the shorter of ten business days or the 
maturity of the non-cleared swap, non-cleared security-based swap or 
netting portfolio.
    (2) All data used to calibrate the initial margin model must be 
based on an equally weighted historical observation period of at least 
one year and not more than five years and must incorporate a period of 
significant financial stress for each broad asset class that is 
appropriate to the non-cleared swaps and non-cleared security-based 
swaps to which the initial margin model is applied.
    (3) The covered swap entity's initial margin model must use risk 
factors sufficient to measure all material price risks inherent in the 
transactions for which initial margin is being calculated. The risk 
categories must include, but should not be limited to, foreign exchange 
or interest rate risk, credit risk, equity risk, and commodity

[[Page 176]]

risk, as appropriate. For material exposures in significant currencies 
and markets, modeling techniques must capture spread and basis risk and 
must incorporate a sufficient number of segments of the yield curve to 
capture differences in volatility and imperfect correlation of rates 
along the yield curve.
    (4) In the case of a non-cleared cross-currency swap, the covered 
swap entity's initial margin model need not recognize any risks or risk 
factors associated with the fixed, physically-settled foreign exchange 
transaction associated with the exchange of principal embedded in the 
non-cleared cross-currency swap. The initial margin model must recognize 
all material risks and risk factors associated with all other payments 
and cash flows that occur during the life of the non-cleared cross-
currency swap.
    (5) The initial margin model may calculate initial margin for a non-
cleared swap or non-cleared security-based swap or a netting portfolio 
of non-cleared swaps or non-cleared security-based swaps covered by an 
eligible master netting agreement. It may reflect offsetting exposures, 
diversification, and other hedging benefits for non-cleared swaps and 
non-cleared security-based swaps that are governed by the same eligible 
master netting agreement by incorporating empirical correlations within 
the following broad risk categories, provided the covered swap entity 
validates and demonstrates the reasonableness of its process for 
modeling and measuring hedging benefits: Commodity, credit, equity, and 
foreign exchange or interest rate. Empirical correlations under an 
eligible master netting agreement may be recognized by the initial 
margin model within each broad risk category, but not across broad risk 
categories.
    (6) If the initial margin model does not explicitly reflect 
offsetting exposures, diversification, and hedging benefits between 
subsets of non-cleared swaps or non-cleared security-based swaps within 
a broad risk category, the covered swap entity must calculate an amount 
of initial margin separately for each subset within which such 
relationships are explicitly recognized by the initial margin model. The 
sum of the initial margin amounts calculated for each subset of non-
cleared swaps and non-cleared security-based swaps within a broad risk 
category will be used to determine the aggregate initial margin due from 
the counterparty for the portfolio of non-cleared swaps and non-cleared 
security-based swaps within the broad risk category.
    (7) The sum of the initial margin amounts calculated for each broad 
risk category will be used to determine the aggregate initial margin due 
from the counterparty.
    (8) The initial margin model may not permit the calculation of any 
initial margin collection amount to be offset by, or otherwise take into 
account, any initial margin that may be owed or otherwise payable by the 
covered swap entity to the counterparty.
    (9) The initial margin model must include all material risks arising 
from the nonlinear price characteristics of option positions or 
positions with embedded optionality and the sensitivity of the market 
value of the positions to changes in the volatility of the underlying 
rates, prices, or other material risk factors.
    (10) The covered swap entity may not omit any risk factor from the 
calculation of its initial margin that the covered swap entity uses in 
its initial margin model unless it has first demonstrated to the 
satisfaction of FHFA that such omission is appropriate.
    (11) The covered swap entity may not incorporate any proxy or 
approximation used to capture the risks of the covered swap entity's 
non-cleared swaps or non-cleared security-based swaps unless it has 
first demonstrated to the satisfaction of FHFA that such proxy or 
approximation is appropriate.
    (12) The covered swap entity must have a rigorous and well-defined 
process for re-estimating, re-evaluating, and updating its internal 
margin model to ensure continued applicability and relevance.
    (13) The covered swap entity must review and, as necessary, revise 
the data used to calibrate the initial margin model at least annually, 
and more frequently as market conditions warrant, to ensure that the 
data incorporate a period of significant financial stress

[[Page 177]]

appropriate to the non-cleared swaps and non-cleared security-based 
swaps to which the initial margin model is applied.
    (14) The level of sophistication of the initial margin model must be 
commensurate with the complexity of the non-cleared swaps and non-
cleared security-based swaps to which it is applied. In calculating an 
initial margin collection amount, the initial margin model may make use 
of any of the generally accepted approaches for modeling the risk of a 
single instrument or portfolio of instruments.
    (15) FHFA may in its sole discretion require a covered swap entity 
using an initial margin model to collect a greater amount of initial 
margin than that determined by the covered swap entity's initial margin 
model if FHFA determines that the additional collateral is appropriate 
due to the nature, structure, or characteristics of the covered swap 
entity's transaction(s), or is commensurate with the risks associated 
with the transaction(s).
    (e) Periodic review. A covered swap entity must periodically, but no 
less frequently than annually, review its initial margin model in light 
of developments in financial markets and modeling technologies, and 
enhance the initial margin model as appropriate to ensure that the 
initial margin model continues to meet the requirements for approval in 
this section.
    (f) Control, oversight, and validation mechanisms. (1) The covered 
swap entity must maintain a risk control unit that reports directly to 
senior management and is independent from the business trading units.
    (2) The covered swap entity's risk control unit must validate its 
initial margin model prior to implementation and on an ongoing basis. 
The covered swap entity's validation process must be independent of the 
development, implementation, and operation of the initial margin model, 
or the validation process must be subject to an independent review of 
its adequacy and effectiveness. The validation process must include:
    (i) An evaluation of the conceptual soundness of (including 
developmental evidence supporting) the initial margin model;
    (ii) An ongoing monitoring process that includes verification of 
processes and benchmarking by comparing the covered swap entity's 
initial margin model outputs (estimation of initial margin) with 
relevant alternative internal and external data sources or estimation 
techniques. The benchmark(s) must address the chosen model's 
limitations. When applicable, the covered swap entity should consider 
benchmarks that allow for non-normal distributions such as historical 
and Monte Carlo simulations. When applicable, validation shall include 
benchmarking against observable margin standards to ensure that the 
initial margin required is not less than what a derivatives clearing 
organization or a clearing agency would require for similar cleared 
transactions; and
    (iii) An outcomes analysis process that includes backtesting the 
initial margin model. This analysis must recognize and compensate for 
the challenges inherent in back-testing over periods that do not contain 
significant financial stress.
    (3) If the validation process reveals any material problems with the 
initial margin model, the covered swap entity must promptly notify FHFA 
of the problems, describe to FHFA any remedial actions being taken, and 
adjust the initial margin model to ensure an appropriately conservative 
amount of required initial margin is being calculated.
    (4) The covered swap entity must have an internal audit function 
independent of business-line management and the risk control unit that 
at least annually assesses the effectiveness of the controls supporting 
the covered swap entity's initial margin model measurement systems, 
including the activities of the business trading units and risk control 
unit, compliance with policies and procedures, and calculation of the 
covered swap entity's initial margin requirements under this part. At 
least annually, the internal audit function must report its findings to 
the covered swap entity's board of directors or a committee thereof.
    (g) Documentation. The covered swap entity must adequately document 
all material aspects of its initial margin model, including the 
management and

[[Page 178]]

valuation of the non-cleared swaps and non-cleared security-based swaps 
to which it applies, the control, oversight, and validation of the 
initial margin model, any review processes and the results of such 
processes.
    (h) Escalation procedures. The covered swap entity must adequately 
document internal authorization procedures, including escalation 
procedures, that require review and approval of any change to the 
initial margin calculation under the initial margin model, demonstrable 
analysis that any basis for any such change is consistent with the 
requirements of this section, and independent review of such 
demonstrable analysis and approval.



Sec. 1221.9  Cross-border application of margin requirements.

    (a) Transactions to which this rule does not apply. The requirements 
of Secs. 1221.3 through 1221.8 and Secs. 1221.10 through 1221.12 shall 
not apply to any foreign non-cleared swap or foreign non-cleared 
security-based swap of a foreign covered swap entity.
    (b) For purposes of this section, a foreign non-cleared swap or 
foreign non-cleared security-based swap is any non-cleared swap or non-
cleared security-based swap with respect to which neither the 
counterparty to the foreign covered swap entity nor any party that 
provides a guarantee of either party's obligations under the non-cleared 
swap or non-cleared security-based swap is:
    (1) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States;
    (2) A branch or office of an entity organized under the laws of the 
United States or any State; or
    (3) A swap entity that is a subsidiary of an entity that is 
organized under the laws of the United States or any State.
    (c) For purposes of this section, a foreign covered swap entity is 
any covered swap entity that is not:
    (1) An entity organized under the laws of the United States or any 
State, including a U.S. branch, agency, or subsidiary of a foreign bank;
    (2) A branch or office of an entity organized under the laws of the 
United States or any State; or
    (3) An entity that is a subsidiary of an entity that is organized 
under the laws of the United States or any State.
    (d) Transactions for which substituted compliance determination may 
apply--(1) Determinations and reliance. For non-cleared swaps and non-
cleared security-based swaps entered into by covered swap entities 
described in paragraph (d)(3) of this section, a covered swap entity may 
satisfy the provisions of this part by complying with the foreign 
regulatory framework for non-cleared swaps and non-cleared security-
based swaps that the prudential regulators jointly, conditionally or 
unconditionally, determine by public order satisfy the corresponding 
requirements of Secs. 1221.3 through 1221.8 and Secs. 1221.10 through 
1221.12.
    (2) Standard. In determining whether to make a determination under 
paragraph (d)(1) of this section, the prudential regulators will 
consider whether the requirements of such foreign regulatory framework 
for non-cleared swaps and non-cleared security-based swaps applicable to 
such covered swap entities are comparable to the otherwise applicable 
requirements of this part and appropriate for the safe and sound 
operation of the covered swap entity, taking into account the risks 
associated with non-cleared swaps and non-cleared security-based swaps.
    (3) Covered swap entities eligible for substituted compliance. A 
covered swap entity may rely on a determination under paragraph (d)(1) 
of this section only if:
    (i) The covered swap entity's obligations under the non-cleared swap 
or non-cleared security-based swap do not have a guarantee from:
    (A) An entity organized under the laws of the United States or any 
State (other than a U.S. branch or agency of a foreign bank) or a 
natural person who is a resident of the United States; or
    (B) A branch or office of an entity organized under the laws of the 
United States or any State; and
    (ii) The covered swap entity is:
    (A) A foreign covered swap entity;
    (B) A U.S. branch or agency of a foreign bank; or

[[Page 179]]

    (C) An entity that is not organized under the laws of the United 
States or any State and is a subsidiary of a depository institution, 
Edge corporation, or agreement corporation.
    (4) Compliance with foreign margin collection requirement. A covered 
swap entity satisfies its requirement to post initial margin under 
Sec. 1221.3(b) by posting to its counterparty initial margin in the form 
and amount, and at such times, that its counterparty is required to 
collect pursuant to a foreign regulatory framework, provided that the 
counterparty is subject to the foreign regulatory framework and the 
prudential regulators have made a determination under paragraph (d)(1) 
of this section, unless otherwise stated in that determination, and the 
counterparty's obligations under the non-cleared swap or non-cleared 
security-based swap do not have a guarantee from:
    (i) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States; or
    (ii) A branch or office of an entity organized under the laws of the 
United States or any State.
    (e) Requests for determinations. (1) A covered swap entity described 
in paragraph (d)(3) of this section may request that the prudential 
regulators make a determination pursuant to this section. A request for 
a determination must include a description of:
    (i) The scope and objectives of the foreign regulatory framework for 
non-cleared swaps and non-cleared security-based swaps;
    (ii) The specific provisions of the foreign regulatory framework for 
non-cleared swaps and non-cleared security-based swaps that govern:
    (A) The scope of transactions covered;
    (B) The determination of the amount of initial margin and variation 
margin required and how that amount is calculated;
    (C) The timing of margin requirements;
    (D) Any documentation requirements;
    (E) The forms of eligible collateral;
    (F) Any segregation and rehypothecation requirements; and
    (G) The approval process and standards for models used in 
calculating initial margin and variation margin;
    (iii) The supervisory compliance program and enforcement authority 
exercised by a foreign financial regulatory authority or authorities in 
such system to support its oversight of the application of the non-
cleared swap or non-cleared security-based swap regulatory framework and 
how that framework applies to the non-cleared swaps or non-cleared 
security-based swaps of the covered swap entity; and
    (iv) Any other descriptions and documentation that the prudential 
regulators determine are appropriate.
    (2) A covered swap entity described in paragraph (d)(3) of this 
section may make a request under this section only if the non-cleared 
swap or non-cleared security-based swap activities of the covered swap 
entity are directly supervised by the authorities administering the 
foreign regulatory framework for non-cleared swaps and non-cleared 
security-based swaps.
    (f) Segregation unavailable. Sections 1221.3(b) and 1221.7 do not 
apply to a non-cleared swap or non-cleared security-based swap entered 
into by:
    (1) A foreign branch of a covered swap entity that is a depository 
institution; or
    (2) A covered swap entity that is not organized under the laws of 
the United States or any State and is a subsidiary of a depository 
institution, Edge corporation, or agreement corporation, if:
    (i) Inherent limitations in the legal or operational infrastructure 
in the foreign jurisdiction make it impracticable for the covered swap 
entity and the counterparty to post any form of eligible initial margin 
collateral recognized pursuant to Sec. 1221.6(b) in compliance with the 
segregation requirements of Sec. 1221.7;
    (ii) The covered swap entity is subject to foreign regulatory 
restrictions that require the covered swap entity to transact in the 
non-cleared swap or non-cleared security-based swap with the 
counterparty through an establishment within the foreign jurisdiction 
and do not accommodate the posting of collateral for the non-cleared 
swap or

[[Page 180]]

non-cleared security-based swap outside the jurisdiction;
    (iii) The counterparty to the non-cleared swap or non-cleared 
security-based swap is not, and the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap do not have a 
guarantee from:
    (A) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States; or
    (B) A branch or office of an entity organized under the laws of the 
United States or any State;
    (iv) The covered swap entity collects initial margin for the non-
cleared swap or non-cleared security-based swap in accordance with 
Sec. 1221.3(a) in the form of cash pursuant to Sec. 1221.6(b)(1), and 
posts and collects variation margin in accordance with Sec. 1221.4(a) in 
the form of cash pursuant to Sec. 1221.6(b)(1); and
    (v) FHFA provides the covered swap entity with prior written 
approval for the covered swap entity's reliance on this paragraph (f) 
for the foreign jurisdiction.
    (g) Guarantee means an arrangement pursuant to which one party to a 
non-cleared swap or non-cleared security-based swap has rights of 
recourse against a third-party guarantor, with respect to its 
counterparty's obligations under the non-cleared swap or non-cleared 
security-based swap. For these purposes, a party to a non-cleared swap 
or non-cleared security-based swap has rights of recourse against a 
guarantor if the party has a conditional or unconditional legally 
enforceable right to receive or otherwise collect, in whole or in part, 
payments from the guarantor with respect to its counterparty's 
obligations under the non-cleared swap or non-cleared security-based 
swap. In addition, any arrangement pursuant to which the guarantor has a 
conditional or unconditional legally enforceable right to receive or 
otherwise collect, in whole or in part, payments from any other third 
party guarantor with respect to the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap, such arrangement 
will be deemed a guarantee of the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap by the other 
guarantor.



Sec. 1221.10  Documentation of margin matters.

    A covered swap entity shall execute trading documentation with each 
counterparty that is either a swap entity or financial end user 
regarding credit support arrangements that:
    (a) Provides the covered swap entity and its counterparty with the 
contractual right to collect and post initial margin and variation 
margin in such amounts, in such form, and under such circumstances as 
are required by this part; and
    (b) Specifies:
    (1) The methods, procedures, rules, and inputs for determining the 
value of each non-cleared swap or non-cleared security-based swap for 
purposes of calculating variation margin requirements; and
    (2) The procedures by which any disputes concerning the valuation of 
non-cleared swaps or non-cleared security-based swaps, or the valuation 
of assets collected or posted as initial margin or variation margin, may 
be resolved; and
    (c) Describes the methods, procedures, rules, and inputs used to 
calculate initial margin for non-cleared swaps and non-cleared security 
based swaps entered into between the covered swap entity and the 
counterparty.



Sec. 1221.11  Special rules for affiliates.

    (a) Affiliates. This part applies to a non-cleared swap or non-
cleared security-based swap of a covered swap entity with its affiliate, 
unless the swap or security-based swap is excluded from coverage under 
Sec. 1221.1(d) or as otherwise provided in this section. To the extent 
of any inconsistency between this section and any other provision of 
this part, this section will apply.
    (b) Initial margin--(1) Posting of initial margin. The requirement 
for a covered swap entity to post initial margin under Sec. 1221.3(b) 
does not apply with respect to any non-cleared swap or non-cleared 
security-based swap with a counterparty that is an affiliate. A covered 
swap entity shall calculate the amount of initial margin that would be

[[Page 181]]

required to be posted to an affiliate that is a financial end user with 
material swaps exposure pursuant to Sec. 1221.3(b) and provide 
documentation of such amount to each affiliate on a daily basis.
    (2) Initial margin threshold amount. For purposes of calculating the 
amount of initial margin to be collected from an affiliate counterparty 
in accordance with Sec. 1221.3(a) or calculating the amount of initial 
margin that would have been posted to an affiliate counterparty in 
accordance with paragraph (b)(1) of this section, the initial margin 
threshold amount is an aggregate credit exposure of $20 million 
resulting from all non-cleared swaps and non-cleared security-based 
swaps between the covered swap entity and that affiliate. For purposes 
of this calculation, an entity shall not count a non-cleared swap or 
non-cleared security-based swap that is exempt pursuant to 
Sec. 1221.1(d).
    (c) Variation margin. A covered swap entity shall collect and post 
variation margin with respect to a non-cleared swap or non-cleared 
security-based swap with any counterparty that is an affiliate as 
provided in Sec. 1221.4.
    (d) Custodian for non-cash collateral. To the extent that a covered 
swap entity collects initial margin required by Sec. 1221.3(a) from an 
affiliate with respect to any non-cleared swap or non-cleared security-
based swap in the form of collateral other than cash collateral, the 
custodian for such collateral may be the covered swap entity or an 
affiliate of the covered swap entity.
    (e) Model holding period and netting--(1) Model holding period. For 
any non-cleared swap or non-cleared security-based swap (or netting 
portfolio) between a covered swap entity and an affiliate that would be 
subject to the clearing requirements of section 2(h)(1)(A) of the 
Commodity Exchange Act of 1936 or section 3C(a)(1) of the Securities 
Exchange Act of 1934 but for an exemption under section 2(h)(7)(C)(iii) 
or (D) or section 4(c)(1) of the Commodity Exchange Act of 1936 or 
regulations of the Commodity Futures Trading Commission or section 
3C(g)(4) of the Securities Exchange Act of 1934 or regulations of the 
U.S. Securities and Exchange Commission, the covered swap entity's 
initial margin model calculation as described in Sec. 1221.8(d)(1) may 
use a holding period equal to the shorter of five business days or the 
maturity of the non-cleared swap or non-cleared security-based swap (or 
netting portfolio).
    (2) Netting arrangements. Any netting portfolio that contains any 
non-cleared swap or non-cleared security-based swap with a model holding 
period equal to the shorter of five business days or the maturity of the 
non-cleared swap or non-cleared security-based swap pursuant to 
paragraph (e)(1) of this section must be identified and separate from 
any other netting portfolio for purposes of calculating and complying 
with the initial margin requirements of this part.
    (f) Standardized amounts. If a covered swap entity's initial margin 
model does not conform to the requirements of Sec. 1221.8, the covered 
swap entity shall calculate the amount of initial margin required to be 
collected for one or more non-cleared swaps or non-cleared security-
based swaps with a given affiliate counterparty pursuant to section 
Sec. 1221.3 on a daily basis pursuant to Appendix A with the gross 
initial margin multiplied by 0.7.



Sec. 1221.12  Capital.

    A covered swap entity shall comply with the capital levels or such 
other amounts applicable to it as required by the Director of FHFA 
pursuant to 12 U.S.C. 4611.

[80 FR 74914, Nov. 30, 2015]



   Sec. Appendix A to Part 1221--Standardized Minimum Initial Margin 
Requirements for Non-cleared Swaps and Non--cleared Security-based Swaps

[[Page 182]]



Table A--Standardized Minimum Gross Initial Margin Requirements for Non-
          cleared Swaps and Non-cleared Security-Based Swaps\1\
------------------------------------------------------------------------
                                                           Gross initial
                                                           margin (% of
                       Asset Class                           notional
                                                             exposure)
------------------------------------------------------------------------
Credit: 0-2 year duration...............................               2
Credit: 2-5 year duration...............................               5
Credit: 5+ year duration................................              10
Commodity...............................................              15
Equity..................................................              15
Foreign Exchange/Currency...............................               6
Cross Currency Swaps: 0-2 year duration.................               1
Cross-Currency Swaps: 2-5 year duration.................               2
Cross-Currency Swaps: 5+ year duration..................               4
Interest Rate: 0-2 year duration........................               1
Interest Rate: 2-5 year duration........................               2
Interest Rate: 5+ year duration.........................               4
Other...................................................              15
------------------------------------------------------------------------
\1\ The initial margin amount applicable to multiple non-cleared swaps
  or non-cleared security-based swaps subject to an eligible master
  netting agreement that is calculated according to Appendix A will be
  computed as follows:
Initial Margin=0.4xGross Initial Margin +0.6x NGRxGross Initial Margin
where;
Gross Initial Margin = the sum of the product of each non-cleared swap's
  or non-cleared security-based swap's effective notional amount and the
  gross initial margin requirement for all non-cleared swaps and non-
  cleared security-based swaps subject to the eligible master netting
  agreement;
and
NGR = the net-to-gross ratio (that is, the ratio of the net current
  replacement cost to the gross current replacement cost). In
  calculating NGR, the gross current replacement cost equals the sum of
  the replacement cost for each non-cleared swap and non-cleared
  security-based swap subject to the eligible master netting agreement
  for which the cost is positive. The net current replacement cost
  equals the total replacement cost for all non-cleared swaps and non-
  cleared security-based swaps subject to the eligible master netting
  agreement. In cases where the gross replacement cost is zero, the NGR
  should be set to 1.0.



   Sec. Appendix B to 1221--Margin Values for Eligible Noncash Margin 
                               Collateral.

      Table B--Margin Values for Eligible Noncash Margin Collateral
------------------------------------------------------------------------
                       Asset class                         Discount (%)
------------------------------------------------------------------------
Eligible government and related (e.g., central bank,                 0.5
 multilateral development bank, GSE securities
 identified in Sec. 1221.6(a)(2)(iv) or (b)(5) debt:
 residual maturity less than one-year...................
Eligible government and related (e.g., central bank,                 2.0
 multilateral development bank, GSE securities
 identified in Sec. 1221.6(a)(2)(iv) or (b)(5) debt:
 residual maturity between one and five years...........
Eligible government and related (e.g., central bank,                 4.0
 multilateral development bank, GSE securities
 identified in Sec. 1221.6(a)(2)(iv) or (b)(5) debt:
 residual maturity greater than five years..............
Eligible GSE debt securities not identified in Sec. 1.0
 1221.6(a)(2)(iv) or (b)(5): residual maturity less than
 one-year...............................................
Eligible GSE debt securities not identified in Sec. 4.0
 1221.6(a)(2)(iv) or (b)(5): residual maturity between
 one and five years:....................................
Eligible GSE debt securities not identified in Sec. 8.0
 1221.6(a)(2)(iv) or (b)(5): residual maturity greater
 than five years:.......................................
Other eligible publicly traded debt: residual maturity               1.0
 less than one-year.....................................
Other eligible publicly traded debt: residual maturity               4.0
 between one and five years.............................
Other eligible publicly traded debt: residual maturity               8.0
 greater than five years................................
Equities included in S&P 500 or related index...........            15.0
Equities included in S&P 1500 Composite or related index            25.0
 but not S&P 500 or related index.......................
Gold....................................................            15.0
------------------------------------------------------------------------
\1\ The discount to be applied to an eligible investment fund is the
  weighted average discount on all assets within the eligible investment
  fund at the end of the prior month. The weights to be applied in the
  weighted average should be calculated as a fraction of the fund's
  total market value that is invested in each asset with a given
  discount amount. As an example, an eligible investment fund that is
  comprised solely of $100 of 91 day Treasury bills and $100 of 3 year
  US Treasury bonds would receive a discount of (100/200)*0.5+(100/
  200)*2.0=(0.5)*0.5+(0.5)*2.0=1.25 percent.


[[Page 183]]



PART 1222_APPRAISALS--Table of Contents



         Subpart A_Requirements for Higher-Priced Mortgage Loans

Sec.
1222.1  Purpose and scope.
1222.2  Reservation of authority.

       Subpart B_Appraisal Management Company Minimum Requirements

1222.20  Authority, purpose, and scope.
1222.21  Definitions.
1222.22  Appraiser panel--annual size calculation.
1222.23  Appraisal management company registration.
1222.24  Ownership limitations for State-registered appraisal management 
          companies.
1222.25  Requirements for Federally regulated appraisal management 
          companies.
1222.26  Information to be presented to the Appraisal Subcommittee by 
          participating States.

Subparts C to Z [Reserved]

    Authority: 12 U.S.C. 4501 et seq., 12 U.S.C. 4526 and 15 U.S.C. 
1639h.

    Source: 78 FR 10446, Feb. 13, 2013, unless otherwise noted.



         Subpart A_Requirements for Higher-Priced Mortgage Loans



Sec. 1222.1  Purpose and scope.

    This subpart cross-references the requirement that creditors 
extending credit in the form of higher-priced mortgage loans comply with 
Section 129H of the Truth-in-Lending Act (TILA), 15 U.S.C. 1639h, and 
its implementing regulations in Regulation Z, 12 CFR 1026.35. Neither 
the Banks nor the Enterprises are subject to Section 129H of TILA or 12 
CFR 1026.35. Originators of higher-priced mortgage loans, including Bank 
members and institutions that sell mortgage loans to the Enterprises, 
are subject to those provisions. A failure of those institutions to 
comply with Section 129H of TILA and 12 CFR 1026.35 may limit their 
ability to sell such loans to the Banks or Enterprises or to pledge such 
loans to the Banks as collateral, to the extent provided in the parties' 
agreements.



Sec. 1222.2  Reservation of authority.

    Nothing in this subpart A shall be read to limit the authority of 
the Director of the Federal Housing Finance Agency to take supervisory 
or enforcement action, including action to address unsafe and unsound 
practices or conditions, or violations of law. In addition, nothing in 
this subpart A shall be read to limit the authority of the Director to 
impose requirements for any purchase of higher-priced mortgage loans by 
an Enterprise or a Federal Home Loan Bank, or acceptance of higher-
priced mortgage loans as collateral to secure advances by a Federal Home 
Loan Bank.



       Subpart B_Appraisal Management Company Minimum Requirements

    Source: 80 FR 32687, June 9, 2015, unless otherwise noted.



Sec. 1222.20  Authority, purpose, and scope.

    (a) Authority. This subpart is issued by the Federal Housing Finance 
Agency pursuant to 12 U.S.C. 4501 et seq., 12 U.S.C. 4526, and Title XI 
of the Financial Institutions Reform, Recovery, and Enforcement Act 
(FIRREA), as amended by the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376 
(2010)), 12 U.S.C. 3331 et seq.
    (b) Purpose. The purpose of this subpart is to implement sections 
1109, 1117, 1121, and 1124 of FIRREA Title XI, 12 U.S.C. 3338, 3346, 
3350, and 3353.
    (c) Scope. This subpart applies to States and to appraisal 
management companies (AMCs) providing appraisal management services in 
connection with consumer credit transactions secured by a consumer's 
principal dwelling or securitizations of those transactions.
    (d) Rule of construction. Nothing in this subpart should be 
construed to prevent a State from establishing requirements in addition 
to those in this subpart. In addition, nothing in this subpart should be 
construed to alter guidance in, and applicability of, the Interagency 
Appraisal and Evaluation

[[Page 184]]

Guidelines \1\ or other relevant agency guidance that cautions banks, 
bank holding companies, Federal savings associations, state savings 
associations, and credit unions, as applicable, that each such entity is 
accountable for overseeing the activities of third-party service 
providers and ensuring that any services provided by a third party 
comply with applicable laws, regulations, and supervisory guidance 
applicable directly to the financial institution.
---------------------------------------------------------------------------

    \1\ 75 FR 77450 (December 10, 2010).
---------------------------------------------------------------------------



Sec. 1222.21  Definitions.

    For purposes of this subpart:
    (a) Affiliate has the meaning provided in 12 U.S.C. 1841.
    (b) AMC National Registry means the registry of State-registered 
AMCs and Federally regulated AMCs maintained by the Appraisal 
Subcommittee.
    (c)(1) Appraisal management company (AMC) means a person that:
    (i) Provides appraisal management services to creditors or to 
secondary mortgage market participants, including affiliates;
    (ii) Provides such services in connection with valuing a consumer's 
principal dwelling as security for a consumer credit transaction or 
incorporating such transactions into securitizations; and
    (iii) Within a given 12-month period, as defined in Sec. 1222.22(d), 
oversees an appraiser panel of more than 15 State-certified or State-
licensed appraisers in a State or 25 or more State-certified or State-
licensed appraisers in two or more States, as described in Sec. 1222.22;
    (2) An AMC does not include a department or division of an entity 
that provides appraisal management services only to that entity.
    (d) Appraisal management services means one or more of the 
following:
    (1) Recruiting, selecting, and retaining appraisers;
    (2) Contracting with State-certified or State-licensed appraisers to 
perform appraisal assignments;
    (3) Managing the process of having an appraisal performed, including 
providing administrative services such as receiving appraisal orders and 
appraisal reports, submitting completed appraisal reports to creditors 
and secondary market participants, collecting fees from creditors and 
secondary market participants for services provided, and paying 
appraisers for services performed; and
    (4) Reviewing and verifying the work of appraisers.
    (e) Appraiser panel means a network, list or roster of licensed or 
certified appraisers approved by an AMC to perform appraisals as 
independent contractors for the AMC. Appraisers on an AMC's ``appraiser 
panel'' under this part include both appraisers accepted by the AMC for 
consideration for future appraisal assignments in covered transactions 
or for secondary mortgage market participants in connection with covered 
transactions and appraisers engaged by the AMC to perform one or more 
appraisals in covered transactions or for secondary mortgage market 
participants in connection with covered transactions. An appraiser is an 
independent contractor for purposes of this subpart if the appraiser is 
treated as an independent contractor by the AMC for purposes of Federal 
income taxation.
    (f) Appraisal Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (g) Consumer credit means credit offered or extended to a consumer 
primarily for personal, family, or household purposes.
    (h) Covered transaction means any consumer credit transaction 
secured by the consumer's principal dwelling.
    (i) Creditor means:
    (1) A person who regularly extends consumer credit that is subject 
to a finance charge or is payable by written agreement in more than four 
installments (not including a down payment), and to whom the obligation 
is initially payable, either on the face of the note or contract, or by 
agreement when there is no note or contract.
    (2) A person regularly extends consumer credit if the person 
extended credit (other than credit subject to the requirements of 12 CFR 
1026.32) more than 5 times for transactions secured by a dwelling in the 
preceding calendar year. If a person did not meet these numerical 
standards in the preceding calendar year, the numerical standards

[[Page 185]]

shall be applied to the current calendar year. A person regularly 
extends consumer credit if, in any 12-month period, the person 
originates more than one credit extension that is subject to the 
requirements of 12 CFR 1026.32 or one or more such credit extensions 
through a mortgage broker.
    (j) Dwelling means:
    (1) A residential structure that contains one to four units, whether 
or not that structure is attached to real property. The term includes an 
individual condominium unit, cooperative unit, mobile home, and trailer, 
if it is used as a residence.
    (2) A consumer can have only one ``principal'' dwelling at a time. 
Thus, a vacation or other second home would not be a principal dwelling. 
However, if a consumer buys or builds a new dwelling that will become 
the consumer's principal dwelling within a year or upon the completion 
of construction, the new dwelling is considered the principal dwelling 
for purposes of this section.
    (k) Federally regulated AMC means an AMC that is owned and 
controlled by an insured depository institution, as defined in 12 U.S.C. 
1813 and that is regulated by the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, or the 
Federal Deposit Insurance Corporation.
    (l) Federally related transaction regulations means regulations 
established by the Office of the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, or the National Credit Union Administration, 
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C. 
3341-3343.
    (m) Person means a natural person or an organization, including a 
corporation, partnership, proprietorship, association, cooperative, 
estate, trust, or government unit.
    (n) Secondary mortgage market participant means a guarantor or 
insurer of mortgage-backed securities, or an underwriter or issuer of 
mortgage-backed securities. Secondary mortgage market participant only 
includes an individual investor in a mortgage-backed security if that 
investor also serves in the capacity of a guarantor, insurer, 
underwriter, or issuer for the mortgage-backed security.
    (o) States mean the 50 States and the District of Columbia and the 
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin 
Islands.
    (p) Uniform Standards of Professional Appraisal Practice (USPAP) 
means the appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation.



Sec. 1222.22  Appraiser panel--annual size calculation.

    For purposes of determining whether, within a 12-month period, an 
AMC oversees an appraiser panel of more than 15 State-certified or 
State-licensed appraisers in a State or 25 or more State-certified or 
State-licensed appraisers in two or more States pursuant to 
Sec. 1222.21(c)(1)(iii)--
    (a) An appraiser is deemed part of the AMC's appraiser panel as of 
the earliest date on which the AMC:
    (1) Accepts the appraiser for the AMC's consideration for future 
appraisal assignments in covered transactions or for secondary mortgage 
market participants in connection with covered transactions; or
    (2) Engages the appraiser to perform one or more appraisals on 
behalf of a creditor for a covered transaction or secondary mortgage 
market participant in connection with covered transactions.
    (b) An appraiser who is deemed part of the AMC's appraiser panel 
pursuant to paragraph (a) of this section is deemed to remain on the 
panel until the date on which the AMC:
    (1) Sends written notice to the appraiser removing the appraiser 
from the appraiser panel, with an explanation of its action; or
    (2) Receives written notice from the appraiser asking to be removed 
from the appraiser panel or notice of the death or incapacity of the 
appraiser.
    (c) If an appraiser is removed from an AMC's appraiser panel 
pursuant to paragraph (b) of this section, but the AMC subsequently 
accepts the appraiser for consideration for future assignments or 
engages the appraiser at any time during the twelve months after the 
AMC's removal, the removal

[[Page 186]]

will be deemed not to have occurred, and the appraiser will be deemed to 
have been part of the AMC's appraiser panel without interruption.
    (d) The period for purposes of counting appraisers on an AMC's 
appraiser panel may be the calendar year or a 12-month period 
established by law or rule of each State with which the AMC is required 
to register.



Sec. 1222.23  Appraisal management company registration.

    Each State electing to register AMCs pursuant to paragraph (b)(1) of 
this section must:
    (a) Establish and maintain within the State appraiser certifying and 
licensing agency a licensing program that is subject to the limitations 
set forth in Sec. 1222.24 and with the legal authority and mechanisms 
to:
    (1) Review and approve or deny an AMC's application for initial 
registration;
    (2) Review and renew or review and deny an AMC's registration 
periodically;
    (3) Examine the books and records of an AMC operating in the State 
and require the AMC to submit reports, information, and documents;
    (4) Verify that the appraisers on the AMC's panel hold valid State 
certifications or licenses, as applicable;
    (5) Conduct investigations of AMCs to assess potential violations of 
applicable appraisal-related laws, regulations, or orders;
    (6) Discipline, suspend, terminate, or deny renewal of the 
registration of an AMC that violates applicable appraisal-related laws, 
regulations, or orders; and
    (7) Report an AMC's violation of applicable appraisal-related laws, 
regulations, or orders, as well as disciplinary and enforcement actions 
and other relevant information about an AMC's operations, to the 
Appraisal Subcommittee.
    (b) Impose requirements on AMCs that are not owned and controlled by 
an insured depository institution and not regulated by a Federal 
financial institutions regulatory agency to:
    (1) Register with and be subject to supervision by the State 
appraiser certifying and licensing agency;
    (2) Engage only State-certified or State-licensed appraisers for 
Federally related transactions in conformity with any Federally related 
transaction regulations;
    (3) Establish and comply with processes and controls reasonably 
designed to ensure that the AMC, in engaging an appraiser, selects an 
appraiser who is independent of the transaction and who has the 
requisite education, expertise, and experience necessary to competently 
complete the appraisal assignment for the particular market and property 
type;
    (4) Direct the appraiser to perform the assignment in accordance 
with USPAP; and
    (5) Establish and comply with processes and controls reasonably 
designed to ensure that the AMC conducts its appraisal management 
services in accordance with the requirements of section 129E(a)-(i) of 
the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and regulations 
thereunder.



Sec. 1222.24  Ownership limitations for State-registered appraisal 
management companies.

    (a) Appraiser certification or licensing of owners. (1) An AMC 
subject to State registration pursuant to Sec. 1222.23 shall not be 
registered by a State or included on the AMC National Registry if such 
AMC, in whole or in part, directly or indirectly, is owned by any person 
who has had an appraiser license or certificate refused, denied, 
cancelled, surrendered in lieu of revocation, or revoked in any State 
for a substantive cause, as determined by the appropriate State 
appraiser certifying and licensing agency.
    (2) An AMC subject to State registration pursuant to Sec. 1222.23 is 
not barred by paragraph (a)(1) of this section from being registered by 
a State or included on the AMC National Registry if the license or 
certificate of the appraiser with an ownership interest was not revoked 
for a substantive cause and has been reinstated by the State or States 
in which the appraiser was licensed or certified.
    (b) Good moral character of owners. An AMC shall not be registered 
by a State if any person that owns more than 10 percent of the AMC--

[[Page 187]]

    (1) Is determined by the State appraiser certifying and licensing 
agency not to have good moral character; or
    (2) Fails to submit to a background investigation carried out by the 
State appraiser certifying and licensing agency.



Sec. 1222.25  Requirements for Federally regulated appraisal
management companies.

    (a) Requirements in providing services. To provide appraisal 
management services for a creditor or secondary mortgage market 
participant relating to a covered transaction, a Federally regulated AMC 
must comply with the requirements in Sec. 1222.23(b)(2) through (5).
    (b) Ownership limitations. (1) A Federally regulated AMC shall not 
be included on the AMC National Registry if such AMC, in whole or in 
part, directly or indirectly, is owned by any person who has had an 
appraiser license or certificate refused, denied, cancelled, surrendered 
in lieu of revocation, or revoked in any State for a substantive cause, 
as determined by the ASC.
    (2) A Federally regulated AMC is not barred pursuant to paragraph 
(b)(1) of this section from being included on the AMC National Registry 
if the license or certificate of the appraiser with an ownership 
interest was not revoked for substantive cause and has been reinstated 
by the State or States in which the appraiser was licensed or certified.
    (c) Reporting information for the AMC National Registry. A Federally 
regulated AMC must report to the State or States in which it operates 
the information required to be submitted by the State to the Appraisal 
Subcommittee pursuant to the Appraisal Subcommittee's policies regarding 
the determination of the AMC National Registry fee, including but not 
necessarily limited to the collection of information related to the 
limitations set forth in this section, as applicable.



Sec. 1222.26  Information to be presented to the Appraisal Subcommittee
by participating States.

    Each State electing to register AMCs for purposes of permitting AMCs 
to provide appraisal management services relating to covered 
transactions in the State must submit to the Appraisal Subcommittee the 
information required to be submitted by Appraisal Subcommittee 
regulations or guidance concerning AMCs that operate in the State.

Subparts C-Z [Reserved]



PART 1225_MINIMUM CAPITAL_TEMPORARY INCREASE--Table of Contents



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

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

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



Sec. 1225.1  Purpose.

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



Sec. 1225.2  Definitions.

    For purposes of this part, the term:
    Minimum capital level means the lowest amount of capital meeting any 
regulation or orders issued pursuant to 12 U.S.C. 1426(a)(2) and 12 
U.S.C. 4612, or any similar requirement established for a Federal Home 
Loan Bank by regulation, order or other action.
    Rescission means a removal in whole or in part of an increase in the 
temporary minimum capital level.

[76 FR 11674, Mar. 3, 2011, as amended at 78 FR 2323, Jan. 11, 2013]



Sec. 1225.3  Procedures.

    (a) Information--(1) Information to the regulated entity or 
entities. If the Director determines, based on standards enunciated in 
this part, that a temporary increase in the minimum capital level is 
necessary, the Director will provide notice to the affected regulated 
entity or entities 30 days in advance of the date that the temporary

[[Page 188]]

minimum capital requirement becomes effective, unless the Director 
determines that an exigency exists that does not permit such notice or 
the Director determines a longer time period would be appropriate.
    (2) Information to the Government. The Director shall inform the 
Secretary of the Treasury, the Secretary of Housing and Urban 
Development, and the Chairman of the Securities and Exchange Commission 
of a temporary increase in the minimum capital level contemporaneously 
with informing the affected regulated entity or entities.
    (b) Comments. The affected regulated entity or entities may provide 
comments regarding or objections to the temporary increase to FHFA 
within 15 days or such other period as the Director determines 
appropriate under the circumstances. The Director may determine to 
modify, delay, or rescind the announced temporary increase in response 
to such comments or objection, but no further notice is required for the 
temporary increase to become effective upon the date originally 
determined by the Director.
    (c) Communication. The Director shall transmit notice of a temporary 
increase or rescission of a temporary increase in the minimum capital 
level in writing, using electronic or such other means as appropriate. 
Such communication shall set forth, at a minimum, the bases for the 
Director's determination, the amount of increase or decrease in the 
minimum capital level, the anticipated duration of such increase, and a 
description of the procedures for requesting a rescission of the 
temporary increase in the minimum capital level.
    (d) Written plan. In making a finding under this part, the Director 
may require a written plan to augment capital to be submitted on a 
timely basis to address the methods by which such temporary increase may 
be attained and the time period for reaching the new temporary minimum 
capital level.
    (e) Time frame for review of temporary increase for purpose of 
rescission. (1) Absent an earlier determination to rescind in whole or 
in part a temporary increase in the minimum capital level for a 
regulated entity or entities, the Director shall no less than every 12 
months, consider the need to maintain, modify, or rescind such increase.
    (2) A regulated entity or regulated entities may at any time request 
in writing such review by the Director.



Sec. 1225.4  Standards and factors.

    (a) Standard for imposing a temporary increase. In making a 
determination to increase temporarily a minimum capital requirement for 
a regulated entity or entities, the Director will consider the necessity 
and consistency of such an increase with the prudential regulation and 
the safe and sound operations of a regulated entity. The Director may 
impose a temporary minimum-capital increase if consideration of one or 
more of the following factors leads the Director to the judgment that 
the current minimum capital requirement for a regulated entity is 
insufficient to address the entity's risks:
    (1) Current or anticipated declines in the value of assets held by a 
regulated entity; the amounts of mortgage-backed securities issued or 
guaranteed by the regulated entity; and, its ability to access liquidity 
and funding;
    (2) Credit (including counterparty), market, operational and other 
risks facing a regulated entity, especially where an increase in risks 
is foreseeable and consequential;
    (3) Current or projected declines in the capital held by a regulated 
entity;
    (4) A regulated entity's material non-compliance with regulations, 
written orders, or agreements;
    (5) Housing finance market conditions;
    (6) Level of reserves or retained earnings;
    (7) Initiatives, operations, products, or practices that entail 
heightened risk;
    (8) With respect to a Bank, the ratio of the market value of its 
equity to par value of its capital stock where the market value of 
equity is the value calculated and reported by the Bank as ``market 
value of total capital'' under 12 CFR 932.5(a)(1)(ii)(A); or
    (9) Other conditions as detailed by the Director in the notice 
provided under Sec. 1225.3.
    (b) Standard for rescission of a temporary increase. In making a 
determination to rescind a temporary increase in

[[Page 189]]

the minimum capital level for a regulated entity or entities, whether in 
full or in part, the Director will consider the consistency of such a 
rescission with the prudential regulation and safe and sound operations 
of a regulated entity. The Director will rescind, in full or in part, a 
temporary minimum capital increase if consideration of one or more of 
the following factors leads the Director to the judgment that rescission 
of a temporary minimum-capital increase for a regulated entity is 
appropriate considering the entity's risks:
    (1) Changes to the circumstances or facts that led to the imposition 
of a temporary increase in the minimum capital levels;
    (2) The meeting of targets set for a regulated entity in advance of 
any capital or capital-related plan agreed to by the Director;
    (3) Changed circumstances or facts based on new developments 
occurring since the imposition of the temporary increase in the minimum 
capital level, particularly where the original problems or concerns have 
been successfully addressed or alleviated in whole or in part; or
    (4) Such other standard as the Director may consider as detailed by 
the Director in the notice provided under Sec. 1225.3.



Sec. 1225.5  Guidances.

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



PART 1227_SUSPENDED COUNTERPARTY PROGRAM--Table of Contents



                            Subpart A_General

Sec.
1227.1  Purpose.
1227.2  Definitions.
1227.3  Scope of suspension orders.
1227.4  Regulated entity reports on covered misconduct.
1227.5  Proposed suspension order.
1227.6  Final suspension order.
1227.7  Appeal to the Director.
1227.8  Posting of final suspension orders.
1227.9  Request for reconsideration.
1227.10  Exception to final suspension order in effect.

Subpart B [Reserved]

    Authority: 12 U.S.C. 4513, 4513b, 4514, 4526.

    Source: 78 FR 63012, Oct. 23, 2013, unless otherwise noted.



                            Subpart A_General



Sec. 1227.1  Purpose.

    This part sets forth the procedures FHFA follows under its Suspended 
Counterparty Program, the purpose of which is to protect the safety and 
soundness of the regulated entities. The procedures require the 
regulated entities to submit reports when they become aware that a 
person with whom they have engaged or are engaging in a covered 
transaction within the past three (3) years has engaged in covered 
misconduct. The procedures set forth a process for FHFA to issue 
suspension orders directing the regulated entities to cease or refrain 
from engaging in covered transactions with such persons and any 
affiliates thereof for a specified period of time or permanently. A 
suspension order is not intended to be, and may not be issued as, a form 
of punishment for the suspended person. The procedures include options 
for:
    (a) Appeal of a final suspension order to the Director;
    (b) Request for reconsideration of a final suspension order after 
twelve (12) months have elapsed; and
    (c) Request for an exception to a final suspension order in effect 
in order to engage in a particular covered transaction with the 
suspended person.



Sec. 1227.2  Definitions.

    For purposes of this part:
    Administrative sanction means debarment or suspension imposed by any 
Federal agency, or any similar administrative action that has the effect 
of limiting the ability of a person to do business with a Federal 
agency, including Limited Denials of Participation, Temporary Denials of 
Participation, or settlements of proposed administrative sanctions if 
the terms of the settlement restrict the person's ability to do business 
with the Federal agency in question.
    Affiliate means a party that either controls or is controlled by 
another person, whether directly or indirectly,

[[Page 190]]

including one or more persons that are controlled by the same third 
person.
    Conviction means:
    (1) A judgment or any other determination of guilt of a criminal 
offense by any court of competent jurisdiction, whether entered upon a 
verdict or plea; or
    (2) Any other resolution that is the functional equivalent of a 
judgment of guilt of a criminal offense, including probation before 
judgment and deferred prosecution. A disposition without the 
participation of the court is the functional equivalent of a judgment 
only if it includes an admission of guilt.
    Covered misconduct means:
    (1) Any conviction or administrative sanction within the past three 
(3) years if the basis of such action involved fraud, embezzlement, 
theft, conversion, forgery, bribery, perjury, making false statements or 
claims, tax evasion, obstruction of justice, or any similar offense, in 
each case in connection with a mortgage, mortgage business, mortgage 
securities or other lending product.
    (2) FHFA may impute covered misconduct among affiliates as follows:
    (i) Conduct imputed from an individual to an organization. FHFA may 
impute the covered misconduct of any officer, director, shareholder, 
partner, employee, or other individual associated with an organization, 
to that organization when the conduct occurred in connection with the 
individual's performance of duties for or on behalf of that 
organization, or with the organization's knowledge, approval, or 
acquiescence. The organization's acceptance of the benefits derived from 
the conduct is evidence of knowledge, approval, or acquiescence.
    (ii) Conduct imputed from an organization to an individual, or 
between individuals. FHFA may impute the covered misconduct of any 
organization to an individual, or from one individual to another 
individual, if the individual to whom the conduct is imputed either 
participated in, had knowledge of, or had reason to know of the conduct.
    (iii) Conduct imputed from one organization to another organization. 
FHFA may impute the covered misconduct of one organization to another 
organization when the conduct occurred in connection with a partnership, 
joint venture, joint application, association, or similar arrangement, 
or when the organization to whom the conduct is imputed has the power to 
direct, manage, control, or influence the activities of the organization 
responsible for the conduct. Acceptance of the benefits derived from the 
conduct is evidence of knowledge, approval, or acquiescence and hence is 
a basis for imputation of conduct.
    Covered transaction means a contract, agreement, or financial or 
business relationship between a regulated entity and a person and any 
affiliates thereof.
    Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, organization, or other entity.
    Respondent means a person and any affiliate thereof that is the 
subject of a proposed or final suspension order.
    Suspending official means the Director, or any other FHFA official 
with delegated authority to sign proposed and final suspension orders 
and their accompanying notices.
    Suspension means an action taken by a suspending official pursuant 
to a final suspension order that requires a regulated entity to cease or 
refrain from engaging in any covered transactions with a person and any 
affiliates thereof for a specified period of time or permanently.



Sec. 1227.3  Scope of suspension orders.

    (a) General. A suspending official may issue a final suspension 
order to the regulated entities directing them to cease or refrain from 
engaging in any covered transactions with a particular person and any 
affiliates thereof for a specified period of time or permanently, 
pursuant to the requirements of this part.
    (b) No effect on other actions by FHFA. Nothing in this part shall 
limit the authority of FHFA to pursue any other regulatory or 
supervisory action with respect to any regulated entity or any other 
person and any affiliates thereof, whether instead of or in addition to 
any action taken under this part.
    (c) No effect on other actions by a regulated entity. Nothing in 
this part shall limit the authority of any regulated

[[Page 191]]

entity to take any action it determines appropriate to address risks 
from any person and any affiliates thereof with which it engages in 
covered transactions.
    (d) No effect on residential mortgage loans secured by respondent's 
own personal or household residence. A final suspension order issued 
pursuant to this part shall have no effect on any transaction involving 
a residential mortgage loan if the loan is secured by the respondent's 
own personal or household residence.

[78 FR 63012, Oct. 23, 2013, as amended at 80 FR 79680, Dec. 23, 2015]



Sec. 1227.4  Regulated entity reports on covered misconduct.

    (a) General. A regulated entity shall submit a report to FHFA when 
the regulated entity becomes aware that a person or any affiliates 
thereof with which the regulated entity is engaging or has engaged in a 
covered transaction within the past three (3) years has engaged in 
covered misconduct. A regulated entity is aware of covered misconduct 
when the regulated entity has reliable information that such misconduct 
has occurred.
    (b) Content of reports. Each report on covered misconduct shall:
    (1) Include sufficient information for FHFA to identify the person 
or persons that are the subject of the report, as well as any affiliates 
thereof if such affiliates are known to the regulated entity;
    (2) Describe the nature and extent of any covered transaction that 
the regulated entity has or had with any persons and any affiliates 
thereof identified in the report; and
    (3) Include a description of the covered misconduct, including the 
date of the covered misconduct, documents evidencing the covered 
misconduct if in the possession of the regulated entity, and any other 
relevant information that the regulated entity chooses to submit.
    (c) Timing of reports. (1) A regulated entity shall submit a report 
to FHFA on covered misconduct no later than thirty (30) calendar 
daysafter the regulated entity becomes aware of such misconduct, even if 
the regulated entity lacks sufficient information to submit a complete 
report.
    (2) A regulated entity may supplement the submission of any covered 
misconduct report by submitting additional relevant information to FHFA 
at any time.

[78 FR 63012, Oct. 23, 2013, as amended at 80 FR 79680, Dec. 23, 2015]



Sec. 1227.5  Proposed suspension order.

    (a) A suspending official may base a proposed suspension order upon 
evidence of covered misconduct from any of the following sources:
    (1) A required report submitted by a regulated entity;
    (2) A referral submitted by FHFA's Office of Inspector General; or
    (3) Any other source of information.
    (b) Grounds for issuance. A suspending official may issue a proposed 
suspension order with respect to a particular person and any affiliates 
thereof if the suspending official determines that there is evidence 
that:
    (1) The person or any affiliates thereof has engaged in covered 
misconduct, which evidence may include copies of any order or other 
documents documenting a conviction or administrative sanction for such 
conduct; and
    (2) The covered misconduct is of a type that would be likely to 
cause significant financial or reputational harm to a regulated entity 
or otherwise threaten the safe and sound operation of a regulated 
entity.
    (c) Notice required. If a suspending official determines that 
grounds exist under paragraph (b) of this section for issuance of a 
proposed suspension order with respect to a particular person and any 
affiliates thereof, the suspending official may issue a written notice 
of proposed suspension to the person and any affiliates thereof, and 
shall provide a copy of such notice to the regulated entity and to all 
of the other regulated entities.
    (d) Content of notice. The notice of proposed suspension shall 
include:
    (1) The time period during which the suspension will apply;
    (2) A statement of the suspending official's proposed suspension 
determination and supporting grounds;
    (3) The proposed suspension order;

[[Page 192]]

    (4) Instructions on how to respond; and
    (5) The date by which any response must be received, which must be 
at least thirty (30) calendar days after the date on which the notice is 
sent.
    (e) Method of sending notice. The suspending official shall send the 
notice of proposed suspension to the last known street address, 
facsimile number, or email address of:
    (1) The person, the person's counsel, or an agent for service of 
process; and
    (2) Any affiliates of the person, the counsel for those affiliates, 
or an agent for service of process, if suspension is also being proposed 
for such affiliates.
    (f) Response from respondent--(1) Timing of response. Any response 
from the affected person and any affiliates thereof must be submitted to 
FHFA within the time period specified in the notice. If a response is 
submitted after the specified deadline, the suspending official may 
consider or disregard such response, in the suspending official's 
discretion.
    (2) Content of response. The response shall identify:
    (i) Any information and argument in opposition to the proposed 
suspension;
    (ii) Any specific facts that contradict the statements contained in 
the notice of proposed suspension. A general denial is insufficient to 
raise a genuine dispute over facts material to the suspension;
    (iii) All criminal and civil proceedings not included in the notice 
of proposed suspension that grew out of facts relevant to the bases for 
the proposed suspension stated in such notice;
    (iv) All existing, proposed, or prior exclusions under regulations 
implementing Executive Order 12549 and all similar actions taken by 
Federal, state, or local agencies, including administrative agreements 
that affect only those agencies; and
    (v) The names and identifying information for any affiliates of the 
affected person.
    (g) Response from regulated entities--(1) Timing of response. Any 
response from the regulated entities must be submitted to FHFA within 
the time period specified in the notice. If a response is submitted 
after the specified deadline, the suspending official may consider or 
disregard such response, in the suspending official's discretion.
    (2) Content of response. (i) The response shall include:
    (A) Any information that would indicate that suspension of the 
person in question could reasonably be expected to have a negative 
financial impact or other significant adverse effect on the financial or 
operating performance of the regulated entity; and
    (B) Any existing contractual relationship with the person in 
question for which the regulated entity might request a limitation or 
qualification.
    (ii) The response may include any other information that the 
regulated entity believes would be relevant to the proposed suspension 
determination, including but not limited to:
    (A) Any information related to the factual basis for the proposed 
suspension;
    (B) Any information about other known affiliates of the person;
    (C) Recommendations for alternatives to suspension that could 
mitigate the risks presented by engaging in covered transactions with 
the respondent; and
    (D) Recommendations for limitations or qualifications on the scope 
of the proposed suspension.

[78 FR 63012, Oct. 23, 2013, as amended at 80 FR 79680, Dec. 23, 2015]



Sec. 1227.6  Final suspension order.

    (a) Grounds for issuance. A suspending official may issue a final 
suspension order with respect to a respondent proposed for suspension 
if, based solely on the written record, the suspending official 
determines that there is adequate evidence that:
    (1) The respondent engaged in covered misconduct; and
    (2) The covered misconduct is of a type that would be likely to 
cause significant financial or reputational harm to a regulated entity 
or otherwise threaten the safe and sound operation of a regulated 
entity.
    (b) Written record. The written record shall include any material 
submitted by the respondent and any material submitted by the regulated 
entities, as well as any other material that was considered by the 
suspending official in

[[Page 193]]

making the final determination, including any information related to the 
factors in paragraph (c) of this section. FHFA may independently obtain 
information relevant to the suspension determination for inclusion in 
the written record.
    (c) Factors that may be considered by the suspending official. In 
determining whether or not to issue a final suspension order with 
respect to the respondent where the grounds for suspension are 
satisfied, the suspending official may also consider any factors that 
the suspending official determines may be relevant in light of the 
circumstances of the particular case, including but not limited to:
    (1) The actual or potential harm or impact that results or may 
result from the covered misconduct;
    (2) The frequency of incidents or duration of the covered 
misconduct;
    (3) Whether there is a pattern of prior covered misconduct;
    (4) Whether and to what extent the respondent planned, initiated, or 
carried out the covered misconduct;
    (5) Whether the respondent has accepted responsibility for the 
covered misconduct and recognizes its seriousness;
    (6) Whether the respondent has paid or agreed to pay all criminal, 
civil and administrative penalties or liabilities for the covered 
misconduct, including any investigative or administrative costs incurred 
by the government, and has made or agreed to make full restitution;
    (7) Whether the covered misconduct was pervasive within the 
respondent's organization;
    (8) The kind of positions held by the individuals involved in the 
covered misconduct;
    (9) Whether the respondent's organization took appropriate 
corrective action or remedial measures, such as establishing ethics 
training and implementing programs to prevent recurrence of the covered 
misconduct;
    (10) Whether the respondent brought the covered misconduct to the 
attention of the appropriate government agency in a timely manner;
    (11) Whether the respondent has fully investigated the circumstances 
surrounding the covered misconduct and, if so, made the result of the 
investigation available to the suspending official;
    (12) Whether the respondent had effective standards of conduct and 
internal control systems in place at the time the covered misconduct 
occurred;
    (13) Whether the respondent has taken appropriate disciplinary 
action against the individuals responsible for the covered misconduct; 
or
    (14) Whether the respondent has had adequate time to eliminate the 
circumstances within the organization that led to the covered 
misconduct.
    (d) Deadline for decision. The suspending official shall make a 
determination on whether to issue a final suspension order with respect 
to the respondent within thirty (30) calendar days of the deadline given 
for the respondent's response in the notice of proposed suspension, 
unless the suspending official notifies the respondent in writing that 
additional time is needed.
    (e) Determination not to issue final suspension order. If the 
suspending official determines that suspension is not appropriate with 
respect to the respondent, the suspending official shall provide prompt 
written notice of that determination to the respondent, the regulated 
entity, and all of the other regulated entities.
    (f) Issuance of final suspension order--(1) General. If the 
suspending official makes a final determination to suspend the 
respondent, the suspending official shall issue a final suspension order 
to each regulated entity regarding the respondent.
    (2) Content of final suspension order. A final suspension order 
shall include:
    (i) A statement of the suspension determination and supporting 
grounds, including a discussion of any relevant information submitted by 
the respondent or regulated entities;
    (ii) Identification of each person and any affiliates thereof to 
which the suspension applies;
    (iii) A description of the scope of the suspension, including the 
time period to which the suspension applies; and
    (iv) A description of any limitations or qualifications that apply 
to the scope of the suspension, including modification of the conduct of 
covered

[[Page 194]]

transactions that may be engaged in with the respondent.
    (3) Notice to respondent required. The suspending official shall 
provide prompt written notice to the respondent of the final suspension 
order issued to the regulated entities with respect to such respondent.
    (4) Content of notice. The notice of a final suspension order shall 
include:
    (i) A statement of the suspension determination and supporting 
grounds, including a discussion of any relevant information submitted by 
the respondent; and
    (ii) A copy of the final suspension order.
    (g) Effective date. A final suspension order shall take effect on 
the date specified in the order, which shall be at least forty-five (45) 
calendar days after the date on which the order is signed by the 
suspending official.

[78 FR 63012, Oct. 23, 2013, as amended at 80 FR 79680, Dec. 23, 2015]



Sec. 1227.7  Appeal to the Director.

    (a) Opportunity to appeal. A respondent may submit an appeal to the 
Director within thirty (30) calendar days after the date a final 
suspension order has been signed. If the Director signed the final 
suspension order as the suspension official, the respondent has no 
appeal right under this section. The appeal shall be accompanied by a 
written brief specifically identifying the respondent's objections to 
the final suspension order and the supporting reasons for such 
objections.
    (b) Decision on appeal. The Director shall issue a written final 
decision on an appeal of a final suspension order based on the record 
submitted by the suspending official, together with any material 
submitted with an appeal. The Director may affirm, vacate or amend the 
suspension, or remand to the suspending official for further 
proceedings, in the discretion of the Director. If the Director does not 
take action on an appeal prior to the effective date of the order, the 
order shall take effect as if it had been affirmed by the Director, on 
the date specified in the order.
    (c) Final agency action. The written final decision of the Director 
on an appeal of a final suspension order shall be the final agency 
action. If the Director does not take action on an appeal prior to the 
effective date of the order, the order shall be the final agency action.
    (d) Exhaustion of administrative remedies. In order to fulfill the 
requirement to exhaust administrative remedies, a respondent must appeal 
a final suspension order to the Director as provided in this section 
prior to seeking judicial review of such order.



Sec. 1227.8  Posting of final suspension orders.

    (a) Required posting. FHFA will publish on its Web site all final 
suspension orders issued by FHFA on the effective date of the order.
    (b) Content of posting. Each posting on FHFA's Web site shall 
include:
    (1) The full name (where available) of each suspended person and any 
affiliates thereof subject to the final suspension order, in 
alphabetical order;
    (2) A description of the time period for which the suspension 
applies; and
    (3) A copy of each final suspension order applicable to the person 
and any affiliates thereof.
    (c) Removal of names. FHFA will remove from the Web site all 
references to the suspension of a person and any affiliates thereof at 
such time as the suspension expires or is otherwise vacated.



Sec. 1227.9  Request for reconsideration.

    (a) Time period for request. A suspended person may submit a request 
to the Director for reconsideration of a final suspension order at any 
time after the expiration of a twelve (12)-month period from the date 
the order took effect, but no such request may be made within twelve 
(12) months of a previous request for reconsideration from such person.
    (b) Content of request. A request for reconsideration must be 
submitted in writing and state the specific grounds for relief from the 
final suspension order, which shall be limited to any new information 
that may indicate that engaging in covered transactions with a regulated 
entity would no longer present a risk of significant financial or 
reputational harm or threat to the safe and sound operation of a 
regulated entity.

[[Page 195]]

    (c) Decision on request. The Director may approve a request for 
reconsideration if the Director determines that engaging in covered 
transactions with a regulated entity is no longer likely to result in 
significant financial or reputational harm to a regulated entity or 
otherwise threaten the safe and sound operation of a regulated entity. 
The Director will inform the requestor of the decision on the request 
for reconsideration in a timely manner. A decision on a request for 
reconsideration shall not constitute an appealable order.



Sec. 1227.10  Exception to final suspension order in effect.

    (a) Request for exception. A regulated entity to which a final 
suspension order in effect is applicable may request an exception from 
such order to allow it to engage in a particular covered transaction 
with a suspended person and any affiliates thereof. Any such request 
shall clearly state any reasons supporting an exception, as well as any 
steps the regulated entity will take to mitigate any risks presented by 
the exception. An exception may not be requested by a suspended person 
or any affiliates thereof.
    (b) Decision on exception. A suspending official may approve an 
exception from a final suspension order in effect to permit a regulated 
entity to engage in a particular covered transaction with a suspended 
person and any affiliates thereof for reasons consistent with those for 
which the suspending official may limit or qualify the scope or effect 
of a final suspension order under Sec. 1227.6(f)(2)(iv) of this part. 
The decision on a request for an exception shall not constitute an 
appealable order.
    (c) Notice required. FHFA shall provide written notice in a timely 
manner to the regulated entity, the suspended person and any affiliates 
thereof, and the other regulated entities of any exception approved for 
a particular covered transaction.

Subpart B [Reserved]



PART 1228_RESTRICTIONS ON THE ACQUISITION OF, OR TAKING SECURITY
INTERESTS IN, MORTGAGES ON PROPERTIES ENCUMBERED BY CERTAIN PRIVATE
TRANSFER FEE COVENANTS AND RELATED SECURITIES--Table of Contents



Sec.
1228.1  Definitions.
1228.2  Restrictions.
1228.3  Prospective application and effective date.
1228.4  State restrictions unaffected.

    Authority: 12 U.S.C. 4511, 4513, 4526, 4616, 4617, 4631.

    Source: 77 FR 15574, Mar. 16, 2012, unless otherwise noted.



Sec. 1228.1  Definitions.

    For the purposes of this part, the following definitions apply:
    Adjacent or contiguous property means property that borders the 
burdened community, provided that such adjacent or contiguous property 
may be separated from the burdened community by public right of way.
    Burdened community means a community comprising all of the parcels 
or interests in real property encumbered by a single private transfer 
fee covenant or a series of separate private transfer fee covenants that 
require payment of private transfer fees to the same entity to be used 
for the same purposes.
    Covered association means a nonprofit mandatory membership 
organization comprising owners of homes, condominiums, cooperatives, 
manufactured homes, or any interest in real property, created pursuant 
to a declaration, covenant or other applicable law; or an organization 
described in section 501(c)(3) or section 501(c)(4) of the Internal 
Revenue Code. A covered association may include master and sub-
associations, each of which is also a covered association.
    Direct benefit means that the proceeds of a private transfer fee are 
used exclusively to support maintenance and improvements to encumbered 
properties, and acquisition, improvement, administration, and 
maintenance of property owned by the covered association of which the 
owners of the burdened property are members and used primarily

[[Page 196]]

for their benefit. Direct benefit also includes cultural, educational, 
charitable, recreational, environmental, conservation or other similar 
activities that--
    (1) Are conducted in or protect the burdened community or adjacent 
or contiguous property, or
    (2) Are conducted on other property that is used primarily by 
residents of the burdened community.
    Excepted transfer fee covenant means a private transfer fee covenant 
that requires payment of a private transfer fee to a covered association 
and limits the use of such transfer fees exclusively to purposes which 
provide a direct benefit to the real property encumbered by the private 
transfer fee covenants.
    Private transfer fee means a transfer fee, including a charge or 
payment, imposed by a covenant, restriction, or other similar document 
and required to be paid in connection with or as a result of a transfer 
of title to real estate, and payable on a continuing basis each time a 
property is transferred (except for transfers specifically excepted) for 
a period of time or indefinitely. A private transfer fee does not 
include fees, charges, payments, or other obligations--
    (1) Imposed by or payable to the Federal government or a State or 
local government; or
    (2) That defray actual costs of the transfer of the property, 
including transfer of membership in the relevant covered association.
    Private transfer fee covenant means a covenant that:
    (1) Purports to run with the land or to bind current owners of, and 
successors in title to, such real property; and
    (2) Obligates a transferee or transferor of all or part of the 
property to pay a private transfer fee upon transfer of an interest in 
all or part of the property, or in consideration for permitting such 
transfer.
    Transfer means, with respect to real property, the sale, gift, 
grant, conveyance, assignment, inheritance, or other transfer of an 
interest in the real property.

[77 FR 15574, Mar. 16, 2012, as amended at 78 FR 2323, Jan. 11, 2013]



Sec. 1228.2  Restrictions.

    The regulated entities shall not purchase, invest or otherwise deal 
in any mortgages on properties encumbered by private transfer fee 
covenants, securities backed by such mortgages, or securities backed by 
the income stream from such covenants, unless such covenants are 
excepted transfer fee covenants. The Federal Home Loan Banks shall not 
accept such mortgages or securities as collateral, unless such covenants 
are excepted transfer fee covenants.



Sec. 1228.3  Prospective application and effective date.

    This part shall apply only to mortgages on properties encumbered by 
private transfer fee covenants if those covenants are created on or 
after February 8, 2011. This part shall not apply to mortgages on 
properties encumbered by private transfer fee covenants if those 
covenants are created pursuant to an agreement entered into before 
February 8, 2011, applicable to land that is identified in the 
agreement, and the agreement was in settlement of litigation or approved 
by a government agency or body. This part also applies to securities 
backed by mortgages to which this part applies, and to securities issued 
after February 8, 2011, backed by revenue from private transfer fees 
regardless of when the covenants were created. The regulated entities 
shall comply with this part not later July 16, 2012.



Sec. 1228.4  State restrictions unaffected.

    This part does not affect state restrictions or requirements with 
respect to private transfer fee covenants, such as with respect to 
validity, enforceability, disclosures, or duration.



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



                    Subpart A_Federal Home Loan Banks

Sec.
1229.1  Definitions.
1229.2  Determination of a Bank's capital classification.
1229.3  Criteria for a Bank's capital classification.

[[Page 197]]

1229.4  Reclassification by the Director.
1229.5  Capital distributions for adequately capitalized Banks.
1229.6  Mandatory actions applicable to undercapitalized Banks.
1229.7  Discretionary actions applicable to undercapitalized Banks.
1229.8  Mandatory actions applicable to significantly undercapitalized 
          Banks.
1229.9  Discretionary actions applicable to significantly 
          undercapitalized Banks.
1229.10  Actions applicable to critically undercapitalized Banks.
1229.11  Capital restoration plans.
1229.12  Procedures related to capital classification and other actions.

                          Subpart B_Enterprises

1229.13  Definitions.

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

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



                    Subpart A_Federal Home Loan Banks



Sec. 1229.1  Definitions.

    For purposes of this subpart:
    Capital distribution means any payment by the Bank, whether in cash 
or stock, of a dividend, any return of capital or retained earnings by 
the Bank to its shareholders, any transaction in which the Bank redeems 
or repurchases capital stock, or any transaction in which the Bank 
redeems, repurchases or retires any other instrument which is included 
in the calculation of its total capital.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(i) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(i)) and related 
regulations.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(ii) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(ii)) and related 
regulations.
    Critical capital level for a Bank means an amount equal to 2 percent 
of the Bank's total assets.
    Executive officer means for a Bank any of the following persons, 
provided that the Director may from time to time add or remove persons, 
positions, or functions to or from the list (individually for one or 
more Banks or jointly for all the Banks) by communication to the 
affected Banks:
    (1) Executive officers about whom the Banks must publicly disclose 
detailed compensation information under Regulation S-K, 17 CFR part 229, 
issued by the Securities and Exchange Commission;
    (2) Any other executive who occupies one of the following positions 
or is in charge of one of the following subject areas:
    (i) Overall Bank operations, such as the Chief Operating Officer or 
an equivalent employee;
    (ii) Chief Financial Officer or an equivalent employee;
    (iii) Chief Administrative Officer or an equivalent employee;
    (iv) Chief Risk Officer or an equivalent employee;
    (v) Asset and Liability Management officer, or an equivalent 
employee;
    (vi) Chief Accounting Officer or an equivalent employee;
    (vii) General Counsel or an equivalent employee;
    (viii) Strategic Planning officer or an equivalent employee;
    (ix) Internal Audit officer or an equivalent employee; or
    (x) Chief Information Officer or an equivalent employee; or
    (3) Any other individual, without regard to title:
    (i) Who is in charge of a principal business unit, division or 
function; or
    (ii) Who reports directly to the Bank's chairman of the board of 
directors, vice chairman of the board of directors, president or chief 
operating officer.
    Minimum capital requirement means the leverage and total capital 
requirements established for a Bank under section 6(a)(2) of the Bank 
Act (12 U.S.C. 1426(a)(2)) and related regulations, as such requirements 
may be revised by the Director, or any similar requirement established 
for a Bank by regulation, order, written agreement or other action.
    New business activity when used in this subpart has the same meaning 
set forth in Sec. 1272.1 of this chapter.

[[Page 198]]

    Permanent capital means the retained earnings of a Bank, determined 
in accordance with generally accepted accounting principles in the 
United States (GAAP), plus the amount paid-in for the Bank's Class B 
stock.
    Risk-based capital requirement means any capital requirement 
established for a Bank under section 6(a)(3) of the Bank Act (12 U.S.C. 
1426(a)(3)) and related regulations that ensures a Bank will hold 
sufficient permanent capital and reserves to support the risks that 
arise from its operations.
    Tangible equity means, for a Bank, the paid-in value of its 
outstanding capital stock plus its retained earnings calculated in 
accordance with generally accepted accounting principles in the United 
States (GAAP) less the amount of any assets that would be intangible 
assets under GAAP.
    Total capital means the sum of the Bank's permanent capital, the 
amount paid-in for its Class A stock, the amount of any general 
allowances for losses, and the amount of any other instruments 
identified in a Bank's capital plan that the Director has determined to 
be available to absorb losses incurred by such Bank.

[74 FR 5604, Jan. 30, 2009, as amended at 78 FR 2323, Jan. 11, 2013; 81 
FR 76295, Nov. 2, 2016]



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

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



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

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

[[Page 199]]

shall be considered critically undercapitalized if, at the time of the 
determination under Sec. 1229.2(a) of this subpart, the total capital 
held by the Bank is less than or equal to the critical capital level for 
a Bank as defined under Sec. 1229.1 of this subpart.



Sec. 1229.4  Reclassification by the Director.

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



Sec. 1229.5  Capital distributions for adequately capitalized Banks.

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

[[Page 200]]



Sec. 1229.6  Mandatory actions applicable to undercapitalized Banks.

    (a) Mandatory Actions by the Bank. A Bank that is classified as 
undercapitalized shall:
    (1) Submit to the Director for approval a capital restoration plan 
that complies with the requirements and procedures established by 
Sec. 1229.11 of this part and receive approval from the Director for 
such plan;
    (2) Fulfill all terms, conditions and obligations contained in the 
capital restoration plan as approved by the Director;
    (3) Not make any capital distribution unless:
    (i) The distribution meets the requirements of Sec. 1229.5(b) and 
paragraphs (a)(3)(ii) and (iii) of this section and the Director has 
provided permission for such distribution as set forth in 
Sec. 1229.5(b);
    (ii) The capital distribution will not result in the Bank being 
reclassified as significantly undercapitalized or critically 
undercapitalized; and
    (iii) The capital distribution does not violate any restriction on 
the redemption or repurchase of capital stock or the declaration or 
payment of a dividend set forth in section 6 of the Bank Act (12 U.S.C. 
1426) or in any other applicable regulation;
    (4) Not permit its average total assets in any calendar quarter to 
exceed its average total assets during the preceding calendar quarter, 
where such average is calculated based on the total amount of assets 
held by the Bank for each day in a quarter, unless:
    (i) The Director has approved the Bank's capital restoration plan; 
and
    (ii) The Director determines that:
    (A) The increase in total assets is consistent with the approved 
capital restoration plan; and
    (B) The ratio of tangible equity to the Bank's total assets is 
increasing at a rate sufficient to enable the Bank to become adequately 
capitalized within a reasonable time and consistent with any schedule 
established in the capital restoration plan; and
    (5) Not acquire, directly or indirectly, an equity interest in any 
operating entity (other than as necessary to enforce a security interest 
granted to the Bank) nor engage in any new business activity unless:
    (i) The Director has approved the Bank's capital restoration plan, 
the Bank is implementing the capital restoration plan and the Director 
determines that proposed acquisition or activity will further 
achievement of the goals set forth in that plan; or
    (ii) The Director determines that the proposed acquisition or 
activity will be consistent with the safe and sound operation of the 
Bank and will further the Bank's compliance with its risk-based and 
minimum capital requirements in a reasonable period of time.
    (b) Mandatory reclassification by the Director. The Director shall 
reclassify an undercapitalized Bank as significantly undercapitalized 
if:
    (1) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of this subpart and within 
the time frame required.
    (2) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (3) The Director determines that the Bank has failed in any material 
respect to comply with its approved capital restoration plan or fulfill 
any schedule for action established by that plan.
    (c) Monitoring. The Director shall monitor the condition of any 
undercapitalized Bank and monitor the Bank's compliance with the capital 
restoration plan and any restrictions imposed under this section or 
Sec. 1229.7 of this subpart. As part of this process, the Director shall 
review the capital restoration plan and any restrictions or requirements 
imposed on the undercapitalized Bank to determine whether such plan, 
restrictions or requirements are consistent with the safe and sound 
operation of the Bank and will further the Bank's compliance with its 
risk-based and minimum capital requirements in a reasonable period of 
time.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009; 81 
FR 76295, Nov. 2, 2016]



Sec. 1229.7  Discretionary actions applicable to undercapitalized Banks.

    (a) Discretionary safeguards. The Director may take any action with 
regard to an undercapitalized Bank that

[[Page 201]]

may be taken with regard to a significantly undercapitalized Bank under 
section 1366 of the Safety and Soundness Act (12 U.S.C. 4616) or 
Sec. 1229.8 or Sec. 1229.9 if the Director determines that such action 
is necessary to assure the safe and sound operation of the Bank and the 
Bank's compliance with its risk-based and minimum capital requirements 
in a reasonable period of time.
    (b) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such action in 
accordance with Sec. 1229.12 of this subpart.

[74 FR 5604, Jan. 30, 2009, as amended at 81 FR 76295, Nov. 2, 2016]



Sec. 1229.8  Mandatory actions applicable to significantly 
undercapitalized Banks.

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

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



Sec. 1229.9  Discretionary actions applicable to significantly
undercapitalized Banks.

    (a) Actions by the Director. The Director shall carry out this 
section by taking, at any time, one or more of the following actions 
with respect to a significantly undercapitalized Bank:
    (1) Limit the increase in any obligations or class of obligations of 
the Bank, including any off-balance sheet obligations. Such limitation 
may be stated in an absolute dollar amount, as a percentage of current 
obligations or in any other form chosen by the Director;
    (2) Reduce the amount of any obligations or class of obligations 
held by the Bank, including any off-balance sheet obligations. Such 
reduction may be stated in an absolute dollar amount, as a percentage of 
current obligations or in any other form chosen by the Director;

[[Page 202]]

    (3) Limit the increase in, or prohibit the growth of any asset or 
class of assets held by the Bank. Such limitation may be stated in an 
absolute dollar amount, as a percentage of current assets or in any 
other form chosen by the Director;
    (4) Reduce the amount of any asset or class of asset held by the 
Bank. Such reduction may be stated in an absolute dollar amount, as a 
percentage of current obligations or in any other form chosen by the 
Director;
    (5) Acquire new capital in the form and amount determined by the 
Director, which specifically may include requiring a Bank to increase 
its level of retained earnings;
    (6) Modify, limit or terminate any activity of the Bank that the 
Director determines creates excessive risk;
    (7) Take steps to improve the management at the Bank by:
    (i) Ordering a new election for the Bank's board of directors in 
accordance with procedures established by the Director;
    (ii) Dismissing particular directors or executive officers, in 
accordance with section 1366(b)(5)(B) of the Safety and Soundness Act 
(12 U.S.C. 4616(b)(5)(B)), who held office for more than 180 days 
immediately prior to the date on which the Bank became undercapitalized, 
provided further that such dismissals shall not be considered removal 
pursuant to an enforcement action under section 1377 of the Safety and 
Soundness Act (12 U.S.C. 4636a) and shall not be subject to the 
requirements necessary to remove an officer or director under that 
section; or
    (iii) Ordering the Bank to hire qualified executive officers, the 
hiring of whom, prior to employment by the Bank and at of the option of 
the Director, may be subject to review and approval by the Director; or
    (8)(i) Reclassify a significantly undercapitalized Bank as 
critically undercapitalized if:
    (A) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of this part and within 
the time frame required;
    (B) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (C) The Director determines that the Bank has failed to make 
reasonable, good faith efforts to comply with its approved capital 
restoration plan and fulfill any schedule established by that plan.
    (ii) Subject to paragraph (c) of this section, the Director may 
reclassify a significantly undercapitalized Bank under paragraph 
(a)(8)(i) of this section at any time the grounds for such action exist, 
notwithstanding the fact that such grounds had formed the basis on which 
the Director reclassified a Bank from undercapitalized to significantly 
undercapitalized.
    (b) Additional safeguards. The Director may require a significantly 
undercapitalized Bank to take any other action not specifically listed 
in this section if the Director determines such action will help ensure 
the safe and sound operation of the Bank and the Bank's compliance with 
its risk-based and minimum capital requirements in a reasonable period 
of time more than any action specifically authorized under paragraph (a) 
of this section.
    (c) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such action in 
accordance with Sec. 1229.12 of this subpart.



Sec. 1229.10  Actions applicable to critically undercapitalized Banks.

    (a) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank at any time after the 
Director determines that the Bank is, or the Director otherwise 
exercises authority to reclassify the Bank as, critically 
undercapitalized.
    (b) Periodic determination--(1) Determination. Not later than 30 
calendar days after the Director first determines that a Bank is, or the 
Director otherwise exercises authority to reclassify

[[Page 203]]

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

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



Sec. 1229.11  Capital restoration plans.

    (a) Contents. Each capital restoration plan submitted by a Bank 
shall set forth a plan to restore its permanent and total capital to 
levels sufficient to fulfill its risk-based and minimum capital 
requirements within a reasonable period of time. Such plan must be 
feasible given general market conditions and the conditions of the Bank 
and, at a minimum, shall:
    (1) Describe the actions the Bank will take, including any changes 
that the Bank will make to member stock purchase requirements, to assure 
that it will become adequately capitalized within the meaning of 
Sec. 1229.3(a) of this subpart and, if appropriate, to resolve any 
structural or long term causes for the capital deficiency;
    (2) Specify the level of permanent and total capital the Bank will 
achieve and maintain and provide quarterly projections indicating how 
each component of total and permanent capital and the major components 
of income, assets and liabilities are expected to change over the term 
of the plan;
    (3) Specify the types and levels of activities in which the Bank 
will engage during the term of the plan, including any new business 
activities that it intends to begin during such term;
    (4) Describe any other actions the Bank intends to take to comply 
with any other requirements imposed on it under this subpart A of part 
1229;
    (5) Provide a schedule which sets forth dates for meeting specific 
goals and benchmarks and taking other actions described in the proposed 
capital restoration plan, including setting forth a schedule for it to 
restore its permanent and total capital to levels necessary for meeting 
its risk-based

[[Page 204]]

and minimum capital requirements; and
    (6) Address such other items that the Director shall provide in 
writing in advance of such submission.
    (b) Deadline for submission. A Bank must submit a proposed capital 
restoration plan no later than 15 business-days after it receives 
written notification that such a plan is required either because the 
notice specifically states that the Director has required the submission 
of a plan or the notice indicates that the Bank's capital classification 
or reclassification is to a category for which a capital restoration 
plan is a mandatory action required of the Bank. The Director may extend 
this deadline if the Director determines that such extension is 
necessary. Any such extension shall be in writing and provide a specific 
date by which the Bank must submit its proposed capital restoration 
plan.
    (c) Review of the plan by the Director. The Director shall have 30 
calendar days from the date the Bank submits a proposed capital 
restoration plan to approve or disapprove the plan. The Director may 
extend the period for consideration of a capital restoration plan for a 
single 30 calendar day period by providing the Bank with written 
notification that the decision deadline has been extended. The Director 
shall provide the Bank with written notification of the decision to 
approve or not approve a proposed capital restoration plan. If the 
Director does not approve the capital restoration plan, the written 
notification of such decision shall provide the reasons for the 
disapproval.
    (d) Resubmission. If the Director does not approve the Bank's 
proposed capital restoration plan, the Bank shall submit a new capital 
restoration plan acceptable to the Director within 30 calendar days of 
the date that the Bank was notified of the disapproval. The Director may 
extend the period for the Bank's submission of a new acceptable capital 
restoration plan upon a determination that such extension is in the 
public interest. The Director shall provide the Bank written notice of 
the extension and include in such notice the date by which the Bank must 
submit an acceptable plan.
    (e) Amendments. The Director, in his or her sole discretion, may 
approve amendments to an approved capital restoration plan if, after 
consideration of changes in conditions of the Bank, changes in market 
conditions and other relevant factors, the Director determines that such 
amendments are consistent with the restoration of the Bank's capital to 
levels necessary to meet its risk-based and minimum capital requirements 
in a reasonable period of time and with the safe and sound operations of 
the Bank.
    (f) Effectiveness of provisions. A Bank is obligated to implement 
and fulfill all provisions of an approved capital restoration plan. 
Unless expressly addressed by the terms of the capital restoration plan, 
a Bank remains bound by each and every obligation and requirement set 
forth in the approved capital restoration plan until such requirement or 
obligation is amended under paragraph (e) of this section or terminated 
in writing by the Director.
    (g) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank that is classified as 
undercapitalized or significantly undercapitalized if the Bank fails to 
submit a capital restoration plan acceptable to the Director within the 
time frames established by this section or if the Bank materially fails 
to implement any capital restoration plan that has been approved by the 
Director. A Bank may within 30 days of such appointment bring an action 
in the United States district court for the judicial district in which 
the Bank is established pursuant to section 3 of the Bank Act (12 U.S.C. 
1423) or in the United States District Court for the District of 
Columbia, for an order requiring the FHFA to remove itself as 
conservator or receiver.

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



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

    (a) Classification or reclassification of a Bank. Before finalizing 
any decision to classify a Bank under Sec. 1229.2(a) of this subpart or 
reclassify the Bank under Sec. 1229.4(a) of this subpart, the Director

[[Page 205]]

shall provide the Bank with written notification of the proposed action 
that states the reasons for the proposed action and describes the 
information on which the proposed action is based. The notice required 
under this paragraph may be combined with the notice of a proposed 
supervisory action required under paragraph (b) of this section. The 
Director also may combine a notice informing the Bank of its capital 
classification and simultaneously informing the Bank that the Director 
intends to reclassify a Bank to a lower capital classification category.
    (b) Notice of a supervisory action. Before finalizing any action or 
actions authorized under Sec. 1229.7 or Sec. 1229.9 of this subpart, the 
Director shall provide the Bank with written notification of the 
proposed action that states the reasons for the proposed action and 
describes the information on which the proposed action is based. The 
notice required under this paragraph may be combined with the notice of 
a proposed action to classify or reclassify the Bank required under 
paragraph (a) of this section.
    (c) Bank response. During the 30 calendar day period beginning on 
the date that the Bank is provided notice under paragraph (a) or (b) of 
this section of a proposed action or actions, a Bank may submit to the 
Director any information that the Bank considers relevant or appropriate 
for the Director to consider in determining whether to finalize the 
proposed action. The Director may, in his or her sole discretion, 
convene an informal hearing with representatives of the Bank to receive 
or discuss any such information. The Director, in his or her sole 
discretion, also may extend the period in which the Bank may respond to 
a notice for an additional 30 calendar days for good cause, or shorten 
such comment period if the Director determines the condition of the Bank 
requires faster action or a shorter comment period or if the Bank 
consents to a shorter comment period. The Director shall inform the Bank 
in writing, which may be provided as part of the notice required under 
paragraphs (a) or (b) of this section, of any decision to extend or 
shorten the comment period. The failure of a Bank to provide information 
during the allotted comment period will waive any right of the Bank to 
comment on the proposed action.
    (d) Final action. At the earlier of the completion of the comment 
period established under paragraph (c) or the receipt of information 
provided by the Bank during such period, the Director shall determine 
whether to take the proposed action or actions that were the subject of 
the notice under paragraphs (a) or (b) of this section, after taking 
into consideration any information provided by the Bank. Such notice 
shall respond to any information submitted by the Bank. Any final order 
that the Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall take effect upon the Bank's receipt of the notice required 
under this paragraph, unless a different effective date is set forth in 
this notice, and shall remain in effect and binding on the Bank until 
terminated in writing by the Director or until any terms and conditions 
for termination, as set forth in the notice, have been met.
    (e) Final actions under this section. Any final decision that the 
Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall constitute an order under the Safety and Soundness Act. 
The Director in his or her discretion may apply to the United States 
District Court for the District of Columbia or to the United States 
district court for the judicial district in which the Bank in question 
is established pursuant to section 3 of the Bank Act (12 U.S.C. 1423) 
for the enforcement of such order, as allowed under Sec. 1375 of the 
Safety and Soundness Act (12 U.S.C. 4635) . In addition, a Bank or any 
executive officer or director of a Bank can be subject to enforcement 
action, including the imposition of civil monetary penalties, under 
Sec. 1371, Sec. 1372 or Sec. 1376 of the Safety and Soundness Act (12 
U.S.C. 4631, 4632, or 4636) for failure to comply with such an order.
    (f) Judicial review. A Bank that is not classified as critically 
undercapitalized may obtain judicial review of any final capital 
classification decision or of any final decision to take supervisory 
action made by the Director under

[[Page 206]]

Sec. 1229.2, Sec. 1229.4, Sec. 1229.7 or Sec. 1229.9 in accordance with 
the requirements and procedures set forth in Sec. 1369D of the Safety 
and Soundness Act (12 U.S.C. 4623).



                          Subpart B_Enterprises

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

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



Sec. 1229.13  Definitions.

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



PART 1230_EXECUTIVE COMPENSATION--Table of Contents



Sec.
1230.1  Purpose.
1230.2  Definitions.
1230.3  Prohibition and withholding of executive compensation.
1230.4  Prior approval of termination agreements of Enterprises.
1230.5  Submission of supporting information.

    Authority: 12 U.S.C. 1427, 1431(l)(5), 1452(h), 4502(6), 4502(12), 
4513, 4514, 4517, 4518, 4518a, 4526, 4631, 4632, 4636, and 1723a(d).

    Source: 79 FR 4393, Jan. 28, 2014, unless otherwise noted.



Sec. 1230.1  Purpose.

    The purpose of this part is to implement requirements relating to 
the supervisory authority of FHFA under the Safety and Soundness Act 
with respect to compensation provided by the regulated entities and the 
Office of Finance to their executive officers. This part also 
establishes a structured process for submission of relevant information 
by the regulated entities and the Office of Finance, in order to 
facilitate and enhance the efficiency of FHFA's oversight of executive 
compensation.



Sec. 1230.2  Definitions.

    The following definitions apply to the terms used in this part:
    Charter acts mean the Federal National Mortgage Association Charter 
Act and the Federal Home Loan Mortgage Corporation Act, which are 
codified at 12 U.S.C. 1716 through 1723i and 12 U.S.C. 1451 through 
1459, respectively.
    Compensation means any payment of money or the provision of any 
other thing of current or potential value in connection with employment. 
Compensation includes all direct and indirect payments of benefits, both 
cash and non-cash, granted to or for the benefit of any executive 
officer, including, but not limited to, payments and benefits derived 
from an employment contract, compensation or benefit agreement, fee 
arrangement, perquisite, stock option plan, post-employment benefit, or 
other compensatory arrangement.
    Enterprise means the Federal National Mortgage Association and the 
Federal Home Loan Mortgage Corporation (collectively, Enterprises) and, 
except as provided by the Director, any affiliate thereof.
    Executive officer means:
    (1) With respect to an Enterprise:

[[Page 207]]

    (i) The chairman of the board of directors, chief executive officer, 
chief financial officer, chief operating officer, president, vice 
chairman, any executive vice president, any senior vice president, any 
individual in charge of a principal business unit, division, or 
function, and any individual who performs functions similar to such 
positions whether or not the individual has an official title; and
    (ii) Any other officer as identified by the Director;
    (2) With respect to a Bank:
    (i) The president, the chief financial officer, and the three other 
most highly compensated officers; and
    (ii) Any other officer as identified by the Director.
    (3) With respect to the Office of Finance:
    (i) The chief executive officer, chief financial officer, and chief 
operating officer; and
    (ii) Any other officer identified by the Director.
    Reasonable and comparable means compensation that is:
    (1) Reasonable--compensation, taken in whole or in part, that would 
be appropriate for the position and based on a review of relevant 
factors including, but not limited to:
    (i) The duties and responsibilities of the position;
    (ii) Compensation factors that indicate added or diminished risks, 
constraints, or aids in carrying out the responsibilities of the 
position; and
    (iii) Performance of the regulated entity, the specific employee, or 
one of the entity's significant components with respect to achievement 
of goals, consistency with supervisory guidance and internal rules of 
the entity, and compliance with applicable law and regulation.
    (2) Comparable--compensation that, taken in whole or in part, does 
not materially exceed compensation paid at institutions of similar size 
and function for similar duties and responsibilities.
    Regulated entity means any Enterprise and any Federal Home Loan 
Bank.



Sec. 1230.3  Prohibition and withholding of executive compensation.

    (a) In general. The Director may review the compensation 
arrangements for any executive officer of a regulated entity or the 
Office of Finance at any time, and shall prohibit the regulated entity 
or the Office of Finance from providing compensation to any such 
executive officer that the Director determines is not reasonable and 
comparable with compensation for employment in other similar businesses 
involving similar duties and responsibilities. No regulated entity or 
the Office of Finance shall pay compensation to an executive officer 
that is not reasonable and comparable with compensation paid by such 
similar businesses involving similar duties and responsibilities. No 
Enterprise in conservatorship shall pay a bonus to any senior executive 
during the period of that conservatorship.
    (b) Factors to be taken into account. In determining whether 
compensation provided by a regulated entity or the Office of Finance to 
an executive officer is not reasonable and comparable, the Director may 
take into consideration any factors the Director considers relevant, 
including any wrongdoing on the part of the executive officer, such as 
any fraudulent act or omission, breach of trust or fiduciary duty, 
violation of law, rule, regulation, order, or written agreement, and 
insider abuse with respect to the regulated entity or the Office of 
Finance.
    (c) Prohibition on setting compensation by Director. In carrying out 
paragraph (a) of this section, the Director may not prescribe or set a 
specific level or range of compensation.
    (d) Advance notice to Director of certain compensation actions. (1) 
A regulated entity or the Office of Finance shall not, without providing 
the Director at least 60 days' advance written notice, enter into any 
written arrangement that provides incentive awards to any executive 
officer or officers.
    (2) A regulated entity or the Office of Finance shall not, without 
providing the Director at least 30 days' advance written notice, enter 
into any written arrangement that:

[[Page 208]]

    (i) Provides an executive officer a term of employment for a term of 
six months or more; or
    (ii) In the case of a Bank or the Office of Finance, provides 
compensation to any executive officer in connection with the termination 
of employment, or establishes a policy of compensation in connection 
with the termination of employment.
    (3) A regulated entity or the Office of Finance shall not, without 
providing the Director at least 30 days' advance written notice, pay, 
disburse, or transfer to any executive officer, annual compensation 
(where the annual amount has changed); pay for performance or other 
incentive pay; any amounts under a severance plan, change-in-control 
agreement, or other separation agreement; any compensation that would 
qualify as direct compensation for purposes of securities filings; or 
any other element of compensation identified by the Director prior to 
the notice period.
    (4) Notwithstanding the foregoing review periods, a regulated entity 
or the Office of Finance shall provide five business days' advance 
written notice to the Director before committing to pay compensation of 
any amount or type to an executive officer who is being newly hired.
    (5) The Director reserves the right to extend any of the foregoing 
review periods, and may do so in the Director's discretion, upon notice 
to the regulated entity or the Office of Finance. Any such notice shall 
set forth the number of business or calendar days by which the review 
period is being extended.
    (e) Withholding, escrow, prohibition. During the review period 
required by paragraph (d) of this section, or any extension thereof, a 
regulated entity or the Office of Finance shall not execute the 
compensation action that is under review unless the Director provides 
written notice of approval or non-objection. During a review under 
paragraph (a) or (d) of this section, or at any time before an executive 
compensation action has been taken, the Director may, by written notice, 
require a regulated entity or the Office of Finance to withhold any 
payment, transfer, or disbursement of compensation to an executive 
officer, or to place such compensation in an escrow account, or may 
prohibit the action.



Sec. 1230.4  Prior approval of termination agreements of Enterprises.

    (a) In general. An Enterprise may not enter into any agreement or 
contract to provide any payment of money or other thing of current or 
potential value in connection with the termination of employment of an 
executive officer unless the agreement or contract is approved in 
advance by the Director.
    (b) Covered agreements or contracts. An agreement or contract that 
provides for termination payments to an executive officer of an 
Enterprise that was entered into before October 28, 1992,\1\ is not 
retroactively subject to approval or disapproval by the Director. 
However, any renegotiation, amendment, or change to such an agreement or 
contract shall be considered as entering into an agreement or contract 
that is subject to approval by the Director.
---------------------------------------------------------------------------

    \1\ This date refers to the date of enactment of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992.
---------------------------------------------------------------------------

    (c) Factors to be taken into account. In making the determination 
whether to approve or disapprove termination benefits, the Director may 
consider:
    (1) Whether the benefits provided under the agreement or contract 
are comparable to benefits provided under such agreements or contracts 
for officers of other public or private entities involved in financial 
services and housing interests who have comparable duties and 
responsibilities;
    (2) The factors set forth in Sec. 1230.3(b); and
    (3) Such other information as deemed appropriate by the Director.
    (d) Exception to prior approval. An employment agreement or contract 
subject to prior approval of the Director under this section may be 
entered into prior to that approval, provided that such agreement or 
contract specifically provides notice that termination benefits under 
the agreement or contract shall not be effective and no payments shall 
be made under such agreement or contract unless and until approved by 
the Director. Such notice

[[Page 209]]

should make clear that alteration of benefit plans subsequent to FHFA 
approval under this section, which affect final termination benefits of 
an executive officer, requires review at the time of the individual's 
termination from the Enterprise and prior to the payment of any 
benefits.
    (e) Effect of prior approval of an agreement or contract. The 
Director's approval of an executive officer's termination of employment 
benefits shall not preclude the Director from making any subsequent 
determination under this section to prohibit and withhold executive 
compensation.
    (f) Form of approval. The Director's approval pursuant to this 
section may occur in such form and manner as the Director shall provide 
through written notice to the regulated entities or the Office of 
Finance.



Sec. 1230.5  Submission of supporting information.

    In support of the reviews and decisions provided for in this part, 
the Director may issue guidance, orders, or notices on the subject of 
information submissions by the regulated entities and the Office of 
Finance.



PART 1231_GOLDEN PARACHUTE AND INDEMNIFICATION PAYMENTS--
Table of Contents



Sec.
1231.1  Purpose.
1231.2  Definitions.
1231.3  Golden parachute payments.
1231.4  [Reserved]
1231.5  Applicability in the event of receivership.
1231.6  Filing instructions.

    Authority: 12 U.S.C. 4518(e), 4518a, 4526.

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



Sec. 1231.1  Purpose.

    The purpose of this part is to implement section 1318(e) of the 
Safety and Soundness Act (12 U.S.C. 4518(e)) by setting forth the 
standards that the Director will take into consideration in determining 
whether to limit or prohibit golden parachute payments and by setting 
forth prohibited and permissible indemnification payments that regulated 
entities and the Office of Finance may make to entity-affiliated 
parties.

[79 FR 4398, Jan. 28, 2014]



Sec. 1231.2  Definitions.

    The following definitions apply to the terms used in this part:
    Benefit plan means any plan, contract, agreement, or other 
arrangement which is an ``employee welfare benefit plan'' as that term 
is defined in section 3(1) of the Employee Retirement Income Security 
Act of 1974, as amended (29 U.S.C. 1002(1)), or other usual and 
customary plans such as dependent care, tuition reimbursement, group 
legal services, or cafeteria plans; provided however, that such term 
shall not include any plan intended to be subject to paragraphs (2)(iii) 
and (v) of the term golden parachute payment as defined in this section.
    Bona fide deferred compensation plan or arrangement means any plan, 
contract, agreement, or other arrangement whereby:
    (1) An entity-affiliated party voluntarily elects to defer all or a 
portion of the reasonable compensation, wages, or fees paid for services 
rendered which otherwise would have been paid to such party at the time 
the services were rendered (including a plan that provides for the 
crediting of a reasonable investment return on such elective deferrals) 
and the regulated entity or the Office of Finance either:
    (i) Recognizes compensation expense and accrues a liability for the 
benefit payments according to generally accepted accounting principles 
(GAAP); or
    (ii) Segregates or otherwise sets aside assets in a trust which may 
only be used to pay plan and other benefits and related expenses, except 
that the assets of such trust may be available to satisfy claims of 
creditors of the regulated entities or the Office of Finance in the case 
of insolvency; or
    (2) A regulated entity or the Office of Finance establishes a 
nonqualified deferred compensation or supplemental retirement plan, 
other than an elective deferral plan described in paragraph (1) of this 
definition:

[[Page 210]]

    (i) Primarily for the purpose of providing benefits for certain 
entity-affiliated parties in excess of the limitations on contributions 
and benefits imposed by sections 401(a)(17), 402(g), 415, or any other 
applicable provision of the Internal Revenue Code of 1986 (26 U.S.C. 
401(a)(17), 402(g), 415); or
    (ii) Primarily for the purpose of providing supplemental retirement 
benefits or other deferred compensation for a select group of directors, 
management, or highly compensated employees (excluding severance 
payments described in paragraph (2)(v) of the term golden parachute 
payment as defined in this section and permissible golden parachute 
payments described in Sec. 1231.3(b)); and
    (3) In the case of any nonqualified deferred compensation or 
supplemental retirement plans as described in paragraphs (1) and (2) of 
this definition, the following requirements shall apply:
    (i) The plan was in effect at least one year prior to any of the 
events described in paragraph (1)(ii) of the term golden parachute 
payment as defined in this section;
    (ii) Any payment made pursuant to such plan is made in accordance 
with the terms of the plan as in effect no later than one year prior to 
any of the events described in paragraph (1)(ii) of the term golden 
parachute payment as defined in this section and in accordance with any 
amendments to such plan during such one-year period that do not increase 
the benefits payable thereunder, provided that changes required by law 
should be disregarded in determining whether a plan provision has been 
in effect for one year;
    (iii) The entity-affiliated party has a vested right, as defined 
under the applicable plan document, at the time of termination of 
employment to payments under such plan;
    (iv) Benefits under such plan are accrued each period only for 
current or prior service rendered to the employer (except that an 
allowance may be made for service with a predecessor employer);
    (v) Any payment made pursuant to such plan is not based on any 
discretionary acceleration of vesting or accrual of benefits which 
occurs at any time later than one year prior to any of the events 
described in paragraph (1)(ii) of the term golden parachute payment as 
defined in this section;
    (vi) The regulated entity or the Office of Finance has previously 
recognized compensation expense and accrued a liability for the benefit 
payments according to GAAP, or segregated or otherwise set aside assets 
in a trust which may only be used to pay plan benefits and related 
expenses, except that the assets of such trust may be available to 
satisfy claims of the regulated entity's creditors or the Office of 
Finance's creditors in the case of insolvency; and
    (vii) Payments pursuant to such plans shall not be in excess of the 
accrued liability computed in accordance with GAAP.
    Entity-affiliated party means:
    (1) With respect to the Office of Finance, any director, officer, or 
manager of the Office of Finance; and
    (2) With respect to a regulated entity:
    (i) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;
    (ii) Any shareholder, affiliate, consultant, or joint venture 
partner of a regulated entity, and any other person as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Federal Home Loan Bank shall not be deemed to have participated in 
the affairs of that Federal Home Loan Bank solely by virtue of being a 
shareholder of, and obtaining advances from, that Federal Home Loan 
Bank;
    (iii) Any independent contractor for a regulated entity (including 
any attorney, appraiser, or accountant) if:
    (A) The independent contractor knowingly or recklessly participates 
in any violation of any law or regulation, any breach of fiduciary duty, 
or any unsafe or unsound practice; and
    (B) Such violation, breach, or practice caused, or is likely to 
cause, more than a minimal financial loss to, or a significant adverse 
effect on, the regulated entity;
    (iv) Any not-for-profit corporation that receives its principal 
funding, on

[[Page 211]]

an ongoing basis, from any regulated entity.
    Golden parachute payment means:
    (1) Any payment (or any agreement to make any payment) in the nature 
of compensation by any regulated entity or the Office of Finance for the 
benefit of any current or former entity-affiliated party pursuant to an 
obligation of such regulated entity or the Office of Finance that:
    (i) Is contingent on, or by its terms is payable on or after, the 
termination of such party's primary employment or affiliation with the 
regulated entity or the Office of Finance; and
    (ii) Is received on or after, or is made in contemplation of, any of 
the following events:
    (A) The insolvency (or similar event) of the regulated entity which 
is making the payment;
    (B) The appointment of any conservator or receiver for such 
regulated entity; or
    (C) The regulated entity is in a troubled condition.
    (2) Exceptions. The term golden parachute payment shall not include:
    (i) Any payment made pursuant to a pension or retirement plan that 
is qualified (or is intended within a reasonable period of time to be 
qualified) under section 401 of the Internal Revenue Code of 1986 (26 
U.S.C. 401) or pursuant to a pension or other retirement plan that is 
governed by the laws of any foreign country;
    (ii) Any payment made pursuant to a ``benefit plan'' as that term is 
defined in this section;
    (iii) Any payment made pursuant to a ``bona fide deferred 
compensation plan or arrangement'' as that term is defined in this 
section;
    (iv) Any payment made by reason of death or by reason of termination 
caused by the disability of an entity-affiliated party; or
    (v) Any payment made pursuant to a nondiscriminatory severance pay 
plan or arrangement that provides for payment of severance benefits to 
all eligible employees upon involuntary termination other than for 
cause, voluntary resignation, or early retirement; provided that:
    (A) No employee shall receive any such payment that exceeds the base 
compensation paid to such employee during the 12 months (or such longer 
period or greater benefit as the Director shall consent to) immediately 
preceding termination of employment, resignation, or early retirement, 
and such severance pay plan or arrangement shall not have been adopted, 
or modified to increase the amount or scope of severance benefits, at a 
time when the regulated entity or the Office of Finance is in a 
condition specified in paragraph (1)(ii) of the term golden parachute 
payment as defined in this section, or in contemplation of such a 
condition, without the prior written consent of the Director; and
    (B) If an employee is an executive officer, as ``executive officer'' 
is defined under 12 CFR 1230.2, and such employee's base salary exceeds 
$300,000, then the exception provided under this paragraph (2)(v) shall 
not apply to that employee; or
    (vi) Any severance or similar payment that is required to be made 
pursuant to a state statute or foreign law that is applicable to all 
employers within the appropriate jurisdiction (with the exception of 
employers that may be exempt due to their small number of employees or 
other similar criteria).
    Nondiscriminatory means that the plan, contract, or arrangement in 
question applies to all employees of a regulated entity or the Office of 
Finance who meet reasonable and customary eligibility requirements 
applicable to all employees, such as minimum length of service 
requirements. A nondiscriminatory plan, contract, or arrangement may 
provide different benefits based only on objective criteria such as 
salary, total compensation, length of service, job grade, or 
classification, which are applied on a proportionate basis (with a 
variance in severance benefits relating to any criterion of plus or 
minus ten percent) to groups of employees consisting of not less than 
the lesser of 33 percent of employees or 1,000 employees.
    Payment means:
    (1) Any direct or indirect transfer of any funds or any asset;
    (2) Any forgiveness of any debt or other obligation;

[[Page 212]]

    (3) The conferring of any benefit, including but not limited to 
stock options and stock appreciation rights; and
    (4) Any segregation of any funds or assets, the establishment or 
funding of any trust or the purchase of or arrangement for any letter of 
credit or other instrument, for the purpose of making, or pursuant to 
any agreement to make, any payment on or after the date on which such 
funds or assets are segregated, or at the time of or after such trust is 
established or letter of credit or other instrument is made available, 
without regard to whether the obligation to make such payment is 
contingent on:
    (i) The determination, after such date, of the liability for the 
payment of such amount; or
    (ii) The liquidation, after such date, of the amount of such 
payment.
    Troubled condition means a regulated entity that:
    (1) Is subject to a cease-and-desist order or written agreement 
issued by FHFA that requires action to improve the financial condition 
of the regulated entity or is subject to a proceeding initiated by the 
Director, which contemplates the issuance of an order that requires 
action to improve the financial condition of the regulated entity, 
unless otherwise informed in writing by FHFA;
    (2) Is assigned a composite rating of 4 or 5 by FHFA under its 
CAMELSO examination rating system as it may be revised from time to 
time; or
    (3) Is informed in writing by the Director that it is in a troubled 
condition for purposes of the requirements of this part on the basis of 
the most recent report of examination or other information available to 
FHFA, on account of its financial condition, risk profile, or management 
deficiencies.

[79 FR 4398, Jan. 28, 2014]



Sec. 1231.3  Golden parachute payments.

    (a) Prohibited golden parachute payments. No regulated entity or the 
Office of Finance shall make or agree to make any golden parachute 
payment, except as provided in this part.
    (b) Permissible golden parachute payments. (1) A regulated entity or 
the Office of Finance may agree to make or may make a golden parachute 
payment if and to the extent that:
    (i) The Director determines that such a payment or agreement is 
permissible; or
    (ii) Such an agreement is made in order to hire a person to become 
an entity-affiliated party either at a time when the regulated entity or 
the Office of Finance satisfies, or in an effort to prevent it from 
imminently satisfying, any of the criteria set forth in paragraph 
(1)(ii) of the term golden parachute payment as defined in Sec. 1231.2, 
and the Director consents in writing to the amount and terms of the 
golden parachute payment. Such consent by the Director shall not improve 
the entity-affiliated party's position in the event of the insolvency of 
the regulated entity or the Office of Finance since such consent can 
neither bind a receiver nor affect the provability of receivership 
claims; or
    (iii) Such a payment is made pursuant to an agreement which provides 
for a reasonable severance payment, not to exceed 12 months salary, to 
an entity-affiliated party in the event of a change in control of the 
regulated entity or the Office of Finance; provided, however, that a 
regulated entity or the Office of Finance shall obtain the consent of 
the Director prior to making such a payment, and this paragraph 
(b)(1)(iii) shall not apply to any change in control of a regulated 
entity that results from the regulated entity being placed into 
conservatorship or receivership; and
    (iv) A regulated entity or the Office of Finance making a request 
pursuant to paragraphs (b)(1)(i) through (iii) of this section shall 
demonstrate that it does not possess and is not aware of any 
information, evidence, documents, or other materials that would indicate 
that there is a reasonable basis to believe, at the time such payment is 
proposed to be made, that:
    (A) The entity-affiliated party has committed any fraudulent act or 
omission, breach of trust or fiduciary duty, or insider abuse with 
regard to the regulated entity or the Office of Finance that is likely 
to have a material adverse effect on the regulated entity or the Office 
of Finance;

[[Page 213]]

    (B) The entity-affiliated party is substantially responsible for the 
insolvency of, the appointment of a conservator or receiver for, or the 
troubled condition of the regulated entity or the Office of Finance;
    (C) The entity-affiliated party has materially violated any 
applicable Federal or State law or regulation that has had or is likely 
to have a material effect on the regulated entity or the Office of 
Finance; and
    (D) The entity-affiliated party has violated or conspired to violate 
sections 215, 657, 1006, 1014, or 1344 of title 18 of the United States 
Code, or section 1341 or 1343 of such title affecting a ``financial 
institution'' as the term is defined in title 18 of the United States 
Code (18 U.S.C. 20).
    (2) In making a determination under paragraphs (b)(1)(i) through 
(iii) of this section, the Director may consider:
    (i) Whether, and to what degree, the entity-affiliated party was in 
a position of managerial or fiduciary responsibility;
    (ii) The length of time the entity-affiliated party was affiliated 
with the regulated entity or the Office of Finance, and the degree to 
which the proposed payment represents a reasonable payment for services 
rendered over the period of employment; and
    (iii) Any other factor the Director determines relevant to the facts 
and circumstances surrounding the golden parachute payment, including 
any fraudulent act or omission, breach of fiduciary duty, violation of 
law, rule, regulation, order, or written agreement, and the level of 
willful misconduct, breach of fiduciary duty, and malfeasance on the 
part of the entity-affiliated party.

[79 FR 4400, Jan. 28, 2014]



Sec. 1231.4  [Reserved]



Sec. 1231.5  Applicability in the event of receivership.

    The provisions of this part, or any consent or approval granted 
under the provisions of this part by FHFA, shall not in any way bind any 
receiver of a regulated entity in receivership. Any consent or approval 
granted under the provisions of this part by FHFA shall not in any way 
obligate FHFA or receiver to pay any claim or obligation pursuant to any 
golden parachute, severance, indemnification, or other agreement. 
Nothing in this part may be construed to permit the payment of salary or 
any liability or legal expense of an entity-affiliated party contrary to 
section 1318(e)(3) of the Safety and Soundness Act (12 U.S.C. 
4518(e)(3)).

[79 FR 4400, Jan. 28, 2014]



Sec. 1231.6  Filing instructions.

    (a) Scope. This section contains the procedures to apply for the 
consent of the Director to make golden parachute payments under 
Sec. 1231.3(b) (including entering into agreements to make such 
payments) or to make excess nondiscriminatory severance plan payments 
under paragraph (2)(v) of the term golden parachute payment as defined 
in Sec. 1231.2.
    (b) Where to file. A regulated entity or the Office of Finance must 
submit a letter application to the Manager, Executive Compensation, 
Division of Supervision Policy and Support, or to such other person as 
FHFA may direct.
    (c) Content of filing. The letter application must contain the 
following:
    (1) The reasons why the regulated entity or the Office of Finance 
seeks to make the payment;
    (2) An identification of the entity-affiliated party who will 
receive the payment;
    (3) A copy of any contract or agreement regarding the subject matter 
of the filing;
    (4) The cost of the proposed payment and its impact on the capital 
and earnings of the regulated entity;
    (5) The reasons why the consent to the payment should be granted; 
and
    (6) Certification and documentation as to each of the factors listed 
in Sec. 1231.3(b)(1)(iv).
    (d) Additional information. FHFA may request additional information 
at any time during the processing of the letter application.
    (e) Written notice. FHFA shall provide the applicant with written 
notice of the decision as soon as it is rendered.

[79 FR 4400, Jan. 28, 2014]

[[Page 214]]



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



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

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

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



Sec. 1233.1  Purpose.

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



Sec. 1233.2  Definitions.

    The following definitions apply to the terms used in this part:
    Entity-affiliated party means--
    (1) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;
    (2) Any shareholder, affiliate, consultant, or joint venture partner 
of a regulated entity, and any other person, as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Federal Home Loan Bank shall not be deemed to have participated in 
the affairs of that Federal Home Loan Bank solely by virtue of being a 
shareholder of, and obtaining advances from, that Federal Home Loan 
Bank;
    (3) Any independent contractor for a regulated entity (including any 
attorney, appraiser, or accountant);
    (4) Any not-for-profit corporation that receives its principal 
funding, on an ongoing basis, from any regulated entity; and
    (5) The Office of Finance.
    Financial instrument means any legally enforceable agreement, 
certificate, or other writing, in hardcopy or electronic form, having 
monetary value including, but not limited to, any agreement, 
certificate, or other writing evidencing an asset pledged as collateral 
to a Bank by a member to secure an advance by the Bank to that member.
    Fraud means a misstatement, misrepresentation, or omission that 
cannot be corrected and that was relied upon by a regulated entity to 
purchase or sell a loan or financial instrument.
    Possible fraud means that a regulated entity has a reasonable 
belief, based upon a review of information available to the regulated 
entity, that fraud may be occurring or has occurred.
    Purchased or sold or relating to the purchase or sale means any 
transaction involving a financial instrument including, but not limited 
to, any purchase, sale, other acquisition, or creation of a financial 
instrument by the member of a Bank to be pledged as collateral to the 
Bank to secure an advance by the Bank to that member, the pledging by a 
member to a Bank of such financial instrument to secure such an advance, 
the making of a grant by a Bank under its affordable housing program or 
community investment program, and the effecting of a wire transfer or 
other form of electronic payments transaction by the Bank.

[75 FR 4258, Jan. 27, 2010, as amended at 78 FR 2323, Jan. 11, 2013]



Sec. 1233.3  Reporting.

    (a) Timeframe for reporting. (1) A regulated entity shall submit to 
the Director a timely written report upon discovery by the regulated 
entity that it has purchased or sold a fraudulent loan or financial 
instrument, or suspects a possible fraud relating to the purchase or 
sale of any loan or financial instrument.
    (2) In addition to submitting a report in accordance with paragraph 
(a)(1) of this section, in any situation that would have a significant 
impact on the regulated entity, the regulated entity shall immediately 
report any fraud or possible fraud to the Director by telephone or 
electronic communication.

[[Page 215]]

    (b) Format for reporting. (1) The report shall be in such format and 
shall be filed in accordance with such procedures that the Director may 
prescribe.
    (2) The Director may require a regulated entity to provide such 
additional or continuing information relating to such fraud or possible 
fraud that the Director deems appropriate.
    (3) A regulated entity may satisfy the reporting requirements of 
this section by submitting the required information on a form or in 
another format used by any other regulatory agency, provided it has 
first obtained the prior written approval of the Director.
    (c) Retention of records. A regulated entity or entity-affiliated 
party shall maintain a copy of any report submitted to the Director and 
the original or business record equivalent of any supporting 
documentation for a period of five years from the date of submission.
    (d) Nondisclosure. (1) A regulated entity or entity-affiliated party 
may not disclose to any person that it has submitted a report to the 
Director pursuant to this section, unless it has first obtained the 
prior written approval of the Director.
    (2) The restriction in paragraph (d)(1) of this section does not 
prohibit a regulated entity from--
    (i) Disclosing or reporting such fraud or possible fraud pursuant to 
legal requirements, including reporting to appropriate law enforcement 
or other governmental authorities; or
    (ii) Taking any legal or business action it may deem appropriate, 
including any action involving the party or parties connected with the 
fraud or possible fraud.
    (e) No waiver of privilege. A regulated entity does not waive any 
privilege it may possess under any applicable law as a consequence of 
reporting fraud or possible fraud under this part.



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

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



Sec. 1233.5  Protection from liability for reports.

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



Sec. 1233.6  Supervisory action.

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



PART 1234_CREDIT RISK RETENTION--Table of Contents



           Subpart A_Authority, Purpose, Scope and Definitions

Sec.
1234.1  Purpose, scope and reservation of authority.
1234.2  Definitions.

                     Subpart B_Credit Risk Retention

1234.3  Base risk retention requirement.
1234.4  Standard risk retention.
1234.5  Revolving pool securitizations.
1234.6  Eligible ABCP conduits.

[[Page 216]]

1234.7  Commercial mortgage-backed securities.
1234.8  Federal National Mortgage Association and Federal Home Loan 
          Mortgage Corporation ABS.
1234.9  Open market CLOs.
1234.10  Qualified tender option bonds.

                  Subpart C_Transfer of Risk Retention

1234.11  Allocation of risk retention to an originator.
1234.12  Hedging, transfer and financing prohibitions.

                   Subpart D_Exceptions and Exemptions

1234.13  Exemption for qualified residential mortgages.
1234.14  Definitions applicable to qualifying commercial real estate 
          loans.
1234.15  Qualifying commercial real estate loans.
1234.16  [Reserved]
1234.17  Underwriting standards for qualifying CRE loans.
1234.18  [Reserved]
1234.19  General exemptions.
1234.20  Safe harbor for certain foreign-related transactions.
1234.21  Additional exemptions.
1234.22  Periodic review of the QRM definition, exempted three-to-four 
          unit residential mortgage loans, and community-focused 
          residential mortgage exemption.

    Authority: 12 U.S.C. 4511(b), 4526, 4617; 15 U.S.C. 78o-11(b)(2).

    Source: 79 FR 77740, Dec. 24, 2014, unless otherwise noted.



           Subpart A_Authority, Purpose, Scope and Definitions



Sec. 1234.1  Purpose, scope and reservation of authority.

    (a) Purpose. This part requires securitizers to retain an economic 
interest in a portion of the credit risk for any residential mortgage 
asset that the securitizer, through the issuance of an asset-backed 
security, transfers, sells, or conveys to a third party in a transaction 
within the scope of section 15G of the Exchange Act. This part specifies 
the permissible types, forms, and amounts of credit risk retention, and 
it establishes certain exemptions for securitizations collateralized by 
assets that meet specified underwriting standards or that otherwise 
qualify for an exemption.
    (b) Scope. (1) Effective December 24, 2015, this part will apply to 
any securitizer that is an entity regulated by the Federal Housing 
Finance Agency with respect to a securitization transaction 
collateralized by residential mortgages.
    (2) Effective December 24, 2016, this part will apply to any 
securitizer that is an entity regulated by the Federal Housing Finance 
Agency with respect to a securitization transaction collateralized by 
assets other than residential mortgages.
    (c) Reservation of authority. Nothing in this part shall be read to 
limit the authority of the Director of the Federal Housing Finance 
Agency to take supervisory or enforcement action, including action to 
address unsafe or unsound practices or conditions, or violations of law.

[79 FR 77765, Dec. 24, 2014]



Sec. 1234.2  Definitions.

    For purposes of this part, the following definitions apply:
    ABS interest means:
    (1) Any type of interest or obligation issued by an issuing entity, 
whether or not in certificated form, including a security, obligation, 
beneficial interest or residual interest (other than an uncertificated 
regular interest in a REMIC that is held by another REMIC, where both 
REMICs are part of the same structure and a single REMIC in that 
structure issues ABS interests to investors, or a non-economic residual 
interest issued by a REMIC), payments on which are primarily dependent 
on the cash flows of the collateral owned or held by the issuing entity; 
and
    (2) Does not include common or preferred stock, limited liability 
interests, partnership interests, trust certificates, or similar 
interests that:
    (i) Are issued primarily to evidence ownership of the issuing 
entity; and
    (ii) The payments, if any, on which are not primarily dependent on 
the cash flows of the collateral held by the issuing entity; and
    (3) Does not include the right to receive payments for services 
provided by the holder of such right, including servicing, trustee 
services and custodial services.
    Affiliate of, or a person affiliated with, a specified person means 
a person that directly, or indirectly through one or

[[Page 217]]

more intermediaries, controls, or is controlled by, or is under common 
control with, the person specified.
    Appropriate Federal banking agency has the same meaning as in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    Asset means a self-liquidating financial asset (including but not 
limited to a loan, lease, mortgage, or receivable).
    Asset-backed security has the same meaning as in section 3(a)(79) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(79)).
    Collateral means, with respect to any issuance of ABS interests, the 
assets that provide the cash flow and the servicing assets that support 
such cash flow for the ABS interests irrespective of the legal structure 
of issuance, including security interests in assets or other property of 
the issuing entity, fractional undivided property interests in the 
assets or other property of the issuing entity, or any other property 
interest in or rights to cash flow from such assets and related 
servicing assets. Assets or other property collateralize an issuance of 
ABS interests if the assets or property serve as collateral for such 
issuance.
    Commercial real estate loan has the same meaning as in Sec. 1234.14.
    Commission means the Securities and Exchange Commission.
    Control including the terms ``controlling,'' ``controlled by'' and 
``under common control with'':
    (1) Means the possession, direct or indirect, of the power to direct 
or cause the direction of the management and policies of a person, 
whether through the ownership of voting securities, by contract, or 
otherwise.
    (2) Without limiting the foregoing, a person shall be considered to 
control another person if the first person:
    (i) Owns, controls or holds with power to vote 25 percent or more of 
any class of voting securities of the other person; or
    (ii) Controls in any manner the election of a majority of the 
directors, trustees or persons performing similar functions of the other 
person.
    Credit risk means:
    (1) The risk of loss that could result from the failure of the 
borrower in the case of a securitized asset, or the issuing entity in 
the case of an ABS interest in the issuing entity, to make required 
payments of principal or interest on the asset or ABS interest on a 
timely basis;
    (2) The risk of loss that could result from bankruptcy, insolvency, 
or a similar proceeding with respect to the borrower or issuing entity, 
as appropriate; or
    (3) The effect that significant changes in the underlying credit 
quality of the asset or ABS interest may have on the market value of the 
asset or ABS interest.
    Creditor has the same meaning as in 15 U.S.C. 1602(g).
    Depositor means:
    (1) The person that receives or purchases and transfers or sells the 
securitized assets to the issuing entity;
    (2) The sponsor, in the case of a securitization transaction where 
there is not an intermediate transfer of the assets from the sponsor to 
the issuing entity; or
    (3) The person that receives or purchases and transfers or sells the 
securitized assets to the issuing entity in the case of a securitization 
transaction where the person transferring or selling the securitized 
assets directly to the issuing entity is itself a trust.
    Eligible horizontal residual interest means, with respect to any 
securitization transaction, an ABS interest in the issuing entity:
    (1) That is an interest in a single class or multiple classes in the 
issuing entity, provided that each interest meets, individually or in 
the aggregate, all of the requirements of this definition;
    (2) With respect to which, on any payment date or allocation date on 
which the issuing entity has insufficient funds to satisfy its 
obligation to pay all contractual interest or principal due, any 
resulting shortfall will reduce amounts payable to the eligible 
horizontal residual interest prior to any reduction in the amounts 
payable to any other ABS interest, whether through loss allocation, 
operation of the priority of payments, or any other governing 
contractual provision (until the amount of such ABS interest is reduced 
to zero); and

[[Page 218]]

    (3) That, with the exception of any non-economic REMIC residual 
interest, has the most subordinated claim to payments of both principal 
and interest by the issuing entity.
    Eligible horizontal cash reserve account means an account meeting 
the requirements of Sec. 1234.4(b).
    Eligible vertical interest means, with respect to any securitization 
transaction, a single vertical security or an interest in each class of 
ABS interests in the issuing entity issued as part of the securitization 
transaction that constitutes the same proportion of each such class.
    Federal banking agencies means the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, and the 
Federal Deposit Insurance Corporation.
    GAAP means generally accepted accounting principles as used in the 
United States.
    Issuing entity means, with respect to a securitization transaction, 
the trust or other entity:
    (1) That owns or holds the pool of assets to be securitized; and
    (2) In whose name the asset-backed securities are issued.
    Majority-owned affiliate of a person means an entity (other than the 
issuing entity) that, directly or indirectly, majority controls, is 
majority controlled by or is under common majority control with, such 
person. For purposes of this definition, majority control means 
ownership of more than 50 percent of the equity of an entity, or 
ownership of any other controlling financial interest in the entity, as 
determined under GAAP.
    Originator means a person who:
    (1) Through an extension of credit or otherwise, creates an asset 
that collateralizes an asset-backed security; and
    (2) Sells the asset directly or indirectly to a securitizer or 
issuing entity.
    REMIC has the same meaning as in 26 U.S.C. 860D.
    Residential mortgage means:
    (1) A transaction that is a covered transaction as defined in 
Sec. 1026.43(b) of Regulation Z (12 CFR 1026.43(b)(1));
    (2) Any transaction that is exempt from the definition of ``covered 
transaction'' under Sec. 1026.43(a) of Regulation Z (12 CFR 1026.43(a)); 
and
    (3) Any other loan secured by a residential structure that contains 
one to four units, whether or not that structure is attached to real 
property, including an individual condominium or cooperative unit and, 
if used as a residence, a mobile home or trailer.
    Retaining sponsor means, with respect to a securitization 
transaction, the sponsor that has retained or caused to be retained an 
economic interest in the credit risk of the securitized assets pursuant 
to subpart B of this part.
    Securitization transaction means a transaction involving the offer 
and sale of asset-backed securities by an issuing entity.
    Securitized asset means an asset that:
    (1) Is transferred, sold, or conveyed to an issuing entity; and
    (2) Collateralizes the ABS interests issued by the issuing entity.
    Securitizer means, with respect to a securitization transaction, 
either:
    (1) The depositor of the asset-backed securities (if the depositor 
is not the sponsor); or
    (2) The sponsor of the asset-backed securities.
    Servicer means any person responsible for the management or 
collection of the securitized assets or making allocations or 
distributions to holders of the ABS interests, but does not include a 
trustee for the issuing entity or the asset-backed securities that makes 
allocations or distributions to holders of the ABS interests if the 
trustee receives such allocations or distributions from a servicer and 
the trustee does not otherwise perform the functions of a servicer.
    Servicing assets means rights or other assets designed to assure the 
servicing or timely distribution of proceeds to ABS interest holders and 
rights or other assets that are related or incidental to purchasing or 
otherwise acquiring and holding the issuing entity's securitized assets. 
Servicing assets include amounts received by the issuing entity as 
proceeds of securitized assets, including proceeds of rights or other 
assets, whether as remittances by obligors or as other recoveries.
    Single vertical security means, with respect to any securitization 
transaction,

[[Page 219]]

an ABS interest entitling the sponsor to a specified percentage of the 
amounts paid on each class of ABS interests in the issuing entity (other 
than such single vertical security).
    Sponsor means a person who organizes and initiates a securitization 
transaction by selling or transferring assets, either directly or 
indirectly, including through an affiliate, to the issuing entity.
    State has the same meaning as in Section 3(a)(16) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(16)).
    United States or U.S. means the United States of America, including 
its territories and possessions, any State of the United States, and the 
District of Columbia.
    Wholly-owned affiliate means a person (other than an issuing entity) 
that, directly or indirectly, wholly controls, is wholly controlled by, 
or is wholly under common control with, another person. For purposes of 
this definition, ``wholly controls'' means ownership of 100 percent of 
the equity of an entity.



                     Subpart B_Credit Risk Retention



Sec. 1234.3  Base risk retention requirement.

    (a) Base risk retention requirement. Except as otherwise provided in 
this part, the sponsor of a securitization transaction (or majority-
owned affiliate of the sponsor) shall retain an economic interest in the 
credit risk of the securitized assets in accordance with any one of 
Secs. 1234.4 through 1234.10. Credit risk in securitized assets required 
to be retained and held by any person for purposes of compliance with 
this part, whether a sponsor, an originator, an originator-seller, or a 
third-party purchaser, except as otherwise provided in this part, may be 
acquired and held by any of such person's majority-owned affiliates 
(other than an issuing entity).
    (b) Multiple sponsors. If there is more than one sponsor of a 
securitization transaction, it shall be the responsibility of each 
sponsor to ensure that at least one of the sponsors of the 
securitization transaction (or at least one of their majority-owned or 
wholly-owned affiliates, as applicable) retains an economic interest in 
the credit risk of the securitized assets in accordance with any one of 
Secs. 1234.4, 1234.5, 1234.8, 1234.9, or 1234.10.



Sec. 1234.4  Standard risk retention.

    (a) General requirement. Except as provided in Secs. 1234.5 through 
1234.10, the sponsor of a securitization transaction must retain an 
eligible vertical interest or eligible horizontal residual interest, or 
any combination thereof, in accordance with the requirements of this 
section.
    (1) If the sponsor retains only an eligible vertical interest as its 
required risk retention, the sponsor must retain an eligible vertical 
interest in a percentage of not less than 5 percent.
    (2) If the sponsor retains only an eligible horizontal residual 
interest as its required risk retention, the amount of the interest must 
equal at least 5 percent of the fair value of all ABS interests in the 
issuing entity issued as a part of the securitization transaction, 
determined using a fair value measurement framework under GAAP.
    (3) If the sponsor retains both an eligible vertical interest and an 
eligible horizontal residual interest as its required risk retention, 
the percentage of the fair value of the eligible horizontal residual 
interest and the percentage of the eligible vertical interest must equal 
at least five.
    (4) The percentage of the eligible vertical interest, eligible 
horizontal residual interest, or combination thereof retained by the 
sponsor must be determined as of the closing date of the securitization 
transaction.
    (b) Option to hold base amount in eligible horizontal cash reserve 
account. In lieu of retaining all or any part of an eligible horizontal 
residual interest under paragraph (a) of this section, the sponsor may, 
at closing of the securitization transaction, cause to be established 
and funded, in cash, an eligible horizontal cash reserve account in the 
amount equal to the fair value of such eligible horizontal residual 
interest or part thereof, provided that the account meets all of the 
following conditions:
    (1) The account is held by the trustee (or person performing similar 
functions) in the name and for the benefit of the issuing entity;

[[Page 220]]

    (2) Amounts in the account are invested only in cash and cash 
equivalents; and
    (3) Until all ABS interests in the issuing entity are paid in full, 
or the issuing entity is dissolved:
    (i) Amounts in the account shall be released only to:
    (A) Satisfy payments on ABS interests in the issuing entity on any 
payment date on which the issuing entity has insufficient funds from any 
source to satisfy an amount due on any ABS interest; or
    (B) Pay critical expenses of the trust unrelated to credit risk on 
any payment date on which the issuing entity has insufficient funds from 
any source to pay such expenses and:
    (1) Such expenses, in the absence of available funds in the eligible 
horizontal cash reserve account, would be paid prior to any payments to 
holders of ABS interests; and
    (2) Such payments are made to parties that are not affiliated with 
the sponsor; and
    (ii) Interest (or other earnings) on investments made in accordance 
with paragraph (b)(2) of this section may be released once received by 
the account.
    (c) Disclosures. A sponsor relying on this section shall provide, or 
cause to be provided, to potential investors, under the caption ``Credit 
Risk Retention'', a reasonable period of time prior to the sale of the 
asset-backed securities in the securitization transaction the following 
disclosures in written form and within the time frames set forth in this 
paragraph (c):
    (1) Horizontal interest. With respect to any eligible horizontal 
residual interest held under paragraph (a) of this section, a sponsor 
must disclose:
    (i) A reasonable period of time prior to the sale of an asset-backed 
security issued in the same offering of ABS interests,
    (A) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest that the sponsor expects to retain at the closing of 
the securitization transaction. If the specific prices, sizes, or rates 
of interest of each tranche of the securitization are not available, the 
sponsor must disclose a range of fair values (expressed as a percentage 
of the fair value of all of the ABS interests issued in the 
securitization transaction and dollar amount (or corresponding amount in 
the foreign currency in which the ABS interests are issued, as 
applicable)) of the eligible horizontal residual interest that the 
sponsor expects to retain at the close of the securitization transaction 
based on a range of bona fide estimates or specified prices, sizes, or 
rates of interest of each tranche of the securitization. A sponsor 
disclosing a range of fair values based on a range of bona fide 
estimates or specified prices, sizes or rates of interest of each 
tranche of the securitization must also disclose the method by which it 
determined any range of prices, tranche sizes, or rates of interest.
    (B) A description of the material terms of the eligible horizontal 
residual interest to be retained by the sponsor;
    (C) A description of the valuation methodology used to calculate the 
fair values or range of fair values of all classes of ABS interests, 
including any portion of the eligible horizontal residual interest 
retained by the sponsor;
    (D) All key inputs and assumptions or a comprehensive description of 
such key inputs and assumptions that were used in measuring the 
estimated total fair value or range of fair values of all classes of ABS 
interests, including the eligible horizontal residual interest to be 
retained by the sponsor.
    (E) To the extent applicable to the valuation methodology used, the 
disclosure required in paragraph (c)(1)(i)(D) of this section shall 
include, but should not be limited to, quantitative information about 
each of the following:
    (1) Discount rates;
    (2) Loss given default (recovery);
    (3) Prepayment rates;
    (4) Default rates;
    (5) Lag time between default and recovery; and
    (6) The basis of forward interest rates used.

[[Page 221]]

    (F) The disclosure required in paragraphs (c)(1)(i)(C) and (D) of 
this section shall include, at a minimum, descriptions of all inputs and 
assumptions that either could have a material impact on the fair value 
calculation or would be material to a prospective investor's ability to 
evaluate the sponsor's fair value calculations. To the extent the 
disclosure required in this paragraph (c)(1) includes a description of a 
curve or curves, the description shall include a description of the 
methodology that was used to derive each curve and a description of any 
aspects or features of each curve that could materially impact the fair 
value calculation or the ability of a prospective investor to evaluate 
the sponsor's fair value calculation. To the extent a sponsor uses 
information about the securitized assets in its calculation of fair 
value, such information shall not be as of a date more than 60 days 
prior to the date of first use with investors; provided that for a 
subsequent issuance of ABS interests by the same issuing entity with the 
same sponsor for which the securitization transaction distributes 
amounts to investors on a quarterly or less frequent basis, such 
information shall not be as of a date more than 135 days prior to the 
date of first use with investors; provided further, that the balance or 
value (in accordance with the transaction documents) of the securitized 
assets may be increased or decreased to reflect anticipated additions or 
removals of assets the sponsor makes or expects to make between the cut-
off date or similar date for establishing the composition of the asset 
pool collateralizing such asset-backed security and the closing date of 
the securitization.
    (G) A summary description of the reference data set or other 
historical information used to develop the key inputs and assumptions 
referenced in paragraph (c)(1)(i)(D) of this section, including loss 
given default and default rates;
    (ii) A reasonable time after the closing of the securitization 
transaction:
    (A) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS are issued, as applicable)) of the eligible horizontal residual 
interest the sponsor retained at the closing of the securitization 
transaction, based on actual sale prices and finalized tranche sizes;
    (B) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS are issued, as applicable)) of the eligible horizontal residual 
interest that the sponsor is required to retain under this section; and
    (C) To the extent the valuation methodology or any of the key inputs 
and assumptions that were used in calculating the fair value or range of 
fair values disclosed prior to sale and required under paragraph 
(c)(1)(i) of this section materially differs from the methodology or key 
inputs and assumptions used to calculate the fair value at the time of 
closing, descriptions of those material differences.
    (iii) If the sponsor retains risk through the funding of an eligible 
horizontal cash reserve account:
    (A) The amount to be placed (or that is placed) by the sponsor in 
the eligible horizontal cash reserve account at closing, and the fair 
value (expressed as a percentage of the fair value of all of the ABS 
interests issued in the securitization transaction and dollar amount (or 
corresponding amount in the foreign currency in which the ABS interests 
are issued, as applicable)) of the eligible horizontal residual interest 
that the sponsor is required to fund through the eligible horizontal 
cash reserve account in order for such account, together with other 
retained interests, to satisfy the sponsor's risk retention requirement;
    (B) A description of the material terms of the eligible horizontal 
cash reserve account; and
    (C) The disclosures required in paragraphs (c)(1)(i) and (ii) of 
this section.
    (2) Vertical interest. With respect to any eligible vertical 
interest retained under paragraph (a) of this section, the sponsor must 
disclose:
    (i) A reasonable period of time prior to the sale of an asset-backed 
security

[[Page 222]]

issued in the same offering of ABS interests,
    (A) The form of the eligible vertical interest;
    (B) The percentage that the sponsor is required to retain as a 
vertical interest under this section; and
    (C) A description of the material terms of the vertical interest and 
the amount that the sponsor expects to retain at the closing of the 
securitization transaction.
    (ii) A reasonable time after the closing of the securitization 
transaction, the amount of the vertical interest the sponsor retained at 
closing, if that amount is materially different from the amount 
disclosed under paragraph (c)(2)(i) of this section.
    (d) Record maintenance. A sponsor must retain the certifications and 
disclosures required in paragraphs (a) and (c) of this section in its 
records and must provide the disclosure upon request to the Commission 
and its appropriate Federal banking agency, if any, until three years 
after all ABS interests are no longer outstanding.



Sec. 1234.5  Revolving pool securitizations.

    (a) Definitions. For purposes of this section, the following 
definitions apply:
    Revolving pool securitization means an issuing entity that is 
established to issue on multiple issuance dates more than one series, 
class, subclass, or tranche of asset-backed securities that are 
collateralized by a common pool of securitized assets that will change 
in composition over time, and that does not monetize excess interest and 
fees from its securitized assets.
    Seller's interest means an ABS interest or ABS interests:
    (1) Collateralized by the securitized assets and servicing assets 
owned or held by the issuing entity, other than the following that are 
not considered a component of seller's interest:
    (i) Servicing assets that have been allocated as collateral only for 
a specific series in connection with administering the revolving pool 
securitization, such as a principal accumulation or interest reserve 
account; and
    (ii) Assets that are not eligible under the terms of the 
securitization transaction to be included when determining whether the 
revolving pool securitization holds aggregate securitized assets in 
specified proportions to aggregate outstanding investor ABS interests 
issued; and
    (2) That is pari passu with each series of investor ABS interests 
issued, or partially or fully subordinated to one or more series in 
identical or varying amounts, with respect to the allocation of all 
distributions and losses with respect to the securitized assets prior to 
early amortization of the revolving securitization (as specified in the 
securitization transaction documents); and
    (3) That adjusts for fluctuations in the outstanding principal 
balance of the securitized assets in the pool.
    (b) General requirement. A sponsor satisfies the risk retention 
requirements of Sec. 1234.3 with respect to a securitization transaction 
for which the issuing entity is a revolving pool securitization if the 
sponsor maintains a seller's interest of not less than 5 percent of the 
aggregate unpaid principal balance of all outstanding investor ABS 
interests in the issuing entity.
    (c) Measuring the seller's interest. In measuring the seller's 
interest for purposes of meeting the requirements of paragraph (b) of 
this section:
    (1) The unpaid principal balance of the securitized assets for the 
numerator of the 5 percent ratio shall not include assets of the types 
excluded from the definition of seller's interest in paragraph (a) of 
this section;
    (2) The aggregate unpaid principal balance of outstanding investor 
ABS interests in the denominator of the 5 percent ratio may be reduced 
by the amount of funds held in a segregated principal accumulation 
account for the repayment of outstanding investor ABS interests, if:
    (i) The terms of the securitization transaction documents prevent 
funds in the principal accumulation account from being applied for any 
purpose other than the repayment of the unpaid principal of outstanding 
investor ABS interests; and
    (ii) Funds in that account are invested only in the types of assets 
in

[[Page 223]]

which funds held in an eligible horizontal cash reserve account pursuant 
to Sec. 1234.4 are permitted to be invested;
    (3) If the terms of the securitization transaction documents set 
minimum required seller's interest as a proportion of the unpaid 
principal balance of outstanding investor ABS interests for one or more 
series issued, rather than as a proportion of the aggregate outstanding 
investor ABS interests in all outstanding series combined, the 
percentage of the seller's interest for each such series must, when 
combined with the percentage of any minimum seller's interest set by 
reference to the aggregate outstanding investor ABS interests, equal at 
least 5 percent;
    (4) The 5 percent test must be determined and satisfied at the 
closing of each issuance of ABS interests to investors by the issuing 
entity, and
    (i) At least monthly at a seller's interest measurement date 
specified under the securitization transaction documents, until no ABS 
interest in the issuing entity is held by any person not a wholly-owned 
affiliate of the sponsor; or
    (ii) If the revolving pool securitization fails to meet the 5 
percent test as of any date described in paragraph (c)(4)(i) of this 
section, and the securitization transaction documents specify a cure 
period, the 5 percent test must be determined and satisfied within the 
earlier of the cure period, or one month after the date described in 
paragraph (c)(4)(i).
    (d) Measuring outstanding investor ABS interests. In measuring the 
amount of outstanding investor ABS interests for purposes of this 
section, ABS interests held for the life of such ABS interests by the 
sponsor or its wholly-owned affiliates may be excluded.
    (e) Holding and retention of the seller's interest; legacy trusts. 
(1) Notwithstanding Sec. 1234.12(a), the seller's interest, and any 
offsetting horizontal retention interest retained pursuant to paragraph 
(g) of this section, must be retained by the sponsor or by one or more 
wholly-owned affiliates of the sponsor, including one or more depositors 
of the revolving pool securitization.
    (2) If one revolving pool securitization issues collateral 
certificates representing a beneficial interest in all or a portion of 
the securitized assets held by that securitization to another revolving 
pool securitization, which in turn issues ABS interests for which the 
collateral certificates are all or a portion of the securitized assets, 
a sponsor may satisfy the requirements of paragraphs (b) and (c) of this 
section by retaining the seller's interest for the assets represented by 
the collateral certificates through either of the revolving pool 
securitizations, so long as both revolving pool securitizations are 
retained at the direction of the same sponsor or its wholly-owned 
affiliates.
    (3) If the sponsor retains the seller's interest associated with the 
collateral certificates at the level of the revolving pool 
securitization that issues those collateral certificates, the proportion 
of the seller's interest required by paragraph (b) of this section 
retained at that level must equal the proportion that the principal 
balance of the securitized assets represented by the collateral 
certificates bears to the principal balance of the securitized assets in 
the revolving pool securitization that issues the ABS interests, as of 
each measurement date required by paragraph (c) of this section.
    (f) Offset for pool-level excess funding account. The 5 percent 
seller's interest required on each measurement date by paragraph (c) of 
this section may be reduced on a dollar-for-dollar basis by the balance, 
as of such date, of an excess funding account in the form of a 
segregated account that:
    (1) Is funded in the event of a failure to meet the minimum seller's 
interest requirements or other requirement to maintain a minimum balance 
of securitized assets under the securitization transaction documents by 
distributions otherwise payable to the holder of the seller's interest;
    (2) Is invested only in the types of assets in which funds held in a 
horizontal cash reserve account pursuant to Sec. 1234.4 are permitted to 
be invested; and
    (3) In the event of an early amortization, makes payments of amounts 
held in the account to holders of investor ABS interests in the same 
manner as payments to holders of investor ABS

[[Page 224]]

interests of amounts received on securitized assets.
    (g) Combined seller's interests and horizontal interest retention. 
The 5 percent seller's interest required on each measurement date by 
paragraph (c) of this section may be reduced to a percentage lower than 
5 percent to the extent that, for all series of investor ABS interests 
issued after the applicable effective date of this Sec. 1234.5, the 
sponsor, or notwithstanding Sec. 1234.12(a) a wholly-owned affiliate of 
the sponsor, retains, at a minimum, a corresponding percentage of the 
fair value of ABS interests issued in each series, in the form of one or 
more of the horizontal residual interests meeting the requirements of 
paragraphs (h) or (i).
    (h) Residual ABS interests in excess interest and fees. The sponsor 
may take the offset described in paragraph (g) of this section for a 
residual ABS interest in excess interest and fees, whether certificated 
or uncertificated, in a single or multiple classes, subclasses, or 
tranches, that meets, individually or in the aggregate, the requirements 
of this paragraph (h);
    (1) Each series of the revolving pool securitization distinguishes 
between the series' share of the interest and fee cash flows and the 
series' share of the principal repayment cash flows from the securitized 
assets collateralizing the revolving pool securitization, which may 
according to the terms of the securitization transaction documents, 
include not only the series' ratable share of such cash flows but also 
excess cash flows available from other series;
    (2) The residual ABS interest's claim to any part of the series' 
share of the interest and fee cash flows for any interest payment period 
is subordinated to all accrued and payable interest due on the payment 
date to more senior ABS interests in the series for that period, and 
further reduced by the series' share of losses, including defaults on 
principal of the securitized assets collateralizing the revolving pool 
securitization (whether incurred in that period or carried over from 
prior periods) to the extent that such payments would have been included 
in amounts payable to more senior interests in the series;
    (3) The revolving pool securitization continues to revolve, with one 
or more series, classes, subclasses, or tranches of asset-backed 
securities that are collateralized by a common pool of assets that 
change in composition over time; and
    (4) For purposes of taking the offset described in paragraph (g) of 
this section, the sponsor determines the fair value of the residual ABS 
interest in excess interest and fees, and the fair value of the series 
of outstanding investor ABS interests to which it is subordinated and 
supports using the fair value measurement framework under GAAP, as of:
    (i) The closing of the securitization transaction issuing the 
supported ABS interests; and
    (ii) The seller's interest measurement dates described in paragraph 
(c)(4) of this section, except that for these periodic determinations 
the sponsor must update the fair value of the residual ABS interest in 
excess interest and fees for the numerator of the percentage ratio, but 
may at the sponsor's option continue to use the fair values determined 
in (h)(4)(i) for the outstanding investor ABS interests in the 
denominator.
    (i) Offsetting eligible horizontal residual interest. The sponsor 
may take the offset described in paragraph (g) of this section for ABS 
interests that would meet the definition of eligible horizontal residual 
interests in Sec. 1234.2 but for the sponsor's simultaneous holding of 
subordinated seller's interests, residual ABS interests in excess 
interests and fees, or a combination of the two, if:
    (1) The sponsor complies with all requirements of paragraphs (b) 
through (e) of this section for its holdings of subordinated seller's 
interest, and paragraph (h) for its holdings of residual ABS interests 
in excess interests and fees, as applicable;
    (2) For purposes of taking the offset described in paragraph (g) of 
this section, the sponsor determines the fair value of the eligible 
horizontal residual interest as a percentage of the fair value of the 
outstanding investor ABS interests in the series supported by the 
eligible horizontal residual interest,

[[Page 225]]

determined using the fair value measurement framework under GAAP:
    (i) As of the closing of the securitization transaction issuing the 
supported ABS interests; and
    (ii) Without including in the numerator of the percentage ratio any 
fair value based on:
    (A) The subordinated seller's interest or residual ABS interest in 
excess interest and fees;
    (B) the interest payable to the sponsor on the eligible horizontal 
residual interest, if the sponsor is including the value of residual ABS 
interest in excess interest and fees pursuant to paragraph (h) of this 
section in taking the offset in paragraph (g) of this section; and,
    (C) the principal payable to the sponsor on the eligible horizontal 
residual interest, if the sponsor is including the value of the seller's 
interest pursuant to paragraphs (b) through (f) of this section and 
distributions on that seller's interest are available to reduce charge-
offs that would otherwise be allocated to reduce principal payable to 
the offset eligible horizontal residual interest.
    (j) Specified dates. A sponsor using data about the revolving pool 
securitization's collateral, or ABS interests previously issued, to 
determine the closing-date percentage of a seller's interest, residual 
ABS interest in excess interest and fees, or eligible horizontal 
residual interest pursuant to this Sec. 1234.5 may use such data 
prepared as of specified dates if:
    (1) The sponsor describes the specified dates in the disclosures 
required by paragraph (k) of this section; and
    (2) The dates are no more than 60 days prior to the date of first 
use with investors of disclosures required for the interest by paragraph 
(k) of this section, or for revolving pool securitizations that make 
distributions to investors on a quarterly or less frequent basis, no 
more than 135 days prior to the date of first use with investors of such 
disclosures.
    (k) Disclosure and record maintenance. (1) Disclosure. A sponsor 
relying on this section shall provide, or cause to be provided, to 
potential investors, under the caption ``Credit Risk Retention'' the 
following disclosure in written form and within the time frames set 
forth in this paragraph (k):
    (i) A reasonable period of time prior to the sale of an asset-backed 
security, a description of the material terms of the seller's interest, 
and the percentage of the seller's interest that the sponsor expects to 
retain at the closing of the securitization transaction, measured in 
accordance with the requirements of this Sec. 1234.5, as a percentage of 
the aggregate unpaid principal balance of all outstanding investor ABS 
interests issued, or as a percentage of the aggregate unpaid principal 
balance of outstanding investor ABS interests for one or more series 
issued, as required by the terms of the securitization transaction;
    (ii) A reasonable time after the closing of the securitization 
transaction, the amount of seller's interest the sponsor retained at 
closing, if that amount is materially different from the amount 
disclosed under paragraph (k)(1)(i) of this section; and
    (iii) A description of the material terms of any horizontal residual 
interests offsetting the seller's interest in accordance with paragraphs 
(g), (h), and (i) of this section; and
    (iv) Disclosure of the fair value of those horizontal residual 
interests retained by the sponsor for the series being offered to 
investors and described in the disclosures, as a percentage of the fair 
value of the outstanding investor ABS interests issued, described in the 
same manner and within the same timeframes required for disclosure of 
the fair values of eligible horizontal residual interests specified in 
Sec. 1234.4(c).
    (2) Adjusted data. Disclosures required by this paragraph (k) to be 
made a reasonable period of time prior to the sale of an asset-backed 
security of the amount of seller's interest, residual ABS interest in 
excess interest and fees, or eligible horizontal residual interest may 
include adjustments to the amount of securitized assets for additions or 
removals the sponsor expects to make before the closing date and 
adjustments to the amount of outstanding investor ABS interests for 
expected increases and decreases of those interests under the control of 
the sponsor.

[[Page 226]]

    (3) Record maintenance. A sponsor must retain the disclosures 
required in paragraph (k)(1) of this section in its records and must 
provide the disclosure upon request to the Commission and its 
appropriate Federal banking agency, if any, until three years after all 
ABS interests are no longer outstanding.
    (l) Early amortization of all outstanding series. A sponsor that 
organizes a revolving pool securitization that relies on this 
Sec. 1234.5 to satisfy the risk retention requirements of Sec. 1234.3, 
does not violate the requirements of this part if its seller's interest 
falls below the level required by Sec. 1234. 5 after the revolving pool 
securitization commences early amortization, pursuant to the terms of 
the securitization transaction documents, of all series of outstanding 
investor ABS interests, if:
    (1) The sponsor was in full compliance with the requirements of this 
section on all measurement dates specified in paragraph (c) of this 
section prior to the commencement of early amortization;
    (2) The terms of the seller's interest continue to make it pari 
passu with or subordinate in identical or varying amounts to each series 
of outstanding investor ABS interests issued with respect to the 
allocation of all distributions and losses with respect to the 
securitized assets;
    (3) The terms of any horizontal interest relied upon by the sponsor 
pursuant to paragraph (g) to offset the minimum seller's interest amount 
continue to require the interests to absorb losses in accordance with 
the terms of paragraph (h) or (i) of this section, as applicable; and
    (4) The revolving pool securitization issues no additional ABS 
interests after early amortization is initiated to any person not a 
wholly-owned affiliate of the sponsor, either at the time of issuance or 
during the amortization period.



Sec. 1234.6  Eligible ABCP conduits.

    (a) Definitions. For purposes of this section, the following 
additional definitions apply:
    100 percent liquidity coverage means an amount equal to the 
outstanding balance of all ABCP issued by the conduit plus any accrued 
and unpaid interest without regard to the performance of the ABS 
interests held by the ABCP conduit and without regard to any credit 
enhancement.
    ABCP means asset-backed commercial paper that has a maturity at the 
time of issuance not exceeding 397 days, exclusive of days of grace, or 
any renewal thereof the maturity of which is likewise limited.
    ABCP conduit means an issuing entity with respect to ABCP.
    Eligible ABCP conduit means an ABCP conduit, provided that:
    (1) The ABCP conduit is bankruptcy remote or otherwise isolated for 
insolvency purposes from the sponsor of the ABCP conduit and from any 
intermediate SPV;
    (2) The ABS interests acquired by the ABCP conduit are:
    (i) ABS interests collateralized solely by assets originated by an 
originator-seller and by servicing assets;
    (ii) Special units of beneficial interest (or similar ABS interests) 
in a trust or special purpose vehicle that retains legal title to leased 
property underlying leases originated by an originator-seller that were 
transferred to an intermediate SPV in connection with a securitization 
collateralized solely by such leases and by servicing assets;
    (iii) ABS interests in a revolving pool securitization 
collateralized solely by assets originated by an originator-seller and 
by servicing assets; or
    (iv) ABS interests described in paragraph (2)(i), (ii), or (iii) of 
this definition that are collateralized, in whole or in part, by assets 
acquired by an originator-seller in a business combination that 
qualifies for business combination accounting under GAAP, and, if 
collateralized in part, the remainder of such assets are assets 
described in paragraph (2)(i), (ii), or (iii) of this definition; and
    (v) Acquired by the ABCP conduit in an initial issuance by or on 
behalf of an intermediate SPV:
    (A) Directly from the intermediate SPV,
    (B) From an underwriter of the ABS interests issued by the 
intermediate SPV, or

[[Page 227]]

    (C) From another person who acquired the ABS interests directly from 
the intermediate SPV;
    (3) The ABCP conduit is collateralized solely by ABS interests 
acquired from intermediate SPVs as described in paragraph (2) of this 
definition and servicing assets; and
    (4) A regulated liquidity provider has entered into a legally 
binding commitment to provide 100 percent liquidity coverage (in the 
form of a lending facility, an asset purchase agreement, a repurchase 
agreement, or other similar arrangement) to all the ABCP issued by the 
ABCP conduit by lending to, purchasing ABCP issued by, or purchasing 
assets from, the ABCP conduit in the event that funds are required to 
repay maturing ABCP issued by the ABCP conduit. With respect to the 100 
percent liquidity coverage, in the event that the ABCP conduit is unable 
for any reason to repay maturing ABCP issued by the issuing entity, the 
liquidity provider shall be obligated to pay an amount equal to any 
shortfall, and the total amount that may be due pursuant to the 100 
percent liquidity coverage shall be equal to 100 percent of the amount 
of the ABCP outstanding at any time plus accrued and unpaid interest 
(amounts due pursuant to the required liquidity coverage may not be 
subject to credit performance of the ABS interests held by the ABCP 
conduit or reduced by the amount of credit support provided to the ABCP 
conduit and liquidity support that only funds performing loans or 
receivables or performing ABS interests does not meet the requirements 
of this section).
    Intermediate SPV means a special purpose vehicle that:
    (1) (i) Is a direct or indirect wholly-owned affiliate of the 
originator-seller; or
    (ii) Has nominal equity owned by a trust or corporate service 
provider that specializes in providing independent ownership of special 
purpose vehicles, and such trust or corporate service provider is not 
affiliated with any other transaction parties;
    (2) Is bankruptcy remote or otherwise isolated for insolvency 
purposes from the eligible ABCP conduit and from each originator-seller 
and each majority-owned affiliate in each case that, directly or 
indirectly, sells or transfers assets to such intermediate SPV;
    (3) Acquires assets from the originator-seller that are originated 
by the originator-seller or acquired by the originator-seller in the 
acquisition of a business that qualifies for business combination 
accounting under GAAP or acquires ABS interests issued by another 
intermediate SPV of the originator-seller that are collateralized solely 
by such assets; and
    (4) Issues ABS interests collateralized solely by such assets, as 
applicable.
    Originator-seller means an entity that originates assets and sells 
or transfers those assets, directly or through a majority-owned 
affiliate, to an intermediate SPV, and includes (except for the purposes 
of identifying the sponsorship and affiliation of an intermediate SPV 
pursuant to this Sec. 1234.6) any affiliate of the originator-seller 
that, directly or indirectly, majority controls, is majority controlled 
by or is under common majority control with, the originator-seller. For 
purposes of this definition, majority control means ownership of more 
than 50 percent of the equity of an entity, or ownership of any other 
controlling financial interest in the entity, as determined under GAAP.
    Regulated liquidity provider means:
    (1) A depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813));
    (2) A bank holding company (as defined in 12 U.S.C. 1841), or a 
subsidiary thereof;
    (3) A savings and loan holding company (as defined in 12 U.S.C. 
1467a), provided all or substantially all of the holding company's 
activities are permissible for a financial holding company under 12 
U.S.C. 1843(k), or a subsidiary thereof; or
    (4) A foreign bank whose home country supervisor (as defined in 
Sec. 211.21 of the Federal Reserve Board's Regulation K (12 CFR 211.21)) 
has adopted capital standards consistent with the Capital Accord of the 
Basel Committee on Banking Supervision, as amended, and that is subject 
to such standards, or a subsidiary thereof.

[[Page 228]]

    (b) In general. An ABCP conduit sponsor satisfies the risk retention 
requirement of Sec. 1234.3 with respect to the issuance of ABCP by an 
eligible ABCP conduit in a securitization transaction if, for each ABS 
interest the ABCP conduit acquires from an intermediate SPV:
    (1) An originator-seller of the intermediate SPV retains an economic 
interest in the credit risk of the assets collateralizing the ABS 
interest acquired by the eligible ABCP conduit in the amount and manner 
required under Sec. 1234.4 or Sec. 1234.5; and
    (2) The ABCP conduit sponsor:
    (i) Approves each originator-seller permitted to sell or transfer 
assets, directly or indirectly, to an intermediate SPV from which an 
eligible ABCP conduit acquires ABS interests;
    (ii) Approves each intermediate SPV from which an eligible ABCP 
conduit is permitted to acquire ABS interests;
    (iii) Establishes criteria governing the ABS interests, and the 
securitized assets underlying the ABS interests, acquired by the ABCP 
conduit;
    (iv) Administers the ABCP conduit by monitoring the ABS interests 
acquired by the ABCP conduit and the assets supporting those ABS 
interests, arranging for debt placement, compiling monthly reports, and 
ensuring compliance with the ABCP conduit documents and with the ABCP 
conduit's credit and investment policy; and
    (v) Maintains and adheres to policies and procedures for ensuring 
that the requirements in this paragraph (b) of this section have been 
met.
    (c) Originator-seller compliance with risk retention. The use of the 
risk retention option provided in this section by an ABCP conduit 
sponsor does not relieve the originator-seller that sponsors ABS 
interests acquired by an eligible ABCP conduit from such originator-
seller's obligation to comply with its own risk retention obligations 
under this part.
    (d) Disclosures--(1) Periodic disclosures to investors. An ABCP 
conduit sponsor relying upon this section shall provide, or cause to be 
provided, to each purchaser of ABCP, before or contemporaneously with 
the first sale of ABCP to such purchaser and at least monthly 
thereafter, to each holder of commercial paper issued by the ABCP 
conduit, in writing, each of the following items of information, which 
shall be as of a date not more than 60 days prior to date of first use 
with investors:
    (i) The name and form of organization of the regulated liquidity 
provider that provides liquidity coverage to the eligible ABCP conduit, 
including a description of the material terms of such liquidity 
coverage, and notice of any failure to fund.
    (ii) With respect to each ABS interest held by the ABCP conduit:
    (A) The asset class or brief description of the underlying 
securitized assets;
    (B) The standard industrial category code (SIC Code) for the 
originator-seller that will retain (or has retained) pursuant to this 
section an interest in the securitization transaction; and
    (C) A description of the percentage amount of risk retention 
pursuant to the rule by the originator-seller, and whether it is in the 
form of an eligible horizontal residual interest, vertical interest, or 
revolving pool securitization seller's interest, as applicable.
    (2) Disclosures to regulators regarding originator-sellers. An ABCP 
conduit sponsor relying upon this section shall provide, or cause to be 
provided, upon request, to the Commission and its appropriate Federal 
banking agency, if any, in writing, all of the information required to 
be provided to investors in paragraph (d)(1) of this section, and the 
name and form of organization of each originator-seller that will retain 
(or has retained) pursuant to this section an interest in the 
securitization transaction.
    (e) Sale or transfer of ABS interests between eligible ABCP 
conduits. At any time, an eligible ABCP conduit that acquired an ABS 
interest in accordance with the requirements set forth in this section 
may transfer, and another eligible ABCP conduit may acquire, such ABS 
interest, if the following conditions are satisfied:
    (1) The sponsors of both eligible ABCP conduits are in compliance 
with this section; and

[[Page 229]]

    (2) The same regulated liquidity provider has entered into one or 
more legally binding commitments to provide 100 percent liquidity 
coverage to all the ABCP issued by both eligible ABCP conduits.
    (f) Duty to comply. (1) The ABCP conduit sponsor shall be 
responsible for compliance with this section.
    (2) An ABCP conduit sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures that are 
reasonably designed to monitor compliance by each originator-seller 
which is satisfying a risk retention obligation in respect of ABS 
interests acquired by an eligible ABCP conduit with the requirements of 
paragraph (b)(1) of this section; and
    (ii) In the event that the ABCP conduit sponsor determines that an 
originator-seller no longer complies with the requirements of paragraph 
(b)(1) of this section, shall:
    (A) Promptly notify the holders of the ABCP, and upon request, the 
Commission and its appropriate Federal banking agency, if any, in 
writing of:
    (1) The name and form of organization of any originator-seller that 
fails to retain risk in accordance with paragraph (b)(1) of this section 
and the amount of ABS interests issued by an intermediate SPV of such 
originator-seller and held by the ABCP conduit;
    (2) The name and form of organization of any originator-seller that 
hedges, directly or indirectly through an intermediate SPV, its risk 
retention in violation of paragraph (b)(1) of this section and the 
amount of ABS interests issued by an intermediate SPV of such 
originator-seller and held by the ABCP conduit; and
    (3) Any remedial actions taken by the ABCP conduit sponsor or other 
party with respect to such ABS interests; and
    (B) Take other appropriate steps pursuant to the requirements of 
paragraphs (b)(2)(iv) and (v) of this section which may include, as 
appropriate, curing any breach of the requirements in this section, or 
removing from the eligible ABCP conduit any ABS interest that does not 
comply with the requirements in this section.



Sec. 1234.7  Commercial mortgage-backed securities.

    (a) Definitions. For purposes of this section, the following 
definition shall apply:
    Special servicer means, with respect to any securitization of 
commercial real estate loans, any servicer that, upon the occurrence of 
one or more specified conditions in the servicing agreement, has the 
right to service one or more assets in the transaction.
    (b) Third-party purchaser. A sponsor may satisfy some or all of its 
risk retention requirements under Sec. 1234.3 with respect to a 
securitization transaction if a third party (or any majority-owned 
affiliate thereof) purchases and holds for its own account an eligible 
horizontal residual interest in the issuing entity in the same form, 
amount, and manner as would be held by the sponsor under Sec. 1234.4 and 
all of the following conditions are met:
    (1) Number of third-party purchasers. At any time, there are no more 
than two third-party purchasers of an eligible horizontal residual 
interest. If there are two third-party purchasers, each third-party 
purchaser's interest must be pari passu with the other third-party 
purchaser's interest.
    (2) Composition of collateral. The securitization transaction is 
collateralized solely by commercial real estate loans and servicing 
assets.
    (3) Source of funds. (i) Each third-party purchaser pays for the 
eligible horizontal residual interest in cash at the closing of the 
securitization transaction.
    (ii) No third-party purchaser obtains financing, directly or 
indirectly, for the purchase of such interest from any other person that 
is a party to, or an affiliate of a party to, the securitization 
transaction (including, but not limited to, the sponsor, depositor, or 
servicer other than a special servicer affiliated with the third-party 
purchaser), other than a person that is a party to the transaction 
solely by reason of being an investor.
    (4) Third-party review. Each third-party purchaser conducts an 
independent review of the credit risk of each securitized asset prior to 
the sale of the asset-backed securities in the

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securitization transaction that includes, at a minimum, a review of the 
underwriting standards, collateral, and expected cash flows of each 
commercial real estate loan that is collateral for the asset-backed 
securities.
    (5) Affiliation and control rights. (i) Except as provided in 
paragraph (b)(5)(ii) of this section, no third-party purchaser is 
affiliated with any party to the securitization transaction (including, 
but not limited to, the sponsor, depositor, or servicer) other than 
investors in the securitization transaction.
    (ii) Notwithstanding paragraph (b)(5)(i) of this section, a third-
party purchaser may be affiliated with:
    (A) The special servicer for the securitization transaction; or
    (B) One or more originators of the securitized assets, as long as 
the assets originated by the affiliated originator or originators 
collectively comprise less than 10 percent of the unpaid principal 
balance of the securitized assets included in the securitization 
transaction at the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction.
    (6) Operating Advisor. The underlying securitization transaction 
documents shall provide for the following:
    (i) The appointment of an operating advisor (the Operating Advisor) 
that:
    (A) Is not affiliated with other parties to the securitization 
transaction;
    (B) Does not directly or indirectly have any financial interest in 
the securitization transaction other than in fees from its role as 
Operating Advisor; and
    (C) Is required to act in the best interest of, and for the benefit 
of, investors as a collective whole;
    (ii) Standards with respect to the Operating Advisor's experience, 
expertise and financial strength to fulfill its duties and 
responsibilities under the applicable transaction documents over the 
life of the securitization transaction;
    (iii) The terms of the Operating Advisor's compensation with respect 
to the securitization transaction;
    (iv) When the eligible horizontal residual interest has been reduced 
by principal payments, realized losses, and appraisal reduction amounts 
(which reduction amounts are determined in accordance with the 
applicable transaction documents) to a principal balance of 25 percent 
or less of its initial principal balance, the special servicer for the 
securitized assets must consult with the Operating Advisor in connection 
with, and prior to, any material decision in connection with its 
servicing of the securitized assets, including, without limitation:
    (A) Any material modification of, or waiver with respect to, any 
provision of a loan agreement (including a mortgage, deed of trust, or 
other security agreement);
    (B) Foreclosure upon or comparable conversion of the ownership of a 
property; or
    (C) Any acquisition of a property.
    (v) The Operating Advisor shall have adequate and timely access to 
information and reports necessary to fulfill its duties under the 
transaction documents, including all reports made available to holders 
of ABS interests and third-party purchasers, and shall be responsible 
for:
    (A) Reviewing the actions of the special servicer;
    (B) Reviewing all reports provided by the special servicer to the 
issuing entity or any holder of ABS interests;
    (C) Reviewing for accuracy and consistency with the transaction 
documents calculations made by the special servicer; and
    (D) Issuing a report to investors (including any third-party 
purchasers) and the issuing entity on a periodic basis concerning:
    (1) Whether the Operating Advisor believes, in its sole discretion 
exercised in good faith, that the special servicer is operating in 
compliance with any standard required of the special servicer in the 
applicable transaction documents; and
    (2) Which, if any, standards the Operating Advisor believes, in its 
sole discretion exercised in good faith, the special servicer has failed 
to comply.
    (vi)(A) The Operating Advisor shall have the authority to recommend 
that the special servicer be replaced by a successor special servicer if 
the Operating Advisor determines, in its sole discretion exercised in 
good faith, that:

[[Page 231]]

    (1) The special servicer has failed to comply with a standard 
required of the special servicer in the applicable transaction 
documents; and
    (2) Such replacement would be in the best interest of the investors 
as a collective whole; and
    (B) If a recommendation described in paragraph (b)(6)(vi)(A) of this 
section is made, the special servicer shall be replaced upon the 
affirmative vote of a majority of the outstanding principal balance of 
all ABS interests voting on the matter, with a minimum of a quorum of 
ABS interests voting on the matter. For purposes of such vote, the 
applicable transaction documents shall specify the quorum and may not 
specify a quorum of more than the holders of 20 percent of the 
outstanding principal balance of all ABS interests in the issuing 
entity, with such quorum including at least three ABS interest holders 
that are not affiliated with each other.
    (7) Disclosures. The sponsor provides, or causes to be provided, to 
potential investors a reasonable period of time prior to the sale of the 
asset-backed securities as part of the securitization transaction and, 
upon request, to the Commission and its appropriate Federal banking 
agency, if any, the following disclosure in written form under the 
caption ``Credit Risk Retention'':
    (i) The name and form of organization of each initial third-party 
purchaser that acquired an eligible horizontal residual interest at the 
closing of a securitization transaction;
    (ii) A description of each initial third-party purchaser's 
experience in investing in commercial mortgage-backed securities;
    (iii) Any other information regarding each initial third-party 
purchaser or each initial third-party purchaser's retention of the 
eligible horizontal residual interest that is material to investors in 
light of the circumstances of the particular securitization transaction;
    (iv) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest that will be retained (or was retained) by each 
initial third-party purchaser, as well as the amount of the purchase 
price paid by each initial third-party purchaser for such interest;
    (v) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest in the securitization transaction that the sponsor 
would have retained pursuant to Sec. 1234.4 if the sponsor had relied on 
retaining an eligible horizontal residual interest in that section to 
meet the requirements of Sec. 1234.3 with respect to the transaction;
    (vi) A description of the material terms of the eligible horizontal 
residual interest retained by each initial third-party purchaser, 
including the same information as is required to be disclosed by 
sponsors retaining horizontal interests pursuant to Sec. 1234.4;
    (vii) The material terms of the applicable transaction documents 
with respect to the Operating Advisor, including without limitation:
    (A) The name and form of organization of the Operating Advisor;
    (B) A description of any material conflict of interest or material 
potential conflict of interest between the Operating Advisor and any 
other party to the transaction;
    (C) The standards required by paragraph (b)(6)(ii) of this section 
and a description of how the Operating Advisor satisfies each of the 
standards; and
    (D) The terms of the Operating Advisor's compensation under 
paragraph (b)(6)(iii) of this section; and
    (viii) The representations and warranties concerning the securitized 
assets, a schedule of any securitized assets that are determined not to 
comply with such representations and warranties, and what factors were 
used to make the determination that such securitized assets should be 
included in the pool notwithstanding that the securitized assets did not 
comply with such representations and warranties,

[[Page 232]]

such as compensating factors or a determination that the exceptions were 
not material.
    (8) Hedging, transfer and pledging--(i) General rule. Except as set 
forth in paragraph (b)(8)(ii) of this section, each third-party 
purchaser and its affiliates must comply with the hedging and other 
restrictions in Sec. 1234.12 as if it were the retaining sponsor with 
respect to the securitization transaction and had acquired the eligible 
horizontal residual interest pursuant to Sec. 1234.4; provided that, the 
hedging and other restrictions in Sec. 1234.12 shall not apply on or 
after the date that each CRE loan (as defined in Sec. 1234.14) that 
serves as collateral for outstanding ABS interests has been defeased. 
For purposes of this section, a loan is deemed to be defeased if:
    (A) cash or cash equivalents of the types permitted for an eligible 
horizontal cash reserve account pursuant to Sec. 1234.4 whose maturity 
corresponds to the remaining debt service obligations, have been pledged 
to the issuing entity as collateral for the loan and are in such amounts 
and payable at such times as necessary to timely generate cash 
sufficient to make all remaining debt service payments due on such loan; 
and
    (B) the issuing entity has an obligation to release its lien on the 
loan.
    (ii) Exceptions--(A) Transfer by initial third-party purchaser or 
sponsor. An initial third-party purchaser that acquired an eligible 
horizontal residual interest at the closing of a securitization 
transaction in accordance with this section, or a sponsor that acquired 
an eligible horizontal residual interest at the closing of a 
securitization transaction in accordance with this section, may, on or 
after the date that is five years after the date of the closing of the 
securitization transaction, transfer that interest to a subsequent 
third-party purchaser that complies with paragraph (b)(8)(ii)(C) of this 
section. The initial third-party purchaser shall provide the sponsor 
with complete identifying information for the subsequent third-party 
purchaser.
    (B) Transfer by subsequent third-party purchaser. At any time, a 
subsequent third-party purchaser that acquired an eligible horizontal 
residual interest pursuant to this section may transfer its interest to 
a different third-party purchaser that complies with paragraph 
(b)(8)(ii)(C) of this section. The transferring third-party purchaser 
shall provide the sponsor with complete identifying information for the 
acquiring third-party purchaser.
    (C) Requirements applicable to subsequent third-party purchasers. A 
subsequent third-party purchaser is subject to all of the requirements 
of paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section 
applicable to third-party purchasers, provided that obligations under 
paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section that 
apply to initial third-party purchasers at or before the time of closing 
of the securitization transaction shall apply to successor third-party 
purchasers at or before the time of the transfer of the eligible 
horizontal residual interest to the successor third-party purchaser.
    (c) Duty to comply. (1) The retaining sponsor shall be responsible 
for compliance with this section by itself and for compliance by each 
initial or subsequent third-party purchaser that acquired an eligible 
horizontal residual interest in the securitization transaction.
    (2) A sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures to monitor 
each third-party purchaser's compliance with the requirements of 
paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section; and
    (ii) In the event that the sponsor determines that a third-party 
purchaser no longer complies with one or more of the requirements of 
paragraphs (b)(1), (b)(3) through (5), or (b)(8) of this section, shall 
promptly notify, or cause to be notified, the holders of the ABS 
interests issued in the securitization transaction of such noncompliance 
by such third-party purchaser.



Sec. 1234.8  Federal National Mortgage Association and Federal Home
Loan Mortgage Corporation ABS.

    (a) In general. A sponsor satisfies its risk retention requirement 
under this part if the sponsor fully guarantees the

[[Page 233]]

timely payment of principal and interest on all ABS interests issued by 
the issuing entity in the securitization transaction and is:
    (1) The Federal National Mortgage Association or the Federal Home 
Loan Mortgage Corporation operating under the conservatorship or 
receivership of the Federal Housing Finance Agency pursuant to section 
1367 of the Federal Housing Enterprises Financial Safety and Soundness 
Act of 1992 (12 U.S.C. 4617) with capital support from the United 
States; or
    (2) Any limited-life regulated entity succeeding to the charter of 
either the Federal National Mortgage Association or the Federal Home 
Loan Mortgage Corporation pursuant to section 1367(i) of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4617(i)), provided that the entity is operating with capital 
support from the United States.
    (b) Certain provisions not applicable. The provisions of 
Sec. 1234.12(b), (c), and (d) shall not apply to a sponsor described in 
paragraph (a)(1) or (2) of this section, its affiliates, or the issuing 
entity with respect to a securitization transaction for which the 
sponsor has retained credit risk in accordance with the requirements of 
this section.
    (c) Disclosure. A sponsor relying on this section shall provide to 
investors, in written form under the caption ``Credit Risk Retention'' 
and, upon request, to the Federal Housing Finance Agency and the 
Commission, a description of the manner in which it has met the credit 
risk retention requirements of this part.



Sec. 1234.9  Open market CLOs.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    CLO means a special purpose entity that:
    (i) Issues debt and equity interests, and
    (ii) Whose assets consist primarily of loans that are securitized 
assets and servicing assets.
    CLO-eligible loan tranche means a term loan of a syndicated facility 
that meets the criteria set forth in paragraph (c) of this section.
    CLO manager means an entity that manages a CLO, which entity is 
registered as an investment adviser under the Investment Advisers Act of 
1940, as amended (15 U.S.C. 80b-1 et seq.), or is an affiliate of such a 
registered investment adviser and itself is managed by such registered 
investment adviser.
    Commercial borrower means an obligor under a corporate credit 
obligation (including a loan).
    Initial loan syndication transaction means a transaction in which a 
loan is syndicated to a group of lenders.
    Lead arranger means, with respect to a CLO-eligible loan tranche, an 
institution that:
    (i) Is active in the origination, structuring and syndication of 
commercial loan transactions (as defined in Sec. 1234.14) and has played 
a primary role in the structuring, underwriting and distribution on the 
primary market of the CLO-eligible loan tranche.
    (ii) Has taken an allocation of the funded portion of the syndicated 
credit facility under the terms of the transaction that includes the 
CLO-eligible loan tranche of at least 20 percent of the aggregate 
principal balance at origination, and no other member (or members 
affiliated with each other) of the syndication group that funded at 
origination has taken a greater allocation; and
    (iii) Is identified in the applicable agreement governing the CLO-
eligible loan tranche; represents therein to the holders of the CLO-
eligible loan tranche and to any holders of participation interests in 
such CLO-eligible loan tranche that such lead arranger satisfies the 
requirements of paragraph (i) of this definition and, at the time of 
initial funding of the CLO-eligible tranche, will satisfy the 
requirements of paragraph (ii) of this definition; further represents 
therein (solely for the purpose of assisting such holders to determine 
the eligibility of such CLO-eligible loan tranche to be held by an open 
market CLO) that in the reasonable judgment of such lead arranger, the 
terms of such CLO-eligible loan tranche are consistent with the 
requirements of paragraphs (c)(2) and (3) of this section; and covenants 
therein to such holders that such lead arranger

[[Page 234]]

will fulfill the requirements of paragraph (c)(1) of this section.
    Open market CLO means a CLO:
    (i) Whose assets consist of senior, secured syndicated loans 
acquired by such CLO directly from the sellers thereof in open market 
transactions and of servicing assets,
    (ii) That is managed by a CLO manager, and
    (iii) That holds less than 50 percent of its assets, by aggregate 
outstanding principal amount, in loans syndicated by lead arrangers that 
are affiliates of the CLO or the CLO manager or originated by 
originators that are affiliates of the CLO or the CLO manager.
    Open market transaction means:
    (i) Either an initial loan syndication transaction or a secondary 
market transaction in which a seller offers senior, secured syndicated 
loans to prospective purchasers in the loan market on market terms on an 
arm's length basis, which prospective purchasers include, but are not 
limited to, entities that are not affiliated with the seller, or
    (ii) A reverse inquiry from a prospective purchaser of a senior, 
secured syndicated loan through a dealer in the loan market to purchase 
a senior, secured syndicated loan to be sourced by the dealer in the 
loan market.
    Secondary market transaction means a purchase of a senior, secured 
syndicated loan not in connection with an initial loan syndication 
transaction but in the secondary market.
    Senior, secured syndicated loan means a loan made to a commercial 
borrower that:
    (i) Is not subordinate in right of payment to any other obligation 
for borrowed money of the commercial borrower,
    (ii) Is secured by a valid first priority security interest or lien 
in or on specified collateral securing the commercial borrower's 
obligations under the loan, and
    (iii) The value of the collateral subject to such first priority 
security interest or lien, together with other attributes of the obligor 
(including, without limitation, its general financial condition, ability 
to generate cash flow available for debt service and other demands for 
that cash flow), is adequate (in the commercially reasonable judgment of 
the CLO manager exercised at the time of investment) to repay the loan 
and to repay all other indebtedness of equal seniority secured by such 
first priority security interest or lien in or on the same collateral, 
and the CLO manager certifies, on or prior to each date that it acquires 
a loan constituting part of a new CLO-eligible tranche, that it has 
policies and procedures to evaluate the likelihood of repayment of loans 
acquired by the CLO and it has followed such policies and procedures in 
evaluating each CLO-eligible loan tranche.
    (b) In general. A sponsor satisfies the risk retention requirements 
of Sec. 1234.3 with respect to an open market CLO transaction if:
    (1) The open market CLO does not acquire or hold any assets other 
than CLO-eligible loan tranches that meet the requirements of paragraph 
(c) of this section and servicing assets;
    (2) The governing documents of such open market CLO require that, at 
all times, the assets of the open market CLO consist of senior, secured 
syndicated loans that are CLO-eligible loan tranches and servicing 
assets;
    (3) The open market CLO does not invest in ABS interests or in 
credit derivatives other than hedging transactions that are servicing 
assets to hedge risks of the open market CLO;
    (4) All purchases of CLO-eligible loan tranches and other assets by 
the open market CLO issuing entity or through a warehouse facility used 
to accumulate the loans prior to the issuance of the CLO's ABS interests 
are made in open market transactions on an arms-length basis;
    (5) The CLO manager of the open market CLO is not entitled to 
receive any management fee or gain on sale at the time the open market 
CLO issues its ABS interests.
    (c) CLO-eligible loan tranche. To qualify as a CLO-eligible loan 
tranche, a term loan of a syndicated credit facility to a commercial 
borrower must have the following features:
    (1) A minimum of 5 percent of the face amount of the CLO-eligible 
loan tranche is retained by the lead arranger thereof until the earliest 
of the repayment, maturity, involuntary and

[[Page 235]]

unscheduled acceleration, payment default, or bankruptcy default of such 
CLO-eligible loan tranche, provided that such lead arranger complies 
with limitations on hedging, transferring and pledging in Sec. 1234.12 
with respect to the interest retained by the lead arranger.
    (2) Lender voting rights within the credit agreement and any 
intercreditor or other applicable agreements governing such CLO-eligible 
loan tranche are defined so as to give holders of the CLO-eligible loan 
tranche consent rights with respect to, at minimum, any material waivers 
and amendments of such applicable documents, including but not limited 
to, adverse changes to the calculation or payments of amounts due to the 
holders of the CLO-eligible tranche, alterations to pro rata provisions, 
changes to voting provisions, and waivers of conditions precedent; and
    (3) The pro rata provisions, voting provisions, and similar 
provisions applicable to the security associated with such CLO-eligible 
loan tranches under the CLO credit agreement and any intercreditor or 
other applicable agreements governing such CLO-eligible loan tranches 
are not materially less advantageous to the holder(s) of such CLO-
eligible tranche than the terms of other tranches of comparable 
seniority in the broader syndicated credit facility.
    (d) Disclosures. A sponsor relying on this section shall provide, or 
cause to be provided, to potential investors a reasonable period of time 
prior to the sale of the asset-backed securities in the securitization 
transaction and at least annually with respect to the information 
required by paragraph (d)(1) of this section and, upon request, to the 
Commission and its appropriate Federal banking agency, if any, the 
following disclosure in written form under the caption ``Credit Risk 
Retention'':
    (1) Open market CLOs. A complete list of every asset held by an open 
market CLO (or before the CLO's closing, in a warehouse facility in 
anticipation of transfer into the CLO at closing), including the 
following information:
    (i) The full legal name, Standard Industrial Classification (SIC) 
category code, and legal entity identifier (LEI) issued by a utility 
endorsed or otherwise governed by the Global LEI Regulatory Oversight 
Committee or the Global LEI Foundation (if an LEI has been obtained by 
the obligor) of the obligor of the loan or asset;
    (ii) The full name of the specific loan tranche held by the CLO;
    (iii) The face amount of the entire loan tranche held by the CLO, 
and the face amount of the portion thereof held by the CLO;
    (iv) The price at which the loan tranche was acquired by the CLO; 
and
    (v) For each loan tranche, the full legal name of the lead arranger 
subject to the sales and hedging restrictions of Sec. 1234.12; and
    (2) CLO manager. The full legal name and form of organization of the 
CLO manager.



Sec. 1234.10  Qualified tender option bonds.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Municipal security or municipal securities shall have the same 
meaning as the term ``municipal securities'' in Section 3(a)(29) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29)) and any rules 
promulgated pursuant to such section.
    Qualified tender option bond entity means an issuing entity with 
respect to tender option bonds for which each of the following applies:
    (i) Such entity is collateralized solely by servicing assets and by 
municipal securities that have the same municipal issuer and the same 
underlying obligor or source of payment (determined without regard to 
any third-party credit enhancement), and such municipal securities are 
not subject to substitution.
    (ii) Such entity issues no securities other than:
    (A) A single class of tender option bonds with a preferred variable 
return payable out of capital that meets the requirements of paragraph 
(b) of this section, and
    (B) One or more residual equity interests that, in the aggregate, 
are entitled to all remaining income of the issuing entity.

[[Page 236]]

    (C) The types of securities referred to in paragraphs (ii)(A) and 
(B) of this definition must constitute asset-backed securities.
    (iii) The municipal securities held as assets by such entity are 
issued in compliance with Section 103 of the Internal Revenue Code of 
1986, as amended (the ``IRS Code'', 26 U.S.C. 103), such that the 
interest payments made on those securities are excludable from the gross 
income of the owners under Section 103 of the IRS Code.
    (iv) The terms of all of the securities issued by the entity are 
structured so that all holders of such securities who are eligible to 
exclude interest received on such securities will be able to exclude 
that interest from gross income pursuant to Section 103 of the IRS Code 
or as ``exempt-interest dividends'' pursuant to Section 852(b)(5) of the 
IRS Code (26 U.S.C. 852(b)(5)) in the case of regulated investment 
companies under the Investment Company Act of 1940, as amended.
    (v) Such entity has a legally binding commitment from a regulated 
liquidity provider as defined in Sec. 1234.6(a), to provide a 100 
percent guarantee or liquidity coverage with respect to all of the 
issuing entity's outstanding tender option bonds.
    (vi) Such entity qualifies for monthly closing elections pursuant to 
IRS Revenue Procedure 2003-84, as amended or supplemented from time to 
time.
    Tender option bond means a security which has features which entitle 
the holders to tender such bonds to the issuing entity for purchase at 
any time upon no more than 397 days' notice, for a purchase price equal 
to the approximate amortized cost of the security, plus accrued 
interest, if any, at the time of tender.
    (b) Risk retention options. Notwithstanding anything in this 
section, the sponsor with respect to an issuance of tender option bonds 
may retain an eligible vertical interest or eligible horizontal residual 
interest, or any combination thereof, in accordance with the 
requirements of Sec. 1234.4. In order to satisfy its risk retention 
requirements under this section, the sponsor with respect to an issuance 
of tender option bonds by a qualified tender option bond entity may 
retain:
    (1) An eligible vertical interest or an eligible horizontal residual 
interest, or any combination thereof, in accordance with the 
requirements of Sec. 1234.4; or
    (2) An interest that meets the requirements set forth in paragraph 
(c) of this section; or
    (3) A municipal security that meets the requirements set forth in 
paragraph (d) of this section; or
    (4) Any combination of interests and securities described in 
paragraphs (b)(1) through (b)(3) of this section such that the sum of 
the percentages held in each form equals at least five.
    (c) Tender option termination event. The sponsor with respect to an 
issuance of tender option bonds by a qualified tender option bond entity 
may retain an interest that upon issuance meets the requirements of an 
eligible horizontal residual interest but that upon the occurrence of a 
``tender option termination event'' as defined in Section 4.01(5) of IRS 
Revenue Procedure 2003-84, as amended or supplemented from time to time 
will meet the requirements of an eligible vertical interest.
    (d) Retention of a municipal security outside of the qualified 
tender option bond entity. The sponsor with respect to an issuance of 
tender option bonds by a qualified tender option bond entity may satisfy 
its risk retention requirements under this Section by holding municipal 
securities from the same issuance of municipal securities deposited in 
the qualified tender option bond entity, the face value of which 
retained municipal securities is equal to 5 percent of the face value of 
the municipal securities deposited in the qualified tender option bond 
entity.
    (e) Disclosures. The sponsor shall provide, or cause to be provided, 
to potential investors a reasonable period of time prior to the sale of 
the asset-backed securities as part of the securitization transaction 
and, upon request, to the Commission and its appropriate Federal banking 
agency, if any, the following disclosure in written form under the 
caption ``Credit Risk Retention'':
    (1) The name and form of organization of the qualified tender option 
bond entity;

[[Page 237]]

    (2) A description of the form and subordination features of such 
retained interest in accordance with the disclosure obligations in 
Sec. 1234.4(c);
    (3) To the extent any portion of the retained interest is claimed by 
the sponsor as an eligible horizontal residual interest (including any 
interest held in compliance with Sec. 1234.10(c)), the fair value of 
that interest (expressed as a percentage of the fair value of all of the 
ABS interests issued in the securitization transaction and as a dollar 
amount);
    (4) To the extent any portion of the retained interest is claimed by 
the sponsor as an eligible vertical interest (including any interest 
held in compliance with Sec. 1234.10(c)), the percentage of ABS 
interests issued represented by the eligible vertical interest; and
    (5) To the extent any portion of the retained interest claimed by 
the sponsor is a municipal security held outside of the qualified tender 
option bond entity, the name and form of organization of the qualified 
tender option bond entity, the identity of the issuer of the municipal 
securities, the face value of the municipal securities deposited into 
the qualified tender option bond entity, and the face value of the 
municipal securities retained by the sponsor or its majority-owned 
affiliates and subject to the transfer and hedging prohibition.
    (f) Prohibitions on Hedging and Transfer. The prohibitions on 
transfer and hedging set forth in Sec. 1234.12, apply to any interests 
or municipal securities retained by the sponsor with respect to an 
issuance of tender option bonds by a qualified tender option bond entity 
pursuant to of this section.



                  Subpart C_Transfer of Risk Retention



Sec. 1234.11  Allocation of risk retention to an originator.

    (a) In general. A sponsor choosing to retain an eligible vertical 
interest or an eligible horizontal residual interest (including an 
eligible horizontal cash reserve account), or combination thereof under 
Sec. 1234.4, with respect to a securitization transaction may offset the 
amount of its risk retention requirements under Sec. 1234.4 by the 
amount of the eligible interests, respectively, acquired by an 
originator of one or more of the securitized assets if:
    (1) At the closing of the securitization transaction:
    (i) The originator acquires the eligible interest from the sponsor 
and retains such interest in the same manner and proportion (as between 
horizontal and vertical interests) as the sponsor under Sec. 1234.4, as 
such interest was held prior to the acquisition by the originator;
    (ii) The ratio of the percentage of eligible interests acquired and 
retained by the originator to the percentage of eligible interests 
otherwise required to be retained by the sponsor pursuant to 
Sec. 1234.4, does not exceed the ratio of:
    (A) The unpaid principal balance of all the securitized assets 
originated by the originator; to
    (B) The unpaid principal balance of all the securitized assets in 
the securitization transaction;
    (iii) The originator acquires and retains at least 20 percent of the 
aggregate risk retention amount otherwise required to be retained by the 
sponsor pursuant to Sec. 1234.4; and
    (iv) The originator purchases the eligible interests from the 
sponsor at a price that is equal, on a dollar-for-dollar basis, to the 
amount by which the sponsor's required risk retention is reduced in 
accordance with this section, by payment to the sponsor in the form of:
    (A) Cash; or
    (B) A reduction in the price received by the originator from the 
sponsor or depositor for the assets sold by the originator to the 
sponsor or depositor for inclusion in the pool of securitized assets.
    (2) Disclosures. In addition to the disclosures required pursuant to 
Sec. 1234.4(c), the sponsor provides, or causes to be provided, to 
potential investors a reasonable period of time prior to the sale of the 
asset-backed securities as part of the securitization transaction and, 
upon request, to the Commission and its appropriate Federal banking 
agency, if any, in written form under the caption ``Credit Risk 
Retention'', the name and form of organization of any originator that 
will acquire and retain (or has acquired and

[[Page 238]]

retained) an interest in the transaction pursuant to this section, 
including a description of the form and amount (expressed as a 
percentage and dollar amount (or corresponding amount in the foreign 
currency in which the ABS interests are issued, as applicable)) and 
nature (e.g., senior or subordinated) of the interest, as well as the 
method of payment for such interest under paragraph (a)(1)(iv) of this 
section.
    (3) Hedging, transferring and pledging. The originator and each of 
its affiliates complies with the hedging and other restrictions in 
Sec. 1234.12 with respect to the interests retained by the originator 
pursuant to this section as if it were the retaining sponsor and was 
required to retain the interest under subpart B of this part.
    (b) Duty to comply. (1) The retaining sponsor shall be responsible 
for compliance with this section.
    (2) A retaining sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures that are 
reasonably designed to monitor the compliance by each originator that is 
allocated a portion of the sponsor's risk retention obligations with the 
requirements in paragraphs (a)(1) and (3) of this section; and
    (ii) In the event the sponsor determines that any such originator no 
longer complies with any of the requirements in paragraphs (a)(1) and 
(3) of this section, shall promptly notify, or cause to be notified, the 
holders of the ABS interests issued in the securitization transaction of 
such noncompliance by such originator.



Sec. 1234.12  Hedging, transfer and financing prohibitions.

    (a) Transfer. Except as permitted by Sec. 1234.7(b)(8), and subject 
to Sec. 1234.5, a retaining sponsor may not sell or otherwise transfer 
any interest or assets that the sponsor is required to retain pursuant 
to subpart B of this part to any person other than an entity that is and 
remains a majority-owned affiliate of the sponsor and each such 
majority-owned affiliate shall be subject to the same restrictions.
    (b) Prohibited hedging by sponsor and affiliates. A retaining 
sponsor and its affiliates may not purchase or sell a security, or other 
financial instrument, or enter into an agreement, derivative or other 
position, with any other person if:
    (1) Payments on the security or other financial instrument or under 
the agreement, derivative, or position are materially related to the 
credit risk of one or more particular ABS interests that the retaining 
sponsor (or any of its majority-owned affiliates) is required to retain 
with respect to a securitization transaction pursuant to subpart B of 
this part or one or more of the particular securitized assets that 
collateralize the asset-backed securities issued in the securitization 
transaction; and
    (2) The security, instrument, agreement, derivative, or position in 
any way reduces or limits the financial exposure of the sponsor (or any 
of its majority-owned affiliates) to the credit risk of one or more of 
the particular ABS interests that the retaining sponsor (or any of its 
majority-owned affiliates) is required to retain with respect to a 
securitization transaction pursuant to subpart B of this part or one or 
more of the particular securitized assets that collateralize the asset-
backed securities issued in the securitization transaction.
    (c) Prohibited hedging by issuing entity. The issuing entity in a 
securitization transaction may not purchase or sell a security or other 
financial instrument, or enter into an agreement, derivative or 
position, with any other person if:
    (1) Payments on the security or other financial instrument or under 
the agreement, derivative or position are materially related to the 
credit risk of one or more particular ABS interests that the retaining 
sponsor for the transaction (or any of its majority-owned affiliates) is 
required to retain with respect to the securitization transaction 
pursuant to subpart B of this part; and
    (2) The security, instrument, agreement, derivative, or position in 
any way reduces or limits the financial exposure of the retaining 
sponsor (or any of its majority-owned affiliates) to the credit risk of 
one or more of the particular ABS interests that the sponsor

[[Page 239]]

(or any of its majority-owned affiliates) is required to retain pursuant 
to subpart B of this part.
    (d) Permitted hedging activities. The following activities shall not 
be considered prohibited hedging activities under paragraph (b) or (c) 
of this section:
    (1) Hedging the interest rate risk (which does not include the 
specific interest rate risk, known as spread risk, associated with the 
ABS interest that is otherwise considered part of the credit risk) or 
foreign exchange risk arising from one or more of the particular ABS 
interests required to be retained by the sponsor (or any of its 
majority-owned affiliates) under subpart B of this part or one or more 
of the particular securitized assets that underlie the asset-backed 
securities issued in the securitization transaction; or
    (2) Purchasing or selling a security or other financial instrument 
or entering into an agreement, derivative, or other position with any 
third party where payments on the security or other financial instrument 
or under the agreement, derivative, or position are based, directly or 
indirectly, on an index of instruments that includes asset-backed 
securities if:
    (i) Any class of ABS interests in the issuing entity that were 
issued in connection with the securitization transaction and that are 
included in the index represents no more than 10 percent of the dollar-
weighted average (or corresponding weighted average in the currency in 
which the ABS interests are issued, as applicable) of all instruments 
included in the index; and
    (ii) All classes of ABS interests in all issuing entities that were 
issued in connection with any securitization transaction in which the 
sponsor (or any of its majority-owned affiliates) is required to retain 
an interest pursuant to subpart B of this part and that are included in 
the index represent, in the aggregate, no more than 20 percent of the 
dollar-weighted average (or corresponding weighted average in the 
currency in which the ABS interests are issued, as applicable) of all 
instruments included in the index.
    (e) Prohibited non-recourse financing. Neither a retaining sponsor 
nor any of its affiliates may pledge as collateral for any obligation 
(including a loan, repurchase agreement, or other financing transaction) 
any ABS interest that the sponsor is required to retain with respect to 
a securitization transaction pursuant to subpart B of this part unless 
such obligation is with full recourse to the sponsor or affiliate, 
respectively.
    (f) Duration of the hedging and transfer restrictions--(1) General 
rule. Except as provided in paragraph (f)(2) of this section, the 
prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of 
this section shall expire on or after the date that is the latest of:
    (i) The date on which the total unpaid principal balance (if 
applicable) of the securitized assets that collateralize the 
securitization transaction has been reduced to 33 percent of the total 
unpaid principal balance of the securitized assets as of the cut-off 
date or similar date for establishing the composition of the securitized 
assets collateralizing the asset-backed securities issued pursuant to 
the securitization transaction;
    (ii) The date on which the total unpaid principal obligations under 
the ABS interests issued in the securitization transaction has been 
reduced to 33 percent of the total unpaid principal obligations of the 
ABS interests at closing of the securitization transaction; or
    (iii) Two years after the date of the closing of the securitization 
transaction.
    (2) Securitizations of residential mortgages. (i) If all of the 
assets that collateralize a securitization transaction subject to risk 
retention under this part are residential mortgages, the prohibitions on 
sale and hedging pursuant to paragraphs (a) and (b) of this section 
shall expire on or after the date that is the later of:
    (A) Five years after the date of the closing of the securitization 
transaction; or
    (B) The date on which the total unpaid principal balance of the 
residential mortgages that collateralize the securitization transaction 
has been reduced to 25 percent of the total unpaid principal balance of 
such residential

[[Page 240]]

mortgages at the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction.
    (ii) Notwithstanding paragraph (f)(2)(i) of this section, the 
prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of 
this section shall expire with respect to the sponsor of a 
securitization transaction described in paragraph (f)(2)(i) of this 
section on or after the date that is seven years after the date of the 
closing of the securitization transaction.
    (3) Conservatorship or receivership of sponsor. A conservator or 
receiver of the sponsor (or any other person holding risk retention 
pursuant to this part) of a securitization transaction is permitted to 
sell or hedge any economic interest in the securitization transaction if 
the conservator or receiver has been appointed pursuant to any provision 
of federal or State law (or regulation promulgated thereunder) that 
provides for the appointment of the Federal Deposit Insurance 
Corporation, or an agency or instrumentality of the United States or of 
a State as conservator or receiver, including without limitation any of 
the following authorities:
    (i) 12 U.S.C. 1811;
    (ii) 12 U.S.C. 1787;
    (iii) 12 U.S.C. 4617; or
    (iv) 12 U.S.C. 5382.
    (4) Revolving pool securitizations. The provisions of paragraphs 
(f)(1) and (2) are not available to sponsors of revolving pool 
securitizations with respect to the forms of risk retention specified in 
Sec. 1234.5.



                   Subpart D_Exceptions and Exemptions



Sec. 1234.13  Exemption for qualified residential mortgages.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Currently performing means the borrower in the mortgage transaction 
is not currently thirty (30) days or more past due, in whole or in part, 
on the mortgage transaction.
    Qualified residential mortgage means a ``qualified mortgage'' as 
defined in section 129C of the Truth in Lending Act (15 U.S.C.1639c) and 
regulations issued thereunder, as amended from time to time.
    (b) Exemption. A sponsor shall be exempt from the risk retention 
requirements in subpart B of this part with respect to any 
securitization transaction, if:
    (1) All of the assets that collateralize the asset-backed securities 
are qualified residential mortgages or servicing assets;
    (2) None of the assets that collateralize the asset-backed 
securities are asset-backed securities;
    (3) As of the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, each 
qualified residential mortgage collateralizing the asset-backed 
securities is currently performing; and
    (4)(i) The depositor with respect to the securitization transaction 
certifies that it has evaluated the effectiveness of its internal 
supervisory controls with respect to the process for ensuring that all 
assets that collateralize the asset-backed security are qualified 
residential mortgages or servicing assets and has concluded that its 
internal supervisory controls are effective; and
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls must be performed, for each issuance of an asset-
backed security in reliance on this section, as of a date within 60 days 
of the cut-off date or similar date for establishing the composition of 
the asset pool collateralizing such asset-backed security; and
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (b)(4)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to the 
Commission and its appropriate Federal banking agency, if any.
    (c) Repurchase of loans subsequently determined to be non-qualified 
after closing. A sponsor that has relied on the exemption provided in 
paragraph (b) of

[[Page 241]]

this section with respect to a securitization transaction shall not lose 
such exemption with respect to such transaction if, after closing of the 
securitization transaction, it is determined that one or more of the 
residential mortgage loans collateralizing the asset-backed securities 
does not meet all of the criteria to be a qualified residential mortgage 
provided that:
    (1) The depositor complied with the certification requirement set 
forth in paragraph (b)(4) of this section;
    (2) The sponsor repurchases the loan(s) from the issuing entity at a 
price at least equal to the remaining aggregate unpaid principal balance 
and accrued interest on the loan(s) no later than 90 days after the 
determination that the loans do not satisfy the requirements to be a 
qualified residential mortgage; and
    (3) The sponsor promptly notifies, or causes to be notified, the 
holders of the asset-backed securities issued in the securitization 
transaction of any loan(s) included in such securitization transaction 
that is (or are) required to be repurchased by the sponsor pursuant to 
paragraph (c)(2) of this section, including the amount of such 
repurchased loan(s) and the cause for such repurchase.



Sec. 1234.14  Definitions applicable to qualifying commercial real
estate loans.

    The following definitions apply for purposes of Secs. 1234.15 and 
1234.17 :
    Appraisal Standards Board means the board of the Appraisal 
Foundation that develops, interprets, and amends the Uniform Standards 
of Professional Appraisal Practice (USPAP), establishing generally 
accepted standards for the appraisal profession.
    Combined loan-to-value (CLTV) ratio means, at the time of 
origination, the sum of the principal balance of a first-lien mortgage 
loan on the property, plus the principal balance of any junior-lien 
mortgage loan that, to the creditor's knowledge, would exist at the 
closing of the transaction and that is secured by the same property, 
divided by:
    (1) For acquisition funding, the lesser of the purchase price or the 
estimated market value of the real property based on an appraisal that 
meets the requirements set forth in Sec. 1234.17(a)(2)(ii); or
    (2) For refinancing, the estimated market value of the real property 
based on an appraisal that meets the requirements set forth in 
Sec. 1234.17(a)(2)(ii).
    Commercial real estate (CRE) loan means:
    (1) A loan secured by a property with five or more single family 
units, or by nonfarm nonresidential real property, the primary source 
(50 percent or more) of repayment for which is expected to be:
    (i) The proceeds of the sale, refinancing, or permanent financing of 
the property; or
    (ii) Rental income associated with the property;
    (2) Loans secured by improved land if the obligor owns the fee 
interest in the land and the land is leased to a third party who owns 
all improvements on the land, and the improvements are nonresidential or 
residential with five or more single family units; and
    (3) Does not include:
    (i) A land development and construction loan (including 1- to 4-
family residential or commercial construction loans);
    (ii) Any other land loan; or
    (iii) An unsecured loan to a developer.
    Debt service coverage (DSC) ratio means the ratio of:
    (1) The annual NOI less the annual replacement reserve of the CRE 
property at the time of origination of the CRE loan(s); to
    (2) The sum of the borrower's annual payments for principal and 
interest (calculated at the fully indexed rate) on any debt obligation.
    Environmental risk assessment means a process for determining 
whether a property is contaminated or exposed to any condition or 
substance that could result in contamination that has an adverse effect 
on the market value of the property or the realization of the collateral 
value.
    First lien means a lien or encumbrance on property that has priority 
over all other liens or encumbrances on the property.

[[Page 242]]

    Junior lien means a lien or encumbrance on property that is lower in 
priority relative to other liens or encumbrances on the property.
    Loan-to-value (LTV) ratio means, at the time of origination, the 
principal balance of a first-lien mortgage loan on the property divided 
by:
    (1) For acquisition funding, the lesser of the purchase price or the 
estimated market value of the real property based on an appraisal that 
meets the requirements set forth in Sec. 1234.17(a)(2)(ii); or
    (2) For refinancing, the estimated market value of the real property 
based on an appraisal that meets the requirements set forth in 
Sec. 1234.17(a)(2)(ii).
    Net operating income (NOI) refers to the income a CRE property 
generates for the owner after all expenses have been deducted for 
federal income tax purposes, except for depreciation, debt service 
expenses, and federal and state income taxes, and excluding any unusual 
and nonrecurring items of income.
    Operating affiliate means an affiliate of a borrower that is a 
lessor or similar party with respect to the commercial real estate 
securing the loan.
    Purchase money security interest means a security interest in 
property that secures the obligation of the obligor incurred as all or 
part of the price of the property.
    Qualifying leased CRE loan means a CRE loan secured by commercial 
nonfarm real property, other than a multi-family property or a hotel, 
inn, or similar property:
    (1) That is occupied by one or more qualified tenants pursuant to a 
lease agreement with a term of no less than one (1) month; and
    (2) Where no more than 20 percent of the aggregate gross revenue of 
the property is payable from one or more tenants who:
    (i) Are subject to a lease that will terminate within six months 
following the date of origination; or
    (ii) Are not qualified tenants.
    Qualifying multi-family loan means a CRE loan secured by any 
residential property (excluding a hotel, motel, inn, hospital, nursing 
home, or other similar facility where dwellings are not leased to 
residents):
    (1) That consists of five or more dwelling units (including 
apartment buildings, condominiums, cooperatives and other similar 
structures) primarily for residential use; and
    (2) Where at least 75 percent of the NOI is derived from residential 
rents and tenant amenities (including income from parking garages, 
health or swim clubs, and dry cleaning), and not from other commercial 
uses.
    Rental income means:
    (1) Income derived from a lease or other occupancy agreement between 
the borrower or an operating affiliate of the borrower and a party which 
is not an affiliate of the borrower for the use of real property or 
improvements serving as collateral for the applicable loan; and
    (2) Other income derived from hotel, motel, dormitory, nursing home, 
assisted living, mini-storage warehouse or similar properties that are 
used primarily by parties that are not affiliates or employees of the 
borrower or its affiliates.
    Replacement reserve means the monthly capital replacement or 
maintenance amount based on the property type, age, construction and 
condition of the property that is adequate to maintain the physical 
condition and NOI of the property.
    Uniform Standards of Professional Appraisal Practice (USPAP) means 
generally accepted standards for professional appraisal practice issued 
by the Appraisal Standards Board of the Appraisal Foundation.

[79 FR 77740, Dec. 24, 2014, as amended at 79 FR 77765, Dec. 24, 2014]



Sec. 1234.15  Qualifying commercial real estate loans.

    (a) General exception. Commercial real estate loans that are 
securitized through a securitization transaction shall be subject to a 0 
percent risk retention requirement under subpart B of this part, 
provided that the following conditions are met:
    (1) The CRE assets meet the underwriting standards set forth in 
Sec. 1234.17;
    (2) The securitization transaction is collateralized solely by CRE 
loans and by servicing assets;

[[Page 243]]

    (3) The securitization transaction does not permit reinvestment 
periods; and
    (4) The sponsor provides, or causes to be provided, to potential 
investors a reasonable period of time prior to the sale of asset-backed 
securities of the issuing entity, and, upon request, to the Commission, 
and to the FHFA, in written form under the caption ``Credit Risk 
Retention'' a description of the manner in which the sponsor determined 
the aggregate risk retention requirement for the securitization 
transaction after including qualifying CRE loans with 0 percent risk 
retention.
    (b) Risk retention requirement. For any securitization transaction 
described in paragraph (a) of this section, the percentage of risk 
retention required under Sec. 1234.3(a) is reduced by the percentage 
evidenced by the ratio of the unpaid principal balance of the qualifying 
CRE loans to the total unpaid principal balance of CRE loans that are 
included in the pool of assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction (the 
qualifying asset ratio); provided that;
    (1) The qualifying asset ratio is measured as of the cut-off date or 
similar date for establishing the composition of the securitized assets 
collateralizing the asset-backed securities issued pursuant to the 
securitization transaction;
    (2) If the qualifying asset ratio would exceed 50 percent, the 
qualifying asset ratio shall be deemed to be 50 percent; and
    (3) The disclosure required by paragraph (a)(4) of this section also 
includes descriptions of the qualifying CRE loans and descriptions of 
the CRE loans that are not qualifying CRE loans, and the material 
differences between the group of qualifying CRE loans and CRE loans that 
are not qualifying loans with respect to the composition of each group's 
loan balances, loan terms, interest rates, borrower credit information, 
and characteristics of any loan collateral.
    (c) Exception for securitizations of qualifying CRE only. 
Notwithstanding other provisions of this section, the risk retention 
requirements of subpart B of this part shall not apply to securitization 
transactions where the transaction is collateralized solely by servicing 
assets and qualifying CRE loans.
    (d) Record maintenance. A regulated entity must retain the 
disclosures required in paragraphs (a) and (b) of this section and the 
certification required in Sec. 1234.17(a)(10) of this part, in its 
records until three years after all ABS interests issued in the 
securitization are no longer outstanding. The regulated entity must 
provide the disclosures and certifications upon request to the 
Commission and the FHFA.

[79 FR 77765, Dec. 24, 2014]



Sec. 1234.16  [Reserved]



Sec. 1234.17  Underwriting standards for qualifying CRE loans.

    (a) Underwriting, product and other standards. (1) The CRE loan must 
be secured by the following:
    (i) An enforceable first lien, documented and recorded appropriately 
pursuant to applicable law, on the commercial real estate and 
improvements;
    (ii)(A) An assignment of:
    (1) Leases and rents and other occupancy agreements related to the 
commercial real estate or improvements or the operation thereof for 
which the borrower or an operating affiliate is a lessor or similar 
party and all payments under such leases and occupancy agreements; and
    (2) All franchise, license and concession agreements related to the 
commercial real estate or improvements or the operation thereof for 
which the borrower or an operating affiliate is a lessor, licensor, 
concession granter or similar party and all payments under such other 
agreements, whether the assignments described in this paragraph 
(a)(1)(ii)(A)(2) are absolute or are stated to be made to the extent 
permitted by the agreements governing the applicable franchise, license 
or concession agreements;
    (B) An assignment of all other payments due to the borrower or due 
to any operating affiliate in connection with the operation of the 
property described in paragraph (a)(1)(i) of this section; and
    (C) The right to enforce the agreements described in paragraph 
(a)(1)(ii)(A) of this section and the

[[Page 244]]

agreements under which payments under paragraph (a)(1)(ii)(B) of this 
section are due against, and collect amounts due from, each lessee, 
occupant or other obligor whose payments were assigned pursuant to 
paragraphs (a)(1)(ii)(A) or (B) of this section upon a breach by the 
borrower of any of the terms of, or the occurrence of any other event of 
default (however denominated) under, the loan documents relating to such 
CRE loan; and
    (iii) A security interest:
    (A) In all interests of the borrower and any applicable operating 
affiliate in all tangible and intangible personal property of any kind, 
in or used in the operation of or in connection with, pertaining to, 
arising from, or constituting, any of the collateral described in 
paragraphs (a)(1)(i) or (ii) of this section; and
    (B) In the form of a perfected security interest if the security 
interest in such property can be perfected by the filing of a financing 
statement, fixture filing, or similar document pursuant to the law 
governing the perfection of such security interest;
    (2) Prior to origination of the CRE loan, the originator:
    (i) Verified and documented the current financial condition of the 
borrower and each operating affiliate;
    (ii) Obtained a written appraisal of the real property securing the 
loan that:
    (A) Had an effective date not more than six months prior to the 
origination date of the loan by a competent and appropriately State-
certified or State-licensed appraiser;
    (B) Conforms to generally accepted appraisal standards as evidenced 
by the USPAP and the appraisal requirements \1\ of the Federal banking 
agencies; and
---------------------------------------------------------------------------

    \1\ 12 CFR part 34, subpart C (OCC); 12 CFR part 208, subpart E, and 
12 CFR part 225, subpart G (Board); and 12 CFR part 323 (FDIC).
---------------------------------------------------------------------------

    (C) Provides an ``as is'' opinion of the market value of the real 
property, which includes an income approach; \2\
---------------------------------------------------------------------------

    \2\ See USPAP, Standard 1.
---------------------------------------------------------------------------

    (iii) Qualified the borrower for the CRE loan based on a monthly 
payment amount derived from level monthly payments consisting of both 
principal and interest (at the fully-indexed rate) over the term of the 
loan, not exceeding 25 years, or 30 years for a qualifying multi-family 
property;
    (iv) Conducted an environmental risk assessment to gain 
environmental information about the property securing the loan and took 
appropriate steps to mitigate any environmental liability determined to 
exist based on this assessment;
    (v) Conducted an analysis of the borrower's ability to service its 
overall debt obligations during the next two years, based on reasonable 
projections (including operating income projections for the property);
    (vi)(A) Determined that based on the two years' actual performance 
immediately preceding the origination of the loan, the borrower would 
have had:
    (1) A DSC ratio of 1.5 or greater, if the loan is a qualifying 
leased CRE loan, net of any income derived from a tenant(s) who is not a 
qualified tenant(s);
    (2) A DSC ratio of 1.25 or greater, if the loan is a qualifying 
multi-family property loan; or
    (3) A DSC ratio of 1.7 or greater, if the loan is any other type of 
CRE loan;
    (B) If the borrower did not own the property for any part of the 
last two years prior to origination, the calculation of the DSC ratio, 
for purposes of paragraph (a)(2)(vi)(A) of this section, shall include 
the property's operating income for any portion of the two-year period 
during which the borrower did not own the property;
    (vii) Determined that, based on two years of projections, which 
include the new debt obligation, following the origination date of the 
loan, the borrower will have:
    (A) A DSC ratio of 1.5 or greater, if the loan is a qualifying 
leased CRE loan, net of any income derived from a tenant(s) who is not a 
qualified tenant(s);
    (B) A DSC ratio of 1.25 or greater, if the loan is a qualifying 
multi-family property loan; or
    (C) A DSC ratio of 1.7 or greater, if the loan is any other type of 
CRE loan.
    (3) The loan documentation for the CRE loan includes covenants that:
    (i) Require the borrower to provide the borrower's financial 
statements and supporting schedules to the

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servicer on an ongoing basis, but not less frequently than quarterly, 
including information on existing, maturing and new leasing or rent-roll 
activity for the property securing the loan, as appropriate; and
    (ii) Impose prohibitions on:
    (A) The creation or existence of any other security interest with 
respect to the collateral for the CRE loan described in paragraphs 
(a)(1)(i) and (a)(1)(ii)(A) of this section, except as provided in 
paragraph (a)(4) of this section;
    (B) The transfer of any collateral for the CRE loan described in 
paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section or of any other 
collateral consisting of fixtures, furniture, furnishings, machinery or 
equipment other than any such fixture, furniture, furnishings, machinery 
or equipment that is obsolete or surplus; and
    (C) Any change to the name, location or organizational structure of 
any borrower, operating affiliate or other pledgor unless such borrower, 
operating affiliate or other pledgor shall have given the holder of the 
loan at least 30 days advance notice and, pursuant to applicable law 
governing perfection and priority, the holder of the loan is able to 
take all steps necessary to continue its perfection and priority during 
such 30-day period.
    (iii) Require each borrower and each operating affiliate to:
    (A) Maintain insurance that protects against loss on collateral for 
the CRE loan described in paragraph (a)(1)(i) of this section for an 
amount no less than the replacement cost of the property improvements, 
and names the originator or any subsequent holder of the loan as an 
additional insured or lender loss payee;
    (B) Pay taxes, charges, fees, and claims, where non-payment might 
give rise to a lien on collateral for the CRE loan described in 
paragraphs (a)(1)(i) and (ii) of this section;
    (C) Take any action required to:
    (1) Protect the security interest and the enforceability and 
priority thereof in the collateral described in paragraphs (a)(1)(i) and 
(a)(1)(ii)(A) of this section and defend such collateral against claims 
adverse to the originator's or any subsequent holder's interest; and
    (2) Perfect the security interest of the originator or any 
subsequent holder of the loan in any other collateral for the CRE loan 
to the extent that such security interest is required by this section to 
be perfected;
    (D) Permit the originator or any subsequent holder of the loan, and 
the servicer, to inspect any collateral for the CRE loan and the books 
and records of the borrower or other party relating to any collateral 
for the CRE loan;
    (E) Maintain the physical condition of collateral for the CRE loan 
described in paragraph (a)(1)(i) of this section;
    (F) Comply with all environmental, zoning, building code, licensing 
and other laws, regulations, agreements, covenants, use restrictions, 
and proffers applicable to collateral for the CRE loan described in 
paragraph (a)(1)(i) of this section;
    (G) Comply with leases, franchise agreements, condominium 
declarations, and other documents and agreements relating to the 
operation of collateral for the CRE loan described in paragraph 
(a)(1)(i) of this section, and to not modify any material terms and 
conditions of such agreements over the term of the loan without the 
consent of the originator or any subsequent holder of the loan, or the 
servicer; and
    (H) Not materially alter collateral for the CRE loan described in 
paragraph (a)(1)(i) of this section without the consent of the 
originator or any subsequent holder of the loan, or the servicer.
    (4) The loan documentation for the CRE loan prohibits the borrower 
and each operating affiliate from obtaining a loan secured by a junior 
lien on collateral for the CRE loan described in paragraph (a)(1)(i) or 
(a)(1)(ii)(A) of this section, unless:
    (i) The sum of the principal amount of such junior lien loan, plus 
the principal amount of all other loans secured by collateral described 
in paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section, does not exceed 
the applicable CLTV ratio in paragraph (a)(5) of this section, based on 
the appraisal at origination of such junior lien loan; or

[[Page 246]]

    (ii) Such loan is a purchase money obligation that financed the 
acquisition of machinery or equipment and the borrower or operating 
affiliate (as applicable) pledges such machinery and equipment as 
additional collateral for the CRE loan.
    (5) At origination, the applicable loan-to-value ratios for the loan 
are:
    (i) LTV less than or equal to 65 percent and CLTV less than or equal 
to 70 percent; or
    (ii) LTV less than or equal to 60 percent and CLTV less than or 
equal to 65 percent, if an appraisal used to meet the requirements set 
forth in paragraph (a)(2)(ii) of this section used a direct 
capitalization rate, and that rate is less than or equal to the sum of:
    (A) The 10-year swap rate, as reported in the Federal Reserve's H.15 
Report (or any successor report) as of the date concurrent with the 
effective date of such appraisal; and
    (B) 300 basis points.
    (iii) If the appraisal required under paragraph (a)(2)(ii) of this 
section included a direct capitalization method using an overall 
capitalization rate, that rate must be disclosed to potential investors 
in the securitization.
    (6) All loan payments required to be made under the loan agreement 
are:
    (i) Based on level monthly payments of principal and interest (at 
the fully indexed rate) to fully amortize the debt over a term that does 
not exceed 25 years, or 30 years for a qualifying multifamily loan; and
    (ii) To be made no less frequently than monthly over a term of at 
least ten years.
    (7) Under the terms of the loan agreement:
    (i) Any maturity of the note occurs no earlier than ten years 
following the date of origination;
    (ii) The borrower is not permitted to defer repayment of principal 
or payment of interest; and
    (iii) The interest rate on the loan is:
    (A) A fixed interest rate;
    (B) An adjustable interest rate and the borrower, prior to or 
concurrently with origination of the CRE loan, obtained a derivative 
that effectively results in a fixed interest rate; or
    (C) An adjustable interest rate and the borrower, prior to or 
concurrently with origination of the CRE loan, obtained a derivative 
that established a cap on the interest rate for the term of the loan, 
and the loan meets the underwriting criteria in paragraphs (a)(2)(vi) 
and (vii) of this section using the maximum interest rate allowable 
under the interest rate cap.
    (8) The originator does not establish an interest reserve at 
origination to fund all or part of a payment on the loan.
    (9) At the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, all 
payments due on the loan are contractually current.
    (10)(i) The depositor of the asset-backed security certifies that it 
has evaluated the effectiveness of its internal supervisory controls 
with respect to the process for ensuring that all qualifying CRE loans 
that collateralize the asset-backed security and that reduce the 
sponsor's risk retention requirement under Sec. 1234.15 meet all of the 
requirements set forth in paragraphs (a)(1) through (9) of this section 
and has concluded that its internal supervisory controls are effective;
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls referenced in paragraph (a)(10)(i) of this section 
shall be performed, for each issuance of an asset-backed security, as of 
a date within 60 days of the cut-off date or similar date for 
establishing the composition of the asset pool collateralizing such 
asset-backed security;
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (a)(10)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to its 
appropriate Federal banking agency, if any; and
    (11) Within two weeks of the closing of the CRE loan by its 
originator or, if sooner, prior to the transfer of such CRE loan to the 
issuing entity, the originator shall have obtained a UCC lien search 
from the jurisdiction of organization of the borrower and each operating 
affiliate, that does not report,

[[Page 247]]

as of the time that the security interest of the originator in the 
property described in paragraph (a)(1)(iii) of this section was 
perfected, other higher priority liens of record on any property 
described in paragraph (a)(1)(iii) of this section, other than purchase 
money security interests.
    (b) Cure or buy-back requirement. If a sponsor has relied on the 
exception provided in Sec. 1234.15 with respect to a qualifying CRE loan 
and it is subsequently determined that the CRE loan did not meet all of 
the requirements set forth in paragraphs (a)(1) through (9) and (a)(11) 
of this section, the sponsor shall not lose the benefit of the exception 
with respect to the CRE loan if the depositor complied with the 
certification requirement set forth in paragraph (a)(10) of this 
section, and:
    (1) The failure of the loan to meet any of the requirements set 
forth in paragraphs (a)(1) through (9) and (a)(11) of this section is 
not material; or;
    (2) No later than 90 days after the determination that the loan does 
not meet one or more of the requirements of paragraphs (a)(1) through 
(9) or (a)(11) of this section, the sponsor:
    (i) Effectuates cure, restoring conformity of the loan to the unmet 
requirements as of the date of cure; or
    (ii) Repurchases the loan(s) from the issuing entity at a price at 
least equal to the remaining principal balance and accrued interest on 
the loan(s) as of the date of repurchase.
    (3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) 
of this section, the sponsor must promptly notify, or cause to be 
notified, the holders of the asset-backed securities issued in the 
securitization transaction of any loan(s) included in such 
securitization transaction that is required to be cured or repurchased 
by the sponsor pursuant to paragraph (b)(2) of this section, including 
the principal amount of such repurchased loan(s) and the cause for such 
cure or repurchase.



Sec. 1234.18  [Reserved]



Sec. 1234.19  General exemptions.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Community-focused residential mortgage means a residential mortgage 
exempt from the definition of ``covered transaction'' under 
Sec. 1026.43(a)(3)(iv) and (v) of the CFPB's Regulation Z (12 CFR 
1026.43(a)).
    First pay class means a class of ABS interests for which all 
interests in the class are entitled to the same priority of payment and 
that, at the time of closing of the transaction, is entitled to 
repayments of principal and payments of interest prior to or pro-rata 
with all other classes of securities collateralized by the same pool of 
first-lien residential mortgages, until such class has no principal or 
notional balance remaining.
    Inverse floater means an ABS interest issued as part of a 
securitization transaction for which interest or other income is payable 
to the holder based on a rate or formula that varies inversely to a 
reference rate of interest.
    Qualifying three-to-four unit residential mortgage loan means a 
mortgage loan that is:
    (i) Secured by a dwelling (as defined in 12 CFR 1026.2(a)(19)) that 
is owner occupied and contains three-to-four housing units;
    (ii) Is deemed to be for business purposes for purposes of 
Regulation Z under 12 CFR part 1026, Supplement I, paragraph 3(a)(5)(i); 
and
    (iii) Otherwise meets all of the requirements to qualify as a 
qualified mortgage under Sec. 1026.43(e) and (f) of Regulation Z (12 CFR 
1026.43(e) and (f)) as if the loan were a covered transaction under that 
section.
    (b) This part shall not apply to:
    (1) U.S. Government-backed securitizations. Any securitization 
transaction that:
    (i) Is collateralized solely by residential, multifamily, or health 
care facility mortgage loan assets that are insured or guaranteed (in 
whole or in part) as to the payment of principal and interest by the 
United States or an agency of the United States, and servicing assets; 
or
    (ii) Involves the issuance of asset-backed securities that:
    (A) Are insured or guaranteed as to the payment of principal and 
interest by the United States or an agency of the United States; and

[[Page 248]]

    (B) Are collateralized solely by residential, multifamily, or health 
care facility mortgage loan assets or interests in such assets, and 
servicing assets.
    (2) Certain agricultural loan securitizations. Any securitization 
transaction that is collateralized solely by loans or other assets made, 
insured, guaranteed, or purchased by any institution that is subject to 
the supervision of the Farm Credit Administration, including the Federal 
Agricultural Mortgage Corporation, and servicing assets;
    (3) State and municipal securitizations. Any asset-backed security 
that is a security issued or guaranteed by any State, or by any 
political subdivision of a State, or by any public instrumentality of a 
State that is exempt from the registration requirements of the 
Securities Act of 1933 by reason of section 3(a)(2) of that Act (15 
U.S.C. 77c(a)(2)); and
    (4) Qualified scholarship funding bonds. Any asset-backed security 
that meets the definition of a qualified scholarship funding bond, as 
set forth in section 150(d)(2) of the Internal Revenue Code of 1986 (26 
U.S.C. 150(d)(2)).
    (5) Pass-through resecuritizations. Any securitization transaction 
that:
    (i) Is collateralized solely by servicing assets, and by asset-
backed securities:
    (A) For which credit risk was retained as required under subpart B 
of this part; or
    (B) That were exempted from the credit risk retention requirements 
of this part pursuant to subpart D of this part;
    (ii) Is structured so that it involves the issuance of only a single 
class of ABS interests; and
    (iii) Provides for the pass-through of all principal and interest 
payments received on the underlying asset-backed securities (net of 
expenses of the issuing entity) to the holders of such class.
    (6) First-pay-class securitizations. Any securitization transaction 
that:
    (i) Is collateralized solely by servicing assets, and by first-pay 
classes of asset-backed securities collateralized by first-lien 
residential mortgages on properties located in any state:
    (A) For which credit risk was retained as required under subpart B 
of this part; or
    (B) That were exempted from the credit risk retention requirements 
of this part pursuant to subpart D of this part;
    (ii) Does not provide for any ABS interest issued in the 
securitization transaction to share in realized principal losses other 
than pro rata with all other ABS interests issued in the securitization 
transaction based on the current unpaid principal balance of such ABS 
interests at the time the loss is realized;
    (iii) Is structured to reallocate prepayment risk;
    (iv) Does not reallocate credit risk (other than as a consequence of 
reallocation of prepayment risk); and
    (v) Does not include any inverse floater or similarly structured ABS 
interest.
    (7) Seasoned loans. (i) Any securitization transaction that is 
collateralized solely by servicing assets, and by seasoned loans that 
meet the following requirements:
    (A) The loans have not been modified since origination; and
    (B) None of the loans have been delinquent for 30 days or more.
    (ii) For purposes of this paragraph, a seasoned loan means:
    (A) With respect to asset-backed securities collateralized by 
residential mortgages, a loan that has been outstanding and performing 
for the longer of:
    (1) A period of five years; or
    (2) Until the outstanding principal balance of the loan has been 
reduced to 25 percent of the original principal balance.
    (3) Notwithstanding paragraphs (b)(7)(ii)(A)(1) and (2) of this 
section, any residential mortgage loan that has been outstanding and 
performing for a period of at least seven years shall be deemed a 
seasoned loan.
    (B) With respect to all other classes of asset-backed securities, a 
loan that has been outstanding and performing for the longer of:
    (1) A period of at least two years; or
    (2) Until the outstanding principal balance of the loan has been 
reduced to

[[Page 249]]

33 percent of the original principal balance.
    (8) Certain public utility securitizations. (i) Any securitization 
transaction where the asset-back securities issued in the transaction 
are secured by the intangible property right to collect charges for the 
recovery of specified costs and such other assets, if any, of an issuing 
entity that is wholly owned, directly or indirectly, by an investor 
owned utility company that is subject to the regulatory authority of a 
State public utility commission or other appropriate State agency.
    (ii) For purposes of this paragraph:
    (A) Specified cost means any cost identified by a State legislature 
as appropriate for recovery through securitization pursuant to specified 
cost recovery legislation; and
    (B) Specified cost recovery legislation means legislation enacted by 
a State that:
    (1) Authorizes the investor owned utility company to apply for, and 
authorizes the public utility commission or other appropriate State 
agency to issue, a financing order determining the amount of specified 
costs the utility will be allowed to recover;
    (2) Provides that pursuant to a financing order, the utility 
acquires an intangible property right to charge, collect, and receive 
amounts necessary to provide for the full recovery of the specified 
costs determined to be recoverable, and assures that the charges are 
non-bypassable and will be paid by customers within the utility's 
historic service territory who receive utility goods or services through 
the utility's transmission and distribution system, even if those 
customers elect to purchase these goods or services from a third party; 
and
    (3) Guarantees that neither the State nor any of its agencies has 
the authority to rescind or amend the financing order, to revise the 
amount of specified costs, or in any way to reduce or impair the value 
of the intangible property right, except as may be contemplated by 
periodic adjustments authorized by the specified cost recovery 
legislation.
    (c) Exemption for securitizations of assets issued, insured or 
guaranteed by the United States. This part shall not apply to any 
securitization transaction if the asset-backed securities issued in the 
transaction are:
    (1) Collateralized solely by obligations issued by the United States 
or an agency of the United States and servicing assets;
    (2) Collateralized solely by assets that are fully insured or 
guaranteed as to the payment of principal and interest by the United 
States or an agency of the United States (other than those referred to 
in paragraph (b)(1)(i) of this section) and servicing assets; or
    (3) Fully guaranteed as to the timely payment of principal and 
interest by the United States or any agency of the United States;
    (d) Federal Deposit Insurance Corporation securitizations. This part 
shall not apply to any securitization transaction that is sponsored by 
the Federal Deposit Insurance Corporation acting as conservator or 
receiver under any provision of the Federal Deposit Insurance Act or of 
Title II of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act.
    (e) Reduced requirement for certain student loan securitizations. 
The 5 percent risk retention requirement set forth in Sec. 1234.4 shall 
be modified as follows:
    (1) With respect to a securitization transaction that is 
collateralized solely by student loans made under the Federal Family 
Education Loan Program (``FFELP loans'') that are guaranteed as to 100 
percent of defaulted principal and accrued interest, and servicing 
assets, the risk retention requirement shall be 0 percent;
    (2) With respect to a securitization transaction that is 
collateralized solely by FFELP loans that are guaranteed as to at least 
98 percent but less than 100 percent of defaulted principal and accrued 
interest, and servicing assets, the risk retention requirement shall be 
2 percent; and
    (3) With respect to any other securitization transaction that is 
collateralized solely by FFELP loans, and servicing assets, the risk 
retention requirement shall be 3 percent.
    (f) Community-focused lending securitizations. (1) This part shall 
not apply to any securitization transaction if the asset-backed 
securities issued in

[[Page 250]]

the transaction are collateralized solely by community-focused 
residential mortgages and servicing assets.
    (2) For any securitization transaction that includes both community-
focused residential mortgages and residential mortgages that are not 
exempt from risk retention under this part, the percent of risk 
retention required under Sec. 1234.4(a) is reduced by the ratio of the 
unpaid principal balance of the community-focused residential mortgages 
to the total unpaid principal balance of residential mortgages that are 
included in the pool of assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction (the 
community-focused residential mortgage asset ratio); provided that:
    (i) The community-focused residential mortgage asset ratio is 
measured as of the cut-off date or similar date for establishing the 
composition of the pool assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction; and
    (ii) If the community-focused residential mortgage asset ratio would 
exceed 50 percent, the community-focused residential mortgage asset 
ratio shall be deemed to be 50 percent.
    (g) Exemptions for securitizations of certain three-to-four unit 
mortgage loans. A sponsor shall be exempt from the risk retention 
requirements in subpart B of this part with respect to any 
securitization transaction if:
    (1)(i) The asset-backed securities issued in the transaction are 
collateralized solely by qualifying three-to-four unit residential 
mortgage loans and servicing assets; or
    (ii) The asset-backed securities issued in the transaction are 
collateralized solely by qualifying three-to-four unit residential 
mortgage loans, qualified residential mortgages as defined in 
Sec. 1234.13, and servicing assets.
    (2) The depositor with respect to the securitization provides the 
certifications set forth in Sec. 1234.13(b)(4) with respect to the 
process for ensuring that all assets that collateralize the asset-backed 
securities issued in the transaction are qualifying three-to-four unit 
residential mortgage loans, qualified residential mortgages, or 
servicing assets; and
    (3) The sponsor of the securitization complies with the repurchase 
requirements in Sec. 1234.13(c) with respect to a loan if, after 
closing, it is determined that the loan does not meet all of the 
criteria to be either a qualified residential mortgage or a qualifying 
three-to-four unit residential mortgage loan, as appropriate.
    (h) Rule of construction. Securitization transactions involving the 
issuance of asset-backed securities that are either issued, insured, or 
guaranteed by, or are collateralized by obligations issued by, or loans 
that are issued, insured, or guaranteed by, the Federal National 
Mortgage Association, the Federal Home Loan Mortgage Corporation, or a 
Federal home loan bank shall not on that basis qualify for exemption 
under this part.



Sec. 1234.20  Safe harbor for certain foreign-related transactions.

    (a) Definitions. For purposes of this section, the following 
definition shall apply:
    U.S. person means:
    (i) Any of the following:
    (A) Any natural person resident in the United States;
    (B) Any partnership, corporation, limited liability company, or 
other organization or entity organized or incorporated under the laws of 
any State or of the United States;
    (C) Any estate of which any executor or administrator is a U.S. 
person (as defined under any other clause of this definition);
    (D) Any trust of which any trustee is a U.S. person (as defined 
under any other clause of this definition);
    (E) Any agency or branch of a foreign entity located in the United 
States;
    (F) Any non-discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary for the benefit or 
account of a U.S. person (as defined under any other clause of this 
definition);
    (G) Any discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary organized, 
incorporated, or (if an individual) resident in the United States; and

[[Page 251]]

    (H) Any partnership, corporation, limited liability company, or 
other organization or entity if:
    (1) Organized or incorporated under the laws of any foreign 
jurisdiction; and
    (2) Formed by a U.S. person (as defined under any other clause of 
this definition) principally for the purpose of investing in securities 
not registered under the Act; and
    (ii) ``U.S. person(s)'' does not include:
    (A) Any discretionary account or similar account (other than an 
estate or trust) held for the benefit or account of a person not 
constituting a U.S. person (as defined in paragraph (i) of this section) 
by a dealer or other professional fiduciary organized, incorporated, or 
(if an individual) resident in the United States;
    (B) Any estate of which any professional fiduciary acting as 
executor or administrator is a U.S. person (as defined in paragraph (i) 
of this section) if:
    (1) An executor or administrator of the estate who is not a U.S. 
person (as defined in paragraph (i) of this section) has sole or shared 
investment discretion with respect to the assets of the estate; and
    (2) The estate is governed by foreign law;
    (C) Any trust of which any professional fiduciary acting as trustee 
is a U.S. person (as defined in paragraph (i) of this section), if a 
trustee who is not a U.S. person (as defined in paragraph (i) of this 
section) has sole or shared investment discretion with respect to the 
trust assets, and no beneficiary of the trust (and no settlor if the 
trust is revocable) is a U.S. person (as defined in paragraph (i) of 
this section);
    (D) An employee benefit plan established and administered in 
accordance with the law of a country other than the United States and 
customary practices and documentation of such country;
    (E) Any agency or branch of a U.S. person (as defined in paragraph 
(i) of this section) located outside the United States if:
    (1) The agency or branch operates for valid business reasons; and
    (2) The agency or branch is engaged in the business of insurance or 
banking and is subject to substantive insurance or banking regulation, 
respectively, in the jurisdiction where located;
    (F) The International Monetary Fund, the International Bank for 
Reconstruction and Development, the Inter-American Development Bank, the 
Asian Development Bank, the African Development Bank, the United 
Nations, and their agencies, affiliates and pension plans, and any other 
similar international organizations, their agencies, affiliates and 
pension plans.
    (b) In general. This part shall not apply to a securitization 
transaction if all the following conditions are met:
    (1) The securitization transaction is not required to be and is not 
registered under the Securities Act of 1933 (15 U.S.C. 77a et seq.);
    (2) No more than 10 percent of the dollar value (or equivalent 
amount in the currency in which the ABS interests are issued, as 
applicable) of all classes of ABS interests in the securitization 
transaction are sold or transferred to U.S. persons or for the account 
or benefit of U.S. persons;
    (3) Neither the sponsor of the securitization transaction nor the 
issuing entity is:
    (i) Chartered, incorporated, or organized under the laws of the 
United States or any State;
    (ii) An unincorporated branch or office (wherever located) of an 
entity chartered, incorporated, or organized under the laws of the 
United States or any State; or
    (iii) An unincorporated branch or office located in the United 
States or any State of an entity that is chartered, incorporated, or 
organized under the laws of a jurisdiction other than the United States 
or any State; and
    (4) If the sponsor or issuing entity is chartered, incorporated, or 
organized under the laws of a jurisdiction other than the United States 
or any State, no more than 25 percent (as determined based on unpaid 
principal balance) of the assets that collateralize the ABS interests 
sold in the securitization transaction were acquired by the sponsor or 
issuing entity, directly or indirectly, from:
    (i) A majority-owned affiliate of the sponsor or issuing entity that 
is chartered, incorporated, or organized under

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the laws of the United States or any State; or
    (ii) An unincorporated branch or office of the sponsor or issuing 
entity that is located in the United States or any State.
    (c) Evasions prohibited. In view of the objective of these rules and 
the policies underlying Section 15G of the Exchange Act, the safe harbor 
described in paragraph (b) of this section is not available with respect 
to any transaction or series of transactions that, although in technical 
compliance with paragraphs (a) and (b) of this section, is part of a 
plan or scheme to evade the requirements of section 15G and this part. 
In such cases, compliance with section 15G and this part is required.



Sec. 1234.21  Additional exemptions.

    (a) Securitization transactions. The federal agencies with 
rulewriting authority under section 15G(b) of the Exchange Act (15 
U.S.C. 78o-11(b)) with respect to the type of assets involved may 
jointly provide a total or partial exemption of any securitization 
transaction as such agencies determine may be appropriate in the public 
interest and for the protection of investors.
    (b) Exceptions, exemptions, and adjustments. The Federal banking 
agencies and the Commission, in consultation with the Federal Housing 
Finance Agency and the Department of Housing and Urban Development, may 
jointly adopt or issue exemptions, exceptions or adjustments to the 
requirements of this part, including exemptions, exceptions or 
adjustments for classes of institutions or assets in accordance with 
section 15G(e) of the Exchange Act (15 U.S.C. 78o-11(e)).



Sec. 1234.22  Periodic review of the QRM definition, exempted three-
to-four unit residential mortgage loans, and community-focused 
residential mortgage exemption

    (a) The Federal banking agencies and the Commission, in consultation 
with the Federal Housing Finance Agency and the Department of Housing 
and Urban Development, shall commence a review of the definition of 
qualified residential mortgage in Sec. 1234.13, a review of the 
community-focused residential mortgage exemption in Sec. 1234.19(f), and 
a review of the exemption for qualifying three-to-four unit residential 
mortgage loans in Sec. 1234.19(g):
    (1) No later than four years after the effective date of the rule 
(as it relates to securitizers and originators of asset-backed 
securities collateralized by residential mortgages), five years 
following the completion of such initial review, and every five years 
thereafter; and
    (2) At any time, upon the request of any Federal banking agency, the 
Commission, the Federal Housing Finance Agency or the Department of 
Housing and Urban Development, specifying the reason for such request, 
including as a result of any amendment to the definition of qualified 
mortgage or changes in the residential housing market.
    (b) The Federal banking agencies, the Commission, the Federal 
Housing Finance Agency and the Department of Housing and Urban 
Development shall publish in the Federal Register notice of the 
commencement of a review and, in the case of a review commenced under 
paragraph (a)(2) of this section, the reason an agency is requesting 
such review. After completion of any review, but no later than six 
months after the publication of the notice announcing the review, unless 
extended by the agencies, the agencies shall jointly publish a notice 
disclosing the determination of their review. If the agencies determine 
to amend the definition of qualified residential mortgage, the agencies 
shall complete any required rulemaking within 12 months of publication 
in the Federal Register of such notice disclosing the determination of 
their review, unless extended by the agencies.



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



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


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

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



Sec. 1235.1  Purpose and scope.

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



Sec. 1235.2  Definitions.

    For purposes of this part, the term--
    Electronic record means a record created, generated, communicated, 
or stored by electronic means.
    E-mail means a document created or received on a computer network 
for transmitting messages electronically, and any attachments which may 
be transmitted with the document.
    Employee means any officer or employee of a regulated entity or the 
Office of Finance.
    Record means any information, whether generated internally or 
received from outside sources by a regulated entity or the Office of 
Finance, related to the conduct of the business of a regulated entity or 
the Office of Finance (which business, in the case of the Office of 
Finance, shall include any functions performed with respect to the 
Financing Corporation) or to legal or regulatory requirements, 
regardless of the following--
    (1) Form or format, including hard copy documents (e.g., files, 
logs, and reports), electronic documents (e.g., e-mail, databases, 
spreadsheets, PowerPoint presentations, electronic reporting systems, 
electronic tapes and back-up tapes, optical discs, CD-ROMS, and DVDs), 
and voicemail or recorded telephone line records;
    (2) Where the information is stored or located, including network 
servers, desktop or laptop computers and handheld computers, other 
wireless devices with text messaging capabilities, and on-site or off-
site at a storage facility;
    (3) Whether the information is maintained or used on regulated 
entity or Office of Finance equipment, or on personal or home computer 
systems of an employee; or
    (4) Whether the information is active or inactive.
    Record hold means a requirement, an order, or a directive from a 
regulated entity, the Office of Finance, or FHFA that the regulated 
entity or the Office of Finance is to retain records relating to a 
particular issue in connection with an actual or a potential FHFA 
examination, investigation, enforcement proceeding, or litigation of 
which the regulated entity or the Office of Finance has received notice 
from FHFA or otherwise has knowledge.
    Record retention schedule means a schedule that details the 
categories of records a regulated entity or the Office of Finance is 
required to retain and the corresponding retention periods. The record 
retention schedule includes all media, such as microfilm and machine-
readable computer records, for each record category.
    Retention period means the length of time that records must be kept 
before they are destroyed, as determined by the organization's record 
retention schedule. Records not authorized for destruction have a 
retention period of ``permanent.''

[76 FR 33127, June 8, 2011, as amended at 78 FR 2324, Jan. 11, 2013]



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

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

[[Page 254]]

every two years and provide a copy of the evaluation to the board of 
directors and the Director.



Sec. 1235.4  Minimum requirements of a record retention program.

    (a) General minimum requirements. The record retention program 
established and maintained by each regulated entity and the Office of 
Finance under Sec. 1235.3 shall:
    (1) Assure that retained records are complete and accurate;
    (2) Assure that the form of retained records and the retention 
period--
    (i) Are appropriate to support administrative, business, external 
and internal audit functions, and litigation of the regulated entity or 
the Office of Finance; and
    (ii) Comply with requirements of applicable laws and regulations, 
including this part;
    (3) Assign in writing the authorities and responsibilities for 
record retention activities for employees, including line managers and 
corporate management;
    (4) Include policies and procedures concerning record holds, 
consistent with Sec. 1235.5, and, as appropriate, integrate them with 
policies and procedures throughout the organization;
    (5) Include an accurate, current, and comprehensive record retention 
schedule that lists records by major categories, subcategories, record 
type, and ret