[Federal Register Volume 74, Number 83 (Friday, May 1, 2009)]
[Proposed Rules]
[Pages 20236-20263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-9994]


=======================================================================
-----------------------------------------------------------------------

FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AA25


2009 Enterprise Transition Affordable Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Proposed rule.

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

SUMMARY: Section 1128(b) of the Housing and Economic Recovery Act of 
2008 (HERA) transferred the authority to establish, monitor and enforce 
the affordable housing goals for the Federal National Mortgage 
Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation 
(Freddie Mac) (collectively, Enterprises) from the Department of 
Housing and Urban Development (HUD) to the Federal Housing Finance 
Agency (FHFA). Section 1128(b) further provides that the annual housing 
goals in effect for 2008 as established by HUD shall remain in effect 
for 2009, except that the Director of FHFA shall review such goals to 
determine their feasibility given current market conditions, and make 
appropriate adjustments consistent with such market conditions. 
Pursuant to this directive, FHFA has analyzed current market conditions 
and is issuing and seeking comments on a proposed rule that would 
adjust the affordable housing goal and home purchase subgoal levels for 
the Enterprises for 2009. The proposed rule would also permit loans 
owned or guaranteed by an Enterprise that are modified in accordance 
with the Administration's Homeowner Affordability and Stability Plan 
announced on March 4, 2009, to be treated as mortgage purchases and 
count for purposes of the housing goals. In addition, the proposed rule 
would exclude purchases of jumbo conforming loans from counting towards 
the 2009 housing goals. FHFA's housing goals regulation would be set 
forth in new part 1282 of FHFA's regulations, and would be generally 
consistent with the housing goals provisions previously established by 
HUD in 24 CFR part 81, except as modified herein. Pursuant to section 
1302 of HERA and 12 U.S.C. 4603, to the extent FHFA is adopting 
provisions from part 81 in new part 1282, those provisions in part 81 
will no longer be in effect.

DATES: Written comments must be received on or before May 22, 2009.

ADDRESSES: You may submit your comments, identified by regulatory 
information number (RIN) 2590-AA25, by any of the following methods:
    <bullet> U.S. Mail, United Parcel Post, Federal Express, or Other 
Mail Service: The mailing address for comments is: Alfred M. Pollard, 
General Counsel, Attention: Comments/RIN 2590-AA25, 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-AA25, 
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.
    <bullet> E-mail: Comments to Alfred M. Pollard, General Counsel may 
be sent by e-mail to <a href="/cdn-cgi/l/email-protection#24764143674b4949414a505764424c42450a434b52"><span class="__cf_email__" data-cfemail="74261113371b1919111a000734121c12155a131b02">[email protected]</span></a>. Please include ``RIN 2590-
AA25'' 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#33615654705c5e5e565d474073555b55521d545c45"><span class="__cf_email__" data-cfemail="396b5c5e7a5654545c574d4a795f515f58175e564f">[email protected]</span></a> to ensure timely receipt by the 
Agency. Please include ``RIN 2590-AA25'' in the subject line of the 
message.

FOR FURTHER INFORMATION CONTACT: Brian Doherty, Acting Manager, Housing 
Mission and Goals--Policy, (202) 408-2991, or Paul Manchester, Acting 
Manager, Housing Mission and Goals--Quantitative Analysis, (202) 408-
2946 (these are not toll-free numbers); Sharon Like, Associate General 
Counsel, (202) 414-8950, Lyn Abrams, Attorney-Advisor, (202) 414-8951, 
or Kevin Sheehan, Attorney-Advisor, (202) 414-8952 (these are not toll-
free numbers), Office of General Counsel, Federal Housing Finance 
Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The 
telephone number for the Telecommunications Device for the Hearing 
Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Comments

    FHFA invites comments on all aspects of the proposed rule, and will 
revise the language of the proposed rule as appropriate after taking 
all comments into consideration. Copies of all comments will be posted 
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,

[[Page 20237]]

please call the Office of General Counsel at (202) 414-3751.

II. Background

A. Establishment of FHFA

    Effective July 30, 2008, Division A of HERA, Public Law 110-289, 
122 Stat. 2654 (2008), amended the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (Safety and Soundness Act), 
12 U.S.C. 4501 et seq., and created the FHFA as an independent agency 
of the Federal government.\1\ HERA transferred the safety and soundness 
supervisory and oversight responsibilities over the Enterprises from 
the Office of Federal Housing Enterprise Oversight (OFHEO) to FHFA. 
HERA also transferred the charter compliance authority and 
responsibility to establish, monitor and enforce the affordable housing 
goals for the Enterprises from HUD to FHFA. HERA provides for the 
abolishment of OFHEO one year after the date of enactment. FHFA is 
responsible for ensuring that the Enterprises operate in a safe and 
sound manner, including maintenance of adequate capital and internal 
controls, that their operations and activities foster liquid, 
efficient, competitive, and resilient national housing finance markets, 
and that they carry out their public policy missions through authorized 
activities. See 12 U.S.C. 4513.
---------------------------------------------------------------------------

    \1\ See Division A, titled the ``Federal Housing Finance 
Regulatory Reform Act of 2008,'' Title I, Section 1101 of HERA.
---------------------------------------------------------------------------

    Section 1302 of HERA provides, in part, that all regulations, 
orders and determinations issued by the Secretary of HUD (Secretary) 
with respect to the Secretary's authority under the Safety and 
Soundness Act, the Federal National Mortgage Association Charter Act, 
12 U.S.C. 1716 et seq., and the Federal Home Loan Mortgage Corporation 
Act, 12 U.S.C. 1451 et seq., (Charter Acts), shall remain in effect and 
be enforceable by the Secretary or the Director of FHFA, as the case 
may be, until modified, terminated, set aside or superseded by the 
Secretary or the Director, any court, or operation of law. The 
Enterprises continue to operate under regulations promulgated by OFHEO 
and HUD until FHFA issues its own regulations. See HERA at section 
1302, 122 Stat. 2795; 12 U.S.C. 4603. The Enterprises are government-
sponsored enterprises (GSEs) chartered by Congress for the purpose of 
establishing secondary market facilities for residential mortgages. See 
12 U.S.C. 1716 et seq.; 12 U.S.C. 1451 et seq. Specifically, Congress 
established the Enterprises to provide stability in the secondary 
market for residential mortgages, respond appropriately to the private 
capital market, provide ongoing assistance to the secondary market for 
residential mortgages, and promote access to mortgage credit throughout 
the nation. Id.

B. Statutory and Regulatory Background

    Prior to HERA, the Safety and Soundness Act provided the Secretary 
with the authority to establish, monitor and enforce affordable housing 
goals for the Enterprises. See 12 U.S.C. 4561 et seq. (2008). HUD 
issued regulations establishing affordable housing goals for the 
Enterprises, which were periodically updated, most recently in 2004 
when HUD established new housing goal levels for 2005 through 2008. See 
24 CFR part 81. HUD's regulations provide that the housing goal levels 
for 2008 continue in effect in 2009 and each year thereafter until 
replaced by new annual housing goals established by HUD. See 24 CFR 
81.12 through 81.14.
    Section 1331(c) of the Safety and Soundness Act, as amended by 
section 1128(b) of HERA, provides that the housing goal levels 
established by HUD for 2008 ``shall remain in effect for 2009, except 
that not later than the expiration of the 270-day period beginning on 
the date of the enactment of [HERA], the Director shall review such 
goals applicable for 2009 to determine the feasibility of such goals 
given the market conditions current at such time and, after seeking 
public comment for a period not to exceed 30 days, may make appropriate 
adjustments consistent with such market conditions.'' See 12 U.S.C. 
4561(c). Under section 1336 of the Safety and Soundness Act, as amended 
by section 1130 of HERA, the Director of FHFA has authority to monitor 
and enforce compliance with the 2009 housing goals, as well as the 
housing goals established by FHFA for subsequent years. See 12 U.S.C. 
4566.\2\
---------------------------------------------------------------------------

    \2\ Sections 1331 through 1335 of the Safety and Soundness Act, 
as amended by HERA, also contain new housing goal and other 
requirements for the Enterprises effective for 2010 and each year 
thereafter. FHFA will implement these requirements pursuant to a 
separate rulemaking. See 12 U.S.C. 4561 through 4565.
---------------------------------------------------------------------------

C. Conservatorship

    On September 7, 2008, the Director of FHFA appointed FHFA as 
conservator of the Enterprises in accordance with the Safety and 
Soundness Act, as amended by HERA, to maintain the Enterprises in a 
safe and sound financial condition. The Enterprises remain under 
conservatorship at this time.

III. Summary of Proposed Amendments

A. Adoption of Housing Goals Provisions in New 12 CFR Part 1282

    HUD's regulations on establishing, monitoring and enforcing the 
housing goals for the Enterprises are set forth in 24 CFR part 81, 
Subparts A and B. Under section 1302 of HERA, part 81 continues in 
effect and is enforceable by the Director of FHFA until modified, 
terminated, set aside or superseded by the Secretary or the Director, 
any court, or operation of law. The proposed rule would establish 
housing goals requirements for the Enterprises for 2009 in new part 
1282 of title 12 of FHFA's regulations. The housing goals requirements 
would be generally consistent with the HUD housing goals provisions in 
Subparts A and B, except as modified herein. Upon FHFA's adoption of 
the final rule for the 2009 housing goals, the related housing goals 
provisions adopted by FHFA in chapter XII from 24 CFR part 81 will no 
longer be in effect pursuant to section 1302 of HERA.

B. Adjustment of Housing Goal and Home Purchase Subgoal Levels

    Section 1128(b) of HERA authorizes the Director of FHFA to adjust 
the housing goal levels established by HUD for 2009 based on current 
market conditions. FHFA has reviewed the current market conditions and 
has determined that the 2009 housing goal and home purchase subgoal 
levels established in 24 CFR part 81 are not feasible unless they are 
adjusted.\3\ Adverse market conditions, such as stricter underwriting 
standards, the increased standards of private mortgage insurers, and 
the high rate of unemployment will result in the origination of fewer 
goals-qualifying loans. Moreover, the increase in the share of the 
mortgage market of mortgages insured by the government and the decline 
in private label securities backed by mortgages are two of several 
factors that contribute to fewer goals-qualifying mortgages available 
for purchase by the

[[Page 20238]]

Enterprises. Consequently, FHFA is proposing to lower the 2009 housing 
goal and home purchase subgoal levels, based on current market 
conditions, to the following:
---------------------------------------------------------------------------

    \3\ Performance under each of the housing goals is measured 
using a fraction that is converted into a percentage. See proposed 
Sec.  1282.15(a); 24 CFR 81.15(a). The numerator of each fraction is 
the number of dwelling units financed by an Enterprise's mortgage 
purchases in a particular year that count toward achievement of the 
housing goal. The denominator of each fraction is, for all mortgages 
purchased, the number of dwelling units that could count toward 
achievement of the goal under appropriate circumstances. The 
denominator may not include Enterprise transactions or activities 
that are not mortgages or mortgage purchases as defined by the FHFA 
or transactions that are specifically excluded as ineligible under 
the rule. See id.

--Low- and moderate-income housing goal: 51 percent;
--Special affordable housing goal: 23 percent;
--Underserved areas housing goal: 37 percent;
--Low- and moderate-income home purchase subgoal: 40 percent;
--Special affordable home purchase subgoal: 14 percent;
--Underserved areas home purchase subgoal: 30 percent.

    No adjustments would be made to the Enterprises' 2009 minimum 
dollar-based special affordable multifamily housing subgoals, which 
would remain at $5.49 billion for Fannie Mae, and $3.92 billion for 
Freddie Mac.
    FHFA's analysis that serves as the basis for these determinations 
is set forth in section IV. Analysis of Proposed Rule below.

C. New Counting Requirements

    Exclusion of jumbo conforming loans. The proposed rule would 
exclude the Enterprises' purchases of jumbo conforming loans from 
counting towards the 2009 housing goals.
    HASP loan modifications. The proposed rule would permit loans owned 
or guaranteed by an Enterprise that are modified in accordance with the 
Administration's Homeowner Affordability and Stability Plan announced 
on March 4, 2009 (HASP), to be treated as mortgage purchases and count 
for purposes of the housing goals.

IV. Analysis of Proposed Rule

A. Scope of Part--Proposed Sec.  1282.1

    Proposed Sec.  1282.1 would set forth the scope of new part 1282. 
Section 81.1 of HUD's regulations describes the scope with regard to 
the respective duties of HUD and OFHEO in relation to the Enterprises. 
24 CFR 81.1. Proposed Sec.  1282.1 would describe the scope with 
reference to the Director of FHFA's regulatory authority, since HUD's 
housing goals authority and OFHEO's safety and soundness supervisory 
authority were transferred to FHFA by HERA.

B. Definitions--Proposed Sec.  1282.2

    Proposed Sec.  1282.2 would set forth definitions of terms used in 
the proposed rule that would be generally consistent with the 
definitions in Sec.  81.2 of HUD's regulations, except for minor 
technical and clarifying changes and the addition of several new 
definitions in light of the transfer of the housing goals authority 
from HUD to FHFA and other changes made by HERA. See 24 CFR 81.2.

C. Housing Goal and Subgoal Levels for 2009--Proposed Sec. Sec.  
1282.12 Through 1282.14

    In 2004, HUD established by regulation new housing goal levels for 
years 2005 through 2008, with the 2008 levels applicable in 2009 
pending establishment by HUD of goals for 2009 (2004 Rule). See 69 FR 
63639 (Nov. 2, 2004) (codified at 24 CFR 81.12 through 81.14). The 2004 
Rule also implemented home purchase subgoals under each housing goal 
and established target levels for each subgoal. Id. These levels rose 
in yearly increments, capping out at the highest levels in 2008. HUD 
had not established new goal levels for 2009 before HERA was enacted 
and HUD's housing goals authority was transferred to FHFA.
1. Adjustment of Housing Goal and Home Purchase Subgoal Levels
    Section 1128(b) of HERA provides that the housing goals established 
by HUD for the Enterprises shall continue in effect for 2009 at their 
2008 levels, unless the Director of FHFA adjusts the levels based on 
current market conditions. FHFA has reviewed the feasibility of the 
2009 housing goal and subgoal levels established by HUD in light of 
current market conditions, and has determined that the current goal and 
home purchase subgoal levels are not feasible given current market 
conditions.
    Accordingly, FHFA proposes the following downward adjustments to 
the housing goal levels for 2009 consistent with current market 
conditions:
    <bullet> Low- and moderate-income housing goal--The low- and 
moderate-income housing goal level for 2008 and 2009 was 56 percent. 
For calendar year 2009, FHFA proposes to lower this goal level to 51 
percent. That is, under proposed Sec.  1282.12, the 2009 goal for each 
Enterprise's purchases of mortgages on housing for low- and moderate-
income families would be 51 percent of the total number of dwelling 
units financed by that Enterprise's mortgage purchases.
    <bullet> Underserved areas housing goal--The underserved areas 
housing goal level for 2008 and 2009 was 39 percent. For calendar year 
2009, FHFA proposes to lower this goal level to 37 percent. That is, 
under proposed Sec.  1282.13, the 2009 goal for each Enterprise's 
purchases of mortgages on housing located in central cities, rural 
areas, and other underserved areas would be 37 percent of the total 
number of dwelling units financed by that Enterprise's mortgage 
purchases.
    <bullet> Special affordable housing goal--The special affordable 
housing goal level for 2008 and 2009 was 27 percent. For calendar year 
2009, FHFA proposes to lower this goal level to 23 percent. That is, 
under proposed Sec.  1282.14, the 2009 goal for each Enterprise's 
purchases of mortgages on rental and owner-occupied housing meeting the 
then-existing, unaddressed needs of and affordable to low-income 
families in low-income areas and very low-income families would be 23 
percent of the total number of dwelling units financed by that 
Enterprise's mortgage purchases.
    In addition, FHFA proposes the following downward adjustments to 
the home purchase subgoal levels for 2009 consistent with current 
market conditions:
    <bullet> Low- and moderate-income home purchase subgoal--The low- 
and moderate-income home purchase subgoal level for 2008 and 2009 was 
47 percent. FHFA proposes to lower this subgoal level to 40 percent for 
calendar year 2009. That is, under proposed Sec.  1282.12, 40 percent 
of the total number of home purchase mortgages in metropolitan areas 
financed by the Enterprise's mortgage purchases shall be home purchase 
mortgages in metropolitan areas which count toward the low- and 
moderate-income housing goal for 2009.
    <bullet> Underserved areas home purchase subgoal--The underserved 
areas home purchase subgoal level for 2008 and 2009 was 34 percent. 
FHFA proposes to lower this subgoal level to 30 percent for calendar 
year 2009. That is, under proposed Sec.  1282.13, 30 percent of the 
total number of home purchase mortgages in metropolitan areas financed 
by the Enterprise's mortgage purchases shall be home purchase mortgages 
in metropolitan areas which count toward the underserved areas housing 
goal for 2009.
    <bullet> Special affordable home purchase subgoal--The special 
affordable home purchase subgoal level for 2008 and 2009 was 18 
percent. FHFA proposes to lower this subgoal level to 14 percent for 
calendar year 2009. That is, under proposed Sec.  1282.14, 14 percent 
of the total number of home purchase mortgages in metropolitan areas 
financed by the Enterprise's mortgage purchases shall be home purchase 
mortgages in metropolitan areas which count toward the special 
affordable housing goal for 2009.
    The proposed overall housing goals, while generally below those set 
by HUD for calendar years 2006 through 2008, are higher than the goals 
for calendar

[[Page 20239]]

year 2004 and almost identical to the 2005 goals. In 2005, the low- and 
moderate-income housing goal was 52 percent, the underserved areas 
housing goal was 37 percent, and the special affordable housing goal 
was 22 percent. The proposed goals are well in excess of those in 
effect in 2000, when the low- and moderate-income housing goal was 42 
percent, the underserved areas housing goal was 24 percent,\4\ and the 
special affordable housing goal was 14 percent.
---------------------------------------------------------------------------

    \4\ The underserved areas housing goal in 2001-2004 was based on 
the 1990 Census. The underserved areas housing goal for 2005-2008 
was based on the 2000 Census. This switch from the 1990 to 2000 
Census had the effect of adding several percentage points to the 
goal.
---------------------------------------------------------------------------

    At the time the 2004 Rule was implemented, mortgage markets were 
still evidencing significant expansion. However, as discussed further 
below, based on current market conditions, FHFA estimates that market 
shares for certain goals and home purchase subgoals have declined 
significantly. Adjusting the 2009 housing goals and home purchase 
subgoals to levels that reflect market conditions consistent with 
current projections is necessary to ensure that the Enterprises 
continue to serve their secondary market purposes at feasible and 
appropriate levels that reflect their capacity to lead the market. Even 
so, as described below, the proposed 2009 goals are generally at the 
upper end of FHFA's market estimates for 2009.
    Notably, this proposed rule, for the first time, would allow 
housing goals credit for certain loan modifications, which would tend 
to improve the Enterprises' performance on the housing goals. By 
adjusting the goals and home purchase subgoals to challenging levels 
for 2009, and by allowing housing goals credit for important activities 
that directly affect the 2009 housing market, FHFA seeks to ensure that 
the Enterprises place a high priority on the achievement of their 
affordable housing mission based on performance standards that align 
with current market conditions.
2. Special Affordable Multifamily Subgoals--Proposed Sec.  1282.14
    The 2004 Rule also established minimum dollar-based special 
affordable multifamily subgoals for each Enterprise. 24 CFR 81.14. 
These were established as a percentage of the aggregate dollar volume 
of total mortgage purchases by each Enterprise in a base period (2000, 
2001 and 2002). The subgoal applicable to 2009 is $5.49 billion for 
Fannie Mae and $3.92 billion for Freddie Mac. FHFA is not proposing to 
adjust these levels downward for 2009 because both Enterprises have 
exceeded their respective multifamily subgoals by wide margins in 
recent years, especially in 2007. FHFA also is not proposing to 
increase the subgoal levels for 2009 because the prospects for 
multifamily mortgage market volume in 2009 are significantly less 
favorable than in recent years. Accordingly, proposed Sec.  1282.14 
would retain these subgoal levels for 2009.
    FHFA will monitor the size of the refinance market closely in 2009. 
Refinances may be a very large part of the market in 2009, with the 
likely effect of a lower percentage of goals-qualifying loans available 
for purchase by the Enterprises, thus making it more difficult to 
achieve the goals proposed in this rule. FHFA will consider the size of 
the refinance market in any determination as to the feasibility of any 
goal an Enterprise fails to achieve in 2009.
3. Market Conditions
a. Market Conditions Do Not Support the Current Goal and Home Purchase 
Subgoal Levels
    FHFA has determined that the current turmoil in the housing and 
mortgage markets has created less than favorable conditions for 
expansions in credit to borrowers on the margins of homeownership. The 
adverse market conditions considered in setting the proposed goal 
levels for 2009 include: (1) Tightened credit underwriting practices; 
(2) the sharply increased standards of private mortgage insurance 
companies; (3) the increased role of the Federal Housing Administration 
(FHA) in the marketplace; (4) the collapse of the mortgage private 
label securities (PLS) market; (5) increasing unemployment; (6) 
multifamily market volatility; and (7) the prospect of a refinancing 
surge in 2009. FHFA finds that while the existence of lower home prices 
and lower mortgage interest rates has increased affordability, there is 
ample evidence to support a conclusion that the housing goal and home 
purchase subgoal levels for 2009 that were set in 2004 are not 
attainable.
    Tightened underwriting practices. In general, tighter underwriting 
standards result in fewer goals-qualifying loans and a lower percentage 
of goals-qualifying loans in the market. Underwriting standards in the 
mortgage market generally, and at Fannie Mae and Freddie Mac, tightened 
considerably in 2008 in response to declining market conditions and 
early payment defaults, among other factors. For example, in May 2008, 
responding to private mortgage insurance underwriting changes, Fannie 
Mae revised its down payment policy to lower the maximum loan-to-value 
(LTV) for loans underwritten by Desktop Underwriter and for manually 
underwritten loans. Freddie Mac similarly tightened its underwriting 
standards. These industry-wide underwriting standards are expected to 
remain in place for 2009.
    Sharply increased standards of private mortgage insurers. Much like 
tighter underwriting standards generally, higher underwriting standards 
of private mortgage insurance (MI) result in fewer goals-qualifying 
loans and a lower percentage of goals-qualifying loans in the market. 
Beginning in late 2007, MI providers implemented profound and sweeping 
changes in the types of risk they were willing to insure. Most MI 
providers faced substantial ratings downgrades and acted to minimize 
losses by imposing stricter underwriting standards on loans with high 
LTVs. For example, on February 12, 2009, Moody's downgraded the 
internal strength rating of the Mortgage Guaranty Insurance Corporation 
(MGIC) to Ba1 from A1, and downgraded the ratings of other mortgage 
insurers. These actions may limit the ability of MI providers to write 
new business in 2009 and reduce the overall mortgage lending volume, 
particularly for higher LTV mortgages, which tend to be more goals-
rich. By increasing the cost of borrowing and the difficulty in 
obtaining loan approval, the tighter underwriting standards limit the 
number of goals-qualifying mortgages. This has an adverse effect on 
high-LTV loan purchases by the Enterprises, which generally require 
some form of credit enhancement.
    MI providers have implemented measures in ``declining markets'' 
that have sharply limited the insurability of certain higher LTV 
mortgage loans. Generally, the availability of MI for high LTV or low 
FICO loans is much reduced relative to a few years ago. The proportion 
of goals-qualifying loans in the market is thereby reduced as it 
becomes more difficult and more expensive for borrowers requiring 
mortgages with lower down payments to qualify for mortgages eligible 
for purchase by the Enterprises.
    Increased role of FHA in the marketplace. Another factor having a 
much greater impact on the Enterprises' housing goals in 2009 than in 
recent years is the increase in the share of the mortgage market of 
mortgages insured by FHA and guaranteed by the Veterans Administration 
(VA). These loans generally are pooled into mortgage-

[[Page 20240]]

backed securities issued by the Government National Mortgage 
Association (GNMA). Purchases of mortgages insured by FHA and VA 
ordinarily do not receive goals credit. In general, the impact of the 
FHA market on the goal-richness of the conventional market depends on: 
(1) The goal-richness of the overall market (conventional plus FHA); 
(2) the share of the market accounted for by FHA mortgages; and (3) the 
goal-richness of FHA mortgages.
    The market share of mortgages insured by FHA and VA has risen 
dramatically from 3 percent in 2006 to 35 percent in the fourth quarter 
of 2008. A key reason for this growth is that Fannie Mae and Freddie 
Mac generally cannot buy loans with original LTV ratios greater than 80 
percent without some form of credit enhancement. With the stresses on 
private mortgage insurers, borrowers without substantial down payments 
are increasingly dependent on government insurance programs.
    In order to assess the impact that the increased FHA share is 
likely to have on the housing goals for 2009, FHFA analyzed mortgages 
originated in 2007 with loan amounts no greater than the conforming 
loan limit for Fannie Mae and Freddie Mac for 1-unit properties in that 
year--$417,000 for most areas, but 50 percent higher in Alaska, Hawaii, 
Guam, and the Virgin Islands. Loans guaranteed by VA or the Rural 
Housing Service were excluded from this analysis, as were loans with 
missing information necessary to determine whether they qualified for 
the housing goals. The remaining loans included both conventional and 
FHA loans with information about whether they qualified for the housing 
goals, resulting in a total of 2.7 million home purchase mortgages and 
3.3 million refinance mortgages.
    The shares of FHA mortgages that would have qualified for the 
Enterprises' housing goals were much higher than the goal-qualifying 
shares of conventional mortgages, especially for the two income-based 
goals (low- and moderate-income housing and special affordable 
housing). Specifically, 60 percent of FHA home purchase mortgages 
qualified for the low- and moderate-income housing goal in 2007, but 
only 40 percent of conventional home purchase mortgages so qualified. 
Similarly, 23 percent of FHA home purchase mortgages qualified for the 
special affordable housing goal, but only 15 percent of conventional 
home purchase mortgages so qualified. The discrepancy was comparable 
for underserved areas, where 46 percent of FHA home purchase mortgages 
qualified for the underserved areas housing goal versus 34 percent of 
conventional home purchase mortgages.
    The discrepancies between the goal-qualifying shares of FHA 
refinance mortgages and conventional refinance mortgages were similar 
to those for home purchase mortgages. For example, 56 percent of FHA 
refinance mortgages qualified for the low- and moderate-income housing 
goal, but only 42 percent of conventional refinance mortgages so 
qualified.
    This analysis measures the degree to which FHA mortgages ``siphon 
off'' goal-rich mortgages from the overall mortgage market. That is, in 
2007, 42 percent of all home purchase mortgages were for low- and 
moderate-income families, but because 60 percent of FHA home purchase 
mortgages were for such families, only 40 percent of conventional 
conforming mortgages were in this category. While in 2007 the goal-
qualifying shares of FHA mortgages were much higher than the 
corresponding shares of conventional mortgages, the impact on the goal-
qualifying shares of conventional mortgages was mitigated by the fact 
that in 2007, FHA accounted for only 9.9 percent of home purchase 
mortgages and only 4.7 percent of refinance mortgages. Although Home 
Mortgage Disclosure Act (HMDA) data for 2008 is not yet available, this 
data will likely show a much larger impact of FHA mortgages because 
FHA's share of the mortgage market was much higher in 2008 than it was 
in 2007.
    Based on FHA's estimated market share in late 2008, its shares of 
both the home purchase mortgage and refinance mortgage markets may be 
significantly higher in 2009 than they were for 2008. The impact of 
these higher shares may again be mitigated to some extent by reduced 
goal-richness of FHA mortgages as higher-income borrowers obtain FHA 
loans. The net impact of the FHA market on the goal-richness of the 
conventional mortgage market in 2009, however, is likely to be greater 
than it was in either 2007 or 2008. Accordingly, the projected increase 
in the size of the FHA market was a major factor taken into account in 
adjusting the Enterprises' housing goals for 2009.
    Collapse of PLS market. The lack of PLS backed by mortgages will 
make it more difficult for the Enterprises to achieve the existing 
housing goals in 2009. Future rulemaking will determine whether, and if 
so, under what conditions PLS investment may contribute to meeting 
housing goals.
    Between 2005 and 2008, the period covered by the 2004 Rule, Fannie 
Mae and Freddie Mac were major purchasers of the AAA-rated tranches of 
PLS that included substantial amounts of subprime mortgages. These 
purchases were due in part to the goal-richness of the securities and, 
particularly, their subgoal-richness.
    While the size and nature of the Enterprises' subprime holdings 
differed, such purchases had an impact on the achievement of the 
housing goals for each Enterprise, particularly for the home purchase 
subgoals. Such loans were not a large factor in the mortgage 
marketplace in 2008, and are unlikely to be a major factor in 2009. 
FHFA guidance incorporating interagency policy guidance from the 
Federal Deposit Insurance Corporation, the Office of the Comptroller of 
the Currency, the Board of Governors of the Federal Reserve System and 
the National Credit Union Administration now restricts the purchase of 
such securities by the Enterprises when certain terms of mortgages 
backing those securities are harmful to the borrower.\5\
---------------------------------------------------------------------------

    \5\ In 2007, OFHEO issued letters directing the Enterprises to 
apply the principles and practices of the interagency Statement on 
Subprime Mortgage Lending to their purchases of subprime loans in 
the regular flow of business, including bulk purchases. OFHEO 
directed that, not later than September 13, 2007, nontraditional and 
subprime loans purchased by Fannie Mae and Freddie Mac as part of 
PLS transactions comply with the Interagency Guidance on 
Nontraditional Mortgage Product Risks and the Statement on Subprime 
Mortgage Lending. This application to PLS conforms to the 
underwriting provisions of the guidance. Further, OFHEO directed 
that the Enterprises adopt such business practices and take such 
quality control steps as necessary to ensure the orderly and 
effective implementation of the guidance with respect to the 
purchase of PLS.
---------------------------------------------------------------------------

    Increasing unemployment. Unemployment increased significantly 
during 2008 and in early 2009, which added to demands on mortgage 
servicers to address increasing delinquencies and foreclosures. 
Unemployment and underemployment have an effect on mortgage default 
rates and on the number of borrowers seeking and obtaining a purchase 
money mortgage or a refinance.
    NeighborWorks, a national network of approximately 230 community-
based organizations actively involved in foreclosure mitigation 
counseling, has estimated that as of January 14, 2009, the two leading 
causes of mortgage default rates were a reduction in income (28 percent 
of defaults) and loss of income (17 percent of defaults).\6\ While a 
reduction in income by itself does not necessarily lead to a mortgage 
default, with falling home prices it is difficult for the home owner 
with little or no

[[Page 20241]]

home equity to either sell the home or refinance into an affordable 
mortgage. The high rates of unemployment and underemployment are likely 
to continue to have a significant impact on the size of the mortgage 
market in 2009.
---------------------------------------------------------------------------

    \6\ NeighborWorks, National Foreclosure Mitigation Counseling 
Program Update, January 23, 2009.
---------------------------------------------------------------------------

    Multifamily market volatility. The multifamily housing market faces 
great uncertainty in 2009. Recent housing data suggests that 
multifamily housing activity (new construction and refinances) will 
continue to decline in 2009 after slowing significantly in 2008. 
Because multifamily housing tends to have high percentages of units 
that qualify for one or more housing goals, declines in multifamily 
housing activity make it more difficult for the Enterprises to achieve 
the housing goals.
    As a result of the financial crisis and ensuing credit crunch, 
important sources of affordable multifamily financing have all but 
disappeared or have been severely diminished, including Commercial 
Mortgage-Backed Securities (CMBS) and Low-Income Housing Tax Credits 
(LIHTC). Other traditional providers of financing for multifamily 
housing, including thrifts, commercial banks and life insurance 
companies, have drastically reduced their multifamily financing 
activities. The Enterprises, FHA and GNMA are the principal sources of 
multifamily financing now.
    New multifamily construction will not provide a significant source 
of goals-eligible units in 2009. In February 2009, the U.S. Census 
Bureau released preliminary data showing that multifamily starts 
plunged from 404,000 units annualized in June 2008 to 114,000 units 
annualized in November 2008.\7\ Some markets, such as New York City, 
Los Angeles, and Miami, have seen rents fall substantially as vacancy 
rates have risen sharply. Declining rents, increasing vacancy rates and 
decreasing multifamily property values in many markets will be 
significant obstacles confronting Enterprise multifamily activity in 
2009. Additional fees and tighter underwriting standards may make it 
difficult for many multifamily investors to qualify for financing. 
Declining multifamily prices will especially impact owners who financed 
with interest only loans over the past decade. As these loans come due, 
properties with interest only loans will not have accumulated 
additional equity over the term of the loan to counter the effects of 
declining property values. The lack of new CMBS issuances will also 
significantly affect the number of multifamily units financed by the 
Enterprises, thereby making the housing goals more difficult to 
achieve.
---------------------------------------------------------------------------

    \7\ New Residential Construction in January 2009, Joint Release 
of Census Bureau and Department of Housing and Urban Development, 
February 18, 2009.
---------------------------------------------------------------------------

    Prospect of a refinancing surge in 2009. A significant increase in 
the volume of refinancings of single-family mortgages would make it 
more difficult for the Enterprises to achieve the housing goals. Higher 
income borrowers are more likely to take advantage of falling interest 
rates and refinance. Furthermore, when single-family owner-occupied 
refinance loans dominate both the market and the Enterprises' 
purchases, the share of goals-rich multifamily mortgages declines, 
which hampers the ability of the Enterprises to meet goal targets. The 
extent to which these historical effects of high refinance rates might 
repeat in 2009 is uncertain, and numerous variables may affect these 
historical patterns. Unlike in previous years, borrowers experiencing 
payment difficulties may have fewer refinancing options because falling 
house prices reduce the amount of homeowner equity, while tighter 
lending standards limit the range of mortgages available, particularly 
for nonprime borrowers.
    Many forecasters expect significantly high rates of refinancing in 
2009. The Mortgage Bankers Association, for example, forecasts a 
single-family refinance rate of 69 percent.\8\ Fannie Mae also 
forecasts a single-family refinance rate of 69 percent.\9\ Freddie Mac 
estimates a refinance rate for 2009 of 67%.\10\ In addition, HASP 
includes an initiative to allow more borrowers with loans owned or 
guaranteed by Fannie Mae or Freddie Mac to refinance into a new 
mortgage that will be held or guaranteed by Fannie Mae or Freddie Mac.
---------------------------------------------------------------------------

    \8\ MBA Mortgage Finance Forecast, March 24, 2009.
    \9\ Fannie Mae Economics and Mortgage Market Analysis, March 10, 
2009.
    \10\ Freddie Mac Economic and Housing Market Outlook, March 10, 
2009.
---------------------------------------------------------------------------

    b. Size of the Mortgage Market that Qualifies for the Housing Goals
    FHFA's estimates of the size of the conventional mortgage market 
for the income-based housing goals and subgoals are lower than HUD's 
estimates for the 2004 Rule. As noted by HUD in prior rules, FHFA 
recognizes that there still is no single, comprehensive data set for 
estimating the size of the affordable lending market, and that 
available databases on different sectors of the market must be combined 
in order to implement FHFA's market share model. The major public data 
sources from which these market estimates were developed are: (1) 
Market originations data submitted by lenders in accordance with HMDA 
for the years 2003 through 2007; (2) the 2000 Decennial Census; (3) the 
American Community Survey (ACS) for years 2005 and 2006; (4) the 
American Housing Survey (AHS); and (5) the 2001 Residential Finance 
Survey (RFS). To a lesser extent, other privately available data and 
information, including market forecasts, were also used. Sources 
included the Mortgage Bankers Association,\11\ Inside Mortgage Finance 
Publications, Inc.,\12\ First American Loan Performance,\13\ Global 
Insight,\14\ Fannie Mae, and Freddie Mac.
---------------------------------------------------------------------------

    \11\ The Mortgage Bankers Association (MBA) is a national 
association representing the real estate finance industry.
    \12\ Inside Mortgage Finance Publications, Inc. is a company 
providing business-to-business news and statistics on the 
residential mortgage market.
    \13\ First American Loan Performance databases track the 
delinquency and prepayment performance of 50 million active 
individual mortgage payments per month, and provide loan-level 
information on more than $2.0 trillion in non-agency mortgage-backed 
and asset-backed securities.
    \14\ Global Insight is a privately-held company formed from two 
former economic and financial information and forecasting companies: 
DRI (Data Resources, Inc.) and WEFA (Wharton Econometric Forecasting 
Associates).
---------------------------------------------------------------------------

    FHFA's market size estimates for the three housing goal categories 
for 2009 are as follows:
    <bullet> 43-51 percent of units financed in the conventional 
conforming primary mortgage market will qualify for the low- and 
moderate-income housing goal;
    <bullet> 32-37 percent of units will qualify for the underserved 
areas housing goal;
    <bullet> 16-23 percent of units will qualify for the special 
affordable housing goal.

These market estimates are lower than those estimated by HUD for 2005 
through 2008. Specifically, the low- and moderate-income share was 
estimated at 51-56 percent, the underserved areas share was estimated 
at 35-39 percent, and the special affordable share was estimated at 23-
27 percent.
    For each home purchase subgoal category, FHFA's market size 
estimates for 2009 are:
    <bullet> 35-41 percent of single-family home purchase mortgages on 
properties in metropolitan areas will qualify for the low- and 
moderate-income home purchase subgoal;
    <bullet> 27-31 percent of such mortgages will qualify for the 
underserved areas home purchase subgoal;
    <bullet> 10-15 percent of such mortgages will qualify for the 
special affordable home purchase subgoal.
    The Economic Stimulus Act of 2008 (Stimulus Act) temporarily 
increased the conforming loan limits for certain high-cost areas for 
loans originated between July 1, 2007 and December 31,

[[Page 20242]]

2008. Public Law 110-185, section 201, 122 Stat. 618, 619. The Stimulus 
Act also excluded purchases of jumbo conforming loans (those which 
exceed the nationwide conforming loan limits in certain high-cost areas 
and exceed 150% of the nationwide conforming loan limits in Alaska, 
Guam, Hawaii and the Virgin Islands) from counting towards the housing 
goals for 2008. The limit for each high-cost area was set at 125% of 
the area median price of a residence, up to a limit of $729,750 for 
one-unit properties (175% of the overall conforming loan limit for 
2008). HERA established the 2009 conforming loan limit at $417,000 for 
one-unit properties and correspondingly higher for two- to four-unit 
properties. Public Law 110-289, section 1124, 122 Stat. 2654, 2691 
(2008) (to be codified at 12 U.S.C. 1717, 1454). HERA also established 
permanent increases in the loan limit for certain high-cost areas, at 
115% of the area median price of a residence, up to a limit of $625,500 
for one-unit properties in 2009 (150% of the overall conforming loan 
limit for 2009). The American Recovery and Reinvestment Act of 2009 
(Recovery Act), signed into law by the President on February 17, 2009, 
generally established the limits that were in place in 2008 as a floor 
for the 2009 limits. Public Law 111-5, section 1203, 123 Stat. 115.
    FHFA has determined that the treatment of jumbo conforming loans in 
2008 should remain in effect for 2009, i.e., that purchases of such 
loans should not be counted toward the housing goals in 2009. This 
treatment is consistent with section 1336(a)(2) of the Safety and 
Soundness Act, which provides FHFA with authority to exclude certain 
categories of mortgage purchases from counting towards the housing 
goals. See 12 U.S.C. 4566(a)(2). Accordingly, in determining the market 
share estimates for the three housing goal categories for 2009, FHFA 
has excluded all jumbo conforming loans on one- to four-unit 
properties.
4. Past Performance of the Enterprises on the Housing Goals
    This section describes the Enterprises' past performance on the 
three overall housing goals, the three home purchase subgoals, and the 
special affordable multifamily subgoals as determined by HUD for 2005 
and 2006 and by FHFA for 2007. In addition, performance for 2008, as 
preliminarily reported by the Enterprises, is discussed.\15\ Although 
HERA does not explicitly require consideration of the Enterprises' past 
performance on the housing goals in determining whether to adjust the 
2009 goals, FHFA believes that the Enterprises' past performance is 
relevant to this determination. Consideration of past performance was 
required in establishing the goals for 2008 and prior years, and is 
required in establishing the goals for 2010 and thereafter. See 12 
U.S.C. 4562(e)(2)(B)(iii). Current market conditions depend in part on 
the Enterprises' loan purchase activities, including their goal 
performance, in previous years. For example, if the Enterprises 
purchased a substantial volume of a certain type of loan to meet the 
housing goals in 2008, lenders might be induced to originate more loans 
of that type in 2009. In addition, in 2008, the Enterprises' combined 
shares of the single-family conventional conforming market and the 
multifamily market were likely at record levels. Given these high 
levels and the collapse of the subprime market, combined Enterprise 
past performance on the goals is likely a good measure of the goal-
qualifying shares of the primary market. Thus, FHFA has analyzed 
combined Enterprise past performance, and finds that it approximates 
FHFA's estimates of the goal-qualifying shares of the 2008 market.
---------------------------------------------------------------------------

    \15\ The Enterprises submitted their Annual Housing Activities 
Reports (AHARs), tables on 2008 goals performance, and loan-level 
data on mortgages purchased to FHFA on March 16, 2009. FHFA will 
make its official determination on their 2008 goals performance 
later this year based on review of loan-level data.
---------------------------------------------------------------------------

a. Housing Goals
    The goal levels for 2005 through 2008 were set to increase each 
year so that by 2008 the goal levels would correspond with the top end 
of the range of estimates for the goal-qualifying shares of units 
financed in the primary mortgage market. Analysis of loan-level data 
for 2005 through 2007 and preliminary results for 2008, as reported by 
the Enterprises, indicates the following results for overall goal 
performance:
    <bullet> Low- and moderate-income housing goal--This goal level was 
set at 52 percent for 2005, 53 percent for 2006, 55 percent for 2007, 
and 56 percent for 2008. Fannie Mae's performance was 55.1 percent in 
2005, 56.9 percent in 2006, and 55.1 percent in 2007. Freddie Mac's 
performance was 54.0 percent in 2005, 55.9 percent in 2006, and 56.1 
percent in 2007. Both Enterprises' performance exceeded the low- and 
moderate-income housing goal levels from 2005 through 2007. In 2008, 
preliminary results indicate that both Enterprises fell significantly 
short of meeting the goal level, with Fannie Mae at 53.6 percent and 
Freddie Mac at 51.5 percent. In letters to Fannie Mae and Freddie Mac, 
dated March 16, 2009, FHFA notified the Enterprises of its final 
determination that there is a substantial probability of failure by the 
Enterprises to meet this goal level, and that achievement of the goal 
was not feasible for each Enterprise.\16\
---------------------------------------------------------------------------

    \16\ See Letter from Edward J. DeMarco, Chief Operating Officer 
& Senior Deputy Director for Housing Mission and Goals, FHFA, to 
Herb Allison, Chief Executive Officer, Fannie Mae, dated March 16, 
2009; Letter from Edward J. DeMarco, Chief Operating Officer & 
Senior Deputy Director for Housing Mission and Goals, FHFA, to John 
Koskinen, Interim Chief Executive Officer, Freddie Mac, dated March 
16, 2009 (2008 Goals Feasibility Letters).
---------------------------------------------------------------------------

    <bullet> Underserved areas housing goal--This goal level was set at 
37 percent for 2005, 38 percent for 2006 and 2007, and 39 percent for 
2008. Fannie Mae's performance was 41.4 percent in 2005, 43.6 percent 
in 2006, and fell slightly to 43.4 percent in 2007. Freddie Mac's 
performance was 42.3 percent in 2005, 42.7 percent in 2006, and 43.1 
percent in 2007. Both Enterprises' performance exceeded the underserved 
areas housing goal levels from 2005 through 2007. In 2008, preliminary 
results indicate that Fannie Mae barely exceeded the goal level at 39.4 
percent, and Freddie Mac fell short at 37.7 percent. In the 2008 Goals 
Feasibility Letter to Freddie Mac, FHFA notified the Enterprise of its 
final determination that there is a substantial probability of failure 
by Freddie Mac to meet this goal level, and that achievement of the 
goal was feasible but challenging.
    <bullet> Special affordable housing goal--This goal level was set 
at 22 percent for 2005, 23 percent for 2006, 25 percent for 2007, and 
27 percent for 2008. Fannie Mae's performance was 26.3 percent in 2005, 
27.8 percent in 2006, and 26.8 percent in 2007. Freddie Mac's 
performance was 24.3 percent in 2005, 26.4 percent in 2006, and 25.8 
percent in 2007. Both Enterprises surpassed this goal level from 2005 
through 2007. In 2008, preliminary results indicate that Fannie Mae's 
performance fell slightly to 26.0 percent, and Freddie Mac's 
performance fell sharply to 23.0 percent. In the 2008 Goals Feasibility 
Letters, FHFA notified the Enterprises of its final determination that 
there is a substantial probability of failure by the Enterprises to 
meet this goal level, and that achievement of the goal was not feasible 
for each Enterprise.
    These results are shown in Table 1.

[[Page 20243]]

b. Special Affordable Multifamily Subgoals
    In order to encourage the Enterprises to play a significant role in 
the multifamily mortgage market, HUD established minimum dollar-based 
special affordable multifamily subgoals. These were established based 
on a percentage of the aggregate dollar volume of total mortgage 
purchases by each Enterprise in a base period. Unlike the overall 
goals, these subgoals differ between the Enterprises. Specifically, for 
2005 through 2008, the subgoal was established at $5.49 billion per 
year for Fannie Mae, and $3.92 billion per year for Freddie Mac.
    Results for these dollar-based special affordable multifamily 
subgoals are also presented in Table 1. As indicated, the Enterprises 
surpassed these subgoals by wide margins in each year through 2008. In 
2008, Fannie Mae's performance was 244 percent of its subgoal ($13.42 
billion compared with its subgoal of $5.49 billion), and Freddie Mac's 
performance was 196 percent of its subgoal ($7.68 billion compared with 
its subgoal of $3.92 billion).
c. Home Purchase Subgoals
    In the 2004 Rule, HUD established home purchase subgoals for the 
first time. The overall housing goals are expressed in terms of minimum 
qualifying shares of all dwelling units financed by the Enterprises, 
combining mortgages on both single-family and multifamily, owner-
occupied and rental housing. They include all mortgages, whether for 
home purchase, refinancing, or some other purpose. The home purchase 
subgoals are expressed in terms of minimum qualifying shares of each 
Enterprise's acquisitions of single-family home purchase mortgages in 
metropolitan areas. The subgoals specify minimum shares of home 
purchase mortgages that the Enterprises must purchase under each 
category of the housing goals. The home purchase subgoals are expressed 
in terms of mortgages, rather than dwelling units.
    Analysis of loan-level data for 2005 through 2007 and preliminary 
results for 2008, as reported by the Enterprises, indicate the 
following results for home purchase subgoal performance:
    <bullet> Low- and moderate-income home purchase subgoal--This 
subgoal level was set at 45 percent for 2005, 46 percent for 2006, and 
47 percent for 2007 and 2008. Fannie Mae's performance was 44.6 percent 
in 2005, 46.9 percent in 2006, and 42.1 percent in 2007. Freddie Mac's 
performance was 46.8 percent in 2005, 47.0 percent in 2006, and 43.5 
percent in 2007. Neither Enterprise met this subgoal level in 2007, but 
in letters to the Enterprises dated April 24, 2008, HUD declared that 
the subgoal level for 2007 was not feasible. In 2008, Fannie Mae's 
performance was 38.9 percent, and Freddie Mac's performance was 39.4 
percent. In the 2008 Goals Feasibility Letters, FHFA notified the 
Enterprises of its final determination that there is a substantial 
probability of failure by the Enterprises to meet this subgoal level, 
and that achievement of the subgoal was not feasible for each 
Enterprise.
    <bullet> Underserved areas home purchase subgoal--This subgoal 
level was set at 32 percent for 2005, 33 percent for 2006 and 2007, and 
34 percent for 2008. Fannie Mae's performance was 32.6 percent in 2005, 
34.5 percent in 2006, and decreased to 33.4 percent in 2007, slightly 
exceeding the subgoal level in that year. Freddie Mac's performance was 
35.5 percent in 2005, exceeding both Fannie Mae's performance and the 
32 percent subgoal level by wide margins. In 2006 and 2007, Freddie Mac 
exceeded this subgoal level by narrow margins at 33.6 percent and 33.8 
percent, respectively. In 2008, both Enterprises fell short of the 
subgoal level, at 30.4 percent and 30.2 percent for Fannie Mae and 
Freddie Mac, respectively. In the 2008 Goals Feasibility Letters, FHFA 
notified the Enterprises of its final determination that there is a 
substantial probability of failure by the Enterprises to meet this 
subgoal level, and that achievement of the subgoal was not feasible for 
each Enterprise.
    <bullet> Special affordable home purchase subgoal--This subgoal 
level was set at 17 percent for 2005 and 2006, and 18 percent for 2007 
and 2008. Fannie Mae's performance was 17.0 percent in 2005, and 17.9 
percent in 2006, and decreased to 15.5 percent in 2007. Freddie Mac's 
performance was 17.7 percent in 2005, and 17.0 percent in 2006, and 
decreased further to 15.9 percent in 2007. Thus, Freddie Mac surpassed 
this goal level in 2005, and barely met it in 2006. Conversely, Fannie 
Mae barely met the goal level in 2005, and surpassed it in 2006. Both 
Enterprises fell short on this subgoal level in 2007, but in letters to 
the Enterprises dated April 24, 2008, HUD declared that the subgoal 
level for 2007 was not feasible. In 2008, Fannie Mae's performance was 
13.6 percent, and Freddie Mac's performance was 15.1 percent. In the 
2008 Goals Feasibility Letters, FHFA notified the Enterprises of its 
final determination that there is a substantial probability of failure 
by the Enterprises to meet this subgoal level, and that achievement of 
the subgoal was not feasible for each Enterprise.
BILLING CODE 8070-01-P

[[Page 20244]]

[GRAPHIC] [TIFF OMITTED] TP01MY09.019


[[Page 20245]]


[GRAPHIC] [TIFF OMITTED] TP01MY09.020

BILLING CODE 8070-01-C

[[Page 20246]]

d. Estimating the Size of the Conventional Conforming Market for Each 
Housing Goal in 2009
    Since 2005, the market's goal-qualifying share for the two borrower 
income-based goals has decreased, as shown in Table 3, and the market's 
goal-qualifying share for the underserved areas housing goal has 
decreased in 2007 and most likely also in 2008. Following the 
methodology HUD used in 2004 and prior rulemakings, there are three 
steps involved in sizing the market. The first step is to estimate the 
number of conventional conforming units expected to be financed with 
new mortgages in the overall market each year, broken out by property-
type, loan purpose, and owner-type. The second step is to estimate the 
percentage ranges of goal- and subgoal-qualifying units among the 
number of conventional conforming units expected to be financed for 
each property-type, loan purpose and owner-type. The third step is to 
multiply the estimates from the first step by the percentage ranges in 
the second step and sum the result, giving FHFA's goal-qualifying 
shares of the overall market. This process is repeated for each goal.
BILLING CODE 8070-01-P

[[Page 20247]]

[GRAPHIC] [TIFF OMITTED] TP01MY09.021

BILLING CODE 8070-01-C

[[Page 20248]]

    Several issues need to be taken into account when producing the 
market estimates for 2009. The temporary increase in the FHA loan 
limits will affect the share of the government-backed market in 2009. A 
corresponding reduction in the conventional share is expected, 
affecting the goal-qualifying proportion of the conforming conventional 
market as FHA serves more of the goal-qualifying market than it has in 
the recent past. In addition, FHFA is projecting that refinance loans 
will account for 59 percent of the single-family conventional 
conforming market.
    To accomplish the first step noted above, FHFA analyzed the single-
family and multifamily mortgage markets separately. Single-family 
refers to 1- to 4-unit properties, and multifamily refers to 5- or more 
unit properties. The process began by estimating the total dollar 
volume of the single-family mortgage origination market, and separating 
out the estimated portion that is expected to comprise conforming, 
conventional loans.
    FHFA then broke out the conforming conventional loan volumes by 
loan purpose (home purchase or refinance), after which FHFA converted 
the home purchase and refinance dollar volumes to mortgage volumes 
using data and trend information on average loan sizes for home 
purchase and refinance loans. FHFA separated the mortgages into three 
property-type groups (for both home purchase and refinance loans): (1) 
Owner-occupied 1-unit; (2) owner-occupied 2-4 unit; and (3) investor-
owned 1-4 unit properties. Using historical patterns from HMDA data and 
expected market conditions, the mortgages were divided between the 
owner-occupied and investor-owned properties. Based on the 2001 RFS 
data, the owner-occupied units were divided between 1-unit and 2-4 unit 
properties. Finally, using information from the 2001 RFS, the mortgages 
by property type were converted to units, and units from single-family 
owner-occupied 2-4 unit properties were divided between the owner-
occupied and rental units. The unit counts were converted into owner-
occupied unit and rental unit shares of the conventional conforming 
mortgage market.
    FHFA then projected the multifamily unit share, or ``multifamily 
mix,'' of the total (single-family and multifamily) mortgage market. 
The multifamily mix is an important parameter in FHFA's model because 
the multifamily segment of the mortgage market has a disproportionate 
importance for the housing goals, given that most multifamily rental 
units are occupied by households with low or moderate incomes. FHFA 
arrived at the multifamily mix estimate through an analysis of 
historical trends in multifamily dollar volumes and average mortgage 
amount per unit to calculate historical multifamily mixes. The 
multifamily mortgage volume was then projected for 2009 based on 
expected market conditions and then converted to the multifamily mix. 
The multifamily market was then combined with the single-family market 
to obtain single-family owner-occupied unit, single-family rental unit 
and multifamily unit shares of the total mortgage market (not including 
jumbo and government-insured mortgages).
    Later in the process, FHFA removed non-investment grade loans (B- 
or C-grade subprime loans) to further refine the conforming market 
estimates. In the economic environment for this proposed rule, the 
exclusion of the B and C (B&C) subprime segment of the market is 
especially important because subprime and other non-conforming loans 
were an increasing share of the total single-family market between 2004 
and mid-2007, but are expected to be greatly reduced in volume for the 
foreseeable future.
    The second major step in FHFA's market model, estimating the goal- 
and subgoal-qualifying performance of the market for all three goal 
categories, was accomplished as follows: FHFA first projected the 
expected goal-qualifying shares for single-family rental and 
multifamily units. FHFA then estimated expected ranges of single-family 
owner-occupied units that would qualify for the housing goals for home 
purchase and refinance mortgages, including B&C loans.\17\ FHFA 
proceeded to project the overall goals performance by combining the 
single-family owner-occupied segment with the projected goal 
performances of single-family rental and the multifamily segments.
---------------------------------------------------------------------------

    \17\ In a high refinance activity environment, as FHFA expects 
for 2009, it is anticipated that refinance goal-qualifying shares 
will be significantly lower than home purchase goal-qualifying 
shares.
---------------------------------------------------------------------------

    As described above, the market model required estimates to be made 
of the investor mortgage share (i.e., 7-9 percent of the overall 
single-family market), and the multifamily mix (i.e., 9-13 percent of 
the total conventional market). Also, in this step, units associated 
with B&C-grade loans (single-family owner-occupied and investor-owned) 
were removed from the overall goals- and subgoals-qualifying estimates. 
The results of the market model for 2009 are presented in Table 4. The 
market and subgoal-qualifying ranges in Table 4 reflect the uncertainty 
in projecting single-family owner-occupied goal richness, investor-
owned property mortgage volume and multifamily mortgage volume, given 
the anticipated economic environment in 2009. Also, there is 
considerable uncertainty in the refinance rate for 2009. As noted 
above, the market estimates in Table 4 are based on the expectation 
that refinance loans will be 59 percent of the single-family 
conventional conforming market. Table 5 provides the following three 
scenarios of alternative refinance activity assumptions:

Scenario A--low- and moderate-income share for home purchase units of 
36 percent and 32 percent for refinance loans, and a refinance rate of 
50 percent;
Scenario B--low- and moderate-income share for home purchase units of 
36 percent and 32 percent for refinance loans, and a refinance rate of 
70 percent; and
Scenario C--low- and moderate-income share for home purchase units of 
36 percent and 29 percent for refinance loans, and a refinance rate of 
70 percent.

This analysis assumes an investor mortgage share of 9.0 percent.
BILLING CODE 8070-01-P

[[Page 20249]]

[GRAPHIC] [TIFF OMITTED] TP01MY09.022


[[Page 20250]]


[GRAPHIC] [TIFF OMITTED] TP01MY09.023

BILLING CODE 8070-01-C

[[Page 20251]]

    The impact of alternative refinance assumptions is illustrated with 
the low- and moderate-housing income goal. The low- and moderate-income 
share decreases by 0.5 to 0.8 percent for every 1.0 percent decrease in 
the multifamily mix. Under scenario B, the low- and moderate-income 
percentages are all 60 basis points lower than those of scenario A when 
the refinance rate is increased 20 percent to 70 percent. The results 
under the higher spread between home purchase and refinance single-
family owner-occupied low- and moderate-income, scenario C, are lower 
by approximately 170 basis points from comparable numbers in scenario 
B. The scenario C low- and moderate-income market shares are 200 basis 
points lower than comparable low- and moderate-income shares produced 
from FHFA's market model.
    Comparing results across all three scenarios, increasing the low- 
and moderate-income spread between home purchase and refinances from 
400 to 700 basis points has a larger negative impact on the low- and 
moderate-income share than increasing the refinance rate from 50 
percent to 70 percent. As the amount of refinance loans increases and 
single-family owner-occupied units dominate the model, the decrease in 
low- and moderate-income shares can be significant. The key to updating 
the estimated market ranges for the income-based goals and subgoals 
lies in: (1) An analysis of data on recent actual market experience; 
and (2) making adjustments to recent experience to account for known 
but not empirically quantifiable market trends. As noted above, FHFA's 
2009 market estimates for the housing goals and subgoals are lower than 
projected in HUD's 2004 Rule. The data available to FHFA show a decline 
in the goals-qualifying market for single-family owner-occupied 
mortgages through 2007. However, the extensive market turmoil during 
2008 is not fully captured in the empirical data.
    FHFA's analysis of the mortgage market for 2009 that is the basis 
for this market forecast, as well as a detailed description of FHFA's 
market model, are provided in a document entitled ``Estimating the Size 
of the Conventional Conforming Market for each Housing Goal in 2009,'' 
which is available at http://www.fhfa.gov.

D. General Requirements--Proposed Sec.  1282.15

    Proposed Sec.  1282.15 would set forth general requirements for the 
counting of mortgage purchases toward the achievement of the housing 
goals. These requirements are generally consistent with those in 24 CFR 
81.15.

E. Special Counting Requirements--Proposed Sec.  1282.16

    Proposed Sec.  1282.16 would set forth special counting 
requirements for the receipt of full, partial or no credit for a 
transaction toward achievement of the housing goals. These requirements 
are generally consistent with those in 24 CFR 81.16, with the addition 
of two counting requirements discussed below. In some provisions, where 
the HUD regulatory language cites to specific statutory provisions that 
no longer appear in the statute due to amendment by HERA, the proposed 
rule incorporates the applicable statutory language.
1. Exclusion of Jumbo Conforming Loans--Proposed Sec.  1282.16(b)(10)
    The Stimulus Act excluded purchases of jumbo conforming loans from 
counting towards the housing goals for 2008. Under section 1336(a)(2) 
of the Safety and Soundness Act, FHFA has authority to exclude certain 
categories of mortgage purchases from counting towards the housing 
goals. See 12 U.S.C. 4566(a)(2). Consistent with the treatment of jumbo 
conforming loans in 2008, proposed Sec.  1282.16(b)(10) would exclude 
purchases of jumbo conforming loans from counting towards the 2009 
housing goals.
2. HASP Loan Modifications--Proposed Sec.  1282.16(c)(10)
    Currently, Enterprise purchases of loans that have been modified by 
third parties are eligible for goals credit. To address the increasing 
importance of loan modifications, proposed Sec.  1282.16(c)(10) would 
provide that an Enterprise's modification of a loan in accordance with 
HASP that is held in portfolio, or in a pool backing a security 
guaranteed by the Enterprise, would be treated as a mortgage purchase 
and count for purposes of the housing goals. Many homeowners face the 
prospect of sharp increases in monthly mortgage costs as a result of 
rate resets. While loan modifications cannot prevent all defaults or 
foreclosures from occurring, they can help some existing homeowners 
stay in their homes, which will enhance the stability and liquidity of 
the housing and credit markets. In addition, such loan modifications 
may help to stabilize local communities and preserve the home values of 
homeowners who are not in danger of losing their jobs. HASP is designed 
to help families restructure or refinance their troubled mortgages to 
achieve an affordable payment and avoid foreclosure. HASP includes 
access to low-cost refinance loans for borrowers with loans that are 
owned or guaranteed by the Enterprises. Many borrowers may also be 
eligible for loan modification assistance under HASP. Allowing goals 
credit for HASP loan modifications may encourage the Enterprises to 
modify more loans in their portfolios. FHFA requests comment on whether 
other types of loan modifications in addition to those made in 
accordance with HASP should receive goals credit.
    The general rule for counting mortgages in proposed Sec.  
1282.16(a), consistent with 24 CFR 81.16(a), permits FHFA to assign 
goals credit upon its determination that a transaction or activity is 
substantially equivalent to a mortgage purchase, adds liquidity to an 
existing market, and fulfills an Enterprise's purpose and is in 
accordance with its Charter Act. FHFA believes that the proposed loan 
modifications meet the standards in Sec.  1282.16(a) for goals credit. 
In today's unique market conditions, the largest threat to home 
ownership, including for the low- and moderate-income borrowers and 
communities at whom the housing goals are targeted, is the risk of 
default and foreclosure. The Administration's HASP loan modification 
initiative is a principal means of combating that risk. Therefore, 
during these unique conditions, FHFA finds that loan modifications 
within the HASP initiative are ``substantially equivalent to a mortgage 
purchase'' for purposes of the housing goals. FHFA also finds that they 
add liquidity, fulfill an Enterprise's purpose, and are consistent with 
the Charter Acts.

F. Affordability--Income Level and Rent Level Definitions--Proposed 
Sec. Sec.  1282.17 Through 1282.19

    Proposed Sec. Sec.  1282.17 through 1282.19 would include income 
level and rent level definitions for purposes of determining whether a 
dwelling or rental unit is affordable to very low-, low- or moderate-
income families. The proposed definitions are consistent with the 
definitions in 24 CFR 81.17 through 81.19.

G. Actions To Meet the Goals--Proposed Sec.  1282.20

    Proposed Sec.  1282.20 would provide that to meet the housing goals 
under this rule, the Enterprises shall operate in accordance with 12 
U.S.C. 4565(b). This is generally consistent with 24 CFR 81.20.

H. Notice and Determination of Failure To Meet Goals--Proposed Sec.  
1282.21

    Proposed Sec.  1282.21 would provide that if the Director of FHFA 
preliminarily determines that an

[[Page 20252]]

Enterprise has failed, or there is a substantial probability that an 
Enterprise will fail, to meet any housing goal, the Director shall 
follow the procedures in 12 U.S.C. 4566(b) for purposes of making a 
final determination on the Enterprises' achievement of the goals and 
the feasibility of the goals. This is generally consistent with 24 CFR 
81.21.

I. Housing Plans--Proposed Sec.  1282.22

    Proposed Sec.  1282.22 includes requirements for submission of a 
housing plan by an Enterprise for failure or substantial probability of 
failure to meet any housing goal that was or is feasible. The 
requirements are generally consistent with 24 CFR 81.22, except that 
the requirement to submit a housing plan would be at the discretion of 
the Director, pursuant to the amendments made by HERA to Sec.  1336(c) 
of the Safety and Soundness Act. See 12 U.S.C. 4566(c).

IV. Paperwork Reduction Act

    The proposed rule does not contain any information collection 
requirement that requires the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 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. 5 U.S.C. 605(b). FHFA has considered the impact of the 
proposed rule under the Regulatory Flexibility Act. The General Counsel 
of FHFA certifies that the proposed rule, if adopted as a final rule, 
is not likely to have a significant economic impact on a substantial 
number of small business entities because the regulation 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 1282

    Federal Reserve System, Mortgages, Reporting and recordkeeping 
requirements, Securities.

    Accordingly, for the reasons stated in the preamble, FHFA proposes 
to amend chapter XII of title 12 of the Code of Federal Regulations, by 
adding new part 1282 to subchapter E to read as follows:

Chapter XII--Federal Housing Finance Agency

Subchapter E--Housing Goals and Mission

PART 1282--ENTERPRISE HOUSING GOALS AND MISSION

Subpart A--General
Sec.
1282.1 Scope of part.
1282.2 Definitions.
Subpart B--Housing Goals
1282.11 General.
1282.12 Low- and Moderate-Income Housing Goal.
1282.13 Central Cities, Rural Areas, and Other Underserved Areas 
Housing Goal.
1282.14 Special Affordable Housing Goal.
1282.15 General requirements.
1282.16 Special counting requirements.
1282.17 Affordability--Income level definitions--family size and 
income known (owner-occupied units, actual tenants, and prospective 
tenants).
1282.18 Affordability--Income level definitions--family size not 
known (actual or prospective tenants).
1282.19 Affordability--Rent level definitions--tenant income is not 
known.
1282.20 Actions to be taken to meet the goals.
1282.21 Notice and determination of failure to meet goals.
1282.22 Housing plans.

    Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526, 4561(c), 
4565(b), 4566, 4603.

Subpart A--General


Sec.  1282.1  Scope of part.

    The Director has general regulatory and supervisory authority over 
Fannie Mae and Freddie Mac, and is required to make such regulations as 
are necessary to carry out the Director's duties under the Safety and 
Soundness Act, the Fannie Mae Charter Act, and the Freddie Mac Act, and 
to ensure that the purposes of such statutes are accomplished.


Sec.  1282.2  Definitions.

    (a) Statutory terms. All terms defined in the Safety and Soundness 
Act are used in accordance with their statutory meaning unless 
otherwise defined in paragraph (b) of this section.
    (b) Other terms. As used in this part, the term--
    AHAR means the Annual Housing Activities Report that an Enterprise 
submits to the Director under section 309(n) of the Fannie Mae Charter 
Act or section 307(f) of the Freddie Mac Act.
    AHAR information means data or information contained in the AHAR.
    AHS means the American Housing Survey published by HUD and the 
Department of Commerce.
    Balloon mortgage means a mortgage providing for payments at regular 
intervals, with a final payment (``balloon payment'') that is at least 
5 percent more than the periodic payments. The periodic payments may 
cover some or all of the periodic principal or interest. Typically, the 
periodic payments are level monthly payments that would fully amortize 
the mortgage over a stated term and the balloon payment is a single 
payment due after a specified period (but before the mortgage would 
fully amortize) and pays off or satisfies the outstanding balance of 
the mortgage.
    Book-entry GSE Security means a GSE Security issued or maintained 
in the Book-entry System. Book-entry GSE Security also means the 
separate interest and principal components of a Book-entry GSE Security 
if such security has been designated by the GSE as eligible for 
division into such components and the components are maintained 
separately on the books of one or more Federal Reserve Banks.
    Book-entry System means the automated book-entry system operated by 
the Federal Reserve Banks acting as the fiscal agent for the GSEs, on 
which Book-entry GSE Securities are issued, recorded, transferred and 
maintained in book-entry form.
    Central city means the underserved areas located in any political 
subdivision designated as a central city by the Office of Management 
and Budget of the Executive Office of the President.
    Charter Act means the Fannie Mae Charter Act or the Freddie Mac 
Act.
    Contract rent means the total rent that is, or is anticipated to 
be, specified in the rental contract as payable by the tenant to the 
owner for rental of a dwelling unit, including fees or charges for 
management and maintenance services and those utility charges that are 
included in the rental contract. In determining contract rent, rent 
concessions shall not be considered, i.e., contract rent is not 
decreased by any rent concessions. Contract rent is rent net of rental 
subsidies.
    Conventional mortgage means a mortgage other than a mortgage as to 
which an Enterprise has the benefit of any guaranty, insurance or other 
obligation by the United States or any of its agencies or 
instrumentalities.
    Day means a calendar day.
    Definitive GSE Security means a GSE Security in engraved or printed 
form, or that is otherwise represented by a certificate.

[[Page 20253]]

    Director means the Director of FHFA or his or her designee.
    Dwelling unit means a room or unified combination of rooms intended 
for use, in whole or in part, as a dwelling by one or more persons, and 
includes a dwelling unit in a single-family property, multifamily 
property, or other residential or mixed-use property.
    ECOA means the Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.).
    Eligible Book-entry Enterprise Security means a Book-entry 
Enterprise Security issued or maintained in the Book-entry System which 
by the terms of its Security Documentation is eligible to be converted 
from book-entry form into definitive form.
    Enterprise means Fannie Mae or Freddie Mac (Enterprises means, 
collectively, Fannie Mae and Freddie Mac).
    Entitlement Holder means a Person or a GSE to whose account an 
interest in a Book-entry GSE Security is credited on the records of a 
Securities Intermediary.
    Family means one or more individuals who occupy the same dwelling 
unit.
    Fannie Mae means the Federal National Mortgage Association and any 
affiliate thereof.
    Fannie Mae Charter Act means the Federal National Mortgage 
Association Charter Act (12 U.S.C. 1715 et seq.).
    Federal Reserve Bank Operating Circular means the publication 
issued by each Federal Reserve Bank that sets forth the terms and 
conditions under which the Reserve Bank maintains book-entry Securities 
accounts (including Book-entry GSE Securities) and transfers book-entry 
Securities (including Book-entry GSE Securities).
    FHFA means the Federal Housing Finance Agency.
    FOIA means the Freedom of Information Act (5 U.S.C. 552).
    Freddie Mac means the Federal Home Loan Mortgage Corporation and 
any affiliate thereof.
    Freddie Mac Act means the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1451 et seq.).
    Government-sponsored enterprise or GSE means Fannie Mae or Freddie 
Mac.
    GSE Security means any security or obligation of Fannie Mae or 
Freddie Mac issued under its respective Charter Act in the form of a 
Definitive GSE Security or a Book-entry GSE Security.
    HOEPA mortgage means a mortgage for which the annual percentage 
rate (as calculated in accordance with the relevant provisions of 
section 107 of the Home Ownership Equity Protection Act (HOEPA) (15 
U.S.C. 1606)) exceeds the threshold described in section 103(aa)(1)(A) 
of HOEPA (15 U.S.C. 1602(aa)(1)(A)), or for which the total points and 
fees payable by the borrower exceed the threshold described in section 
103(aa)(1)(B) of HOEPA (15 U.S.C. 1602(aa)(1)(B)), as those thresholds 
may be increased or decreased by the Federal Reserve Board or by 
Congress, unless the Enterprises are otherwise notified in writing by 
FHFA. Notwithstanding the exclusions in section 103(aa)(1) of HOEPA, 
for purposes of this part, the term ``HOEPA mortgage'' includes all 
types of mortgages as defined in this section, including residential 
mortgage transactions as that term is defined in section 103(w) of 
HOEPA (15 U.S.C. 1602(w)), but does not include reverse mortgages.
    Home Purchase Mortgage means a residential mortgage for the 
purchase of an owner-occupied single-family property.
    HUD means the United States Department of Housing and Urban 
Development.
    Lender means any entity that makes, originates, sells, or services 
mortgages, and includes the secured creditors named in the debt 
obligation and document creating the mortgage.
    Low-income area means a census tract or block numbering area in 
which the median income does not exceed 80 percent of the area median 
income.
    Median income means, with respect to an area, the unadjusted median 
family income for the area as most recently determined by HUD. FHFA 
will provide the Enterprises annually with information specifying how 
the median family income estimates for metropolitan areas are to be 
applied for the purposes of determining median family income.
    Metropolitan area means a metropolitan statistical area (``MSA''), 
or a portion of such an area for which median family income estimates 
are determined by HUD.
    Minority means any individual who is included within any one or 
more of the following racial and ethnic categories:
    (1) American Indian or Alaskan Native--a person having origins in 
any of the original peoples of North and South America (including 
Central America), and who maintains tribal affiliation or community 
attachment;
    (2) Asian--a person having origins in any of the original peoples 
of the Far East, Southeast Asia, or the Indian subcontinent, including, 
for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, 
the Philippine Islands, Thailand, and Vietnam;
    (3) Black or African American--a person having origins in any of 
the black racial groups of Africa;
    (4) Hispanic or Latino--a person of Cuban, Mexican, Puerto Rican, 
South or Central American, or other Spanish culture or origin, 
regardless of race; and
    (5) Native Hawaiian or Other Pacific Islander--a person having 
origins in any of the original peoples of Hawaii, Guam, Samoa, or other 
Pacific Islands.
    Mortgage means a member of such classes of liens, including 
subordinate liens, as are commonly given or are legally effective to 
secure advances on, or the unpaid purchase price of, real estate under 
the laws of the State in which the real estate is located, or a 
manufactured home that is personal property under the laws of the State 
in which the manufactured home is located, together with the credit 
instruments, if any, secured thereby, and includes interests in 
mortgages. ``Mortgage'' includes a mortgage, lien, including a 
subordinate lien, or other security interest on the stock or membership 
certificate issued to a tenant-stockholder or resident-member by a 
cooperative housing corporation, as defined in section 216 of the 
Internal Revenue Code of 1986, and on the proprietary lease, occupancy 
agreement, or right of tenancy in the dwelling unit of the tenant-
stockholder or resident-member in such cooperative housing corporation.
    Mortgage data means data obtained by the Director from the 
Enterprises under subsection 309(m) of the Fannie Mae Charter Act and 
subsection 307(e) of the Freddie Mac Act.
    Mortgage purchase means a transaction in which an Enterprise bought 
or otherwise acquired with cash or other thing of value, a mortgage for 
its portfolio or for securitization.
    Mortgages contrary to good lending practices means a mortgage or a 
group or category of mortgages entered into by a lender and purchased 
by an Enterprise where it can be shown that a lender engaged in a 
practice of failing to:
    (1) Report monthly on the borrower's repayment history to credit 
repositories on the status of each Enterprise loan that a lender is 
servicing;
    (2) Offer mortgage applicants products for which they qualify, but 
rather steer applicants to high cost products that are designed for 
less credit worthy borrowers. Similarly, for consumers who seek 
financing through a lender's higher-priced subprime lending channel, 
lenders should not fail to offer or direct such consumers toward the 
lender's standard mortgage line if they are able to qualify for one of 
the standard products;

[[Page 20254]]

    (3) Comply with fair lending requirements; or
    (4) Engage in other good lending practices that are:
    (i) Identified in writing by an Enterprise as good lending 
practices for inclusion in this definition; and
    (ii) Determined by the Director to constitute good lending 
practices.
    Mortgages with unacceptable terms or conditions or resulting from 
unacceptable practices means a mortgage or a group or category of 
mortgages with one or more of the following terms or conditions:
    (1) Excessive fees, where the total points and fees charged to a 
borrower exceed the greater of 5 percent of the loan amount or a 
maximum dollar amount of $1000, or an alternative amount requested by 
an Enterprise and determined by the Director as appropriate for small 
mortgages.
    (i) For purposes of this definition, points and fees include:
    (A) Origination fees;
    (B) Underwriting fees;
    (C) Broker fees;
    (D) Finder's fees; and
    (E) Charges that the lender imposes as a condition of making the 
loan, whether they are paid to the lender or a third party.
    (ii) For purposes of this definition, points and fees do not 
include:
    (A) Bona fide discount points;
    (B) Fees paid for actual services rendered in connection with the 
origination of the mortgage, such as attorneys' fees, notary's fees, 
and fees paid for property appraisals, credit reports, surveys, title 
examinations and extracts, flood and tax certifications, and home 
inspections;
    (C) The cost of mortgage insurance or credit-risk price 
adjustments;
    (D) The costs of title, hazard, and flood insurance policies;
    (E) State and local transfer taxes or fees;
    (F) Escrow deposits for the future payment of taxes and insurance 
premiums; and
    (G) Other miscellaneous fees and charges that, in total, do not 
exceed 0.25 percent of the loan amount.
    (2) Prepayment penalties, except where:
    (i) The mortgage provides some benefits to the borrower (e.g., a 
rate or fee reduction for accepting the prepayment premium);
    (ii) The borrower is offered the choice of another mortgage that 
does not contain payment of such a premium;
    (iii) The terms of the mortgage provision containing the prepayment 
penalty are adequately disclosed to the borrower; and
    (iv) The prepayment penalty is not charged when the mortgage debt 
is accelerated as the result of the borrower's default in making his or 
her mortgage payments.
    (3) The sale or financing of prepaid single-premium credit life 
insurance products in connection with the origination of the mortgage;
    (4) Evidence that the lender did not adequately consider the 
borrower's ability to make payments, i.e., mortgages that are 
originated with underwriting techniques that focus on the borrower's 
equity in the home, and do not give full consideration of the 
borrower's income and other obligations. Ability to repay must be 
determined and must be based upon relating the borrower's income, 
assets, and liabilities to the mortgage payments; or
    (5) Other terms or conditions that are:
    (i) Identified in writing by an Enterprise as unacceptable terms or 
conditions or resulting from unacceptable practices for inclusion in 
this definition; and
    (ii) Determined by the Director as an unacceptable term or 
condition of a mortgage for which goals credit should not be received.
    Multifamily housing means a residence consisting of more than four 
dwelling units. The term includes cooperative buildings and condominium 
projects.
    New England means Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island, and Vermont.
    Ongoing program means a program that is expected to continue for 
the foreseeable future.
    Other underserved area means any underserved area that is in a 
metropolitan area, but not in a central city.
    Owner-occupied unit means a dwelling unit in single-family housing 
in which a mortgagor of the unit resides.
    Participant means a Person or GSE that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    Participation means a fractional interest in the principal amount 
of a mortgage.
    Person, as used in subpart H, means and includes an individual, 
corporation, company, governmental entity, association, firm, 
partnership, trust, estate, representative, and any other similar 
organization, but does not mean or include the United States, a GSE, or 
a Federal Reserve Bank.
    Portfolio of loans means 10 or more loans.
    Proprietary information means all mortgage data and all AHAR 
information that the Enterprises submit to the Director in the AHARs 
that contain trade secrets or privileged or confidential, commercial, 
or financial information that, if released, would be likely to cause 
substantial competitive harm.
    Public data means all mortgage data and all AHAR information that 
the Enterprises submit to the Director in the AHARs that the Director 
determines are not proprietary and may appropriately be disclosed 
consistent with other applicable laws and regulations.
    Real estate mortgage investment conduit (REMIC) means multi-class 
mortgage securities issued by a tax-exempt entity.
    Refinancing means a transaction in which an existing mortgage is 
satisfied or replaced by a new mortgage undertaken by the same 
borrower. The term does not include:
    (1) A renewal of a single payment obligation with no change in the 
original terms;
    (2) A reduction in the annual percentage rate of the mortgage as 
computed under the Truth in Lending Act, with a corresponding change in 
the payment schedule;
    (3) An agreement involving a court proceeding;
    (4) A workout agreement, in which a change in the payment schedule 
or collateral requirements is agreed to as a result of the mortgagor's 
default or delinquency, unless the rate is increased or the new amount 
financed exceeds the unpaid balance plus earned finance charges and 
premiums for the continuation of insurance;
    (5) The renewal of optional insurance purchased by the mortgagor 
and added to an existing mortgage;
    (6) A renegotiated balloon mortgage on a multifamily property where 
the balloon payment was due within 1 year after the date of the closing 
of the renegotiated mortgage; and
    (7) A conversion of a balloon mortgage note on a single family 
property to a fully amortizing mortgage note where the Enterprise 
already owns or has an interest in the balloon note at the time of the 
conversion.
    Rent means, for a dwelling unit:
    (1) When the contract rent includes all utilities, the contract 
rent; or
    (2) When the contract rent does not include all utilities, the 
contract rent plus:
    (i) The actual cost of utilities not included in the contract rent; 
or
    (ii) A utility allowance.
    Rental housing means dwelling units in multifamily housing and 
dwelling units that are not owner-occupied in single-family housing.
    Rental unit means a dwelling unit that is not owner-occupied and is 
rented or available to rent.

[[Page 20255]]

    Residence means a property where one or more families reside.
    Residential mortgage means a mortgage on single-family or 
multifamily housing.
    Revised Article 8 has the same meaning as in 31 CFR 357.2.
    Rural area means any underserved area located outside of any 
metropolitan area.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Housing 
and Economic Recovery Act of 2008, codified generally at 12 U.S.C. 4501 
et seq.
    Seasoned mortgage means a mortgage on which the date of the 
mortgage note is more than 1 year before the Enterprise purchased the 
mortgage.
    Second mortgage means any mortgage that has a lien position 
subordinate only to the lien of the first mortgage.
    Secondary residence means a dwelling where the mortgagor maintains 
(or will maintain) a part-time place of abode and typically spends (or 
will spend) less than the majority of the calendar year. A person may 
have more than one secondary residence at a time.
    Security means any mortgage participation certificate, note, bond, 
debenture, evidence of indebtedness, collateral-trust certificate, 
transferable share, certificate of deposit for a security, or, in 
general, any interest or instrument commonly known as a ``security''.
    Securities Documentation means the applicable statement of terms, 
trust indenture, securities agreement or other documents establishing 
the terms of a Book-entry GSE Security.
    Single-family housing means a residence consisting of one to four 
dwelling units. Single-family housing includes condominium dwelling 
units and dwelling units in cooperative housing projects.
    Transfer message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry Security (including a 
Book-entry GSE Security) maintained in the Book-entry System, as set 
forth in Federal Reserve Bank Operating Circulars.
    Underserved area means:
    (1) For purposes of the definitions of ``Central city'' and ``Other 
underserved area'', a census tract, a Federal or State American Indian 
reservation or tribal or individual trust land, or the balance of a 
census tract excluding the area within any Federal or State American 
Indian reservation or tribal or individual trust land, having:
    (i) A median income at or below 120 percent of the median income of 
the metropolitan area and a minority population of 30 percent or 
greater; or
    (ii) A median income at or below 90 percent of median income of the 
metropolitan area.
    (2) For purposes of the definition of ``Rural area'', a whole 
census tract, a Federal or State American Indian reservation or tribal 
or individual trust land, or the balance of a census tract excluding 
the area within any Federal or State American Indian reservation or 
tribal or individual trust land, having:
    (i) A median income at or below 120 percent of the greater of the 
State non-metropolitan median income or the nationwide non-metropolitan 
median income and a minority population of 30 percent or greater; or
    (ii) A median income at or below 95 percent of the greater of the 
State non-metropolitan median income or nationwide non-metropolitan 
median income.
    (3) Any Federal or State American Indian reservation or tribal or 
individual trust land that includes land that is both within and 
outside of a metropolitan area and that is designated as an underserved 
area by FHFA. In such cases, FHFA will notify the Enterprises as to 
applicability of other definitions and counting conventions.
    Utilities means charges for electricity, piped or bottled gas, 
water, sewage disposal, fuel (oil, coal, kerosene, wood, solar energy, 
or other), and garbage and trash collection. Utilities do not include 
charges for telephone service.
    Utility allowance means either:
    (1) The amount to be added to contract rent when utilities are not 
included in contract rent (also referred to as the ``AHS-derived 
utility allowance''), as issued periodically by FHFA; or
    (2) The utility allowance established under the HUD Section 8 
Program (42 U.S.C. 1437f) for the area where the property is located.
    Very low-income means, for purposes of the 2009 housing goals:
    (i) In the case of owner-occupied units, income not in excess of 60 
percent of area median income; and
    (ii) In the case of rental units, income not in excess of 60 
percent of area median income, with adjustments for smaller and larger 
families, as determined by the Director.
    Wholesale exchange means a transaction in which an Enterprise buys 
or otherwise acquires mortgages held in portfolio or securitized by the 
other Enterprise, or where both Enterprises swap such mortgages.
    Working day means a day when FHFA is officially open for business.
    (c) Subpart H terms. Unless the context requires otherwise, terms 
used in subpart H of this part that are not defined in this part, have 
the meanings as set forth in 31 CFR 357.2. Definitions and terms used 
in 31 CFR part 357 should read as though modified to effectuate their 
application to the GSEs.

Subpart B--Housing Goals


Sec.  1282.11  General.

    This subpart establishes three housing goals for 2009 as required 
by section 1331(c) of the Safety and Soundness Act, requirements for 
measuring performance under the goals, and procedures for monitoring 
and enforcing the goals.


Sec.  1282.12  Low- and Moderate-Income Housing Goal.

    (a) Purpose of goal. This annual goal for the purchase by each 
Enterprise of mortgages on housing for low- and moderate-income 
families (``the Low- and Moderate-Income Housing Goal'') is intended to 
achieve increased purchases by the Enterprises of such mortgages.
    (b) Factors. In establishing the Low- and Moderate-Income Housing 
Goals for 2009, the Director considered the feasibility of the goals 
given the current market conditions as required by section 1331(c) of 
the Safety and Soundness Act.
    (c) Goals. For the year 2009, the goal for each Enterprise's 
purchases of mortgages on housing for low- and moderate-income families 
shall be 51 percent of the total number of dwelling units financed by 
that Enterprise's mortgage purchases in 2009. In addition, as a Low- 
and Moderate-Income Housing Home Purchase Subgoal, 40 percent of the 
total number of home purchase mortgages in metropolitan areas financed 
by that Enterprise's mortgage purchases shall be home purchase 
mortgages in metropolitan areas which count toward the Low- and 
Moderate-Income Housing Goal for 2009.


Sec.  1282.13  Central Cities, Rural Areas, and Other Underserved Areas 
Housing Goal.

    (a) Purpose of the goal. This annual goal for the purchase by each 
Enterprise of mortgages on housing located in central cities, rural 
areas, and other underserved areas is intended to achieve increased 
purchases by the Enterprises of mortgages financing housing in areas 
that are underserved in terms of mortgage credit.
    (b) Factors. In establishing the Central Cities, Rural Areas, and 
Other Underserved Areas Goals for 2009, the Director considered the 
feasibility of the goals given the current market

[[Page 20256]]

conditions as required by section 1331(c) of the Safety and Soundness 
Act.
    (c) Goals. For the year 2009, the goal for each Enterprise's 
purchases of mortgages on housing located in central cities, rural 
areas, and other underserved areas shall be 37 percent of the total 
number of dwelling units financed by that Enterprise's mortgage 
purchases in 2009. In addition, as a Central Cities, Rural Areas, and 
Other Underserved Areas Home Purchase Subgoal, 30 percent of the total 
number of home purchase mortgages in metropolitan areas financed by 
that Enterprise's mortgage purchases shall be home purchase mortgages 
in metropolitan areas which count toward the Central Cities, Rural 
Areas, and Other Underserved Areas Housing Goal for 2009.
    (d) Measuring performance. The Enterprises shall determine on a 
mortgage-by-mortgage basis, through geocoding or any similarly accurate 
and reliable method, whether a mortgage finances one or more dwelling 
units located in a central city, rural area, or other underserved area.


Sec.  1282.14  Special Affordable Housing Goal.

    (a) Purpose of the goal. This goal is intended to achieve increased 
purchases by the Enterprises of mortgages on rental and owner-occupied 
housing meeting the then-existing unaddressed needs of, and affordable 
to, low-income families in low-income areas and very low-income 
families.
    (b) Factors. In establishing the Special Affordable Housing Goals 
for 2009, the Director considered the feasibility of the goals given 
the current market conditions as required by section 1331(c) of the 
Safety and Soundness Act.
    (c) Goals. For the year 2009, the goal for each Enterprise's 
purchases of mortgages on rental and owner-occupied housing meeting the 
then-existing, unaddressed needs of and affordable to low-income 
families in low-income areas and very low-income families shall be 23 
percent of the total number of dwelling units financed by that 
Enterprise's mortgage purchases in 2009. The goal for the year 2009 
shall include mortgage purchases financing dwelling units in 
multifamily housing totaling not less than 1.0 percent of the annual 
average dollar volume of combined (single-family and multifamily) 
mortgages purchased by the respective Enterprise in the years 2000, 
2001, and 2002. In addition, as a Special Affordable Housing Home 
Purchase Subgoal, 14 percent of the total number of home purchase 
mortgages in metropolitan areas financed by that Enterprise's mortgage 
purchases shall be home purchase mortgages in metropolitan areas which 
count toward the Special Affordable Housing Goal for 2009.
    (d) Counting of multifamily units.--(1) Dwelling units affordable 
to low-income families and financed by a particular purchase of a 
mortgage on multifamily housing shall count toward achievement of the 
Special Affordable Housing Goal where at least:
    (i) 20 percent of the dwelling units in the particular multifamily 
property are affordable to especially low-income families; or
    (ii) 40 percent of the dwelling units in the particular multifamily 
property are affordable to very low-income families.
    (2) Where only some of the units financed by a purchase of a 
mortgage on multifamily housing count under the multifamily component 
of the goal, only a portion of the unpaid principal balance of the 
mortgage attributable to such units shall count toward the multifamily 
component. The portion of the mortgage counted under the multifamily 
requirement shall be equal to the ratio of the total units that count 
to the total number of units in the mortgaged property.
    (e) Full Credit Activities.--(1) For purposes of this paragraph 
(e), full credit means that each unit financed by a mortgage purchased 
by an Enterprise and meeting the requirements of this section shall 
count toward achievement of the Special Affordable Housing Goal for 
that Enterprise.
    (2) The following mortgages meet the requirements of paragraph 
(e)(3) of this section: Mortgages insured under HUD's Home Equity 
Conversion Mortgage (``HECM'') Insurance Program, 12 U.S.C. 1715z-20; 
mortgages guaranteed under the Rural Housing Service's Single Family 
Housing Guaranteed Loan Program, 42 U.S.C. 1472; mortgages on 
properties on tribal lands insured under FHA's Section 248 program, 12 
U.S.C. 1715z-13, HUD's Section 184 program, 12 U.S.C. 1515z-13a, or 
Title VI of the Native American Housing Assistance and Self-
Determination Act of 1996, 25 U.S.C. 4191 through 4195.
    (3) FHFA will give full credit toward achievement of the Special 
Affordable Housing Goal for the purchase or securitization of Federally 
insured or guaranteed mortgages if such mortgages cannot be readily 
securitized through the Government National Mortgage Association or any 
other Federal Agency, and participation of the Enterprise substantially 
enhances the affordability of the housing subject to such mortgages, 
provided the Enterprise submits documentation to FHFA that supports 
eligibility under this paragraph for FHFA's approval.
    (4)(i) FHFA will give full credit toward achievement of the Special 
Affordable Housing Goal for the purchase or refinancing of existing 
seasoned portfolios of loans if the seller is engaged in a specific 
program to use the proceeds of such sales to originate additional loans 
that meet such goal, and such purchases or refinancings support 
additional lending for housing that otherwise qualifies under such goal 
to be considered for purposes of such goal. For purposes of determining 
whether a seller meets the requirement in this paragraph (e)(4), a 
seller must currently operate on its own or actively participate in an 
on-going, discernible, active, and verifiable program directly targeted 
at the origination of new mortgage loans that qualify under the Special 
Affordable Housing Goal.
    (ii) A seller's activities must evidence a current intention or 
plan to reinvest the proceeds of the sale into mortgages qualifying 
under the Special Affordable Housing Goal, with a current commitment of 
resources on the part of the seller for this purpose.
    (iii) A seller's actions must evidence willingness to buy 
qualifying loans when these loans become available in the market as 
part of active, on-going, sustainable efforts to ensure that additional 
loans that meet the goal are originated.
    (iv) Actively participating in such a program includes purchasing 
qualifying loans from a correspondent originator, including a lender or 
qualified housing group, that operates an on-going program resulting in 
the origination of loans that meet the requirements of the goal, has a 
history of delivering, and currently delivers qualifying loans to the 
seller.
    (v) The Enterprise must verify and monitor that the seller meets 
the requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this 
section and develop any necessary mechanisms to ensure compliance with 
the requirements, except as provided in paragraphs (e)(4)(vi) and (vii) 
of this section.
    (vi) Where a seller's primary business is originating mortgages on 
housing that qualifies under this Special Affordable Housing Goal, such 
seller is presumed to meet the requirements in paragraphs (e)(4)(i) 
through (e)(4)(iv) of this section. Sellers that are institutions that 
are:
    (A) Regularly in the business of mortgage lending;
    (B) Depository institutions insured under the Deposit Insurance 
Fund; and

[[Page 20257]]

    (C) Subject to, and have received at least a satisfactory 
performance evaluation rating for:
    (1) At least the two most recent consecutive examinations under the 
Community Reinvestment Act, if the lending institutions have total 
assets in excess of $250 million; or
    (2) The most recent examination under the Community Reinvestment 
Act if the lending institutions which have total assets no more than 
$250 million are identified as sellers that are presumed to have a 
primary business of originating mortgages on housing that qualifies 
under this Special Affordable Housing Goal and, therefore, are presumed 
to meet the requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of 
this section.
    (vii) Classes of institutions or organizations that are presumed to 
have as their primary business originating mortgages on housing that 
qualifies under this Special Affordable Housing Goal and, therefore, 
are presumed in paragraphs (e)(4)(i) through (e)(4)(iv) of this section 
to meet the requirements are as follows: State housing finance 
agencies; affordable housing loan consortia; and Federally insured 
credit unions that are:
    (A) Members of the Federal Home Loan Bank System and meet the 
first-time homebuyer lending standard of the Community Support Program; 
or
    (B) Community development credit unions; community development 
financial institutions; public loan funds; or non-profit mortgage 
lenders. FHFA may determine that additional classes of institutions or 
organizations are primarily engaged in the business of financing 
affordable housing mortgages for purposes of this presumption, and if 
so, will notify the Enterprises in writing.
    (viii) For purposes of paragraph (e)(4) of this section, if the 
seller did not originate the mortgage loans but the originator of the 
mortgage loans fulfills the requirements of either paragraphs (e)(4)(i) 
through (e)(4)(iv), paragraph (e)(4)(vi) or paragraph (e)(4)(vii) of 
this section, and the seller has held the loans for six months or less 
prior to selling the loans to the Enterprise, FHFA will consider that 
the seller has met the requirements of this paragraph (e)(4).
    (f) Partial credit activities. Mortgages insured under HUD's Title 
I program, which includes property improvement and manufactured home 
loans, shall receive one-half credit toward the Special Affordable 
Housing Goal until such time as the Government National Mortgage 
Association fully implements a program to purchase and securitize Title 
I loans.
    (g) No credit activities. Neither the purchase nor the 
securitization of mortgages associated with the refinancing of an 
Enterprise's existing mortgages or mortgage-backed securities 
portfolios shall receive credit toward the achievement of the Special 
Affordable Housing Goal. Refinancings that result from the wholesale 
exchange of mortgages between the two Enterprises shall not count 
toward the achievement of this goal. Refinancings of individual 
mortgages shall count toward achievement of this goal when the 
refinancing is an arms-length transaction that is borrower-driven and 
the mortgage otherwise counts toward achievement of this goal. For 
purposes of this paragraph (g), ``mortgages or mortgage-backed 
securities portfolios'' includes mortgages retained by Fannie Mae or 
Freddie Mac and mortgages utilized to back mortgage-backed securities.


Sec.  1282.15  General requirements.

    (a) Calculating the numerator and denominator. Performance under 
each of the housing goals shall be measured using a fraction that is 
converted into a percentage.
    (1) The numerator. The numerator of each fraction is the number of 
dwelling units financed by an Enterprise's mortgage purchases in a 
particular year that count toward achievement of the housing goal.
    (2) The denominator. The denominator of each fraction is, for all 
mortgages purchased, the number of dwelling units that could count 
toward achievement of the goal under appropriate circumstances. The 
denominator shall not include Enterprise transactions or activities 
that are not mortgages or mortgage purchases as defined by FHFA or 
transactions that are specifically excluded as ineligible under Sec.  
1282.16(b).
    (3) Missing data or information. When an Enterprise lacks 
sufficient data or information to determine whether the purchase of a 
mortgage originated after 1992 counts toward achievement of a 
particular housing goal, that mortgage purchase shall be included in 
the denominator for that housing goal, except under the circumstances 
described in paragraphs (d) and (e)(6) of this section.
    (b) Properties with multiple dwelling units. For the purposes of 
counting toward the achievement of the goals, whenever the property 
securing a mortgage contains more than one dwelling unit, each such 
dwelling unit shall be counted as a separate dwelling unit financed by 
a mortgage purchase.
    (c) Credit toward multiple goals. A mortgage purchase (or dwelling 
unit financed by such purchase) by an Enterprise in a particular year 
shall count toward the achievement of each housing goal for which such 
purchase (or dwelling unit) qualifies in that year.
    (d) Counting owner-occupied units. (1) For purposes of counting 
owner-occupied units toward achievement of the Low- and Moderate-Income 
Housing Goal or the Special Affordable Housing Goal, mortgage purchases 
financing such units shall be evaluated based on the income of the 
mortgagors and the area median income at the time of origination of the 
mortgage. To determine whether mortgages may be counted under a 
particular family income level, i.e., especially low-, very low-, low- 
or moderate-income, the income of the mortgagors is compared to the 
median income for the area at the time of the mortgage application, 
using the appropriate percentage factor provided under Sec.  1282.17.
    (2)(i) When the income of the mortgagor(s) is not available to 
determine whether an owner-occupied unit in a property securing a 
single-family mortgage originated after 1992 and purchased by an 
Enterprise counts toward achievement of the Low- and Moderate-Income 
Housing Goal or the Special Affordable Housing Goal, an Enterprise's 
performance with respect to such unit may be evaluated using estimated 
affordability information in accordance with one of the following 
methods:
    (A) Excluding from the denominator and the numerator single-family 
owner-occupied units located in census tracts with median incomes less 
than, or equal to, area median income based on the most recent 
decennial census, up to a maximum of one percent of the total number of 
single-family owner-occupied dwelling units eligible to be counted 
toward the respective housing goal in the current year. Mortgage 
purchases with missing data in excess of the maximum will be included 
in the denominator and excluded from the numerator;
    (B) For home purchase mortgages and for refinance mortgages 
separately, multiplying the number of owner-occupied units with missing 
borrower income information in properties securing mortgages purchased 
by the Enterprise in each census tract by the percentage of all single-
family owner-occupied mortgage originations in the respective tracts 
that would count toward achievement of each goal, as determined by FHFA 
based on the most recent Home Mortgage Disclosure Act data available; 
or

[[Page 20258]]

    (C) Such other data source and methodology as may be approved by 
FHFA.
    (ii) In any calendar year, an Enterprise may use only one of the 
methods specified in paragraph (d)(2)(i) of this section to estimate 
affordability information for single-family owner-occupied units.
    (iii) If an Enterprise chooses to use an estimation methodology 
under paragraph (d)(2)(i)(B) or (d)(2)(i)(C) of this section to 
determine affordability for owner-occupied units in properties securing 
single-family mortgage purchases eligible to be counted toward the 
respective housing goal, then that methodology may be used up to 
nationwide maximums for home purchase mortgages and for refinance 
mortgages that shall be calculated by multiplying, for each census 
tract, the percentage of all single-family owner-occupied mortgage 
originations with missing borrower incomes (as determined by FHFA based 
on the most recent Home Mortgage Disclosure Act data available for home 
purchase and refinance mortgages, respectively) by the number of 
single-family owner-occupied units in properties securing mortgages 
purchased by the Enterprise for each census tract, summed up over all 
census tracts. If this nationwide maximum is exceeded, then the 
estimated number of goal-qualifying units will be adjusted by the ratio 
of the applicable nationwide maximum number of units for which income 
information may be estimated to the total number of single-family 
owner-occupied units with missing income information in properties 
securing mortgages purchased by the Enterprise. Owner-occupied units in 
excess of the nationwide maximum, and any units for which estimation 
information is not available, shall remain in the denominator of the 
respective goal calculation.
    (e) Counting rental units--(1) Use of income, rent--(i) Generally. 
For purposes of counting rental units toward achievement of the Low- 
and Moderate-Income Housing Goal or the Special Affordable Housing 
Goal, mortgage purchases financing such units shall be evaluated based 
on the income of actual or prospective tenants where such data is 
available, i.e., known to a lender.
    (ii) Availability of income information.--(A) Each Enterprise shall 
require lenders to provide to the Enterprise tenant income information 
under paragraphs (e)(3) and (4) of this section, but only when such 
information is known to the lender.
    (B) When such tenant income information is available for all 
occupied units, the Enterprise's performance shall be based on the 
income of the tenants in the occupied units. For unoccupied units that 
are vacant and available for rent and for unoccupied units that are 
under repair or renovation and not available for rent, the Enterprise 
shall use the income of prospective tenants, if paragraph (e)(4) of 
this section is applicable. If paragraph (e)(4) of this section is not 
applicable, the Enterprise shall use rent levels for comparable units 
in the property to determine affordability.
    (2) Model units and rental offices. A model unit or rental office 
in a multifamily property may count toward achievement of the housing 
goals only if an Enterprise determines that:
    (i) It is reasonably expected that the units will be occupied by a 
family within one year;
    (ii) The number of such units is reasonable and minimal considering 
the size of the multifamily property; and
    (iii) Such unit otherwise meets the requirements for the goal.
    (3) Income of actual tenants. When the income of actual tenants is 
available, to determine whether a tenant is very low-, low-, or 
moderate-income, the income of the tenant shall be compared to the 
median income for the area, adjusted for family size as provided in 
Sec.  1282.17.
    (4) Income of prospective tenants. When income for tenants is 
available to a lender because a project is subject to a Federal housing 
program that establishes the maximum income for a tenant or a 
prospective tenant in rental units, the income of prospective tenants 
may be counted at the maximum income level established under such 
housing program for that unit. In determining the income of prospective 
tenants, the income shall be projected based on the types of units and 
market area involved. Where the income of prospective tenants is 
projected, each Enterprise must determine that the income figures are 
reasonable considering the rents (if any) on the same units in the past 
and considering current rents on comparable units in the same market 
area.
    (5) Use of rent. When the income of the prospective or actual 
tenants of a dwelling unit is not available, performance under these 
goals will be evaluated based on rent and whether the rent is 
affordable to the income group targeted by the housing goal. A rent is 
affordable if the rent does not exceed 30 percent of the maximum income 
level of very low-, low-, or moderate-income families as provided in 
Sec.  1282.19. In determining contract rent for a dwelling unit, the 
actual rent or average rent by unit type shall be used.
    (6) Affordability data unavailable.--(i) Multifamily.--(A) When an 
Enterprise lacks sufficient information to determine whether a rental 
unit in a property securing a multifamily mortgage purchased by an 
Enterprise counts toward achievement of the Low- and Moderate-Income 
Housing Goal or the Special Affordable Housing Goal because neither the 
income of prospective or actual tenants, nor the actual or average 
rental data, are available, an Enterprise's performance with respect to 
such unit may be evaluated using estimated affordability information in 
accordance with one of the following methods:
    (1) Multiplying the number of rental units with missing 
affordability information in properties securing multifamily mortgages 
purchased by the Enterprise in each census tract by the percentage of 
all rental dwelling units in the respective tracts that would count 
toward achievement of each goal, as determined by FHFA based on the 
most recent decennial census. For units with missing affordability 
information in tracts for which such methodology is not possible, such 
units will be excluded from the denominator as well as the numerator in 
calculating performance under the respective housing goal(s); or
    (2) Such other data source and methodology as may be approved by 
FHFA.
    (B) In any calendar year, an Enterprise may use only one of the 
methods specified in paragraph (e)(6)(i)(A) of this section to estimate 
affordability information for multifamily rental units.
    (C) If an Enterprise chooses to use an estimation methodology under 
paragraph (e)(6)(i)(A) of this section to determine affordability for 
rental units in properties securing multifamily mortgage purchases 
eligible to be counted toward the respective housing goal, then that 
methodology may be used up to a nationwide maximum of ten percent of 
the total number of rental units in properties securing multifamily 
mortgages purchased by the Enterprise in the current year. If this 
maximum is exceeded, the estimated number of goal-qualifying units will 
be adjusted by the ratio of the nationwide maximum number of units for 
which affordability information may be estimated to the total number of 
multifamily rental units with missing affordability information in 
properties securing mortgages purchased by the Enterprise. Multifamily 
rental units in excess of the maximum set forth in this paragraph

[[Page 20259]]

(e)(6)(i)(C), and any units for which estimation information is not 
available, shall be removed from the denominator of the respective goal 
calculation.
    (ii) Rental units in 1-4 unit single-family properties.--(A) When 
an Enterprise lacks sufficient information to determine whether a 
rental unit in a property securing a single-family mortgage purchased 
by an Enterprise counts toward achievement of the Low- and Moderate-
Income Housing Goal or the Special Affordable Housing Goal because 
neither the income of prospective or actual tenants, nor the actual or 
average rental data, are available, an Enterprise's performance with 
respect to such unit may be evaluated using estimated affordability 
information in accordance with one of the following methods:
    (1) Excluding rental units in 1- to 4-unit properties with missing 
affordability information from the denominator as well as the numerator 
in calculating performance under those goals;
    (2) Multiplying the number of rental units with missing 
affordability information in properties securing single family 
mortgages purchased by the Enterprise in each census tract by the 
percentage of all rental dwelling units in the respective tracts that 
would count toward achievement of each goal, as determined by FHFA 
based on the most recent decennial census. For units with missing 
affordability information in tracts for which such methodology is not 
possible, such units will be excluded from the denominator as well as 
the numerator in calculating performance under the respective housing 
goal(s); or
    (3) Such other data source and methodology as may be approved by 
FHFA.
    (B) In any calendar year, an Enterprise may use only one of the 
methods specified in paragraph (e)(6)(ii)(A) of this section to 
estimate affordability information for single-family rental units.
    (C) If an Enterprise chooses to use an estimation methodology under 
paragraph (e)(6)(ii)(A)(2) or (e)(6)(ii)(A)(3) of this section to 
determine affordability for rental units in properties securing single-
family mortgage purchases eligible to be counted toward the respective 
housing goal, then that methodology may be used up to nationwide 
maximums of five percent of the total number of rental units in 
properties securing non-seasoned single-family mortgage purchases by 
the Enterprise in the current year and 20 percent of the total number 
of rental units in properties securing seasoned single-family mortgage 
purchases by the Enterprise in the current year. If either or both of 
these maximums are exceeded, the estimated number of goal-qualifying 
units will be adjusted by the ratio of the applicable nationwide 
maximum number of units for which affordability information may be 
estimated to the total number of single-family rental units with 
missing affordability information in properties securing seasoned or 
unseasoned mortgages purchased by the Enterprise, as applicable. 
Single-family rental units in excess of the maximums set forth in this 
paragraph (e)(6)(ii)(C), and any units for which estimation information 
is not available, shall be removed from the denominator of the 
respective goal calculation.
    (7) Timeliness of information. In determining performance under the 
housing goals, each Enterprise shall use tenant and rental information 
as of the time of mortgage:
    (i) Acquisition for mortgages on multifamily housing; and
    (ii) Origination for mortgages on single-family housing.
    (f) Application of median income.--(1) For purposes of determining 
an area's median income under Sec. Sec.  1282.17 through 1282.19 and 
for the definition of ``low-income area,'' the area is:
    (i) The metropolitan area, if the property which is the subject of 
the mortgage is in a metropolitan area; and
    (ii) In all other areas, the county in which the property is 
located, except that where the State nonmetropolitan median income is 
higher than the county's median income, the area is the State 
nonmetropolitan area.
    (2) When an Enterprise cannot precisely determine whether a 
mortgage is on dwelling unit(s) located in one area, the Enterprise 
shall determine the median income for the split area in the manner 
prescribed by the Federal Financial Institutions Examination Council 
for reporting under the Home Mortgage Disclosure Act, if the Enterprise 
can determine that the mortgage is on dwelling unit(s) located in:
    (i) A census tract;
    (ii) A census place code;
    (iii) A block-group enumeration district;
    (iv) A nine-digit zip code; or
    (v) Another appropriate geographic segment that is partially 
located in more than one area (``split area'').
    (g) Sampling not permitted. Performance under the housing goals for 
each year shall be based on a complete tabulation of mortgage purchases 
for that year; a sampling of such purchases is not acceptable.
    (h) Newly available data. When an Enterprise uses data to determine 
whether a mortgage purchase counts toward achievement of any goal and 
new data is released after the start of a calendar quarter, the 
Enterprise need not use the new data until the start of the following 
quarter.
    (i) Counting mortgages toward the Home Purchase Subgoals.--(1) 
General. The requirements of this section, except for paragraphs (b) 
and (e) of this section, shall apply to counting mortgages toward the 
Home Purchase Subgoals at Sec. Sec.  1282.12 through 1282.14. However, 
performance under the subgoals shall be counted using a fraction that 
is converted into a percentage for each subgoal and the numerator of 
the fraction for each subgoal shall be the number of home purchase 
mortgages in metropolitan areas financed by each Enterprise's mortgage 
purchases in a particular year that count towards achievement of the 
applicable housing goal. The denominator of each fraction shall be the 
total number of home purchase mortgages in metropolitan areas financed 
by each Enterprise's mortgage purchases in a particular year. For 
purposes of each subgoal, the procedure for addressing missing data or 
information, as set forth in paragraph (d) of this section, shall be 
implemented using numbers of home purchase mortgages in metropolitan 
areas and not single-family owner-occupied dwelling units.
    (2) Special counting rule for mortgages with more than one owner-
occupied unit. For purposes of counting mortgages toward the Home 
Purchase Subgoals, where a single home purchase mortgage finances the 
purchase of two or more owner-occupied units in a metropolitan area, 
the mortgage shall count once toward each subgoal that applies to the 
Enterprise's mortgage purchase.


Sec.  1282.16  Special counting requirements.

    (a) General. FHFA shall determine whether an Enterprise shall 
receive full, partial, or no credit for a transaction toward 
achievement of any of the housing goals. In this determination, FHFA 
will consider whether a transaction or activity of the Enterprise is 
substantially equivalent to a mortgage purchase and either creates a 
new market or adds liquidity to an existing market, provided however 
that such mortgage purchase actually fulfills the Enterprise's purposes 
and is in accordance with its Charter Act.
    (b) Not counted. The following transactions or activities shall not 
count

[[Page 20260]]

toward achievement of any of the housing goals and shall not be 
included in the denominator in calculating either Enterprise's 
performance under the housing goals:
    (1) Equity investments in housing development projects;
    (2) Purchases of State and local government housing bonds except as 
provided in Sec.  1282.16(c)(8);
    (3) Purchases of non-conventional mortgages except:
    (i) Where such mortgages are acquired under a risk-sharing 
arrangement with a Federal agency;
    (ii) Mortgages insured under HUD's Home Equity Conversion Mortgage 
(``HECM'') insurance program, 12 U.S.C. 1715z-20; mortgages guaranteed 
under the Rural Housing Service's Single Family Housing Guaranteed Loan 
Program, 42 U.S.C. 1472; mortgages on properties on lands insured under 
FHA's Section 248 program, 12 U.S.C. 1715z-13, HUD's Section 184 
program, 12 U.S.C. 1515z-13a, or Title VI of the Native American 
Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191 
through 4195; and mortgages with expiring assistance contracts as 
defined at 42 U.S.C. 1737f;
    (iii) Mortgages under other mortgage programs involving Federal 
guarantees, insurance or other Federal obligation where FHFA determines 
in writing that the financing needs addressed by the particular 
mortgage program are not well served and that the mortgage purchases 
under such program should count under the housing goals, provided the 
Enterprise submits documentation to FHFA that supports eligibility and 
that FHFA makes such a determination; or
    (iv) As provided in Sec.  1282.14(e)(3);
    (4) Commitments to buy mortgages at a later date or time;
    (5) Options to acquire mortgages;
    (6) Rights of first refusal to acquire mortgages;
    (7) Any interests in mortgages that the Director determines, in 
writing, shall not be treated as interests in mortgages;
    (8) Mortgage purchases to the extent they finance any dwelling 
units that are secondary residences;
    (9) Single family mortgage refinancings that result from conversion 
of balloon notes to fully amortizing notes, if the Enterprise already 
owns or has an interest in the balloon note at the time conversion 
occurs;
    (10) Purchases of mortgages on one- to four-unit properties with 
maximum original principal obligations that exceed:
    (i) The nationwide conforming loan limits for properties of a 
particular size; or
    (ii) 150 percent of the nationwide conforming loan limits for 
properties of a particular size located in Alaska, Guam, Hawaii and the 
Virgin Islands; and
    (11) Any combination of factors in paragraphs (b)(1) through (10) 
of this section.
    (c) Other special rules. Subject to FHFA's primary determination of 
whether an Enterprise shall receive full, partial, or no credit for a 
transaction toward achievement of any of the housing goals as provided 
in paragraph (a) of this section, the following supplemental rules 
apply:
    (1) Credit enhancements.--(i) Dwelling units financed under a 
credit enhancement entered into by an Enterprise shall be treated as 
mortgage purchases and count toward achievement of the housing goals 
when:
    (A) The Enterprise provides a specific contractual obligation to 
ensure timely payment of amounts due under a mortgage or mortgages 
financed by the issuance of housing bonds (such bonds may be issued by 
any entity, including a State or local housing finance agency);
    (B) The Enterprise assumes a credit risk in the transaction 
substantially equivalent to the risk that would have been assumed by 
the Enterprise if it had securitized the mortgages financed by such 
bonds; and
    (C) Such dwelling units otherwise qualify under this part.
    (ii) When an Enterprise provides a specific contractual obligation 
to ensure timely payment of amounts due under any mortgage originally 
insured by a public purpose mortgage insurance entity or fund, the 
Enterprise may, on a case-by-case basis, seek approval from the 
Director for such activities to count toward achievement of the housing 
goals.
    (2) Real estate mortgage investment conduits (``REMICs'').--(i) An 
Enterprise's purchase or guarantee of all or a portion of a REMIC shall 
be treated as a mortgage purchase and receive credit toward the 
achievement of the housing goals provided:
    (A) The underlying mortgages or mortgage-backed securities for the 
REMIC were not:
    (1) Guaranteed by the Government National Mortgage Association; or
    (2) Previously counted toward any housing goal by the Enterprise; 
and
    (B) The Enterprise has the information necessary to support 
counting the dwelling units financed by the REMIC, or that part of the 
REMIC purchased or guaranteed by the Enterprise, toward the achievement 
of a particular housing goal.
    (ii) For REMICs that meet the requirements in paragraph (c)(2)(i) 
of this section and for which the Enterprise purchased or guaranteed:
    (A) The whole REMIC, all of the units financed by the REMIC shall 
be treated as a mortgage purchase and count toward achievement of the 
housing goals; or
    (B) A portion of the REMIC, the Enterprise shall receive partial 
credit toward achievement of the housing goals. This credit shall be 
equal to the percentage of the REMIC purchased or guaranteed by the 
Enterprise (the dollar amount of the purchase or guarantee divided by 
the total dollar amount of the REMIC) multiplied by the number of 
dwelling units that would have counted toward the goal(s) if the 
Enterprise had purchased or guaranteed the whole REMIC. In calculating 
performance under the housing goals, the denominator shall include the 
number of dwelling units included in the whole REMIC multiplied by the 
percentage of the REMIC purchased or guaranteed by the Enterprise.
    (3) Risk-sharing. Mortgage purchases under risk-sharing 
arrangements between the Enterprises and any Federal agency where the 
units would otherwise count toward achievement of the housing goal 
under which the Enterprise is responsible for a substantial amount (50 
percent or more) of the risk shall be treated as mortgage purchases and 
count toward achievement of the housing goal or goals.
    (4) Participations. Participations purchased by an Enterprise shall 
be treated as mortgage purchases and count toward the achievement of 
the housing goals, if the Enterprise's participation in the mortgage is 
50 percent or more.
    (5) Cooperative housing and condominium projects.--(i) The purchase 
of a mortgage on a cooperative housing unit (``a share loan'') or a 
condominium unit is a mortgage purchase. Such a purchase is counted 
toward achievement of a housing goal in the same manner as a mortgage 
purchase of single-family owner-occupied units, i.e., affordability is 
based on the income of the owner(s).
    (ii) The purchase of a mortgage on a cooperative building (``a 
blanket loan'') or a condominium project is a mortgage purchase and 
shall count toward achievement of the housing goals. Where an 
Enterprise purchases both ``a blanket loan'' and mortgages for units in 
the same building (``share loans''), both the blanket loan and the 
share loan(s) are mortgage purchases and shall count toward achievement 
of the housing goals. Where an Enterprise purchases

[[Page 20261]]

both a condominium project mortgage and mortgages on condominium 
dwelling units in the same project, both the condominium project 
mortgages and the mortgages on condominium dwelling units are mortgage 
purchases and shall count toward achievement of the housing goals.
    (6) Seasoned mortgages. An Enterprise's purchase of a seasoned 
mortgage shall be treated as a mortgage purchase for purposes of these 
goals and shall be included in the numerator, as appropriate, and the 
denominator in calculating the Enterprise's performance under the 
housing goals, except where:
    (i) The Enterprise has already counted the mortgage under a housing 
goal applicable to 1993 or any subsequent year; or
    (ii) FHFA determines, based upon a written request by an 
Enterprise, that a seasoned mortgage or class of such mortgages should 
be excluded from the numerator and the denominator in order to further 
the purposes of the Special Affordable Housing Goal.
    (7) Purchase of refinanced mortgages. Except as otherwise provided 
in this part, the purchase of a refinanced mortgage by an Enterprise is 
a mortgage purchase and shall count toward achievement of the housing 
goals to the extent the mortgage qualifies.
    (8) Mortgage revenue bonds.--(i) The purchase of a state or local 
mortgage revenue bond shall be treated as a mortgage purchase and units 
financed under such mortgage revenue bond shall count toward 
achievement of the goals where:
    (A) The mortgage revenue bond is to be repaid only from the 
principal and interest of the underlying mortgages originated with 
funds made available by the mortgage revenue bond; and
    (B) The mortgage revenue bond is not a general obligation of a 
state or local government or agency or is not credit enhanced by any 
government or agency, third party guarantor or surety.
    (ii) Dwelling units financed by a mortgage revenue bond meeting the 
requirements of paragraph (c)(8)(i) of this section shall count toward 
achievement of a housing goal to the extent such dwelling units 
otherwise qualify under this part.
    (9) Expiring assistance contracts. Actions that assist in 
maintaining the affordability of assisted units in eligible multifamily 
housing projects with expiring contracts, as defined under the 
Multifamily Assisted Housing Reform and Affordability Act of 1997, 
shall receive credit under the housing goals as provided in paragraph 
(b)(3)(ii) and in accordance with paragraphs (b) and (c)(1) through 
(c)(10) of this section.
    (i) For restructured (modified) multifamily mortgage loans with an 
expiring assistance contract where an Enterprise holds the loan in 
portfolio and facilitates modification of loan terms that results in 
lower debt service to the project's owner, the Enterprise shall receive 
full credit under any of the housing goals for which the units covered 
by the mortgage otherwise qualify.
    (ii) Where an Enterprise undertakes more than one action to assist 
a single project or where an Enterprise engages in an activity that it 
believes assists in maintaining the affordability of assisted units in 
eligible multifamily housing projects but which is not otherwise 
covered in paragraph (c)(9)(i) of this section, the Enterprise must 
submit the transaction to FHFA for a determination on appropriate goals 
counting treatment.
    (10) Loan modifications. An Enterprise's modification of a loan in 
accordance with the Homeowner Affordability and Stability Plan 
announced on March 4, 2009, that is held in the Enterprise's portfolio 
or that is in a pool backing a security guaranteed by the Enterprise, 
shall be treated as a mortgage purchase for purposes of the housing 
goals.
    (11) [Reserved]
    (12) HOEPA mortgages and mortgages with unacceptable terms and 
conditions. HOEPA mortgages and mortgages with unacceptable terms or 
conditions as defined in Sec.  1282.2 shall not receive credit toward 
any of the three housing goals.
    (13) Mortgages contrary to good lending practices. The Director 
shall monitor the practices and processes of the Enterprises to ensure 
that they are not purchasing loans that are contrary to good lending 
practices as defined in Sec.  1282.2. Based on the results of such 
monitoring, the Director may determine in accordance with paragraph (d) 
of this section that mortgages or categories of mortgages where a 
lender has not engaged in good lending practices shall not receive 
credit toward the three housing goals.
    (14) Seller dissolution option.--(i) Mortgages acquired through 
transactions involving seller dissolution options shall be treated as 
mortgage purchases and receive credit toward the achievement of the 
housing goals, only when:
    (A) The terms of the transaction provide for a lockout period that 
prohibits the exercise of the dissolution option for at least one year 
from the date on which the transaction was entered into by the 
Enterprise and the seller of the mortgages; and
    (B) The transaction is not dissolved during the one-year minimum 
lockout period.
    (ii) The Director may grant an exception to the one-year minimum 
lockout period described in paragraph (c)(14)(i)(A) and (B) of this 
section, in response to a written request from an Enterprise, if the 
Director determines that the transaction furthers the purposes of the 
Safety and Soundness Act and the Enterprise's Charter Act;
    (iii) For purposes of this paragraph (c)(14), ``seller dissolution 
option'' means an option for a seller of mortgages to the Enterprises 
to dissolve or otherwise cancel a mortgage purchase agreement or loan 
sale.
    (d) FHFA review of transactions. FHFA will determine whether a 
class of transactions counts as a mortgage purchase under the housing 
goals. If an Enterprise seeks to have a class of transactions counted 
under the housing goals that does not otherwise count under the rules 
in this part, the Enterprise may provide FHFA detailed information 
regarding the transactions for evaluation and determination by FHFA in 
accordance with this section. In making its determination, FHFA may 
also request and evaluate additional information from an Enterprise 
with regard to how the Enterprise believes the transactions should be 
counted. FHFA will notify the Enterprise of its determination regarding 
the extent to which the class of transactions may count under the 
goals.


Sec.  1282.17  Affordability--Income level definitions--family size and 
income known (owner-occupied units, actual tenants, and prospective 
tenants).

    In determining whether a dwelling unit is affordable to very low-, 
low-, or moderate-income families, where the unit is owner-occupied or, 
for rental housing, family size and income information for the dwelling 
unit is known to the Enterprise, the affordability of the unit shall be 
determined as follows:
    (a) Moderate-income means:
    (1) In the case of owner-occupied units, income not in excess of 
100 percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

[[Page 20262]]



------------------------------------------------------------------------
                                                          Percentage of
              Number of persons in family                  area median
                                                              income
------------------------------------------------------------------------
1......................................................               70
2......................................................               80
3......................................................               90
4......................................................              100
5 or more..............................................                *
------------------------------------------------------------------------
*100% plus (8% multiplied by the number of persons in excess of 4).

    (b) Low-income means:
    (1) In the case of owner-occupied units, income not in excess of 80 
percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

------------------------------------------------------------------------
                                                          Percentage of
              Number of persons in family                  area  median
                                                              income
------------------------------------------------------------------------
1......................................................               56
2......................................................               64
3......................................................               72
4......................................................               80
5 or more..............................................                *
------------------------------------------------------------------------
*80% plus (6.4% multiplied by the number of persons in excess of 4).

    (c) Very-low-income means:
    (1) In the case of owner-occupied units, income not in excess of 60 
percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

------------------------------------------------------------------------
                                                          Percentage of
              Number of persons in family                  area  median
                                                              income
------------------------------------------------------------------------
1......................................................               42
2......................................................               48
3......................................................               54
4......................................................               60
5 or more..............................................                *
------------------------------------------------------------------------
*60% plus (4.8% multiplied by the number of persons in excess of 4).

    (d) Especially-low-income means, in the case of rental units, where 
the income of actual or prospective tenants is available, income not in 
excess of the following percentages of area median income corresponding 
to the following family sizes:

------------------------------------------------------------------------
                                                          Percentage of
              Number of persons in family                  area median
                                                              income
------------------------------------------------------------------------
1......................................................               35
2......................................................               40
3......................................................               45
4......................................................               50
5 or more..............................................                *
------------------------------------------------------------------------
*50% plus (4.0% multiplied by the number of persons in excess of 4).

Sec.  1282.18  Affordability--Income level definitions--family size not 
known (actual or prospective tenants).

    In determining whether a rental unit is affordable to very low, 
low-, or moderate-income families where family size is not known to the 
Enterprise, income will be adjusted using unit size, and affordability 
determined as follows:
    (a) For moderate-income, the income of prospective tenants shall 
not exceed the following percentages of area median income with 
adjustments, depending on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................               70
1 bedroom..............................................               75
2 bedrooms.............................................               90
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*104% plus (12% multiplied by the number of bedrooms in excess of 3).

    (b) For low-income, income of prospective tenants shall not exceed 
the following percentages of area median income with adjustments, 
depending on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................               56
1 bedroom..............................................               60
2 bedrooms.............................................               72
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*83.2% plus (9.6% multiplied by the number of bedrooms in excess of 3).

    (c) For very low-income, income of prospective tenants shall not 
exceed the following percentages of area median income with 
adjustments, depending on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................               42
1 bedroom..............................................               45
2 bedrooms.............................................               54
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*62.4% plus (7.2% multiplied by the number of bedrooms in excess of 3).

    (d) For especially low-income, income of prospective tenants shall 
not exceed the following percentages of area median income with 
adjustments, depending on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................               35
1 bedroom..............................................             37.5
2 bedrooms.............................................               45
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*52% plus (6.0% multiplied by the number of bedrooms in excess of 3).

Sec.  1282.19   Affordability--Rent level definitions--tenant income is 
not known.

    For purposes of determining whether a rental unit is affordable to 
very low-, low-, or moderate-income families where the income of the 
family in the dwelling unit is not known to the Enterprise, the 
affordability of the unit is determined based on unit size as follows:
    (a) For moderate-income, maximum affordable rents to count as 
housing for moderate-income families shall not exceed the following 
percentages of area median income with adjustments, depending on unit 
size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................               21
1 bedroom..............................................             22.5
2 bedrooms.............................................               27
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*31.2% plus (3.6% multiplied by the number of bedrooms in excess of 3).

    (b) For low-income, maximum affordable rents to count as housing 
for low-income families shall not exceed the following percentages of 
area median income with adjustments, depending on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................             16.8
1 bedroom..............................................               18
2 bedrooms.............................................             21.6
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*24.96% plus (2.88% multiplied by the number of bedrooms in excess of
  3).

    (c) For very low-income, maximum affordable rents to count as 
housing for very low-income families shall not exceed the following 
percentages of area median income with adjustments, depending on unit 
size:

[[Page 20263]]



------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................             12.6
1 bedroom..............................................             13.5
2 bedrooms.............................................             16.2
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*18.72% plus (2.16% multiplied by the number of bedrooms in excess of
  3).

    (d) For especially low-income, maximum affordable rents to count as 
housing for especially low-income families shall not exceed the 
following percentages of area median income with adjustments, depending 
on unit size:

------------------------------------------------------------------------
                                                          Percentage of
                       Unit size                           area median
                                                              income
------------------------------------------------------------------------
Efficiency.............................................             10.5
1 bedroom..............................................            11.25
2 bedrooms.............................................             13.5
3 bedrooms or more.....................................                *
------------------------------------------------------------------------
*15.6% plus (1.8% multiplied by the number of bedrooms in excess of 3).

    (e) Missing Information. Each Enterprise shall make every effort to 
obtain the information necessary to make the calculations in this 
section. If an Enterprise makes such efforts but cannot obtain data on 
the number of bedrooms in particular units, in making the calculations 
on such units, the units shall be assumed to be efficiencies except as 
provided in Sec.  1282.15(e)(6)(i).


Sec.  1282.20  Actions to be taken to meet the goals.

    To meet the goals under this rule, each Enterprise shall operate in 
accordance with 12 U.S.C. 4565(b).


Sec.  1282.21  Notice and determination of failure to meet goals.

    If the Director determines that an Enterprise has failed or there 
is a substantial probability that an Enterprise will fail to meet any 
housing goal, the Director shall follow the procedures at 12 U.S.C. 
4566(b).


Sec.  1282.22  Housing plans.

    (a) If the Director determines, under Sec.  1282.21, that an 
Enterprise has failed or there is a substantial probability that an 
Enterprise will fail to meet any housing goal and that the achievement 
of the housing goal was or is feasible, the Director may require the 
Enterprise to submit a housing plan for approval by the Director.
    (b) Nature of plan. If the Director requires a housing plan, the 
housing plan shall:
    (1) Be feasible;
    (2) Be sufficiently specific to enable the Director to monitor 
compliance periodically;
    (3) Describe the specific actions that the Enterprise will take:
    (i) To achieve the goal for the next calendar year; and
    (ii) If the Director determines that there is a substantial 
probability that the Enterprise will fail to meet a housing goal in the 
current year, to make such improvements and changes in its operations 
as are reasonable in the remainder of the year; and
    (4) Address any additional matters relevant to the plan as 
required, in writing, by the Director.
    (c) Deadline for submission. The Enterprise shall submit the 
housing plan to the Director within 30 days after issuance of a notice 
under Sec.  1282.21 requiring the Enterprise to submit a housing plan. 
The Director may extend the deadline for submission of a plan, in 
writing and for a time certain, to the extent the Director determines 
an extension is necessary.
    (d) Review of housing plans. The Director shall review and approve 
or disapprove housing plans in accordance with 12 U.S.C. 4566(c)(4) and 
(5).
    (e) Resubmission. If the Director disapproves an initial housing 
plan submitted by an Enterprise, the Enterprise shall submit an amended 
plan acceptable to the Director not later than 15 days after the 
Director's disapproval of the initial plan; the Director may extend the 
deadline if the Director determines an extension is in the public 
interest. If the amended plan is not acceptable to the Director, the 
Director may afford the Enterprise 15 days to submit a new plan.

    Dated: April 27, 2009.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E9-9994 Filed 4-30-09; 8:45 am]
BILLING CODE 8070-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>