Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 29947 

Federal Green Construction Guide for 

Specifiers’’ for recommendations. 

(iv) Waste and materials 

management. (A) Buildings shall plan 

for recycling of specific materials, such 

as paper, metals, plastics, cardboard, 

and electronics (and associated 

products). 

(B) Adequate space, equipment, and 

transport accommodations for recycling 

must be included in the building design. 

(C) During a project’s planning stage, 

local recycling and salvage operations 

that could process site-related 

construction and demolition materials 

must be identified. If such operations 

are available locally, materials must be 

recycled or salvaged. 

(v) At least 50 percent of nonhazardous and non-radioactive 

construction, demolition and land 

clearing materials, excluding soil, must 

be recycled or salvaged. 

(vi) Ozone-depleting compounds. The 

use of ozone-depleting compounds 

during and after construction must be 

eliminated where alternative 

environmentally preferable products are 

available. 

(9) Siting. (i) The site selection for 

Federal building construction shall 

comply with all applicable Federal 

rules, Executive Orders, and other 

Federal actions governing 

environmental issues impacted by 

Federal building construction. 

(ii) Site selection must prioritize; 

(A) Building orientation to maximize 

energy efficiency of the building; 

(B) Locations in central business 

districts and rural town center; 

(C) Sites well served by transit; 

(D) Site design elements that ensure 

safe and convenient pedestrian access; 

(E) Consideration of transit access and 

proximity to housing affordable to a 

wide range of Federal employees; 

(F) Adaptive reuse or renovation of 

buildings; 

(G) Avoiding development of 

sensitive land resources (such as 

greenfields and USDA Prime Farmland); 

and 

(H) Evaluation of parking 

management strategies. 

(g)(1) Ventilation and thermal 

comfort. Federal agencies shall design 

new buildings and major renovations to 

meet the requirements of ASHRAE 55 

(incorporated by reference; see § 435.3), 

including continuous humidity control 

within established ranges per climate 

zone, and ASHRAE 62.2, (incorporated 

by reference; see § 435.3). 

(2) Radon. New Federal low-rise 

residential buildings and major 

renovations to such buildings in 

locations with a high radon potential 

shall comply with ASTM 1465–08a 

(incorporated by reference; see § 435.3). 

16. Add § 435.7 to read as follows: 

§ 435.7 Water conservation. 

If water is used to achieve energy 

efficiency, water conservation 

technologies must be applied to the 

extent practical that the technologies are 

life-cycle cost-effective. 

17. Revise § 435.8 to read as follows: 

§ 435.8 Life-cycle costing. 

For the purpose of this section, 

evaluation of whether compliance with 

a requirement is life-cycle cost-effective 

shall be considered on the basis of 

individual requirements, not the entire 

rule. If synergies exist that make 

combinations of requirements life-cycle 

cost-effective where individual 

requirements are not, then these 

combination of requirements shall be 

complied with. If requirements 

containing numerical savings values are 

not life-cycle cost-effective, the design 

of the proposed building shall 

incorporate as much savings as is lifecycle cost-effective. 

18. Add a new § 435.9 to read as 

follows: 

§ 435.9 Green building certification. 

(a) Green building certification 

system. If a new Federal building or 

Federal building undergoing a major 

renovation, meeting the criteria in 

§ 435.6(b) for which design for 

construction began 1 year after 

publication of the final rule is to be 

certified under a green building 

certification system, the system under 

which the building is certified must – 

(1) Have the ability for assessors and 

auditors to independently verify the 

criteria and measurement metrics of the 

system; 

(2) Be developed by a certification 

organization that 

(i) Provides an opportunity for public 

comment on the system; and 

(ii) Provides an opportunity for 

development and revision of the system 

through a consensus based process; 

(3) Be nationally recognized within 

the building industry; 

(4) Be subject to periodic evaluation 

and assessment of the environmental 

and energy benefits that result under the 

rating system; and 

(5) Include a verification system for 

post occupancy assessment of the rated 

buildings to periodically demonstrate 

continued environmental benefits and 

energy savings. 

(b) Certification level. If a new Federal 

building or Federal building undergoing 

a major renovation meeting either of the 

two criteria in § 435.6(b) is to be 

certified under a green building 

certification system, the building must 

be certified to a level that – 

(1) Ensures compliance with— 

(i) The energy efficiency performance 

standards of this part; and 

(ii) Water use requirements of this 

part; and 

(iii) Sustainable design requirements 

of this part. 

(2) Promotes the high performance 

sustainable building guidelines 

referenced in E.O. 13423 ‘‘Strengthening 

Federal Environmental, Energy, and 

Transportation Management.’’ 

(c) Federal agencies may request DOE 

approval of internal certification 

processes, using certified professionals, 

in lieu of certification by a system 

meeting the criteria in paragraph (a) of 

this section. Requests for approval must 

be sent to the Office of the Federal 

Energy Management Program in the 

DOE. Submissions should demonstrate 

how the internal certification process 

would ensure compliance with all 

applicable regulations under this Part. 

The Office of the Federal Energy 

Management Program may request 

additional information as necessary. 

The Office of Federal Energy 

Management will make a determination 

within 120 days of a completed 

submission. An agency may then 

employ the approved internal 

certification process but must obtain 

external certification by a system 

meeting the criteria in paragraph (a) of 

this section for at least 5 percent of the 

total number of buildings certified 

annually by the agency. 

[FR Doc. 2010–12677 Filed 5–27–10; 8:45 am] 

BILLING CODE 6450–01–P 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1281 

RIN 2590–AA16 

Federal Home Loan Bank Housing 

Goals 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Notice of proposed rulemaking; 

request for comment. 

SUMMARY: Section 1205 of the Housing 

and Economic Recovery Act of 2008 

(HERA) amended the Federal Home 

Loan Bank Act (Bank Act) by adding a 

new section 10C(a) that requires the 

Director of the Federal Housing Finance 

Agency (FHFA) to establish housing 

goals with respect to the Federal Home 

Loan Banks’ (Banks) purchase of 

mortgages, if any. Section 10C(b) 

provides that the Banks’ housing goals 

are to be consistent with the housing 

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29948 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 

goals established by FHFA for the 

Federal National Mortgage Association 

(Fannie Mae) and the Federal Home 

Loan Mortgage Corporation (Freddie 

Mac) (collectively, the Enterprises) 

under sections 1331 through 1334 of the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 

(Safety and Soundness Act), as amended 

by HERA, taking into consideration the 

unique mission and ownership structure 

of the Banks. Section 10C(c) further 

provides that, to facilitate an orderly 

transition, the Director shall establish 

interim target housing goals for the 

Banks for a transition period extending 

through 2010. Section 10C(d) also 

extends the monitoring and enforcement 

requirements of section 1336 of the 

Safety and Soundness Act to the Banks 

in the same manner and to the same 

extent as those requirements apply to 

the Enterprises. 

To implement section 10C, FHFA is 

issuing and seeking comments on a 

proposed rule that would establish three 

single-family owner-occupied purchase 

money mortgage goals and one singlefamily refinancing mortgage goal 

applicable to the Banks’ purchases of 

single-family owner-occupied 

mortgages, if any, under their Acquired 

Member Assets (AMA) programs, 

consistent with FHFA’s proposed 

single-family housing goals for the 

Enterprises. A Bank would be subject to 

the proposed housing goals if its AMAapproved mortgage purchases in a given 

year exceed a volume threshold of $2.5 

billion. Other provisions in the 

proposed rule would be consistent with 

comparable provisions applicable to the 

proposed Enterprise housing goals to 

the extent appropriate, taking into 

account the nature of the Banks’ AMA 

programs and the Banks’ unique 

mission and ownership structure. 

DATES: Written comments must be 

received on or before July 12, 2010. 

ADDRESSES: You may submit your 

comments, identified by regulatory 

information number (RIN) 2590–AA16, 

by any one of the following methods: 

• E-mail: Comments to Alfred M. 

Pollard, General Counsel, may be sent 

by e-mail to RegComments@fhfa.gov. 

Please include ‘‘RIN 2590–AA16’’ 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–AA16’’ in the subject 

line of the message. 

• Hand Delivered/Courier: The hand 

delivery address is: Alfred M. Pollard, 

General Counsel, Attention: Comments/ 

RIN 2590–AA16, 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. 

• U.S. Mail, United Parcel Service, 

Federal Express, or Other Mail Service: 

The mailing address for comments is: 

Alfred M. Pollard, General Counsel, 

Attention: Comments/RIN 2590–AA16, 

Federal Housing Finance Agency, 

Fourth Floor, 1700 G Street, NW., 

Washington, DC 20552. 

FOR FURTHER INFORMATION CONTACT: 

Nelson Hernandez, Senior Associate 

Director, (202) 408–2993, Charles E. 

McLean, Associate Director, (202) 408– 

2537, or Rafe R. Ellison, Senior Program 

Analyst, (202) 408–2968, Office of 

Housing and Community Investment, 

1625 Eye Street, NW., Washington, DC 

20006. (These are not toll-free numbers.) 

For legal matters, contact Kevin 

Sheehan, Attorney, (202) 414–8952, or 

Sharon Like, Associate General Counsel, 

(202) 414–8950, Office of General 

Counsel, Federal Housing Finance 

Agency, Fourth Floor, 1700 G Street, 

NW., Washington, DC 20552. (These are 

not toll-free numbers.) 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 without 

change, including any personal 

information you provide, such as your 

name and address, on the FHFA Internet 

Web site at http://www.fhfa.gov. In 

addition, copies of all comments 

received will be available for 

examination by the public on business 

days between the hours of 10 a.m. and 

3 p.m., at the Federal Housing Finance 

Agency, Fourth Floor, 1700 G Street, 

NW., Washington, DC 20552. To make 

an appointment to inspect comments, 

please call the Office of General Counsel 

at (202) 414–6924. 

II. Background 

A. Establishment of FHFA 

Effective July 30, 2008, HERA, 

Division A, Public Law 110–289, 122 

Stat. 2654 (2008) (codified at 12 U.S.C. 

4501 et seq.), amended the Safety and 

Soundness Act to create FHFA as an 

independent agency of the Federal 

Government. HERA transferred the 

safety and soundness supervisory and 

oversight responsibilities over the 

Enterprises and the Banks from the 

Office of Federal Housing Enterprise 

Oversight (OFHEO) and the Federal 

Housing Finance Board (FHFB), 

respectively, to FHFA. HERA also 

transferred the charter compliance 

authority and responsibility to establish, 

monitor and enforce the housing goals 

for the Enterprises from the Department 

of Housing and Urban Development 

(HUD) to FHFA. FHFA is responsible for 

ensuring that the Enterprises and the 

Banks operate in a safe and sound 

manner and carry out their public 

policy missions. The Enterprises and 

the Banks continue to operate under 

regulations promulgated by OFHEO and 

FHFB, respectively, until such 

regulations are superseded by 

regulations issued by FHFA. See HERA 

at sections 1302 and 1312, 122 Stat. 

2795 and 2798; 12 U.S.C. 4511 note. 

B. Statutory and Regulatory Background 

1. Federal Home Loan Bank System 

The Federal Home Loan Bank System 

(System) was created by the Bank Act to 

support mortgage lending and related 

community investment. See 12 U.S.C. 

1421 et seq. The System is composed of 

12 Banks with more than 8,000 member 

financial institutions, and the System’s 

fiscal agent, the Office of Finance. The 

Banks fulfill their statutory mission 

primarily through providing secured 

loans (called advances) to their 

members. The Bank Act provides the 

Banks explicit authority to make 

secured advances. 12 U.S.C. 1430(a). 

Advances provide members with a 

source of funding for mortgages and 

asset-liability management, liquidity for 

a member’s short-term needs, and 

additional funds for housing finance 

and community investment. Advances 

are collateralized primarily by 

residential mortgage loans and 

government and agency securities. 12 

U.S.C. 1430(a)(3). Community financial 

institutions (i.e., members with average 

total assets of less than $1 billion (as 

adjusted annually for inflation)) may 

also pledge small business, small 

agriculture or community development 

loans as collateral for advances. 12 

U.S.C. 1430(a)(3)(E). 

Consolidated obligations, consisting 

of bonds and discount notes, are the 

principal source for the Banks to fund 

advances and investments. The Office of 

Finance issues all consolidated 

obligations on behalf of the 12 Banks. 

Although each Bank is primarily liable 

for the portion of consolidated 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 29949 

1See 12 U.S.C. 4562. For that reason, the 

proposed rule would provide that such loans not be 

eligible to be counted toward the Banks’ housing 

goals either. The AMA regulation also authorizes 

the Banks to purchase other real-estate-related 

collateral, including: second liens and commercial 

real estate loans; small business, small farm and 

small agri-business loans; whole loans secured by 

manufactured housing regardless of whether the 

housing qualifies as residential real property, and 

state and local housing finance agency bonds, 

subject to prior new business activity approval by 

FHFA under 12 CFR part 980. See 12 CFR 955.2(a). 

2See ‘‘Federal Home Loan Banks First Quarter 

2010 Combined Financial Report, Combined 

Statement of Condition,’’ at 4. 

3See ‘‘Federal Home Loan Banks Combined 

Financial Report for 2008’’ at 78–80, and ‘‘Federal 

Home Loan Banks Combined Financial Report for 

2009’’ at 55–56. 

obligations corresponding to the 

proceeds received by that Bank, each 

Bank is also jointly and severally liable 

with the other eleven Banks for the 

payment of principal of, and interest on, 

all consolidated obligations. See 12 CFR 

966.9. 

2. Bank AMA Programs 

In July 2000, FHFB adopted a final 

regulation authorizing the Banks to 

establish Acquired Member Assets 

(AMA) programs. See 12 CFR part 955. 

A Bank may participate in an AMA 

program at its discretion; FHFA does 

not have the authority to compel a Bank 

to engage in any mortgage purchase 

activities. Each Bank must receive 

approval from FHFA pursuant to the 

requirements for new business activities 

in order to establish an AMA program. 

See 12 CFR part 980. A majority of the 

Banks have implemented AMA 

programs pursuant to the AMA approval 

authority. 

In order for a Bank to acquire a 

mortgage loan under an AMA program, 

the loan must meet the requirements set 

forth under a three-part test established 

by the regulation. The three-part test 

consists of: a loan type requirement; a 

member or housing associate nexus 

requirement; and a credit risk-sharing 

requirement. 12 CFR 955.2. The AMA 

regulation generally authorizes the 

Banks to purchase conforming whole 

loans on single-family residential real 

property not more than 90 days 

delinquent. In addition, the Banks are 

authorized to purchase conforming 

whole loans on single-family residential 

real property regardless of delinquency 

status if the loan is insured or 

guaranteed by the U.S. government, 

although such loans are not eligible to 

be counted toward the Enterprises’ 

housing goals, as provided in HERA.1

The Banks acquire AMA from their 

participating members through either a 

purchase or funding transaction. The 

Banks are not authorized under the 

AMA programs to securitize the 

mortgages they purchase. 

To date, FHFA has approved two 

AMA programs—the Mortgage 

Partnership Finance (MPF) program and 

the Mortgage Purchase Program (MPP)— 

that authorize the Banks to purchase 

only eligible single-family, fixed-rate 

mortgages, including manufactured 

housing loans, from participating 

financial institution members (PFIs). 

The Banks are not approved to purchase 

any other types of mortgages under the 

AMA programs, including mortgages 

secured by multifamily properties. In 

operation, the Banks have limited their 

AMA programs to purchasing 

conforming, conventional and 

government-insured or -guaranteed 

fixed-rate whole first mortgages on 

single-family residential property with 

maturities ranging from 5–30 years. 

Banks have also purchased 

participations in AMA-approved loan 

pools after the original Bank acquired 

the loans. As of March 31, 2010, the 

combined value of the AMA mortgage 

loans in the 12 Banks’ portfolios was 

$69 billion, representing approximately 

seven percent of the Banks’ total 

combined assets. In contrast, the Banks’ 

outstanding advances, their primary 

business line, totaled $572 billion as of 

March 31, 2010, representing 59 percent 

of the Banks’ total combined assets.2

The MPF and MPP programs are 

designed such that the Banks manage 

the interest-rate risk and the PFI 

assumes a substantial portion of the 

risks associated with originating the 

mortgage, particularly the credit risk. 

The AMA regulation requires that PFIs 

provide credit enhancement to give the 

mortgages the Banks purchase the credit 

quality equivalent to an instrument 

rated at least investment grade (the 

fourth highest credit rating category or 

triple-B), although the approved AMA 

programs require PFIs to enhance the 

loans to the second highest investment 

grade (double-A). 12 CFR 955.3. The PFI 

may provide this credit enhancement 

through various means, such as 

establishing a risk account to cover 

losses in excess of a borrower’s equity 

and primary mortgage insurance on 

mortgages purchased by a Bank, 

accepting direct liability to pay credit 

losses up to a specified amount, or 

entering into a contractual obligation to 

provide supplemental mortgage 

guaranty insurance. 

As previously noted, advances remain 

the core business activity of the Banks 

and a principal means by which they 

fulfill their mission. Participation in an 

AMA program is elective. The 

acquisition of AMA has presented 

certain risk management challenges for 

some Banks. The AMA are long-term, 

fixed-rate loans and the portfolio 

requires careful attention to interest rate 

risk management in order to match the 

duration of assets and liabilities and to 

adjust for loan prepayments. The Banks 

must also competitively price their 

product in the market without eroding 

their own financial interest. Given these 

challenges and in light of recent interest 

rate and earnings volatility, several 

Banks have scaled down their purchases 

of AMA and returned to their core 

products. After peaking in 2003, when 

the Banks purchased over $91.2 billion 

in AMA, annual AMA purchases have 

steadily declined to an annualized 

average of about $6.7 billion during the 

period between 2006 and 2009. Several 

Banks either have stopped accepting 

additional master commitments to 

purchase AMA from their members or 

no longer accept delivery. In 2007, 2008 

and 2009, the principal pay-down and 

maturities of AMA held for portfolio 

were greater than purchases and 

funding of new loans held for portfolio.3

3. Bank Housing Goals Statutory 

Provisions 

Section 10C(a) of the Bank Act, as 

amended by HERA, requires the 

Director of FHFA to ‘‘establish housing 

goals with respect to the purchase of 

mortgages, if any, by the [Banks],’’ 

which ‘‘shall be consistent with the 

goals established under sections 1331 

through 1334 of the [Safety and 

Soundness Act, as amended].’’ 12 U.S.C. 

1430c(a). Section 10C(b) provides that, 

in establishing the goals for the Banks, 

‘‘the Director shall consider the unique 

mission and ownership structure of the 

[Banks].’’ 12 U.S.C. 1430c(b). In 

addition, section 10C(c) provides that, 

‘‘to facilitate an orderly transition,’’ the 

Director shall establish interim target 

goals for the purchase of mortgages by 

the Banks for the calendar years 2009 

and 2010. 12 U.S.C. 1430c(c). Section 

10C(d) provides that the monitoring and 

enforcement requirements of section 

1336 of the Safety and Soundness Act 

shall apply to the Banks in the same 

manner and to the same extent as they 

apply to the Enterprises. 12 U.S.C. 

1430c(d). Section 10C(e) requires the 

Director to annually report to Congress 

on the performance of the Banks in 

meeting the housing goals under section 

10C. 12 U.S.C. 1430c(e). 

Sections 1331 through 1333 of the 

Safety and Soundness Act, as amended 

by HERA, require the Director of FHFA 

to establish new housing goals effective 

for 2010 and beyond for the Enterprises. 

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29950 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 

4 ‘‘Low-income’’ is defined as income not in 

excess of 80 percent of area median income. See 12 

U.S.C. 4502(14). 5 ‘‘Families in low-income areas’’ is defined to 

include families living in census tracts where the 

median income does not exceed 80 percent of the 

area median income and families with incomes not 

in excess of the area median income that either live 

in a minority census tract or in a designated disaster 

area. See 12 U.S.C. 4502(28). 6 ‘‘Very low-income’’ is defined as income not in 

excess of 50 percent of area median income. See 12 

U.S.C. 4502(24). 

The new Enterprise housing goals 

include four goals for conventional 

conforming single-family owneroccupied housing, one multifamily 

special affordable housing goal, and one 

multifamily special affordable housing 

subgoal. See 12 U.S.C. 4561, 4563(a)(2). 

The single-family housing goals target 

purchase money mortgages for lowincome families,4 families that reside in 

low-income areas,5 and very lowincome families,6 and refinancing 

mortgages for low-income families. See 

12 U.S.C. 4562. The multifamily special 

affordable housing goal targets 

multifamily housing affordable to lowincome families, and the multifamily 

special affordable housing subgoal 

targets multifamily housing affordable 

to very low-income families. See 12 

U.S.C. 4563. In a separate rulemaking in 

the Federal Register, FHFA has issued 

and sought comments on proposed new 

housing goals for the Enterprises for 

2010 and 2011 pursuant to the 

requirements of sections 1331 through 

1333 of the Safety and Soundness Act, 

as amended. 75 FR 9034 (Feb. 26, 2010). 

4. Banks’ and Enterprises’ Differences 

Section 1201 of HERA, 12 U.S.C. 

4513(f), requires the Director of FHFA to 

consider the differences between the 

Banks and the Enterprises with respect 

to the Banks’ cooperative ownership 

structure, mission of providing liquidity 

to members, affordable housing and 

community development mission, 

capital structure, and joint and several 

liability, whenever promulgating 

regulations that affect the Banks. The 

Director may also consider any other 

differences that are deemed appropriate. 

In preparing the proposed rule, the 

Director considered the differences 

between the Banks and the Enterprises 

as they relate to the above factors and 

determined that the rule is appropriate. 

As described below, FHFA is proposing 

significant differences between the 

Enterprise housing goals and the Bank 

housing goals—including establishing a 

volume threshold to avoid adverse 

impact on small PFIs—that recognize 

the significant differences between the 

Banks’ businesses and purposes and 

those of the Enterprises. 

Each Bank is a cooperative owned by 

financial institution members that act as 

both owners and customers of the 

cooperative. Members, as owners, are 

entitled to receive shares of the 

cooperative’s earnings and access to the 

cooperative’s products and services, 

including the AMA programs. A Bank is 

authorized to serve only members of its 

cooperative and, as discussed above, its 

primary business is providing advances 

to its members. 

Fannie Mae and Freddie Mac have 

been owned by investors through their 

holdings of preferred or common stock 

shares since 1968 and 1989, 

respectively. An Enterprise’s primary 

business is securitizing mortgages 

originated by financial institutions, and 

guaranteeing the timely payment of 

principal and interest on the mortgagebacked securities (MBS). The 

Enterprises also purchase mortgages for 

their mortgage portfolios. FHFA has 

instructed the Enterprises to 

significantly reduce the size of their 

mortgage portfolios over time. The 

Banks are restricted to purchasing loans 

from their members, most of which are 

regulated depositories. By contrast, the 

Enterprises have access to a broad, 

nationwide network of financial 

institutions from which they purchase 

mortgages. Also, unlike the Banks, for 

which participation in the AMA is an 

elective activity, the fundamental 

statutory purpose of the Enterprises is to 

bring stability in the secondary market 

for residential mortgages by purchasing 

and making commitments to purchase 

residential mortgages. See 12 U.S.C. 

1451 note; 12 U.S.C. 1716. 

The Banks’ and Enterprises’ different 

ownership structures and associated 

statutory restrictions in the Bank Act 

and the Federal National Mortgage 

Association Charter Act and the Federal 

Home Loan Mortgage Corporation Act 

(together, the Charter Acts), 

respectively, have a significant impact 

on their respective mortgage purchase 

activities. The Enterprises’ mortgage 

purchase activities are substantially 

greater than that of the Banks. In 

calendar year 2009, the Banks’ 

combined number of single-family 

mortgage purchases was slightly over 

48,000, while Fannie Mae purchased 

approximately 3.51 million singlefamily mortgages and Freddie Mac 

purchased approximately 2.42 million 

single-family mortgages. The disparity 

between the Banks’ and Enterprises’ 

mortgage purchase businesses was great 

even during the peak years of the AMA 

programs. In 2003, the Banks purchased 

approximately 606,000 single-family 

mortgages, which was only 4.3 percent 

of the approximately 14.02 million 

single-family mortgages purchased by 

the Enterprises in that year (see Figure 

1). 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 29951 

III. The Proposed Rule 

The proposed rule would define 

housing goals for the Banks in terms 

similar to the single-family housing 

goals for the Enterprises. Separate goals 

would be established for AMAapproved mortgages on owner-occupied 

single-family housing. The goals for 

purchase money mortgages would 

separately measure performance on 

purchase money mortgages for lowincome families, for families in lowincome areas, and for very low-income 

families. The goal for refinancing 

mortgages would measure performance 

on refinancing mortgages for lowincome families. 

IV. Applicability of Bank Housing 

Goals to 2010 and Beyond 

HERA requires FHFA to establish 

2009 and 2010 interim target housing 

goals for the Banks that facilitate an 

orderly transition and are consistent 

with those of the Enterprises. In order 

to facilitate an orderly transition, FHFA 

is proposing to establish housing goals 

for 2010 and beyond. The Banks’ 

administrative and monitoring 

challenges would be reduced by 

enabling the Banks to establish policies 

and procedures to meet the housing 

goals requirements with the knowledge 

that these requirements will not be 

changed the following year. Further, 

FHFA believes this approach would 

facilitate a more orderly transition to 

housing goals than the alternative, 

which would entail establishing interim 

target housing goals in the third quarter 

of 2010 and establishing new housing 

goals in the fourth quarter of 2010 or 

first quarter of 2011. The Banks’ unique 

ownership structure and mission is such 

that FHFA needed to add criteria to the 

Bank housing goals that are not 

necessary for those of the Enterprises, 

and FHFA required additional time to 

develop these criteria. In addition, 

establishing interim target housing goals 

for 2009 and 2010 and then replacing 

them with housing goals for 2011 that 

differ significantly could create 

administrative and monitoring 

challenges for the Banks. 

Pursuant to the requirements of 

HERA, a Bank that fails to meet a 

housing goal in 2010 and beyond would 

be required to submit a housing plan if 

FHFA determined that the housing goal 

was feasible for that year and that a 

housing plan was appropriate. See 12 

U.S.C. 4566. FHFA appreciates that a 

Bank’s capacity to meet the housing 

goals is affected by when the housing 

goals requirements are finalized and 

that a Bank may have difficulty meeting 

a housing goal for 2010. For this reason, 

when determining the feasibility of the 

2010 housing goals, FHFA will take into 

consideration whether a Bank had the 

capacity to adjust its AMA program in 

an orderly manner to meet a housing 

goal and whether a Bank had sufficient 

opportunity to meet a housing goal. 

Additionally, FHFA will study the 

Banks’ performance in 2010 and the 

operations of their AMA programs to 

gain information on whether the 

housing goals will require the Banks to 

make significant changes to their MPF 

or MPP programs. 

V. Market-Based Housing Goals 

The proposed rule would establish 

market-based housing goals for the 

Banks in a manner largely consistent 

with the proposed market-based 

housing goals for the Enterprises. The 

proposed rule would measure the 

Banks’ single-family housing goals 

performance relative to the actual goalsqualifying shares of the primary 

mortgage market during the year in their 

districts. FHFA believes that the 

advantages of comparing the Bank’s 

performance to actual market 

performance outweigh the 

disadvantages. A more detailed 

discussion of the proposed marketbased approach and its legal 

justification is included in the proposal 

for the new Enterprise housing goals. 

See 75 FR at 9035–9036 (Feb. 26, 2010). 

A disadvantage of this approach is 

that public information on the goalsqualifying shares of the single-family 

primary mortgage market is not 

available until the release of Home 

Mortgage Disclosure Act (HMDA) data 

in late summer of the following year. 

However, FHFA will conduct a monthly 

survey of single-family mortgage 

originations pursuant to section 1324(c) 

of the Safety and Soundness Act, as 

amended by HERA, and make data 

collected under that survey available to 


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the public. 12 U.S.C. 4544(c). Release of 

that data is likely to provide detailed 

information on home mortgage lending 

activity more frequently and in a 

timelier manner than does the public 

release of the data collected under 

HMDA. FHFA will use the survey data 

to supplement HMDA data in its 

monitoring of Bank housing goals 

performance. 

Proposed § 1281.11 would establish 

single-family housing goals that include 

an assessment of a Bank’s performance 

as compared to the actual share of the 

market that fits the criteria for each goal. 

FHFA is proposing to calculate the 

actual goals-qualifying shares of the 

district-level primary mortgage market 

during a year using all mortgages 

originated in the geographic boundaries 

of each Bank district (meaning that the 

properties securing the mortgages are 

located in the district), including 

mortgages originated both by members 

and non-members. A Bank would meet 

a housing goal if its annual performance 

meets or exceeds the actual share of the 

market in that district that fits the 

criteria for a particular housing goal for 

that year. A Bank would fail to meet a 

goal if it falls short of the actual market 

share for that goal in the year. All 

mortgages purchased by a Bank that 

meet the requirements of the proposed 

regulation would count toward the 

Bank’s goal performance, regardless of 

where the mortgages are located; but the 

market share against which the Bank’s 

performance would be evaluated would 

be the market share of mortgages located 

in the district as described above. The 

housing goals would not apply until an 

individual Bank reached the dollar 

volume threshold. 

FHFA is proposing this approach after 

considering several alternatives. 

Because Banks can only purchase AMAapproved mortgages from their 

members, and because Banks are 

permitted to, and often do, purchase 

AMA-approved mortgages originated 

outside of their districts, defining a 

Bank’s mortgage market based on loans 

originated within the district does not 

completely reflect the market a Bank 

serves. To address this, FHFA 

considered defining the district-level 

mortgage market as those mortgages 

originated by each Bank’s members, 

regardless of the location of the property 

securing the mortgage. However, the 

majority of members have never sold 

mortgages to a Bank, and therefore, this 

approach would not accurately reflect 

the market served by a Bank. 

Additionally, smaller members and 

nonmetropolitan members are not 

subject to the data reporting 

requirements of HMDA, which could 

have a significant impact on 

determining the goals-qualifying share 

in districts such as the Des Moines and 

Topeka Bank districts with a large 

number of such members. 

FHFA also considered limiting the 

market to those members that sold 

AMA-approved mortgages to their 

Banks in a given year. However, the 

issues with measuring the market based 

on all mortgages originated by a Bank’s 

members that are discussed above 

would also exist for this approach. 

There could also be variations in the 

goals-qualifying share resulting from 

changes in member participation in the 

AMA program. Such variations would 

make it difficult for the Banks to 

establish policies and procedures for 

meeting the housing goals requirements. 

FHFA also considered assigning 

weights to each AMA-approved 

mortgage purchased by a Bank to reflect 

the variations in the share of goalsqualifying mortgages in districts. This 

approach would assign more weight to 

a mortgage purchase in a district where 

the goals-qualifying share of the market 

was lower, so that the Banks in such 

districts would not be disadvantaged. 

FHFA concluded that such an approach 

would be impractical, because FHFA 

would not be able to produce the 

weights until district-level shares of 

goals-qualifying mortgages were known. 

As a result, the Banks would not have 

an opportunity to modify their mortgage 

purchase activities in response to the 

weighting values. Such a mortgageweighting approach could also lead a 

Bank to increase its mortgage purchase 

activities outside its district in a manner 

that could adversely impact members 

that operate only within its district. The 

mortgage-weighting approach would 

increase the complexity of calculating 

housing goals performance, thus making 

the process less transparent and 

potentially more subjective. 

FHFA also considered proposing the 

inclusion of a benchmark level for each 

housing goal to measure a Bank’s 

performance. Specifically, a Bank would 

meet a housing goal if its annual 

performance met the benchmark level or 

the actual share of the market that fits 

the criteria for a particular housing goal 

for that year. A Bank would fail to meet 

a goal if it fell short of both the 

benchmark level for that goal and the 

actual market share for that goal in the 

year. Benchmark levels for performance 

could provide more certainty for the 

Banks in establishing strategies for 

meeting the housing goals. 

If benchmark levels were adopted for 

the Bank housing goals, FHFA would 

set the benchmark levels equal to the 

benchmark levels for the corresponding 

Enterprise housing goals. FHFA has 

proposed to establish benchmark levels 

for the Enterprise housing goals based 

on FHFA’s national market size 

estimates. See 75 FR at 9037–9051 (Feb. 

26, 2010). FHFA also considered the 

possibility of setting benchmark levels 

based on district-level market size 

estimates but concluded that the market 

sizes could not be reliably estimated in 

advance. Bank members with large 

residential lending businesses often 

originate mortgages outside the states 

that comprise the district of the Bank of 

which they are a member. For this 

reason, the geographic market being 

served by the Banks is not limited to 

areas within their respective districts. In 

addition, large Bank members have 

affiliates that may be members of 

different Banks, which makes it possible 

for these affiliates to sell mortgages 

originated in one Bank district to 

another Bank. For these reasons, FHFA 

is not proposing to set benchmarks for 

the Banks. 

FHFA seeks comment on whether it 

would be appropriate to establish 

benchmark levels as a means of 

measuring the Banks’ housing goals 

performance, in addition to measuring 

performance based on a Bank’s actual 

share of goal-qualifying mortgages 

relative to its district-level market share, 

and if so, whether it would be 

appropriate to set benchmark levels for 

the Bank housing goals equal to the 

benchmark levels for the Enterprise 

housing goals. See 75 FR at 9051 (Feb. 

26, 2010). 

VI. Volume Threshold 

The proposed rule would establish a 

dollar volume threshold of $2.5 billion 

that a Bank must exceed before it is 

subject to the housing goals. The 

threshold is designed to take into 

consideration the Banks’ unique 

mission and ownership structure and 

the current status of the AMA programs. 

Several Banks that continue to 

participate in the AMA do so 

principally as a service to their 

members. The large majority of 

members participating in the AMA are 

small asset size institutions. Since the 

inception of the AMA programs, 

approximately 88 percent of PFIs that 

sold mortgages to the Banks had total 

assets of under $1 billion. From January 

1, 2009 to June 30, 2009, the percentage 

was even higher at 93 percent. Faced 

with risk management requirements, 

monitoring for compliance, and 

reporting of achievement on the housing 

goals, a Bank with a small AMA 

program might elect to discontinue 

offering an AMA product to its 

members. Discontinuance of an AMA 

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program could adversely impact PFIs, 

such as those in rural areas, that may 

have limited or no access to the 

secondary market because of the higher 

per-mortgage sales cost associated with 

delivering a relatively small number of 

mortgages to purchasers, or the inability 

of these PFIs to meet purchasers’ 

mortgage servicing requirements. 

FHFA is proposing to establish a 

volume threshold that would need to be 

met before a Bank would be subject to 

the proposed housing goals. The volume 

threshold is intended to ensure that 

Banks with significant AMA volume in 

any year would be subject to the 

housing goals, while Banks with a 

relatively low annual volume of 

purchases of AMA-approved mortgages, 

i.e., $2.5 billion or less, can continue to 

serve all PFIs without being subject to 

the housing goals. FHFA believes it is 

important that the housing goal mission 

objective of expanding access to 

mortgage finance to low-income families 

and families in low-income areas be 

balanced against the Banks’ need to 

provide liquidity to small members and 

the communities they serve. 

To establish the proposed volume 

threshold, FHFA used 2008 HMDA 

mortgage origination data since these 

data are the most reliable and accurate 

mortgage data available to FHFA at this 

time. Using these data, FHFA calculated 

the total unpaid principal balance (UPB) 

of conforming, first lien mortgages 

secured by owner-occupied, singlefamily residences (mortgages for home 

improvement and Home Ownership 

Equity Protection Act (HOEPA)) 

mortgages were excluded to be 

consistent with the market estimate 

approach for the Enterprise housing 

goals), which equaled $986 billion 

(approximately $1.0 trillion). FHFA is 

proposing that the volume threshold 

should be equal to approximately 0.25 

percent of the market, i.e., $2.5 billion. 

Assuming the average UPB of the 

mortgages a Bank purchases equals 

$200,000, a Bank would need to 

purchase only 12,500 mortgages in a 

given year to meet the volume 

threshold. 

The proposed volume threshold of 

$2.5 billion would be reasonable in light 

of the history of the AMA program. 

FHFA considered the volume of 

mortgages purchased by the Banks 

during the period when the Banks had 

their largest presence in the national 

market, which was from 2002 to 2004. 

During this period, seven Banks in 2002, 

eight Banks in 2003 and four Banks in 

2004 had annual volume of AMAapproved mortgages greater than $2.5 

billion and would have been subject to 

the housing goals. A significant 

percentage of Banks’ annual volume of 

AMA-approved mortgages exceeded 

$5.0 billion in 2002 and 2003: four 

Banks in 2002 and seven Banks in 2003. 

(See Table 1). Given this, FHFA 

considered proposing to set the volume 

threshold at $5.0 billion. The proposed 

volume threshold of $2.5 billion would 

be mid-way between the higher volume 

threshold and housing goals that would 

apply without regard to the volume of 

mortgages purchased by the Bank. 

FHFA requests comments on whether a 

volume threshold should apply, 

whether the proposed threshold of $2.5 

billion is appropriate, and whether a 

higher or lower threshold should apply. 

FHFA considered proposing a volume 

threshold that would exclude mortgages 

acquired from small members when 

calculating a Bank’s annual volume of 

AMA-approved mortgages for purposes 

of the volume threshold. If small 

members were excluded for purposes of 

the volume threshold, FHFA would 

establish criteria for determining which 

members should be excluded, such as 

excluding members with total assets of 

less than $1.0 billion. An alternative 

would be to exclude members that 

originate a small number of mortgages, 

or members that are not required to 

submit HMDA data to their primary 

regulator. FHFA requests comments on 

whether any of these alternatives would 

be appropriate, what criteria would be 

appropriate for determining which 

members should be excluded, and 

whether affiliates should be considered 

in applying such criteria. 

In developing the proposed rule, 

FHFA also considered other approaches 

for establishing volume thresholds for 

the Bank housing goals. FHFA 

considered a district market share 

approach that would apply housing 

goals to a Bank if its purchases of AMAapproved mortgages exceeded one 

percent of all mortgages originated in its 

district. The rationale behind the 

district market share approach was that 

a Bank would have a material impact on 

the mortgage market serving its district 

if it purchased at least one percent of 

the mortgages originated in its district. 

FHFA also considered a dollar and 

volume loan approach, which was first 

raised by FHFB in the May 2000 

proposed rulemaking for the AMA 

regulation. In that proposed rule, FHFB 

decided to defer establishing housing 

goals until ‘‘* * * such time as the 

conventional residential mortgage 

programs of the Banks, in the aggregate, 

have achieved a size and scope 

indicative of a mature program. * * *’’ 

See 65 FR 25676, 25685 (May 3, 2000). 

As an example of a ‘‘mature program,’’ 

FHFB proposed annual aggregated 

acquisition volume for the System of at 

least 100,000 loans or $10 billion, which 

FHFB considered to be of national 

scope. FHFB also discussed a volume 

threshold of 75,000 mortgages acquired, 

so long as seven Banks accounted for at 

least 10 percent of the AMA 

acquisitions volume for a given year. 


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7Federally declared disaster areas are managed 

by FEMA and can be tracked at FEMA’s Web site. 

See http://www.fema.gov/news/disasters.fema. 

8The Department of the Treasury, the Federal 

Reserve Board and the Federal Deposit Insurance 

Corporation, Community Reinvestment Act; 

Interagency Questions and Answers Regarding 

Community Reinvestment; Notice, 74 FR 498, 509 

(Jan. 6, 2009). 

FHFA also considered the feasibility 

of adopting a volume threshold based 

on the percentage of AMA-approved 

mortgages purchased to Bank assets. For 

example, a Bank would be subject to 

housing goals if its purchases of AMAapproved mortgages exceeded 10 

percent of the Bank’s assets. FHFA 

considered such an approach because at 

some level of annual mortgage 

purchases, a Bank is no longer simply 

providing a service to its members, but 

is engaging in a profitable line of 

business to augment its primary line of 

business—advances to its members. At 

such a point, it would appear to be 

reasonable to also apply housing goals 

to this line of business. 

FHFA requests comments on the 

volume threshold alternatives discussed 

above and on any other alternatives that 

might be used. 

VII. Analysis of Proposed Rule 

A. Definitions—Proposed § 1281.1 

Proposed § 1281.1 would set forth 

definitions applicable to the Bank 

housing goals provisions. A number of 

the definitions are the same as those 

applicable to the Enterprises for their 

proposed new housing goals, and other 

definitions have been modified to reflect 

their applicability under the AMA 

programs. In order to maintain 

consistency between the Enterprise 

housing goals and the Bank housing 

goals where feasible, FHFA will 

consider public comments on the 

definitions proposed in the Enterprise 

housing goals and any resulting changes 

to the Enterprise housing goals in 

determining whether conforming 

changes are needed in the Bank housing 

goals. See 75 FR 9034 (Feb. 26, 2010). 

Definition of ‘‘families in low-income 

areas.’’ The definition of ‘‘families in 

low-income areas’’ includes families 

with incomes at or below 100 percent of 

AMI who reside in ‘‘minority census 

tracts,’’ which is defined by HERA to 

mean a census tract that has a minority 

population of at least 30 percent and a 

median family income of less than 100 

percent of AMI. 12 U.S.C. 4502(29). 

In addition, the definition of ‘‘families 

in low-income areas’’ includes families 

with incomes at or below 100 percent of 

AMI who reside in ‘‘designated disaster 

areas.’’ Consistent with the proposed 

definition for the new Enterprise 

housing goals, the proposed rule would 

define ‘‘designated disaster areas’’ as 

areas at the census tract level and 

include only census tracts in counties 

approved for individual assistance 

within the declared major disaster area 

where the average real property damage 

severity, as reported by the Federal 

Emergency Management Agency 

(FEMA), exceeds $1,000 per household 

for that census tract. 

Definition of ‘‘mortgage.’’ The 

definition of ‘‘mortgage’’ would not 

include personal property manufactured 

housing loans, pending further review 

of the appropriate treatment of such 

loans under the Enterprise and Bank 

housing goals. 

Designated disaster areas. The 

definition of ‘‘families in low-income 

areas’’ includes families with incomes at 

or below 100 percent of AMI who reside 

in ‘‘designated disaster areas.’’ The 

proposed rule would define ‘‘designated 

disaster areas’’ as areas at the census 

tract level and include only census 

tracts in counties approved for 

individual assistance within the 

declared major disaster area where the 

average real property damage severity, 

as reported by FEMA, exceeds $1,000 

per household for that census tract. 

Disaster areas are declared when an 

area is adversely affected by some 

unforeseen event. However, not all 

disasters impact housing to the same 

degree, and the severity of the impact 

varies within the declared area. 

Presidential Major Disaster Declarations 

are defined by FEMA at the county level 

in the area affected by the major disaster 

and can be declared to be eligible for 

public assistance, individual assistance 

or both. Public assistance is available to 

local governments for the repair, 

replacement or clean-up of public 

infrastructure. Individual assistance is 

broken down further into two 

categories, housing needs and ‘‘other 

than housing needs.’’ 7 Housing needs 

include repair, replacement and 

construction of homeowner residences. 

The proposed rule would limit the 

definition of ‘‘designated disaster areas’’ 

to those counties eligible for individual 

assistance, and it would establish a 

minimum average real property damage 

severity. 

For purposes of complying with the 

Community Reinvestment Act (CRA), 

regulators have made the determination 

that ‘‘[e]xaminers will consider 

institution activities related to disaster 

recovery that revitalize or stabilize a 

designated disaster area for 36 months 

following the date of designation. Where 

there is a demonstrable community 

need to extend the period for 

recognizing revitalization or 

stabilization activities in a particular 

disaster area to assist in long-term 

recovery efforts, this time period may be 

extended.’’ 8 To accommodate the Banks’ 

business planning requirements, for 

purposes of the low-income areas 

housing goal, the proposed rule would 

treat a designated disaster area as 

effective beginning no later than January 

1 of the year following the FEMA 

designation and continuing through 

December 31 of the third full calendar 

year following the FEMA designation. If 

data are available in a particular case to 

support treatment as a designated 

disaster area from an earlier date, FHFA 

may provide for such treatment. 

FHFA welcomes comments on the 

proposed definitions in § 1281.1. 

B. Housing Goals—Proposed §§ 1281.10 

and 1281.11 

General. Proposed § 1281.10 provides 

an overview of the contents of this 

subpart. Although the final rule 

establishing the new housing goals for 

the Banks will not be published for 

effect until later in 2010, FHFA will 

evaluate performance under the housing 

goals established for 2010 on a calendar 

year basis. 

Volume Threshold. Proposed 

§ 1281.11(a) would establish a volume 

threshold that would trigger application 

of the housing goals to a Bank. 

Specifically, a Bank that in a calendar 

year purchased AMA-approved 

mortgages with a total UPB greater than 

$2.5 billion would be subject to the 

housing goals for that year. 

Market-Based Housing Goals. 

Proposed § 1281.11(b) would provide 

that compliance with a housing goal 

would be measured by comparing a 

Bank’s performance with the actual 

share of the market in the Bank’s 

district. Proposed § 1281.11(b) would 

establish criteria for determining the 

size of the market for each Bank district 

based on HMDA data on mortgages 

secured by property located in that Bank 

district. The criteria for establishing the 

size of the market reflect the types of 

mortgages that would be counted for 

purposes of the housing goals and that 

would typically be eligible for purchase 

by a Bank. 

Bank Housing Goals. Proposed 

§ 1281.11(c) through 1281.11(f) would 

establish four single-family housing 

goals applicable to any Bank that met 

the volume threshold in a particular 

year. Goals would be established for 

purchase money mortgages for lowincome families, for families in lowincome areas, and for very low-income 

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9 In May 2007, FHFB also approved the Atlanta 

Bank’s request to offer the Global Mortgage Alliance 

Program (GMAP), under which the Bank would 

facilitate the sale of certain qualified conforming 

mortgage loans from eligible members to another of 

its members—Global Mortgage Alliance, LLC, 

which would then securitize those loans. To date, 

no transactions have occurred under GMAP. The 

GMAP is not an AMA program authorized under 

part 955. Both the MPF Xtra and GMAP programs 

were separately authorized under the Banks’ 

incidental authority contained in sections 11(a) and 

11(e)(1) of the Bank Act. See 12 U.S.C. 1431(a), 

1431(e)(1). 

families. A goal would also be 

established for refinancing mortgages for 

low-income families. Unlike the new 

Enterprise housing goals, these Bank 

housing goals would not include a 

multifamily special affordable housing 

goal or multifamily special affordable 

housing subgoal, as the Banks have not 

been approved to purchase multifamily 

loans under the AMA programs. The 

single-family housing goals would be 

based on an evaluation of the Bank’s 

performance relative to the market for 

each housing goal in each year. 

C. General Counting Requirements— 

Proposed § 1281.12 

Proposed § 1281.12 would set forth 

general requirements for the counting of 

Bank AMA-approved mortgage 

purchases toward the achievement of 

the housing goals. Performance under 

the single-family housing goals would 

be evaluated based on the percentage of 

all AMA-approved mortgages on singlefamily, owner-occupied properties 

purchased by a Bank that meet a 

particular goal. 

Proposed § 1281.12(a) would provide 

that performance under each of the 

single-family housing goals shall be 

measured using a fraction that is 

converted into a percentage. Neither the 

numerator nor the denominator shall 

include Bank transactions or activities 

that are not AMA-approved mortgage 

purchases as defined by FHFA or that 

are specifically excluded as ineligible 

under § 1281.13(b). The numerator is 

the number of AMA-approved mortgage 

purchases of a Bank in a particular year 

that finance owner-occupied singlefamily properties that count toward 

achievement of a particular housing 

goal. The denominator is the total 

number of AMA-approved mortgage 

purchases of a Bank in a particular year 

that finance owner-occupied, singlefamily properties. 

Proposed § 1281.12(b) would provide 

that when a Bank lacks sufficient data 

or information, e.g., income of 

mortgagor, to determine whether the 

purchase of a mortgage counts toward 

achievement of a particular housing 

goal, that mortgage purchase shall be 

included in the denominator for that 

housing goal, but may not be included 

in the numerator. The proposed rule 

would not allow the Banks to use 

missing data estimation methodologies 

as used by the Enterprises, in light of 

the complexity of developing an 

estimation methodology that would be 

suitable for the Banks. FHFA invites 

comment on whether a method for 

estimating missing affordability data 

would be feasible for the Bank housing 

goals. 

The provisions in proposed 

§ 1281.12(c) through (f), which address 

credit toward multiple goals, 

application of median income, sampling 

and newly available data, respectively, 

are consistent with the provisions 

proposed for the Enterprise 2010 

housing goals. 

The MPF program allows Banks to 

purchase a percentage of a mortgage or 

mortgage pool initially acquired by 

another Bank under the program. For 

purposes of receiving credit under one 

of the housing goals, each mortgage will 

be assigned to the Bank that initially 

acquired the mortgage regardless of 

whether an interest in the mortgage was 

later sold to another Bank. 

In September 2008, FHFA approved 

the Chicago Bank’s request to establish 

the MPF Xtra program, under which the 

Bank would buy certain qualified, 

conforming mortgages from eligible 

members for immediate sale to Fannie 

Mae. The MPF Xtra program is not an 

AMA program authorized under 12 CFR 

part 955.9 Under the MPF Xtra program, 

the Bank serves essentially as a conduit 

or intermediary with respect to the sale 

of the mortgages to Fannie Mae. The 

mortgages may be counted by Fannie 

Mae toward compliance with its 

housing goals. If the mortgages were 

also to be considered for purposes of the 

Bank housing goals, double-counting of 

the mortgages could occur. For these 

reasons, under the proposed rule, 

mortgages purchased by a Bank 

pursuant to the MPF Xtra program 

would not be considered for purposes of 

the Bank housing goals. 

D. Special Counting Requirements— 

Proposed § 1281.13 

Proposed § 1281.13 would set forth 

special counting requirements for the 

receipt of full, partial or no credit for a 

transaction toward achievement of the 

housing goals, a number of which are 

discussed further below. 

Proposed § 1281.13(b) would specify 

the types of transactions that shall not 

be counted for purposes of the housing 

goals and shall not be included in the 

numerator or the denominator in 

calculating a Bank’s performance under 

the housing goals. The intent of this 

section is to specify the counting 

treatment for transactions in which the 

Banks are authorized to engage under 

the approved AMA programs. The 

counting rules do not purport to 

authorize the purchase of any types of 

mortgages, but are intended solely to 

indicate whether such mortgages shall 

receive full, partial or no credit toward 

the housing goals. Accordingly, 

transactions in which the Banks are not 

authorized to engage under the 

approved AMA programs are not 

included in paragraph (b). The Bank 

counting rules may differ from the 

counting rules for the proposed new 

Enterprise housing goals. For example, 

the Banks are not authorized to 

purchase private label securities (PLS) 

under the AMA programs; therefore, it 

is not necessary to state in the proposed 

rule that Bank purchases of PLS shall 

not be counted for purposes of the 

housing goals. On the other hand, while 

the Banks are authorized to purchase 

non-conventional loans under the AMA 

authority, HERA amended the Safety 

and Soundness Act to prohibit such 

loans from counting toward the 

Enterprise housing goals and, thus, 

purchases of such loans by the Banks 

are specifically excluded from counting 

in paragraph (b). 

Proposed § 1281.13(b) would make 

clear that where a mortgage falls within 

one of the categories excluded from 

consideration under the housing goals, 

the mortgage should be excluded even 

if it otherwise would fall within one of 

the special counting rules in proposed 

§ 1281.13(c). For example, a nonconventional mortgage that would be 

excluded from consideration pursuant 

to proposed § 1281.13(b)(1) could not be 

counted even if it otherwise would be 

counted as a seasoned mortgage under 

proposed § 1281.13(c)(2). 

Home Equity Conversion Mortgages. 

Proposed § 1281.13(b)(1) would exclude 

the purchases of all non-conventional 

single-family mortgages, including 

Home Equity Conversion Mortgages 

(HECMs), from counting towards the 

Banks’ housing goals—that is, such 

purchases would be excluded from both 

the numerator and denominator in 

calculating goal performance. This is 

consistent with the counting treatment 

for the proposed new Enterprise 

housing goals, as HERA amended 

section 1332(a) of the Safety and 

Soundness Act to restrict the Enterprise 

single-family housing goals to include 

only conventional mortgages. See 12 

U.S.C. 4562(a). 

Mortgages financing secondary 

residences. Proposed § 1281.13(b)(6) 

would prohibit the counting of mortgage 

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purchases to the extent they finance any 

dwelling units that are secondary 

residences. This is consistent with the 

counting treatment for the proposed 

new Enterprise housing goals, as HERA 

amended section 1332(a) of the Safety 

and Soundness Act to restrict the 

Enterprise single-family housing goals 

to include only purchases of owneroccupied mortgages. See 12 U.S.C. 4562. 

Subordinate liens. Proposed 

§ 1281.13(b)(8) would exclude the 

purchases of subordinate lien mortgages 

(second mortgages) from counting 

towards the Banks’ housing goals. This 

exclusion is consistent with the 

counting treatment for the proposed 

new Enterprise housing goals, as HERA 

amended section 1331 of the Safety and 

Soundness Act to provide that the 

single-family housing goals are limited 

to purchase money or refinancing 

mortgages. See 12 U.S.C. 4561. This 

would exclude ‘‘piggy-back’’ liens that 

may be acquired by a Bank along with 

the corresponding first lien mortgage 

and subordinate lien mortgages, such as 

home equity loans, acquired separately 

by a Bank where the Bank does not also 

acquire the corresponding first lien 

mortgage. 

Previously counted mortgages. 

Proposed § 1281.13(b)(9) would prohibit 

the counting of mortgages toward 

performance under the housing goals if 

the mortgage has previously been 

counted for purposes of the performance 

of the Bank under the housing goals. In 

order to limit excessively burdensome 

recordkeeping that could result, the rule 

would make clear that this limitation 

only extends back for five years. 

Although the Banks have not previously 

been subject to housing goals, this 

language is included for applicability in 

future years. 

Construction-to-permanent loans. 

Proposed § 1281.13(b)(10) would 

exclude purchases of mortgages secured 

by properties that have not been 

approved for occupancy from 

consideration for purposes of the 

housing goals. 

Housing goals credit for certain 

transactions. Proposed § 1281.13(c) 

would specifically provide that certain 

types of transactions be counted for 

purposes of the housing goals, including 

mortgages on cooperative housing and 

condominium units, seasoned 

mortgages, and refinancing mortgages. 

Proposed § 1281.13(c) would not 

include certain types of transactions 

that are eligible for housing goals credit 

under the Enterprise housing goals, 

including credit enhancements for goalqualifying mortgages, entering into risk 

sharing agreements with federal 

agencies to finance qualifying 

mortgages, and purchasing mortgage 

revenue bonds backed by qualifying 

mortgages. Such transactions would not 

be eligible for Bank housing goals credit 

because of the more limited scope of the 

approved AMA programs. Proposed 

§ 1281.13(c) would also make clear that 

where a transaction falls under more 

than one of the special counting rules in 

§ 1281.13(c), all of the applicable 

requirements must be satisfied in order 

for the loan to be counted for purposes 

of the housing goals. 

HOEPA mortgages and mortgages 

with unacceptable terms and 

conditions. Proposed § 1281.13(d) 

would provide that HOEPA mortgages 

and mortgages with unacceptable terms 

and conditions must be counted in the 

denominator as mortgage purchases but 

may not be counted in the numerator, 

regardless of whether the mortgages 

would otherwise qualify based on the 

affordability and other counting criteria. 

This proposed treatment is consistent 

with past practice for the Enterprises 

and with section 1332(i) of the Safety 

and Soundness Act, as amended by 

HERA, which provides that no credit 

may be given for mortgages that FHFA 

determines are ‘‘unacceptable or 

contrary to good lending practices.’’ 12 

U.S.C. 4562(i). 

FHFA guidance. Proposed 

§ 1281.13(e) would provide that FHFA 

may provide guidance on the treatment 

of any transactions under the housing 

goals. Such guidance may be provided 

in response to a request from a Bank, or 

it may be provided at the initiation of 

FHFA. 

Private label securities. Because 

FHFA is proposing to count only 

mortgages purchased through AMA 

programs in determining each Bank’s 

housing goal performance, and the 

Banks are not authorized to purchase 

PLS through these programs, PLS would 

not be counted in determining a Bank’s 

housing goals performance. 

Housing finance agency obligations. 

FHFA also considered whether to apply 

the housing goals to the Banks’ purchase 

of state or local housing finance agency 

obligations. However, because FHFA is 

proposing to count only mortgages 

purchased through AMA programs in 

determining each Bank’s housing goal 

performance, and the Banks are not 

authorized to purchase state or local 

housing finance agency obligations 

through these programs, state or local 

housing finance agency obligations 

would not be counted in determining a 

Bank’s housing goals performance. 

E. Housing Goals Enforcement— 

Proposed §§ 1281.14 and 1281.15 

Proposed § 1281.14 would provide 

that the Director shall determine 

whether each Bank has exceeded the 

volume threshold on an annual basis. 

For any Bank that has exceeded the 

volume threshold, the Director would 

also determine whether the Bank has 

met the housing goals, in accordance 

with the standards established under 

the Safety and Soundness Act, as 

amended by HERA. If the Director 

determines that a Bank has failed to 

meet any housing goal, the Director 

shall provide notice to the Bank in 

writing of such preliminary 

determination. 

Proposed § 1281.15 would include 

requirements for submission of a 

housing plan by a Bank for failure to 

meet any housing goal that is 

determined to be feasible by FHFA. The 

requirement to submit a housing plan 

would be at the discretion of the 

Director. 

F. Reporting Requirements—Proposed 

§§ 1281.20 through 1281.23 

As required for the Enterprises, 

proposed §§ 1281.20 through 1281.23 

would establish reporting requirements 

for the Banks with respect to their 

housing goals performance. Proposed 

§ 1281.21(a) would require the Banks to 

collect and compile computerized loanlevel data on each AMA mortgage 

purchased, as described in the FHFA’s 

Data Reporting Manual (DRM). These 

reporting requirements would apply to 

each Bank, regardless of whether in a 

particular year the Bank expects to 

exceed the volume threshold and thus 

be subject to the housing goals. 

Proposed § 1281.21(b) would require 

each Bank to submit to the Director, on 

a semi-annual basis, a Mortgage Report 

containing aggregations of the loan-level 

mortgage data for year-to-date AMA 

mortgage purchases, and year-to-date 

dollar volume, number of units, and 

number of AMA mortgages on owneroccupied properties purchased that do, 

and do not, qualify under each housing 

goal. The loan-level data that would be 

required to be reported are currently 

collected by FHFA on a semiannual 

basis. For 2010–2011, the Enterprises 

would be required to submit quarterly 

Mortgage Reports, as advances in 

technology have made more frequent 

submissions less burdensome, and the 

additional data provided will facilitate 

FHFA’s monitoring of Enterprise 

performance under the housing goals. 

FHFA will consider quarterly reporting 

for the Banks in future years. The 

Enterprises are also required to submit 

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Annual Housing Activities Reports 

(AHARs) to FHFA. The proposed rule 

would not require the Banks to submit 

AHARs, but FHFA will consider 

requiring such reports in the future. 

Proposed § 1281.22 would require 

each Bank to provide to the Director 

such reports, information and data as 

the Director may request from time to 

time, or as may be supplemented in the 

DRM. 

Proposed § 1281.23 would set forth 

the data integrity process for Bank 

housing goals data. The proposed rule 

would require the senior officer of each 

Bank who is responsible for submitting 

any report, data or other information for 

which certification is requested by the 

Director, to certify such report, data or 

information. FHFA would determine on 

an annual basis the official housing 

goals performance figures for any Bank 

that is subject to the housing goals, and 

may resolve any error, omission or 

discrepancy by adjusting the Banks’ 

official housing goals performance 

figure. If the Director determines that 

the year-end data reported by a Bank for 

a year preceding the latest year for 

which data on housing goals 

performance was reported to FHFA 

contained a material error, omission or 

discrepancy, the Director may increase 

the corresponding housing goal for the 

current year by the number of mortgages 

that the Director determines were 

overstated in the prior year’s goal 

performance. 

FHFA will implement the data 

integrity process pursuant to its general 

regulatory authority over the Banks. 

FHFA expects that the Banks will work 

cooperatively with FHFA to identify 

and resolve any discrepancies or errors 

in the housing goals data reported to 

FHFA. 

VIII. 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.). 

IX. 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 Banks, which are 

not small entities for purposes of the 

Regulatory Flexibility Act. 

List of Subjects in 12 CFR Part 1281 

Credit, Federal home loan banks, 

Housing, Mortgages, Reporting and 

recordkeeping requirements. 

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 

1281 to subchapter E to read as follows: 

PART 1281—FEDERAL HOME LOAN 

BANK HOUSING GOALS 

Subpart A—General 

Sec. 

1281.1 Definitions. 

Subpart B—Housing Goals 

1281.10 General. 

1281.11 Bank housing goals. 

1281.12 General counting requirements. 

1281.13 Special counting requirements. 

1281.14 Determination of compliance with 

housing goals; notice of determination. 

1281.15 Housing plans. 

Subpart C—Reporting Requirements 

1281.20 General. 

1281.21 Mortgage reports. 

1281.22 Periodic reports. 

1281.23 Bank data integrity. 

Authority: 12 U.S.C. 1430c. 

Subpart A—General 

§ 1281.1 Definitions. 

As used in this part: 

Acquired Member Assets (AMA) 

program means a program that 

authorizes a Bank to hold assets 

acquired from or through Bank members 

or housing associates by means of either 

a purchase or a funding transaction, 

subject to the requirements of 12 CFR 

parts 955 and 980, or successor 

regulations. 

AMA-approved mortgage means a 

mortgage that meets the requirements of 

the AMA program at 12 CFR part 955, 

and is approved to be implemented 

under 12 CFR part 980, or successor 

regulations. 

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 specific period (but 

before the mortgage would fully 

amortize) and pays off or satisfies the 

outstanding balance of the mortgage. 

Bank means a Federal Home Loan 

Bank established under section 12 of the 

Bank Act (12 U.S.C. 1432). 

Bank Act means the Federal Home 

Loan Bank Act, as amended (12 U.S.C. 

1421 et seq.). 

Bank System means the Federal Home 

Loan Bank System, consisting of the 12 

Banks and the Office of Finance. 

Borrower income means the total 

gross income relied on in making the 

credit decision. 

Conforming mortgage means, with 

respect to a Bank, a conventional AMAapproved single-family mortgage having 

an original principal obligation that 

does not exceed the dollar limitation in 

effect at the time of such origination and 

applicable to such mortgage under 12 

CFR 955.2(a)(1)(i) and 12 U.S.C. 

1717(b)(2), as these sections may be 

amended. 

Conventional mortgage means a 

mortgage other than a mortgage as to 

which a Bank has the benefit of any 

guaranty, insurance or other obligation 

by the United States or any of its 

agencies or instrumentalities. 

Data Reporting Manual (DRM) means 

the manual prepared by FHFA in 

connection with the Banks’ reporting 

requirements, as may be supplemented 

from time to time, including reporting 

requirements under this part. 

Day means a calendar day. 

Designated disaster area means any 

census tract that is located in a county 

designated by FEMA as adversely 

affected by a declared major disaster, 

where individual assistance payments 

were authorized by FEMA, and where 

average damage severity, as reported by 

FEMA, exceeds $1,000 per household in 

the census tract. A census tract shall be 

treated as a ‘‘designated disaster area’’ 

for purposes of this part beginning on 

the January 1 after the FEMA 

designation of the county, or such 

earlier date as determined by FHFA, and 

continuing through December 31 of the 

third full calendar year following the 

FEMA designation. 

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 

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property, multifamily property, or other 

residential or mixed-use property. 

Families in low-income areas means: 

(1) Any family that resides in a census 

tract or block numbering area in which 

the median income does not exceed 80 

percent of the area median income; 

(2) Any family with an income that 

does not exceed area median income 

that resides in a minority census tract; 

and 

(3) Any family with an income that 

does not exceed area median income 

that resides in a designated disaster 

area. 

Family means one or more 

individuals who occupy the same 

dwelling unit. 

FEMA means the Federal Emergency 

Management Agency. 

FHFA means the Federal Housing 

Finance Agency. 

HOEPA mortgage means a mortgage 

covered by section 103(aa) of the Truth 

in Lending Act (15 U.S.C. 1602(aa)), as 

amended by the Home Ownership 

Equity Protection Act (HOEPA), as 

implemented by the Board of Governors 

of the Federal Reserve System. 

HMDA means the Home Mortgage 

Disclosure Act of 1975 (12 U.S.C. 2801, 

et seq.), as amended. 

HUD means the United States 

Department of Housing and Urban 

Development. 

Low-income means income not in 

excess of 80 percent of 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 Banks 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. 

Member means an institution that has 

been approved for membership in a 

Bank and has purchased capital stock in 

the Bank in accordance with 12 CFR 

1263.20 or 1263.24(b), or successor 

regulation(s). 

Metropolitan area means a 

metropolitan statistical area (MSA), or a 

portion of such an area, including 

Metropolitan Divisions, 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. 

Minority census tract means a census 

tract that has a minority population of 

at least 30 percent and a median income 

of less than 100 percent of the area 

median income. 

Moderate-income means income not 

in excess of area median income. 

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, 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 residentmember by a cooperative housing 

corporation, as defined in section 216 of 

the Internal Revenue Code of 1986, and 

on the proprietary lease, occupancy 

agreement, or right of tenancy in the 

dwelling unit of the tenant-stockholder 

or resident-member in such cooperative 

housing corporation. 

Mortgage data means data obtained by 

the Director from the Bank or Banks 

under this part and/or the Data 

Reporting Manual. 

Mortgage purchase means a 

transaction in which a Bank bought or 

otherwise acquired a mortgage. 

Mortgages with unacceptable terms or 

conditions means a single-family 

mortgage, including a reverse mortgage, 

or a group or category of such 

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 $1,000, or an alternative 

amount requested by a Bank 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 member imposes 

as a condition of making the loan, 

whether they are paid to the member 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) An annual percentage rate that 

exceeds by more than 8 percentage 

points the yield on Treasury securities 

with comparable maturities as of the 

fifteenth day of the month immediately 

preceding the month in which the 

application for the extension of credit 

was received; 

(3) Prepayment penalties, except 

where: 

(i) The mortgage provides some 

benefits to the borrower in exchange for 

the prepayment penalty (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; 

(4) The sale or financing of prepaid 

single-premium credit life insurance 

products in connection with the 

origination of the mortgage 

(5) Underwriting practices contrary to 

the Interagency Guidance on 

Nontraditional Mortgage Product Risks 

(71 FR 58609) (Oct. 4, 2006), the 

Interagency Statement on Subprime 

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Mortgage Lending (72 FR 37569) (July 

10, 2007), or similar guidance 

subsequently issued by federal banking 

agencies; 

(6) Failure to comply with fair lending 

requirements; or 

(7) Other terms or conditions that are 

determined by the Director to be an 

unacceptable term or condition of a 

mortgage. 

Nonmetropolitan area means a 

county, or a portion of a county, 

including those counties that comprise 

Micropolitan Statistical Areas, located 

outside any metropolitan area for which 

median family income estimates are 

published annually by HUD. 

Owner-occupied housing means 

single-family housing in which a 

mortgagor resides, including two- to 

four-unit owner-occupied properties 

where one or more units are used for 

rental purposes. 

Purchase money mortgage means a 

mortgage given to secure a loan used for 

the purchase of a single-family 

residential property. 

Refinancing mortgage means a 

mortgage undertaken by a borrower that 

satisfies or replaces an existing mortgage 

of such 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) The renewal of optional insurance 

purchased by the mortgagor and added 

to an existing mortgage; or 

(5) A conversion of a balloon 

mortgage note on a single-family 

property to a fully amortizing mortgage 

note where the Bank already owns or 

has an interest in the balloon note at the 

time of the conversion. 

Residence means a property where 

one or more families reside. 

Residential mortgage means a 

mortgage on single-family or 

multifamily housing. 

Seasoned mortgage means a mortgage 

on which the date of the mortgage note 

is more than one year before the Bank 

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. 

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. 

Very low-income means income not in 

excess of 50 percent of area median 

income. 

Subpart B—Housing Goals 

§ 1281.10 General. 

Pursuant to the requirements of the 

Bank Act (12 U.S.C. 1430c), this subpart 

establishes: 

(a) Three single-family owneroccupied purchase money mortgage 

housing goals, and one single-family 

refinancing mortgage housing goal; 

(b) A volume threshold for the 

application of the housing goals to a 

Bank; 

(c) Requirements for measuring 

performance under the housing goals; 

and 

(d) Procedures for monitoring and 

enforcing the housing goals. 

§ 1281.11 Bank housing goals. 

(a) Volume threshold. The housing 

goals established in this section shall 

apply to a Bank for a calendar year only 

if the unpaid principal balance (UPB) of 

the Bank’s purchases of AMA-approved 

mortgages in that year exceeds $2.5 

billion. 

(b) Market-based housing goals. A 

Bank that is subject to the housing goals 

shall be in compliance with a housing 

goal if its performance under the 

housing goal meets or exceeds the share 

of the market that qualifies for the 

housing goal. The size of the market for 

each housing goal shall be established 

annually by FHFA for each Bank district 

based on data reported pursuant to the 

Home Mortgage Disclosure Act for a 

given year. Unless otherwise adjusted 

by FHFA, the size of the market for each 

Bank district shall be determined based 

on the following criteria: 

(1) Only owner-occupied, 

conventional loans secured by property 

located in that Bank district shall be 

considered; 

(2) Purchase money mortgages and 

refinancing mortgages shall only be 

counted for the applicable housing goal 

or goals; 

(3) All mortgages flagged as HOEPA 

loans or subordinate lien loans shall be 

excluded; 

(4) All mortgages with original 

principal balances above the conforming 

loan limits for single unit properties for 

the year being evaluated (rounded to the 

nearest $1,000) shall be excluded; 

(5) All mortgages with rate spreads of 

300 basis points or more above the 

applicable average prime offer rate as 

reported in the Home Mortgage 

Disclosure Act data shall be excluded; 

and 

(6) All mortgages that are missing 

information necessary to determine 

appropriate counting under the housing 

goals shall be excluded. 

(c) Low-income Families Housing 

Goal. For a Bank that is subject to the 

housing goals, the percentage share of 

such Bank’s total purchases of purchase 

money AMA-approved mortgages on 

owner-occupied single-family housing 

that consists of mortgages for lowincome families shall meet or exceed 

the share of such mortgages in the 

market as defined in paragraph (b) of 

this section. 

(d) Low-income Areas Housing Goal. 

For a Bank that is subject to the housing 

goals, the percentage share of such 

Bank’s total purchases of purchase 

money AMA-approved mortgages on 

owner-occupied single-family housing 

that consists of mortgages for families in 

low-income areas shall meet or exceed 

the share of such mortgages in the 

market as defined in paragraph (b) of 

this section. 

(e) Very Low-income Families 

Housing Goal. For a Bank that is subject 

to the housing goals, the percentage 

share of such Bank’s total purchases of 

purchase money AMA-approved 

mortgages on owner-occupied singlefamily housing that consists of 

mortgages for very low-income families 

shall meet or exceed the share of such 

mortgages in the market as defined in 

paragraph (b) of this section. 

(f) Refinancing Housing Goal. For a 

Bank that is subject to the housing goals, 

the percentage share of such Bank’s total 

purchases of refinancing AMAapproved mortgages on owner-occupied 

single-family housing that consists of 

refinancing mortgages for low-income 

families shall meet or exceed the share 

of such mortgages in the market as 

defined in paragraph (b) of this section. 

§ 1281.12 General counting requirements. 

(a) Calculating the numerator and 

denominator for single-family housing 

goals. Performance under each of the 

single family housing goals shall be 

measured using a fraction that is 

converted into a percentage. Neither the 

numerator nor the denominator shall 

include Bank transactions or activities 

that are not AMA-approved mortgage 

purchases as defined by FHFA or that 

are specifically excluded as ineligible 

under § 1281.13(b). 

(1) The numerator. The numerator of 

each fraction is the number of AMAapproved mortgage purchases of a Bank 

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occupied single-family properties that 

count toward achievement of a 

particular single-family housing goal. 

(2) The denominator. The 

denominator of each fraction is the total 

number of AMA-approved mortgage 

purchases of a Bank in a particular year 

that finance owner-occupied, singlefamily properties. A separate 

denominator shall be calculated for 

purchase money mortgages and for 

refinancing mortgages. 

(b) Missing data or information for 

single-family housing goals.—(1) When 

a Bank lacks sufficient data or 

information to determine whether the 

purchase of a mortgage originated after 

1992 counts toward achievement of a 

particular single-family housing goal, 

that mortgage purchase shall be 

included in the denominator for that 

housing goal and shall not be included 

in the numerator for that housing goal. 

(2) Mortgage purchases financing 

owner-occupied single-family properties 

shall be evaluated based on the income 

of the mortgagors and the area median 

income at the time the mortgage was 

originated. To determine whether 

mortgages may be counted under a 

particular family income level (i.e., lowor very low-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 § 1281.1. 

(c) Credit toward multiple goals. A 

mortgage purchase by a Bank in a 

particular year shall count toward the 

achievement of each housing goal for 

which such purchase qualifies in that 

year. 

(d) Application of median income. 

For purposes of determining an area’s 

median income under § 1281.1, the area 

is: 

(1) The metropolitan area, if the 

property which is the subject of the 

mortgage is in a metropolitan area; and 

(2) 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. 

(e) 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. 

(f) Newly available data. When a Bank 

uses data to determine whether a 

mortgage purchase counts toward 

achievement of any housing goal, and 

new data is released after the start of a 

calendar quarter, the Bank need not use 

the new data until the start of the 

following quarter. 

§ 1281.13 Special counting requirements. 

(a) General. FHFA shall determine 

whether a Bank shall receive full, 

partial, or no credit toward achievement 

of any of the housing goals for a 

transaction that otherwise qualifies 

under this part. 

(b) Not counted. The following 

transactions or activities shall not be 

counted for purposes of the housing 

goals and shall not be included in the 

numerator or the denominator in 

calculating a Bank’s performance under 

the housing goals, even if the 

transaction or activity would otherwise 

be counted under paragraph (c) of this 

section: 

(1) Purchases of non-conventional 

single-family mortgages; 

(2) Commitments to buy mortgages at 

a later date or time; 

(3) Options to acquire mortgages; 

(4) Rights of first refusal to acquire 

mortgages; 

(5) Any interests in mortgages that the 

Director determines, in writing, shall 

not be treated as interests in mortgages; 

(6) Mortgage purchases to the extent 

they finance any dwelling units that are 

secondary residences; 

(7) Single family refinancing 

mortgages that result from conversion of 

balloon notes to fully amortizing notes, 

if a Bank already owns, or has an 

interest in, the balloon note at the time 

conversion occurs; 

(8) Purchases of subordinate lien 

mortgages (second mortgages); 

(9) Purchases of mortgages that were 

previously counted by a Bank under any 

current or previous housing goal; 

(10) Purchases of mortgages where the 

property has not been approved for 

occupancy; and 

(11) Any combination of factors in 

paragraphs (b)(1) through (b)(10) of this 

section. 

(c) Other special rules. Subject to 

FHFA’s determination of whether a 

Bank 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 transactions and activities 

identified in this paragraph (c) shall be 

treated as mortgage purchases as 

described. A transaction or activity that 

is covered by more than one paragraph 

below must satisfy the requirements of 

each such paragraph. The mortgages 

from each such transaction or activity 

shall be included in the denominator in 

calculating a Bank’s performance under 

the housing goals, and shall be included 

in the numerator, as appropriate. 

(1) Cooperative housing and 

condominiums. The purchase by a Bank 

of a mortgage on a cooperative housing 

unit (‘‘a share loan’’) or a mortgage on a 

condominium unit shall be treated as a 

mortgage purchase for purposes of the 

housing goals. 

(2) Seasoned mortgages. The purchase 

of a seasoned mortgage by a Bank shall 

be treated as a mortgage purchase for 

purposes of the housing goals, except 

where the Bank has already counted the 

mortgage under any current or previous 

housing goal within the five years 

immediately preceding the current 

performance year. 

(3) Purchase of refinancing mortgages. 

The purchase of a refinancing mortgage 

by a Bank shall be treated as a mortgage 

purchase for purposes of the housing 

goals only if the refinancing is an armslength transaction that is borrowerdriven. 

(d) HOEPA mortgages and mortgages 

with unacceptable terms or conditions. 

The purchase by a Bank of HOEPA 

mortgages and mortgages with 

unacceptable terms or conditions, as 

defined in § 1281.1, shall be treated as 

mortgage purchases for purposes of the 

housing goals and shall be included in 

the denominator for each applicable 

single-family housing goal, but such 

mortgages shall not be counted in the 

numerator for any housing goal. 

(e) FHFA review of transactions. 

FHFA may determine whether and how 

any transaction or class of transactions 

shall be counted for purposes of the 

housing goals. FHFA will notify each 

Bank in writing of any determination 

regarding the treatment of any 

transaction or class of transactions 

under the housing goals. 

§ 1281.14 Determination of compliance 

with housing goals; notice of determination. 

(a) Determination of compliance with 

housing goals. On an annual basis, the 

Director shall determine whether each 

Bank has exceeded the volume 

threshold. For each Bank that has 

exceeded the volume threshold in a 

year, the Director shall determine the 

Bank’s performance under each housing 

goal. 

(b) Failure to meet a housing goal. If 

the Director determines that a Bank has 

failed to meet any housing goal, the 

Director shall notify the Bank in writing 

of such preliminary determination. Any 

notification to a Bank of a preliminary 

determination under this section shall 

provide the Bank with an opportunity to 

respond in writing in accordance with 

the following procedures: 

(1) Notice. The Director shall provide 

written notice to a Bank of a preliminary 

determination under this section, the 

reasons for such determination, and the 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 29961 

information on which the Director based 

the determination. 

(2) Response period.—(i) In general. 

During the 30-day period beginning on 

the date on which notice is provided 

under paragraph (b)(1) of this section, 

the Bank may submit to the Director any 

written information that the Bank 

considers appropriate for consideration 

by the Director in finally determining 

whether such failure has occurred or 

whether the achievement of such goal 

was feasible. 

(ii) Extended period. The Director 

may extend the period under paragraph 

(b)(2)(i) of this section for good cause for 

not more than 30 additional days. 

(iii) Shortened period. The Director 

may shorten the period under paragraph 

(b)(2)(i) of this section for good cause. 

(iv) Failure to respond. The failure of 

a Bank to provide information during 

the 30-day period under this paragraph 

(b)(2), as extended or shortened, shall 

waive any right of the Bank to comment 

on the proposed determination or action 

of the Director. 

(3) Consideration of information and 

final determination.—(i) In general. 

After the expiration of the response 

period under paragraph (b)(2) of this 

section, or upon receipt of information 

provided during such period by a Bank, 

whichever occurs earlier, the Director 

shall issue a final determination on: 

(A) Whether the Bank has failed to 

meet the housing goal; and 

(B) Whether, taking into consideration 

market and economic conditions and 

the financial condition of the Bank, the 

achievement of the housing goal was 

feasible. 

(ii) Considerations. In making a final 

determination under paragraph (b)(3)(i) 

of this section, the Director shall take 

into consideration any relevant 

information submitted by a Bank during 

the response period. 

§ 1281.15 Housing plans. 

(a) Housing plan requirement. If the 

Director determines that a Bank has 

failed to meet any housing goal and that 

the achievement of the housing goal was 

feasible, the Director may require the 

Bank 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 Bank will take to achieve the 

housing goal for the next calendar year; 

and 

(4) Address any additional matters 

relevant to the plan as required, in 

writing, by the Director. 

(c) Deadline for submission. The Bank 

shall submit the housing plan to the 

Director within 45 days after issuance of 

a notice requiring the Bank 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 plan. The 

Director shall review and approve or 

disapprove a housing plan as follows: 

(1) Approval. The Director shall 

review each submission by a Bank, 

including a housing plan submitted 

under this section and, not later than 30 

days after submission, approve or 

disapprove the plan or other action. The 

Director may extend the period for 

approval or disapproval for a single 

additional 30-day period if the Director 

determines it necessary. The Director 

shall approve any plan that the Director 

determines is likely to succeed, and 

conforms with the Bank Act, this part, 

and any other applicable provision of 

law. 

(2) Notice of approval and 

disapproval. The Director shall provide 

written notice to a Bank submitting a 

housing plan of the approval or 

disapproval of the plan, which shall 

include the reasons for any disapproval 

of the plan, and of any extension of the 

period for approval or disapproval. 

(e) Resubmission. If the Director 

disapproves an initial housing plan 

submitted by a Bank, the Bank 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 

Bank 15 days to submit a new plan. 

(f) Enforcement of housing plan. If the 

Director finds that a Bank has failed to 

meet any housing goal, and that the 

achievement of the housing goal was 

feasible, and has required the Bank to 

submit a housing plan under this 

section, the Director may issue a cease 

and desist order, or impose civil money 

penalties, if the Bank refuses to submit 

such a plan, fails to submit an 

acceptable plan, or fails to comply with 

the approved plan. In taking such 

action, the Director shall follow 

procedures consistent with those 

provided in 12 U.S.C. 4581 through 

4588 with respect to actions to enforce 

the housing goals. 

Subpart C—Reporting Requirements 

§ 1281.20 General. 

This subpart establishes data 

submission and reporting requirements 

to provide the Director with the 

mortgage and other information relating 

to the Banks’ performance in connection 

with the housing goals, as 

supplemented from time to time in the 

Banks’ Data Reporting Manual (DRM). 

§ 1281.21 Mortgage reports. 

(a) Loan-level data elements. To 

implement the data collection and 

submission requirements for mortgage 

data, and to assist the Director in 

monitoring the Banks’ housing goal 

activities, each Bank shall collect and 

compile computerized loan-level data 

on each AMA-approved mortgage 

purchase, as described in the DRM. The 

Director may, from time to time, issue 

a list in the DRM specifying the loanlevel data elements to be collected and 

maintained by the Banks and provided 

to the Director. The Director may revise 

the DRM list by written notice to the 

Banks. 

(b) Semi-annual mortgage reports. 

Each Bank shall submit to the Director, 

on a semi-annual basis, a mortgage 

report. The second semi-annual 

mortgage report each year shall serve as 

the annual mortgage report and shall be 

designated as such. Each mortgage 

report shall include: 

(1) Aggregations of the loan-level 

mortgage data compiled by each Bank 

under paragraph (a) of this section for 

year-to-date AMA-approved mortgage 

purchases, in the format specified in 

writing by the Director; 

(2) Year-to-date dollar volume, 

number of units, and number of AMAapproved mortgages on owner-occupied 

properties purchased by each Bank that 

do, and do not, qualify under each 

housing goal as set forth in this part; 

and 

(3) Year-to-date computerized loanlevel data consisting of the data 

elements required under paragraph (a) 

of this section. 

(c) Timing of reports. Each Bank shall 

submit its first semi-annual mortgage 

report within 45 days of the end of the 

second quarter. Each Bank shall submit 

its annual mortgage report within 60 

days after the end of the calendar year. 

(d) Revisions to reports. At any time 

before submission of its annual 

mortgage report, a Bank may revise its 

first semi-annual mortgage report for 

that year. 

(e) Format. The Banks shall submit to 

the Director computerized loan-level 

data with the mortgage report, in the 

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29962 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 

format specified in writing by the 

Director. 

§ 1281.22 Periodic reports. 

Each Bank shall provide to the 

Director such reports, information and 

data as the Director may request from 

time to time, or as may be supplemented 

in the DRM. 

§ 1281.23 Bank data integrity. 

(a) Certification.—(1) The senior 

officer of each Bank who is responsible 

for submitting the annual mortgage 

report, or for submitting any other 

report(s), data or other information for 

which certification is requested in 

writing by the Director, shall certify 

such report(s), data or information. 

(2) The certification shall state as 

follows: ‘‘To the best of my knowledge 

and belief, the information provided 

herein is true, correct and complete.’’ 

(b) Adjustment to correct errors, 

omissions or discrepancies. FHFA shall 

determine on an annual basis the 

official housing goals performance 

figures for a Bank that is subject to the 

housing goals. FHFA may resolve any 

error, omission or discrepancy by 

adjusting the Bank’s official housing 

goals performance figure. If the Director 

determines that the year-end data 

reported by a Bank for a year preceding 

the latest year for which data on 

housing goals performance was reported 

to FHFA contained a material error, 

omission or discrepancy, the Director 

may increase the corresponding housing 

goal for the current year by the number 

of mortgages that the Director 

determines were overstated in the prior 

year’s goal performance. 

Dated: May 24, 2010. 

Edward J. DeMarco, 

Acting Director, Federal Housing Finance 

Agency. 

[FR Doc. 2010–12849 Filed 5–27–10; 8:45 am] 

BILLING CODE 8070–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 23 

[Docket No. CE308; Notice No. 23–10–02– 

SC] 

Special Conditions: Cirrus Design 

Corporation Model SF50 Airplane; 

Function and Reliability Testing 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed special 

conditions. 

SUMMARY: This action proposes special 

conditions for the Cirrus Design 

Corporation SF50 airplane. This 

airplane will have a novel or unusual 

design feature(s) associated with the 

complex design and performance 

features consistent with larger airplanes. 

The applicable airworthiness 

regulations do not contain adequate or 

appropriate safety standards for this 

design feature. These proposed special 

conditions contain the additional safety 

standards that the Administrator 

considers necessary to establish a level 

of safety equivalent to that established 

by the existing airworthiness standards. 

DATES: We must receive your comments 

by June 28, 2010. 

ADDRESSES: Mail two copies of your 

comments to: Federal Aviation 

Administration, Regional Counsel, 

ACE–7, 901 Locust, Kansas City, MO 

64106. You may deliver two copies to 

the Regional Counsel at the above 

address. Mark your comments: Docket 

No. CE308. You may inspect comments 

in the Rules Docket weekdays, except 

Federal holidays, between 7:30 a.m. and 

4 p.m. 

FOR FURTHER INFORMATION CONTACT: 

J. Lowell Foster, Federal Aviation 

Administration, Small Airplane 

Directorate, Aircraft Certification 

Service, 901 Locust, Room 301, Kansas 

City, MO 64106; telephone (816) 329– 

4125; facsimile (816) 329–4090. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite interested persons to take 

submit such written data, views, or 

arguments as they desire. The most 

helpful comments reference a specific 

portion of the special conditions, 

explain the reason for any 

recommended change, and include 

supporting data. We ask that you send 

us two copies of written comments. 

We will file in the docket all 

comments we receive, as well as a 

report summarizing each substantive 

public contact with FAA personnel 

about these special conditions. You may 

inspect the docket before and after the 

comment closing date. If you wish to 

review the docket in person, go to the 

address in the ADDRESSES section of this 

preamble between 7:30 a.m. and 4 p.m., 

Monday through Friday, except Federal 

holidays. 

We will consider all comments we 

receive by the closing date for 

comments. We will consider comments 

filed late if it is possible to do so 

without incurring expense or delay. We 

may change these special conditions 

based on the comments we receive. 

If you want us to let you know we 

received your comments on these 

special conditions, send us a preaddressed, stamped postcard on which 

the docket number appears. We will 

stamp the date on the postcard and mail 

it back to you. 

Background 

On April 29, 2010, Cirrus Design 

Corporation applied for a type 

certificate for their new Model SF 50 

‘‘Vision’’ Jet. The SF50 is a low-wing, 

five-plus-two-place (2 children), singleengine turbofan-powered aircraft. It 

incorporates an Electronic Flight 

Information System (EFIS), pressurized 

cabin, retractable gear, and a V-tail. The 

turbofan engine is mounted on the 

upper fuselage/tail cone along the 

aircraft centerline. It is constructed 

largely of carbon and fiberglass 

composite materials. Like other Cirrus 

products, the SF50 includes a 

ballistically deployed airframe 

parachute. 

The model SF50 has a maximum 

operating altitude of 28,000 feet, where 

it cruises at speeds up to 300 KTAS. Its 

VMO will not exceed 0.62 Mach. The 

maximum takeoff weight will be at or 

below 6000 pounds with a range at 

economy cruise of roughly 1000 nm. 

Cirrus intends for the model SF50 to be 

certified for single-pilot operations 

under 14 CFR part 91 and 14 CFR part 

135 operating rules. The following 

operating conditions will be included: 

• Day and Night VFR. 

• IFR. 

• Flight into Known Icing. 

Discussion 

Before Amendment 3–4, Section 3.19 

of Civil Air Regulation (CAR) part 3 

required service testing of all airplanes 

type certificated on or after May 15, 

1947. The purpose of the testing was to 

‘‘ascertain whether there is reasonable 

assurance that the airplane, its 

components, and equipment are 

reliable, and function properly.’’ 

Amendment 3–4 to CAR part 3 

became effective January 15, 1951, and 

deleted the service test requirements in 

Section 3.19 for airplanes of 6,000 

pounds maximum weight or less. The 

introductory text published in 

Amendment 3–4 explained that most of 

the significant changes in the 

amendment stemmed from ‘‘the desire 

for simplification of the rules in this 

part with respect to the smaller 

airplanes, specifically those of 6,000 

pounds maximum weight or less, which 

would be expected to be used mainly as 

personal airplanes.’’ The introductory 

material also stated the service test 

requirement was removed for airplanes 

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