[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Rules and Regulations]
[Pages 15885-15887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06724]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1251

RIN 2590-AA73


Housing Trust Fund

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a final 
rule setting forth requirements related to allocations by the Federal 
National Mortgage Association (Fannie Mae) and the Federal Home Loan 
Mortgage Corporation (Freddie Mac) (together, the Enterprises) to the 
Housing Trust and Capital Magnet Funds created by the Housing and 
Economic Recovery Act of 2008. The rule implements a statutory 
prohibition against the Enterprises passing the cost of such 
allocations through to the originators of loans they purchase or 
securitize, and finalizes and continues an interim final rule FHFA 
issued on December 16, 2014.

DATES: Effective March 26, 2015.

FOR FURTHER INFORMATION CONTACT: Alfred M. Pollard, General Counsel, 
(202) 649-3050 (not a toll-free number), Federal Housing Finance 
Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20024. The 
telephone number for the Telecommunications Device for the Hearing 
Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 1338 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (Safety and Soundness Act), as added by 
section 1131(b) of the Housing and Economic

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Recovery Act of 2008 (HERA), directs the Secretary of the Department of 
Housing and Urban Development to establish and manage a Housing Trust 
Fund (HTF) that is funded by amounts allocated by Fannie Mae and 
Freddie Mac and any other amounts appropriated, transferred, or 
credited to the HTF under any other provision of law. 12 U.S.C. 
4568(a); see also id. at 4567(a). The purpose of the HTF is to provide 
grants to States ``to increase and preserve the supply of rental 
housing for extremely low- and very low-income families, including 
homeless families'' and ``to increase homeownership for extremely low- 
and very low-income families.'' Id. at 4568(a)(1).
    Separately, section 1339 of the Safety and Soundness Act, as added 
by section 1131(b) of HERA, establishes the Capital Magnet Fund (CMF) 
within the U.S. Treasury as a special account within the Community 
Development Financial Institutions Fund. Id. at 4569(a). As with the 
HTF, the CMF is also funded by amounts allocated by Fannie Mae and 
Freddie Mac and any other amounts appropriated, transferred, or 
credited to it under any other provision of law. Id. at 4569(b); see 
also id. at 4567(a). Funds in the CMF are available to the Secretary of 
the Treasury to carry out a competitive grant program to attract 
private capital for, and increase investment in, ``the development, 
preservation, rehabilitation, or purchase of affordable housing for 
primarily extremely low-, very low-, and low-income families'' and 
``economic development activities or community service facilities . . . 
which in conjunction with affordable housing activities implement a 
concerted strategy to stabilize or revitalize a low-income area or 
underserved rural area.'' Id. at 4569(c).
    Though the HTF is administered by the Secretary of HUD and the CMF 
is administered by the Secretary of the Treasury, Fannie Mae and 
Freddie Mac are supervised by FHFA. See generally id., at 4501 et seq. 
The Director of FHFA has general regulatory authority over each 
Enterprise and is responsible for ensuring that the purposes of the 
Safety and Soundness Act, the Enterprises' charter acts, and any other 
applicable law are carried out. Id. at 4511(b). The duties of the 
Director include ensuring that the operations and activities of each 
Enterprise foster liquid, efficient, competitive and resilient national 
housing finance markets, including activities relating to mortgages on 
housing for low- and moderate-income families; that each Enterprise 
complies with the Safety and Soundness Act and any rules, regulations, 
orders and guidelines issued under it or the Enterprises' charter acts; 
and that the activities of each Enterprise and the manner in which they 
are carried out are consistent with the public interest. Id. at 
4513(a)(1)(B)(ii), (iii) and (v). The Director is authorized to issue 
any regulations, guidelines or orders necessary to carry out the duties 
of the Director under the Safety and Soundness Act or the Enterprise 
charter acts and to ensure that the purposes of such acts are 
accomplished. Id. at 4526.
    The Enterprises' allocation obligations to support the HTF and CMF 
(together, the Funds) and related requirements are set forth at section 
1337 of the Safety and Soundness Act. Id. at 4567. That section 
addresses the amount the Enterprises are to set aside and allocate to 
the Secretaries of HUD and the Treasury each fiscal year, based on the 
unpaid principal balance of their total new business purchases, which 
are the single- and multi-family residential mortgage loans or re-
financings acquired by the Enterprises and held in portfolio or that 
support securities, notes or other obligations which the Enterprises 
guarantee. The section directs the Director to issue a regulation 
prohibiting an Enterprise from redirecting the costs of any required 
allocation to the originators of mortgages the Enterprise purchases or 
securitizes--the subject of this rulemaking--and addresses enforcement 
of Enterprise compliance with the section and any regulation, rule or 
order issued pursuant to it, and gives the Director authority to 
temporarily suspend allocations if the Director makes any finding among 
three set forth by statute. Id.
    Section 1337 requires the Director to issue a regulation regarding 
the prohibition against passing costs of the allocations required under 
the section to originators and how compliance with the requirements of 
the regulation and statute is to be enforced. Pursuant to section 1337 
and the Director's general regulatory authority, the Director 
determined to issue an interim final rule with a request for comments 
to provide transparency on the prohibition and its implementation. The 
interim final rule itself is not a legislative rule but is procedural 
and thus would be excepted from the normal notice and comment 
requirements of the Administrative Procedures Act, 5 U.S.C. 553(b) and 
5 U.S.C. 553(d)(3).
    Though the substantive provisions of the interim final rule were 
established by statute and did not deviate from or add to the statutory 
requirements, the Director determined that issuing an interim final 
rule would support the implementation of the process of setting aside 
and allocating monies for the Funds and assure that the prohibition on 
pass through of costs accompanies the planning and deployment of funds. 
Further, the interim final rule would support the development of 
regulatory oversight mechanisms to be put in place to assure compliance 
with the prohibition.

II. Comments Received on the Interim Final Rule

    FHFA invited comments on all aspects of the interim final rule and 
received 74 comments during the comment period, which closed on January 
15, 2015. Two trade associations, Opportunity Finance Network (OFN), a 
U.S.-based membership organization of community development financial 
institutions, and Independent Community Bankers of America (ICBA), a 
member organization of U.S. community banks, provided comments. The 
remainder of the comments were from private citizens.
    Only one commenter addressed the subject of the interim final rule, 
stating that costs of allocations to the Funds should be passed through 
to the originators of mortgages the Enterprises purchase or securitize 
while the Enterprises are in conservatorships. Since the prohibition 
against redirection or pass-through is established by statute, FHFA has 
not made any change to the interim final rule in response to this 
comment.
    Twenty-one comments did not address any issues related to the 
interim final rule but instead addressed aspects of Enterprise business 
or the conservatorships. Roughly half of the comments indicated support 
for Enterprise allocations to the Funds, and OFN supported allocations 
to the CMF in particular. Some commenters who were supportive 
nonetheless expressed concern about lifting the suspension on 
allocations while the Enterprises are in conservatorships, and others 
suggested that the lifting of the suspension is an indication that the 
Enterprises should no longer be in conservatorships. Other commenters, 
including ICBA, objected to Enterprise allocations to the Funds as long 
as the Enterprises are in conservatorships.
    In light of the comments received, FHFA is adopting the language of 
the interim final rule without change in this final rule.

Regulatory Impact

Paperwork Reduction Act
    The final rule does not contain any information collection 
requirement that requires the approval of OMB under the

[[Page 15887]]

Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a rule 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 
rule's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the rule will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 605(b). FHFA has considered the impact of the final rule under 
the Regulatory Flexibility Act. FHFA certifies that the final rule is 
not likely to have a significant economic impact on a substantial 
number of small business entities because the rule is applicable only 
to the Enterprises, which are not small entities for purposes of the 
Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 1251

    Administrative practice and procedure, Capital Magnet Fund, 
Government-sponsored enterprises, Housing Trust Fund, Reporting and 
recordkeeping requirements.

Authority and Issuance

    Accordingly, for the reasons stated in the Supplementary 
Information, under the authority of 12 U.S.C. 4567, the Federal Housing 
Finance Agency adopts as final the interim final rule published at 79 
FR 74595, December 16, 2014, without change

    Dated: March 18, 2015.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2015-06724 Filed 3-25-15; 8:45 am]
 BILLING CODE 8070-70-P