`[Federal Register Volume 69, Number 211 (Tuesday, November 2, 2004)]
[Proposed Rules]
[Pages 63576-63577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24100]



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Part II





Department of Housing and Urban Development





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24 CFR Part 81



Federal National Mortgage Association (Fannie Mae) and Federal Home 
Loan Mortgage Corporation (Freddie Mac): GSE Housing Goals; Advanced 
Notice of Proposed Rulemaking

  Federal Register / Vol. 69, No. 211 / Tuesday, November 2, 2004 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 81

[Docket No. FR-4960-A-01]
RIN 2501-AD12


HUD's Regulation of the Federal National Mortgage Association 
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie 
Mac): GSE Housing Goals--Advance Notice of Proposed Rulemaking

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner.

ACTION: Advance Notice of Proposed Rulemaking (ANPR).

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SUMMARY: Elsewhere in today's Federal Register, HUD is publishing its 
final rule that establishes new housing goals for Fannie Mae and 
Freddie Mac for the years 2005 through 2008. An issue raised by 
commenters during the public comment period on the proposed rule, but 
not included as a regulatory provision in the final rule published in 
today's Federal Register, concerns the feasibility of the housing goals 
for Fannie Mae and Freddie Mac during a period when refinances of home 
mortgages constitute a large share of the mortgage market. This ANPR 
advises of HUD's intention to consider a regulatory provision that 
recognizes and takes into consideration the impact of high volumes of 
refinance transactions on the GSEs' ability to achieve the housing 
goals in certain years, and solicits proposals on how such a provision 
should be structured and implemented.

DATES: Comment Due Date: December 17, 2004.

ADDRESSES: Interested persons are invited to submit comments regarding 
this advance notice of proposed rulemaking to the Rules Docket Clerk, 
Office of General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410-0500. 
Communications should refer to the above docket number and title. 
Facsimile comments are not accepted. A copy of each communication 
submitted will be available for public inspection and copying between 8 
a.m. and 5 p.m. weekdays at the above referenced address.

FOR FURTHER INFORMATION CONTACT: Sandra Fostek, Director, Office of 
Government Sponsored Enterprises, Office of Housing, Room 3150, 
telephone (202) 708-2224. For questions on data or methodology, contact 
John L. Gardner, Director, Financial Institutions Regulation Division, 
Office of Policy Development and Research, Room 8212, telephone (202) 
708-1464. For legal questions, contact Paul S. Ceja, Deputy Assistant 
General Counsel for Government Sponsored Enterprises/RESPA, Office of 
the General Counsel, Room 9262, telephone (202) 708-3137. The address 
for all of these persons is Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC, 20410. Persons 
with hearing and speech impairments may access the phone numbers via 
TTY by calling the Federal Information Relay Service at (800) 877-8399.

SUPPLEMENTARY INFORMATION:

Background

    Elsewhere in today's Federal Register, HUD is publishing a final 
rule that sets new housing goal levels for Fannie Mae and Freddie Mac 
(collectively the government-sponsored enterprises or GSEs) (Housing 
Goals final rule). The new housing goal levels are established in 
accordance with the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (FHEFSSA) and govern the purchase by Fannie Mae 
and Freddie Mac of mortgages financing low- and moderate-income 
housing, special affordable housing, and housing in central cities, 
rural areas, and other underserved areas. The new goal levels are 
applicable for the years 2005 through 2008, and are accompanied by new 
subgoals for the GSEs' acquisitions of home purchase loans that qualify 
for each of the housing goals.
    The Housing Goals final rule follows publication of a May 3, 2004, 
proposed rule (69 FR 24228) and takes into consideration the public 
comments received on the proposed rule. The preamble to the Housing 
Goals final rule provides a more detailed discussion of the May 3, 
2004, proposed rule, the changes made at the final rule stage, the 
significant issues raised by public commenters on the proposed rule, 
and the Department's responses to those issues. One issue raised by 
several public comments, and not addressed in the Housing Goals final 
rule as a regulatory change, concerns the feasibility of the GSEs 
achieving the housing goals during a period when there is a high volume 
of home mortgage refinances.
    Some public commenters expressed concerns that the housing goals 
would be unattainable in a high refinance environment, when a large 
portion of the mortgage market consists of refinance loans rather than 
home purchase mortgages. These commenters suggested that HUD should 
take into consideration the potential effects of a high refinance 
environment on the GSEs' ability to meet the housing goals. Some 
commenters suggested that refinance mortgages should be excluded from 
the goals calculation, while others suggested that the GSEs should be 
expected to meet the goals without special consideration of a high 
refinance environment. Several commenters suggested that the Housing 
Goals final rule should include a specific mechanism to take into 
account changes in market conditions resulting from a high refinance 
volume. The comments on the possible impacts of a high refinance 
environment are highlighted in more detail in the preamble to the 
Housing Goals final rule.

This ANPR

    As stated in the preamble to the Housing Goals final rule and as 
stated in this ANPR, HUD has decided to consider, as a specific 
regulatory provision, the feasibility of the GSEs meeting the housing 
goals in a high refinance environment through a separate rulemaking, 
which consideration begins with publication of this ANPR.
    HUD did not propose, in the May 3, 2004, proposed rule, a 
regulatory mechanism to address the impact of a high refinance 
environment on the ability of the GSEs to meet their annual housing 
goals in years in which there is a high refinance environment. HUD 
believes that it would benefit from additional public input on this 
issue. HUD recognizes, from prior years, that a period of high 
refinance volume can make it more challenging for the GSEs to attain 
the housing goals. Until this rulemaking is completed, the GSEs are not 
without relief in a high refinance environment under existing 
authority. FHEFSSA provides a mechanism by which HUD can take into 
consideration market and economic conditions that may make the 
achievement of housing goals infeasible in any given year. (See 12 
U.S.C. 4566(b).) It is contemplated, however, that a more efficient 
mechanism could be devised for dealing with high refinance volumes 
under the housing goals.
    HUD is soliciting public comment on how it might add a regulatory 
provision that accommodates a high refinance environment under the 
housing goals. Refinancing of mortgages promotes homeownership by 
helping families to finance their homes on a more affordable basis, and 
also by providing an opportunity to families who have bought their 
homes through subprime financing to move into the prime market as they 
improve their credit rating.

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    Through this ANPR, HUD solicits proposals on an appropriate 
regulatory mechanism to address the impact of a high refinance 
environment on the ability of the GSEs to meet housing goals for any 
year that is characterized by a high refinance environment. HUD 
especially solicits proposals that are sufficiently descriptive and 
detailed concerning any methodology or calculation offered, and HUD 
also encourages the inclusion of examples that illustrate how the 
commenter's proposal would work in practice.

    Dated: October 22, 2004.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 04-24100 Filed 11-1-04; 8:45 am]
BILLING CODE 4210-27-P`