[Federal Register Volume 79, Number 241 (Tuesday, December 16, 2014)]
[Rules and Regulations]
[Pages 74595-74597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29345]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1251

RIN 2590-AA73


Housing Trust Fund

AGENCY: Federal Housing Finance Agency.

ACTION: Interim final rule; request for comments.

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

DATES: This interim final rule is effective on December 16, 2014. FHFA 
will accept written comments on this interim final rule on or before 
January 15, 2015.

ADDRESSES: You may submit your comments on this Interim Final Rule, 
identified by regulatory identifier number ``RIN 2590-AA73,'' by any of 
the following methods:
    <bullet> Agency Web site: www.fhfa.gov/open-for-comment-or-input.
    <bullet> Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions for submitting comments. If you submit your comment to 
the Federal eRulemaking Portal, please also send it by email to FHFA at 
<a href="/cdn-cgi/l/email-protection#6634030125090b0b0308121526000e000748010910"><span class="__cf_email__" data-cfemail="8cdee9ebcfe3e1e1e9e2f8ffcceae4eaeda2ebe3fa">[email protected]</span></a> to ensure timely receipt by the Agency. Please 
include ``RIN 2590-AA73'' in the subject line of the message.
    <bullet> Courier/Hand Delivered: The hand delivery address is: 
Alfred M. Pollard, General Counsel; Attention: Comments/RIN 2590-AA73, 
Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., 
Washington, DC 20024. Deliver the package to the Seventh Street 
entrance Guard Desk, First Floor, on business days between 9 a.m. and 5 
p.m.
    <bullet> U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel; Attention: Comments/RIN 2590-AA73, Federal 
Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., 
Washington, DC 20024.

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

SUPPLEMENTARY INFORMATION:

I. Comments

    FHFA invites comments on any aspect of the interim final rule and 
will

[[Page 74596]]

take all comments into consideration before issuing a final rule. 
Copies of all comments will be posted without change, including any 
personal information you provide such as your name, address, email 
address and phone number, on the FHFA internet Web site at 
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 10:00 a.m. and 3:00 p.m., at the Federal Housing Finance 
Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20024. To 
make an appointment to inspect comments, please call the Office of 
General Counsel at (202) 649-3804.

II. Background

    Section 1338 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (Safety and Soundness Act), as added by 
section 1131(b) of the Housing and Economic Recovery Act of 2008 
(HERA), directs the Secretary of the Department of Housing and Urban 
Development to establish and manage a Housing Trust Fund (HTF) that is 
funded by amounts allocated by Fannie Mae and Freddie Mac and any other 
amounts appropriated, transferred, or credited to the HTF under any 
other provision of law. 12 U.S.C. 4568(a); see also id. at 4567(a). The 
purpose of the HTF is to provide grants to States ``to increase and 
preserve the supply of rental housing for extremely low- and very low-
income families, including homeless families'' and ``to increase 
homeownership for extremely low- and very low-income families.'' Id. at 
4568(a)(1).
    Separately, section 1339 of the Safety and Soundness Act, as added 
by section 1131(b) of HERA, establishes the Capital Magnet Fund (CMF) 
within the U.S. Treasury as a special account within the Community 
Development Financial Institutions Fund. Id. at 4569(a). As with the 
HTF, the CMF is also funded by amounts allocated by Fannie Mae and 
Freddie Mac and any other amounts appropriated, transferred, or 
credited to it under any other provision of law. Id. at 4569(b); see 
also id. at 4567(a). Funds in the CMF are available to the Secretary of 
the Treasury to carry out a competitive grant program to attract 
private capital for, and increase investment in, ``the development, 
preservation, rehabilitation, or purchase of affordable housing for 
primarily extremely low-, very low-, and low-income families'' and 
``economic development activities or community service facilities . . . 
which in conjunction with affordable housing activities implement a 
concerted strategy to stabilize or revitalize a low-income area or 
underserved rural area.'' Id. at 4569(c).
    Though the HTF is administered by the Secretary of HUD and the CMF 
is administered by the Secretary of the Treasury, Fannie Mae and 
Freddie Mac are supervised by FHFA. See generally id., at 4501 et seq. 
The Director of FHFA has general regulatory authority over each 
Enterprise and is responsible for ensuring that the purposes of the 
Safety and Soundness Act, the Enterprises' charter acts, and any other 
applicable law are carried out. Id. at 4511(b). The duties of the 
Director include ensuring that the operations and activities of each 
Enterprise foster liquid, efficient, competitive and resilient national 
housing finance markets, including activities relating to mortgages on 
housing for low- and moderate-income families; that each Enterprise 
complies with the Safety and Soundness Act and any rules, regulations, 
orders and guidelines issued under it or the Enterprises' charter acts; 
and that the activities of each Enterprise and the manner in which they 
are carried out are consistent with the public interest. Id. at 
4513(a)(1)(B)(ii), (iii) and (v). The Director is authorized to issue 
any regulations, guidelines or orders necessary to carry out the duties 
of the Director under the Safety and Soundness Act or the Enterprise 
charter acts and to ensure that the purposes of such acts are 
accomplished. Id. at 4526.
    The Enterprises' allocation obligations to support the HTF and CMF 
(together, the Funds) and related requirements are set forth at section 
1337 of the Safety and Soundness Act. Id. at 4567. That section 
addresses the amount the Enterprises are to set aside and allocate to 
the Secretaries of HUD and the Treasury each fiscal year, based on the 
unpaid principal balance of their total new business purchases, which 
are the single- and multi-family residential mortgage loans or re-
financings acquired by the Enterprises and held in portfolio or that 
support securities, notes or other obligations which the Enterprises 
guarantee. The section further directs the Director to issue a 
regulation prohibiting an Enterprise from redirecting the costs of any 
required allocation to the originators of mortgages the Enterprise 
purchases or securitizes, addresses enforcement of Enterprise 
compliance with the section and any regulation, rule or order issued 
pursuant to it, and authorizes the Director temporarily to suspend 
allocations if the Director makes any finding among three set forth by 
statute. Id.
    Pursuant to section 1337 and the Director's general regulatory 
authority, the Director has determined to issue an Interim Final Rule 
prohibiting each Enterprise from passing through the costs of 
allocations to originators of mortgages purchased or securitized by the 
Enterprise.
    FHFA is issuing this rule as an Interim Final Rule with request for 
comments. Section 1337 requires the Director to issue a regulation 
regarding the prohibition against passing costs of the allocations 
required under the section to originators and how compliance with the 
requirements of the regulation and statute is to be enforced. The 
Interim Final Rule's substantive provisions are established by statute 
and the rule does not deviate from or add to the statutory 
requirements. The need for the rule at this time is to support the 
implementation process that the Director will provide for the 
Enterprises to begin the process of setting aside and allocating monies 
for the Funds and to assure that the prohibition on pass through of 
costs accompanies the planning and deployment of funds. Further, the 
rule will support the development of regulatory oversight mechanisms to 
be put in place to assure compliance with the prohibition.\1\
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    \1\ FHFA is issuing this Interim Final Rule with a request for 
comments to provide transparency on the prohibition and its 
implementation, though the Rule itself is not a legislative rule but 
is procedural and thus would be excepted from the normal notice and 
comment requirements of the Administrative Procedures Act, 5 U.S.C. 
553(b) and 5 U.S.C. 553(d)(3).
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Regulatory Impact

Paperwork Reduction Act

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

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a rule that has a significant economic impact on a substantial number 
of small entities, small businesses, or small organizations must 
include an initial regulatory flexibility analysis describing the 
rule's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the rule will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 605(b). FHFA has considered the impact of the interim final 
rule under the Regulatory Flexibility Act. FHFA certifies that the 
Interim Final Rule is not likely to have a significant economic impact 
on a substantial number of small business entities because the rule is 
applicable

[[Page 74597]]

only to the Enterprises, which are not small entities for purposes of 
the Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 1251

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

Authority and Issuance

    Accordingly, for the reasons stated in the Supplementary 
Information, under the authority of 12 U.S.C. 4567, the Federal Housing 
Finance Agency amends Chapter XII of Title 12 of the Code of Federal 
Regulations, as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

SUBCHAPTER C--ENTERPRISES

0
1. Add part 1251 to Subchapter C to read as follows:

PART 1251--CONTRIBUTIONS TO THE HOUSING TRUST AND CAPITAL MAGNET 
FUNDS

Sec.
1251.1 Purpose.
1251.2 Definitions.
1251.3 Prohibition on pass-through of cost of allocation; 
enforcement.
1251.4 Submission of information.

    Authority:  12 U.S.C. 1452(c), 1718(b), 4511(b), 4513(a), 
4514(a), 4526(a), and 4567.


Sec.  1251.1  Purpose.

    The purpose of this part is to implement a prohibition against an 
Enterprise redirecting the cost of any allocation to the Housing Trust 
Fund or the Capital Magnet Fund to originators of mortgages purchased 
or securitized by an Enterprise.


Sec.  1251.2  Definitions.

    The following definitions apply to the terms used in and related 
specifically to this part. Definitions of other terms may be found in 
12 CFR part 1201, General Definitions Applying to All Federal Housing 
Finance Agency Regulations:
    Capital Magnet Fund means that Fund established at section 1339(a) 
of the Safety and Soundness Act, 12 U.S.C. 4569(a).
    Housing Trust Fund means that Fund established by section 1338(a) 
of the Safety and Soundness Act, 12 U.S.C. 4568(a).


Sec.  1251.3  Prohibition on pass-through of cost of allocation; 
enforcement.

    (a) In general. No Enterprise shall re-direct or pass through the 
cost of any allocation to the Housing Trust Fund or the Capital Magnet 
Fund required pursuant to section 1337(a) of the Safety and Soundness 
Act, 12 U.S.C. 4567(a), through increased charges or fees, or decreased 
premiums, or in any other manner, to the originators of mortgages 
purchased or securitized by the Enterprise.
    (b) Enforcement. Compliance by each Enterprise with the foregoing 
prohibition shall be enforced under subpart 3 of part B of the Safety 
and Soundness Act, 12 U.S.C. 4581-89.


Sec.  1251.4  Submission of information.

    The Director may issue guidance, orders, or notices on compliance 
with section 1337 and this part by the Enterprises, which may include 
information submissions by the Enterprises.

    Dated: December 10, 2014.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2014-29345 Filed 12-15-14; 8:45 am]
BILLING CODE 8070-01-P


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