[Federal Register Volume 75, Number 217 (Wednesday, November 10, 2010)]
[Rules and Regulations]
[Pages 68956-68969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28261]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1208

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1704

RIN 2590-AA15


Debt Collection

AGENCY: Federal Housing Finance Agency; Office of Federal Housing 
Enterprise Oversight, HUD.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing an 
interim final rule with request for comments on Debt Collection. The 
interim final rule sets forth procedures for use by FHFA in collecting 
debts owed to the Federal Government. Agencies are required by law to 
issue a regulation on their debt collection procedures. The interim 
final rule includes procedures for collection of debts through salary 
offset, administrative offset, tax refund offset, and administrative 
wage garnishment. FHFA requests comments on the interim final rule.

DATES: The interim final rule is effective on November 10, 2010. FHFA 
will accept written comments on the interim final rule on or before 
January 10, 2011. For additional information, see SUPPLEMENTARY 
INFORMATION.

ADDRESSES: You may submit your comments on the interim final rule, 
identified by regulatory information number (RIN) 2590-AA15, by any one 
of the following methods:
    <bullet> E-mail: Comments to Alfred M. Pollard, General Counsel may 
be sent by e-mail at <a href="/cdn-cgi/l/email-protection#d183b4b692bebcbcb4bfa5a291b7b9b7b0ffb6bea7"><span class="__cf_email__" data-cfemail="f6a49391b5999b9b93988285b6909e9097d8919980">[email protected]</span></a>. Please include ``RIN 2590-
AA15'' in the subject line of the message.
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by e-
mail to FHFA at <a href="/cdn-cgi/l/email-protection#b7e5d2d0f4d8dadad2d9c3c4f7d1dfd1d699d0d8c1"><span class="__cf_email__" data-cfemail="f7a59290b4989a9a92998384b7919f9196d9909881">[email protected]</span></a> to ensure timely receipt by FHFA. 
Include the following information in the subject line of your 
submission: Comments/RIN 2590-AA15.
    <bullet> U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel, Attention: Comments/RIN 2590-AA15, Federal 
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, 
DC 20552.
    <bullet> Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA15, 
Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., 
Washington, DC 20552. The package should be logged at the Guard Desk, 
First Floor, on business days between 9 a.m. and 5 p.m.

FOR FURTHER INFORMATION CONTACT: Andra Grossman, Senior Counsel, 
telephone (202) 343-1313 or Gail F. Baum, Associate General Counsel, 
telephone (202) 343-1508 (not toll-free numbers); Federal Housing 
Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. 
The telephone number for the Telecommunications Device for the Deaf is 
(800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Comments

    The Federal Housing Finance Agency (FHFA) invites comments on all 
aspects of the interim final rule, and will take all comments into 
consideration before issuing the final regulation. Copies of all 
comments will be posted without change, including any personal 
information you provide, such as your

[[Page 68957]]

name and address, on the FHFA Internet Web site at http://www.fhfa.gov. 
In addition, copies of all comments received will be available for 
examination by the public on business days between the hours of 10 a.m. 
and 3 p.m., at the Federal Housing Finance Agency, Fourth Floor, 1700 G 
Street, NW., Washington, DC 20552. To make an appointment to inspect 
comments, please call the Office of General Counsel at (202) 414-6924.

II. Background

A. Establishment of the Federal Housing Finance Agency

    The Housing and Economic Recovery Act of 2008 (HERA), Public Law 
110-289, 122 Stat. 2654, 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 et seq.) to establish FHFA as an independent agency of the 
Federal Government.\1\ HERA transferred the supervisory and oversight 
responsibilities over the Federal National Mortgage Association (Fannie 
Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) 
(collectively, Enterprises), and the Federal Home Loan Banks 
(collectively, regulated entities), from the Office of Federal Housing 
Enterprise Oversight (OFHEO) and the Federal Housing Finance Board 
(FHFB), respectively, to FHFA. FHFA was established to oversee the 
prudential operations of the regulated entities to ensure that they 
operate in a safe and sound manner, including being adequately 
capitalized; and carry out their public policy missions, including 
fostering liquid, efficient, competitive and resilient national housing 
finance markets. The regulated entities continue to operate under 
regulations promulgated by OFHEO and FHFB and such regulations are 
enforceable by the Director of FHFA until such regulations are 
modified, terminated, set aside, or superseded by regulations issued by 
FHFA.\2\
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    \1\ See Division A, titled the ``Federal Housing Finance 
Regulatory Reform Act of 2008,'' Title I, Section 1101 of HERA.
    \2\ See sections 1302 and 1312 of HERA.
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    The interim final rule, when published in its final form, would 
supersede OFHEO's Debt Collection regulation at 12 CFR part 1704.

B. Debt Collection

    The interim final rule implements the requirements of the Federal 
Claims Collection Act \3\ and the Debt Collection Improvement Act of 
1996 (DCIA).\4\ The DCIA requires agencies to either (1) adopt without 
change regulations on collecting debts by administrative offset 
promulgated by the Department of Justice or Department of the Treasury; 
or (2) prescribe agency regulations for collecting such debts by 
administrative offset, which are consistent with the Federal Claims 
Collection Standards (FCCS).\5\ The agency regulations are to protect 
the minimum due process rights that must be afforded to a debtor when 
an agency seeks to collect a debt, including the ability to verify, 
challenge, and compromise claims, and provide access to administrative 
appeals procedures which are both reasonable and protect the interests 
of the United States. FHFA has determined to issue its own agency 
regulations for debt collection, to account for FHFA's status as an 
independent regulatory agency, and for ease of use. The interim final 
rule is consistent with the FCCS, as required by the DCIA. In addition, 
the tax refund offset provisions of the regulations satisfy the 
requirement of the Internal Revenue Service that FHFA adopt agency 
regulations authorizing its collection of debts by administrative 
offset in general and tax refund offset in particular.\6\ The 
administrative wage garnishment provisions of the regulations satisfy 
the requirement in 31 CFR 285.11(f) that FHFA adopt regulations for the 
conduct of administrative wage garnishment hearings.
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    \3\ Public Law 89-508, 80 Stat. 308 (1966), as amended by the 
Debt Collection Act of 1982, Public Law 97-365, 96 Stat. 1749 
(1982).
    \4\ Public Law 104-134, 110 Stat. 1321 (1996).
    \5\ 31 U.S.C. 3716.
    \6\ 31 U.S.C. 3720A(b)(4); 26 CFR 301.6402-6(b); 31 CFR 
285.2(c).
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1. Subpart A, General
    Subpart A addresses the collection of debts in general, and 
incorporates the debt collection procedures of the FCCS.\7\ Subpart A 
also provides, in accordance with applicable law and regulations, that 
FHFA will transfer debts that are delinquent for over 180 days to the 
Secretary of the Department of the Treasury for collection or other 
appropriate action. It further provides that debts that are delinquent 
for less than 180 days may be referred to debt collection centers for 
collection.
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    \7\ 31 CFR chapter IX.
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2. Subpart B, Salary Offset
    Subpart B provides the procedures to collect debts owed to the 
Federal Government by FHFA employees and former FHFA employees who are 
employed by other agencies by salary offset, that is, by deductions 
from the current pay account of the employee.\8\ Agencies are required 
to promulgate their own salary offset regulations \9\ that must conform 
with OPM regulation and be approved by OPM before becoming 
effective.\10\ The salary offset provisions of subpart B of the interim 
final rule, as well as corresponding definitions in subpart A, have 
been reviewed and approved by OPM.
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    \8\ 5 U.S.C. 5514(a)(1). The procedures for salary offset are 
governed by 5 U.S.C. 5514 and by Office of Personnel Management 
(OPM) regulation at 5 CFR part 550, subpart K.
    \9\ 5 U.S.C. 5514(b)(1).
    \10\ 5 CFR 550.1105(a)(1).
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3. Subpart C, Administrative Offset
    Subpart C provides procedures that FHFA will use to collect debts 
by administrative offset, if salary offset is not applicable or 
appropriate. Under this method of collection, FHFA may collect a debt 
from a debtor by withholding money that is either payable to the debtor 
or held by the Federal Government for the debtor.\11\ Subpart C is 
consistent with the procedures of administrative offset set forth in 31 
U.S.C. 3716 and the FCCS.
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    \11\ 31 U.S.C. 3716.
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4. Subpart D, Tax Refund Offset
    Subpart D sets forth the procedures used for collection by tax 
refund offset. If collection by salary offset or administrative offset 
is not feasible, FHFA may seek to recover monies owed it by requesting 
that the Internal Revenue Service reduce a tax refund to a debtor by 
the amount of the debt and pay such monies to the agency.\12\ In order 
to use the tax refund offset method of collection, the Internal Revenue 
Service requires an agency to promulgate temporary or permanent 
regulations covering all three collection methods: salary offset, 
administrative offset, and tax refund offset.\13\ The publication of 
FHFA's debt collection regulation would satisfy that requirement.
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    \12\ 31 U.S.C. 3720A, 26 CFR 301.6402-6.
    \13\ 31 U.S.C. 3720A(b)(4); 26 CFR 301.6402-6(b).
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5. Subpart E, Administrative Wage Garnishment
    Subpart E sets forth administrative wage garnishment procedures, 
authorized by the DCIA.\14\ DCIA permits agencies to collect debts by 
ordering a non-Federal employer to deduct amounts up to 15 percent of 
an employee's disposable pay (or a greater amount to which the employee 
consents). Treasury regulations require agencies to adopt regulations 
for the conduct of administrative wage

[[Page 68958]]

garnishment hearings.\15\ The provisions of FHFA's interim final rule 
are consistent with DCIA and Treasury regulations, essentially tracking 
Treasury's regulation.
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    \14\ 31 U.S.C. 3720D.
    \15\ 31 CFR 285.11.
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C. Effective Date and Request for Comments

    FHFA has determined that this interim final rule pertains to agency 
practice and procedure and is interpretative in nature. The procedures 
contained in the interim final rule for salary offset, administrative 
offset, tax refund offset, and administrative wage garnishment are 
mandated by law and by regulations promulgated by OPM, jointly by the 
Department of the Treasury and the Department of Justice, and by the 
IRS. Therefore, the interim final rule is not subject to the 
Administrative Procedure Act (APA) and the requirements of the APA for 
a notice and comment period and for a delayed effective date.\16\ 
Nevertheless, FHFA requests comments from the public and will take all 
comments into consideration before promulgating the final rule. Copies 
of all comments received will be posted on the agency Web site and made 
available for examination by the public as indicated in the Comments 
section above.
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    \16\ 5 U.S.C. 553(b) and (c).
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Regulatory Impact

Paperwork Reduction Act

    The interim final rule does not contain any information collection 
requirement that requires the approval of OMB under the Paperwork 
Reduction Act.\17\
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    \17\ 44 U.S.C. 3501 et seq.
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Regulatory Flexibility Act

    The Regulatory Flexibility Act \18\ requires that a regulation that 
has a significant economic impact on a substantial number of small 
entities, small businesses, or small organizations must include an 
initial regulatory flexibility analysis describing the regulation's 
impact on small entities. Such an analysis need not be undertaken if 
the agency has certified that the regulation will not have a 
significant economic impact on a substantial number of small 
entities.\19\ FHFA has considered the impact of the interim final rule 
under the Regulatory Flexibility Act. FHFA certifies that the interim 
final rule is not likely to have a significant economic impact on a 
substantial number of small business entities because the regulation 
applies primarily to Federal employees and a limited number of Federal 
and business entities.\20\
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    \18\ 5 U.S.C. 601 et seq.
    \19\ 5 U.S.C. 605(b).
    \20\ Id.
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List of Subjects

12 CFR Part 1208

    Administrative practice and procedure, Claims, Debt collection, 
Government employees, Wages.

12 CFR Part 1704

    Administrative practice and procedure, Debt collection.

Authority and Issuance

0
Accordingly, for the reasons stated in the preamble, under the 
authority of 12 U.S.C. 4526, FHFA is amending Chapters XII and XVII of 
Title 12 of the Code of Federal Regulations as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

SUBCHAPTER A--ORGANIZATION AND OPERATIONS

0
1. Add part 1208 to Subchapter A to read as follows:

PART 1208--DEBT COLLECTION

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 to 1208.19 [Reserved]
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 to 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


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

[[Page 68959]]

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;
    (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 
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

[[Page 68960]]

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 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.''


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

[[Page 68961]]

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 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.


Sec. Sec.  1208.5 to 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;
    (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

[[Page 68962]]

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.
    (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

[[Page 68963]]

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 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 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

[[Page 68964]]

    (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 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 Sec. Sec.  
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.
    (iii) When an employee transfers to another paying agency, FHFA 
shall not repeat the procedures described in Sec. Sec.  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

[[Page 68965]]

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.

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 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

[[Page 68966]]

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
    (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.
    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

[[Page 68967]]

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 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.


Sec.  1208.54 to 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

[[Page 68968]]

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;
    (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.


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

[[Page 68969]]

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 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.


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.

CHAPTER XVII--OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, 
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PART 1704--[REMOVED]

0
2. Remove part 1704.

    Dated: November 3, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2010-28261 Filed 11-9-10; 8:45 am]
BILLING CODE 8070-01-P


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