20236 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

The NRC is making a preliminary 

version of this draft proposed rule 

language available to inform 

stakeholders of the current status of this 

proposed rulemaking. The NRC is 

inviting stakeholders to comment on the 

draft preliminary language. This 

preliminary draft rule language may be 

subject to significant revisions during 

the rulemaking process. Public input at 

this stage will help inform the 

development of the proposed rule. 

The NRC will review and consider 

any comments received; however, the 

NRC will not respond to any comments 

received at this pre-rulemaking stage. As 

appropriate, the Statements of 

Consideration for the proposed rule will 

briefly discuss any substantive changes 

made to the preliminary draft proposed 

rule language as a result of comments 

received on this preliminary version. 

Stakeholders will also have an 

opportunity to comment on the rule 

language when it is published as a 

proposed rule in accordance with the 

provisions of the Administrative 

Procedure Act. The NRC will respond to 

any such comments in the Statements of 

Consideration for the final rule. 

The NRC may post updates to the 

preliminary draft proposed rule 

language on the Federal eRulemaking 

Portal under Docket # NRC–2008–0120. 

Regulations.gov allows members of the 

public to set-up notifications so that 

they may be alerted when documents 

are added to a docket. Users are notified 

via e-mail at an e-mail address provided 

at the time of registration for the 

notification. Directions for signing up 

for the automatic notifications can be 

found at http://www.regulations.gov. To 

do so, search for the docket you are 

interested in and then choose 

‘‘Notification,’’ found under the title of 

each action. 

Dated at Rockville, Maryland, this 24th day 

of April 2009. 

For the Nuclear Regulatory Commission. 

Kevin Hsueh, 

Acting Director, Division of 

Intergovernmental Liaison and Rulemaking, 

Office of Federal and State Materials and 

Environmental Management Programs. 

[FR Doc. E9–10041 Filed 4–30–09; 8:45 am] 

BILLING CODE 7590–01–P 

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: 

• 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. 

• 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. 

• E-mail: Comments to Alfred M. 

Pollard, General Counsel may be sent by 

e-mail to RegComments@fhfa.gov. 

Please include ‘‘RIN 2590–AA25’’ in the 

subject line of the message. 

• 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 

RegComments@fhfa.gov 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, AttorneyAdvisor, (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, 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20237 

1See Division A, titled the ‘‘Federal Housing 

Finance Regulatory Reform Act of 2008,’’ Title I, 

Section 1101 of HERA. 

2Sections 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. 

3Performance under each of the housing goals is 

measured using a fraction that is converted into a 

percentage. See proposed § 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. 

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. 

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 governmentsponsored 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

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 

20238 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

Enterprises. Consequently, FHFA is 

proposing to lower the 2009 housing 

goal and home purchase subgoal levels, 

based on current market conditions, to 

the following: 

—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 dollarbased 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 § 1282.1 

Proposed § 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 

§ 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 § 1282.2 

Proposed § 1282.2 would set forth 

definitions of terms used in the 

proposed rule that would be generally 

consistent with the definitions in § 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 §§ 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: 

• 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 

§ 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. 

• 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 § 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. 

• 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 § 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: 

• 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 

§ 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. 

• 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 § 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. 

• 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 § 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20239 

4The 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. 

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 lowand 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. 

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 § 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 § 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 goalsqualifying 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 goalsqualifying 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 mortgageVerDate Nov<24>2008 15:03 Apr 30, 2009 Jkt 217001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\01MYP1.SGM 01MYP1
20240 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

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. 

6NeighborWorks, National Foreclosure Mitigation 

Counseling Program Update, January 23, 2009. 

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 goalrichness 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 goalqualifying 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 moderateincome 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 goalqualifying 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

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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20241 

7New Residential Construction in January 2009, 

Joint Release of Census Bureau and Department of 

Housing and Urban Development, February 18, 

2009. 

8 MBA Mortgage Finance Forecast, March 24, 

2009. 

9Fannie Mae Economics and Mortgage Market 

Analysis, March 10, 2009. 

10Freddie Mac Economic and Housing Market 

Outlook, March 10, 2009. 

11The 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. 

13First 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 mortgagebacked 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). 

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. 

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 goalseligible 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. 

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 owneroccupied 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. 

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. 

FHFA’s market size estimates for the 

three housing goal categories for 2009 

are as follows: 

• 43–51 percent of units financed in 

the conventional conforming primary 

mortgage market will qualify for the 

low- and moderate-income housing 

goal; 

• 32–37 percent of units will qualify 

for the underserved areas housing goal; 

• 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: 

• 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; 

• 27–31 percent of such mortgages 

will qualify for the underserved areas 

home purchase subgoal; 

• 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, 

20242 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

15The 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. 

16See 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). 

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. 

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: 

• 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

• 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. 

• 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. 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 singlefamily 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: 

• 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. 

• 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. 

• 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 

20244 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 


EP01MY09.019</GPH>
Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20245 

BILLING CODE 8070–01–C 


EP01MY09.020</GPH>
20246 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

d. Estimating the Size of the 

Conventional Conforming Market for 

Each Housing Goal in 2009 

Since 2005, the market’s goalqualifying share for the two borrower 

income-based goals has decreased, as 

shown in Table 3, and the market’s goalqualifying 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20247 

BILLING CODE 8070–01–C 


EP01MY09.021</GPH>
20248 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

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 goalqualifying shares. 

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 governmentbacked 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 singlefamily 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) owneroccupied 2–4 unit; and (3) investorowned 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 singlefamily owner-occupied unit, singlefamily rental unit and multifamily unit 

shares of the total mortgage market (not 

including jumbo and governmentinsured mortgages). 

Later in the process, FHFA removed 

non-investment grade loans (B- or Cgrade 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 owneroccupied 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. 

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 (singlefamily owner-occupied and investorowned) 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 owneroccupied 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20249 


EP01MY09.022</GPH>
20250 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

BILLING CODE 8070–01–C 


EP01MY09.023</GPH>
Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20251 

The impact of alternative refinance 

assumptions is illustrated with the lowand 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 moderateincome, 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 moderateincome 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 singlefamily 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 incomebased 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 

§ 1282.15 

Proposed § 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 § 1282.16 

Proposed § 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 § 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 § 1282.16(b)(10) would 

exclude purchases of jumbo conforming 

loans from counting towards the 2009 

housing goals. 

2. HASP Loan Modifications—Proposed 

§ 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 

§ 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 § 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 

§ 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 §§ 1282.17 

Through 1282.19 

Proposed §§ 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 

§ 1282.20 

Proposed § 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 § 1282.21 

Proposed § 1282.21 would provide 

that if the Director of FHFA 

preliminarily determines that an 

20252 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

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 § 1282.22 

Proposed § 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 

§ 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 

§ 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. 

§ 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 Bookentry 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. 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 residentmember 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; 

20254 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

(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 taxexempt 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. 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 Bookentry 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 nonmetropolitan 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 nonmetropolitan 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 

§ 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. 

§ 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 Lowand Moderate-Income Housing Goal’’) is 

intended to achieve increased purchases 

by the Enterprises of such mortgages. 

(b) Factors. In establishing the Lowand 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 ModerateIncome 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. 

§ 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 

20256 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

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. 

§ 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 owneroccupied housing meeting the thenexisting, 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 firsttime 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. 

§ 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 § 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 owneroccupied 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 § 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 singlefamily 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 owneroccupied 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 owneroccupied 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 owneroccupied 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 owneroccupied 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 

20258 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

(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 owneroccupied 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 owneroccupied 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 owneroccupied 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 owneroccupied 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 

§ 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 § 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 Lowand 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 goalqualifying 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 singlefamily 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 Lowand 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 nonseasoned 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 §§ 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 

§§ 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 owneroccupied 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. 

§ 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 

20260 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

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 § 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 § 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 owneroccupied 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 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 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 § 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 

§ 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. 

§ 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: 

20262 Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 

Number of persons in family 

Percentage of 

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: 

Number of persons in family 

Percentage of 

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: 

Number of persons in family 

Percentage of 

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: 

Number of persons in family 

Percentage of 

area 

median income 

1 .......................................... 35 

Number of persons in family 

Percentage of 

area 

median income 

2 .......................................... 40 

3 .......................................... 45 

4 .......................................... 50 

5 or more ............................ * 

*50% plus (4.0% multiplied by the number 

of persons in excess of 4). 

§ 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: 

Unit size 

Percentage of 

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: 

Unit size 

Percentage of 

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: 

Unit size 

Percentage of 

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: 

Unit size 

Percentage of 

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). 

§ 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: 

Unit size 

Percentage of 

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: 

Unit size 

Percentage of 

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: 

Federal Register / Vol. 74, No. 83 / Friday, May 1, 2009 / Proposed Rules 20263 

Unit size 

Percentage of 

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: 

Unit size 

Percentage of 

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 § 1282.15(e)(6)(i). 

§ 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). 

§ 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). 

§ 1282.22 Housing plans. 

(a) If the Director determines, under 

§ 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 § 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 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 135 

[Docket No. FAA–2009–0023; Notice No. 09– 

02] 

RIN 2120–AJ32 

Crew Resource Management Training 

for Crewmembers in Part 135 

Operations 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: This proposed rule would 

require all certificate holders 

conducting operations under part 135 to 

include in their training programs crew 

resource management for crewmembers, 

including pilots and flight attendants. 

This proposal is needed to ensure that 

crewmembers in part 135 operations 

receive training and practice in the use 

of crew resource management 

principles, as appropriate for their 

operation. This proposed rule would 

respond to National Transportation 

Safety Board (NTSB) recommendations, 

address a recommendation from the Part 

125/135 Aviation Rulemaking 

Committee (ARC), and would codify 

current FAA guidance. The intended 

effect of this proposal is to reduce the 

frequency and severity of errors that are 

crew based, which will reduce the 

frequency of accidents and incidents 

within the scope of part 135 operations. 

DATES: Send your comments on or 

before July 30, 2009. 

ADDRESSES: You may send comments 

identified by Docket Number FAA– 

2009–0023 using any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov and follow 

the online instructions for sending your 

comments electronically. 

• Mail: Send comments to the Docket 

Operations, M–30; U.S. Department of 

Transportation, 1200 New Jersey 

Avenue, SE., Room W12–140, West 

Building Ground Floor, Washington, DC 

20590–0001. 

• Hand Delivery or Courier: Bring 

comments to the Docket Operations in 

Room W12–140 of the West Building 

Ground Floor at 1200 New Jersey 

Avenue, SE., Washington, DC, between 

9 a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. 

• Fax: Fax comments to the Docket 

Operations at 202–493–2251. 

For more information on the 

rulemaking process, see the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Privacy: We will post all comments 

we receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. 

Using the search function of our docket 

Web site, anyone can find and read the 

comments received into any of our 

dockets, including the name of the 

individual sending the comment (or 

signing the comment for an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477–78) or you may visit http:// 

DocketsInfo.dot.gov. 

Docket: To read background 

documents or comments received, go to