31160 Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 

requirements of paragraph (d)(2)(iii) of 

this section. 

(Approved by the Office of Management and 

Budget under control numbers 0579–0088 

and 0579–0336) 

■ 3. Section 301.32–5 is amended as 

follows: 

■ a. In paragraph (a)(1)(iii), by removing 

the word ‘‘and’’ and adding the word 

‘‘or’’ in its place. 

■ b. By adding a new paragraph 

(a)(1)(iv) to read as set forth below. 

■ c. By revising the OMB citation at the 

end of the section to read as set forth 

below. 

§ 301.32–5 Issuance and cancellation of 

certificates and limited permits. 

(a) * * * 

(1) * * * 

(iv) The regulated articles are Hass 

variety avocados that have been 

harvested, safeguarded, and packed in 

accordance with the conditions in 

§ 301.32–4(d); and 

* * * * * 

(Approved by the Office of Management and 

Budget under control numbers 0579–0088 

and 0579–0336) 

PART 319—FOREIGN QUARANTINE 

NOTICES 

■ 4. The authority citation for part 319 

continues to read as follows: 

Authority: 7 U.S.C. 450, 7701–7772, and 

7781–7786; 21 U.S.C. 136 and 136a; 7 CFR 

2.22, 2.80, and 371.3. 

§ 319.56–30 [Amended] 

■ 5. Section 319.56–30 is amended by 

removing paragraph (c)(2)(ii) and 

redesignating paragraphs (c)(2)(iii) 

through (c)(2)(vi) as paragraphs (c)(2)(ii) 

through (c)(2)(v), respectively. 

Done in Washington, DC, this 24th day of 

June 2009. 

Kevin Shea, 

Acting Administrator, Animal and Plant 

Health Inspection Service. 

[FR Doc. E9–15416 Filed 6–29–09; 8:45 am] 

BILLING CODE 3410–34–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 3 

[Docket ID: OCC–2009–0007] 

RIN 1557–AD25 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 208 and 225 

[Regulations H and Y; Docket No. R–1361] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 325 

RIN 3064–AD42 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 567 

[No. OTS–2009–0007] 

RIN 1550–AC34 

Risk-Based Capital Guidelines; Capital 

Adequacy Guidelines; Capital 

Maintenance; Capital—Residential 

Mortgage Loans Modified Pursuant to 

the Making Home Affordable Program 

AGENCIES: Office of the Comptroller of 

the Currency, Department of the 

Treasury; Board of Governors of the 

Federal Reserve System; Federal Deposit 

Insurance Corporation; and Office of 

Thrift Supervision, Department of the 

Treasury. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: To support and facilitate the 

timely implementation and acceptance 

of the Making Home Affordable Program 

(Program) announced by the U.S. 

Department of the Treasury (Treasury) 

and to promote the stability of banks, 

savings associations, bank holding 

companies (collectively, banking 

organizations) and the financial system, 

the Office of the Comptroller of the 

Currency (OCC), Board of Governors of 

the Federal Reserve System (Board), 

Federal Deposit Insurance Corporation 

(FDIC), and the Office of Thrift 

Supervision (OTS) (collectively, the 

agencies) have adopted this interim 

final rule (interim final rule or rule). 

The rule provides that mortgage loans 

modified under the Program will retain 

the risk weight assigned to the loan 

prior to the modification, so long as the 

loan continues to meet other applicable 

prudential criteria. 

DATES: The interim final rule is effective 

June 30, 2009. Comments must be 

received by July 30, 2009. 

ADDRESSES: Comments should be 

directed to: 

OCC: Because paper mail in the 

Washington, DC area and at the agencies 

is subject to delay, commenters are 

encouraged to submit comments by the 

Federal eRulemaking Portal or e-mail, if 

possible. Please use the title ‘‘RiskBased Capital Guidelines—Residential 

Mortgage Loans Modified Pursuant to 

the Making Home Affordable Program’’ 

to facilitate the organization and 

distribution of the comments. You may 

submit comments by any of the 

following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov. Under the ‘‘More 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Comptroller of 

the Currency’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OCC– 

2009–0007’’ to submit or view public 

comments and to view supporting and 

related materials for this interim final 

rule. The ‘‘How to Use This Site’’ link 

on the Regulations.gov home page 

provides information on using 

Regulations.gov, including instructions 

for submitting or viewing public 

comments, viewing other supporting 

and related materials, and viewing the 

docket after the close of the comment 

period. 

• E-mail: 

regs.comments@occ.treas.gov. 

• Mail: Office of the Comptroller of 

the Currency, 250 E Street, SW., Mail 

Stop 2–3, Washington, DC 20219. 

• Fax: (202) 874–5274. 

• Hand Delivery/Courier: 250 E 

Street, SW., Mail Stop 2–3, Washington, 

DC 20219. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

Number OCC–2009–0007’’ in your 

comment. In general, the OCC will enter 

all comments received into the docket 

and publish them on the 

Regulations.gov Web site without 

change, including any business or 

personal information that you provide 

such as name and address information, 

e-mail addresses, or phone numbers. 

Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 


rmajette on PRODPC74 with RULES
Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 31161 

interim final rule by any of the 

following methods: 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov, under 

the ‘‘More Search Options’’ tab click 

next to the ‘‘Advanced Document 

Search’’ option where indicated, select 

‘‘Comptroller of the Currency’’ from the 

agency drop-down menu, then click 

‘‘Submit.’’ In the ‘‘Docket ID’’ column, 

select ‘‘OCC–2009–0007’’ to view public 

comments for this rulemaking action. 

• Viewing Comments Personally: You 

may personally inspect and photocopy 

comments at the OCC, 250 E Street, 

SW., Washington, DC. For security 

reasons, the OCC requires that visitors 

make an appointment to inspect 

comments. You may do so by calling 

(202) 874–4700. Upon arrival, visitors 

will be required to present valid 

government-issued photo identification 

and submit to security screening in 

order to inspect and photocopy 

comments. 

• Docket: You may also view or 

request available background 

documents and project summaries using 

the methods described above. 

Board: You may submit comments, 

identified by Docket No. R–1361, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available from 

the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Street, NW.) between 9 a.m. and 5 p.m. 

on weekdays. 

FDIC: You may submit by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web site: http:// 

www.FDIC.gov/regulations/laws/ 

federal/propose.html. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments/Legal 

ESS, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

• Hand Delivered/Courier: The guard 

station at the rear of the 550 17th Street 

Building (located on F Street), on 

business days between 7 a.m. and 5 p.m. 

• E-mail: comments@FDIC.gov. 

Instructions: Comments submitted must 

include ‘‘FDIC’’ and ‘‘RIN 3064–AD42.’’ 

Comments received will be posted 

without change to http://www.FDIC.gov/ 

regulations/laws/federal/propose.html, 

including any personal information 

provided. 

OTS: You may submit comments, 

identified by OTS–2009–0007, by any of 

the following methods: 

• Federal eRulemaking Portal: 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov. Under the ‘‘more 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Office of Thrift 

Supervision’’ from the agency drop 

down menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OTS– 

2009–0007’’ to submit or view public 

comments and to view supporting and 

related materials for this proposed 

rulemaking. The ‘‘How to Use This Site’’ 

link on the Regulations.gov home page 

provides information on using 

Regulations.gov, including instructions 

for submitting or viewing public 

comments, viewing other supporting 

and related materials, and viewing the 

docket after the close of the comment 

period. 

• Mail: Regulation Comments, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552, Attention: OTS– 

2009–0007. 

• Facsimile: (202) 906–6518. 

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Regulation 

Comments, Chief Counsel’s Office, 

Attention: OTS–2009–0007. 

• Instructions: All submissions 

received must include the agency name 

and docket number for this rulemaking. 

All comments received will be posted 

without change, including any personal 

information provided. Comments, 

including attachments and other 

supporting materials received are part of 

the public record and subject to public 

disclosure. Do not enclose any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov, under 

the ‘‘More Search Options’’ tab click 

next to the ‘‘Advanced Document 

Search’’ option where indicated, select 

‘‘Office of Thrift Supervision’’ from the 

agency drop-down menu, then click 

‘‘Submit.’’ In the ‘‘Docket ID’’ column, 

select ‘‘OTS–2009–0007’’ to view public 

comments for this notice of proposed 

rulemaking action. 

• Viewing Comments On-Site: You 

may inspect comments at the Public 

Reading Room, 1700 G Street, NW., by 

appointment. To make an appointment 

for access, call (202) 906–5922, send an 

e-mail to public.info@ots.treas.gov, or 

send a facsimile transmission to (202) 

906–6518. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Margot Schwadron, Senior Risk 

Expert, Capital Policy Division, (202) 

874–6022, or Carl Kaminski, Senior 

Attorney, or Ron Shimabukuro, Senior 

Counsel, Legislative and Regulatory 

Activities Division, (202) 874–5090, 

Office of the Comptroller of the 

Currency, 250 E Street, SW., 

Washington, DC 20219. 

Board: Barbara J. Bouchard, Associate 

Director, (202) 452–3072, or William 

Tiernay, Senior Supervisory Financial 

Analyst, (202) 872–7579, Division of 

Banking Supervision and Regulation; or 

April Snyder, Counsel, (202) 452–3099, 

or Benjamin W. McDonough, Senior 

Attorney, (202) 452–2036, Legal 

Division. For the hearing impaired only, 

Telecommunication Device for the Deaf 

(TDD), (202) 263–4869. 

FDIC: Ryan Sheller, Senior Capital 

Markets Specialist, (202) 898–6614, 

Capital Markets Branch, Division of 

Supervision and Consumer Protection; 

or Mark Handzlik, Senior Attorney, 

(202) 898–3990, or Michael Phillips, 

Counsel, (202) 898–3581, Supervision 

Branch, Legal Division. 

OTS: Teresa A. Scott, Senior Policy 

Analyst, (202) 906–6478, Capital Risk, 

or Marvin Shaw, Senior Attorney, (202) 

906–6639, Legislation and Regulation 

Division, Office of Thrift Supervision, 

1700 G Street, NW., Washington, DC 

20552. 


rmajette on PRODPC74 with RULES
31162 Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 

1Further details about the Program, including 

Program terms and borrower eligibility criteria, are 

available at http://www.makinghomeaffordable.gov. 

2For ease of reference, the term servicer refers 

both to servicers that service loans held by other 

entities and to lenders who service loans that they 

hold themselves. The term lender refers to the 

beneficial owner or owners of the mortgage. 

3The Program also provides incentives for 

refinancing certain mortgage loans owned or 

guaranteed by Fannie Mae or Freddie Mac. This 

interim rule does not cover such loans. 

4See 12 CFR part 3, Appendix A, sections 

3(a)(3)(iii) and 3(a)(4) (OCC); 12 CFR parts 208 and 

225, Appendix A, sections III.C.3. and III.C.4. 

(Board); 12 CFR part 325, Appendix A, section II.C 

(FDIC); and 12 CFR 567.1 and 567.6 (OTS). 

5For a mortgage to be eligible for the Program, the 

property securing the mortgage loan must be a oneto-four family owner occupied property that is the 

primary residence of the mortgagee, not vacant, and 

not condemned. The mortgage also must have an 

unpaid principal balance (prior to capitalization of 

arrearages) at or below the Federal National 

Mortgage Association conforming loan limit for the 

type of property. 

6A front-end debt-to-income ratio measures how 

much of the borrower’s gross (pretax) monthly 

income is represented by the borrower’s required 

payment on the first-lien mortgage, including real 

estate taxes and insurance. 

7To qualify for the Treasury match, servicers 

must follow an established sequence of actions 

(capitalize arrearages, reduce interest rate, extend 

term or amortization period, and then defer 

principal) to reduce the front-end ratio on the loan 

from 38 percent to 31 percent, but may reduce 

principal on the loan at any stage during the 

modification sequence to meet affordability targets. 

8A back-end debt-to-income ratio measures how 

much of a borrower’s gross (pretax) monthly income 

would go toward monthly mortgage and 

nonmortgage debt service obligations. 

9Participating servicers will be required to follow 

certain steps in modifying amortizing second-lien 

mortgages, including reducing the interest rate to 1 

percent. Lenders may receive an incentive payment 

from Treasury equal to half of the difference 

between (i) the interest rate on the first lien as 

modified and (ii) 1 percent, subject to a floor. 

10 In some cases when appropriately tailored to 

the borrower, servicers also may choose to accept 

a lump-sum payment from Treasury to extinguish 

some or all of a second-lien mortgage under a preset formula. 

11See 12 CFR part 3, Appendix A, section 

3(a)(3)(iii) (OCC); 12 CFR parts 208 and 225, 

Appendix A, section III.C.3. (Board); 12 CFR part 

325, Appendix A, section II.C (FDIC); and 12 CFR 

567.1 (OTS). 

12See 12 CFR part 3, Appendix A, section 

3(a)(3)(iii) (OCC); 12 CFR parts 208 and 225, 

Appendix A, section III.C.4. (Board); 12 CFR part 

325, Appendix A, section II.C. (FDIC); and 12 CFR 

567.6(1)(iv) (OTS). 

SUPPLEMENTARY INFORMATION: On March 

4, 2009, Treasury announced guidelines 

under the Program to promote 

sustainable loan modifications for 

homeowners at risk of losing their 

homes due to foreclosure.1 The Program 

provides a detailed framework for 

servicers to modify mortgages on owneroccupied residential properties and 

offers financial incentives to lenders 

and servicers that participate in the 

Program.2 The Program also provides 

financial incentives for homeowners 

whose mortgages are modified pursuant 

to Program guidelines to remain current 

on their mortgages after modification.3

Taken together, these incentives should 

help responsible homeowners remain in 

their homes and avoid foreclosure, 

which in turn should help ease the 

current downward pressures on house 

prices and the costs that families, 

communities, and the economy incur 

from unnecessary foreclosures. 

Under the Program, Treasury will 

partner with lenders and loan services 

to offer at-risk homeowners loan 

modifications under which the 

homeowners may obtain more 

affordable monthly mortgage payments. 

The Program applies to a spectrum of 

outstanding loans, some of which meet 

all of the prudential criteria under the 

agencies’ general risk-based capital rules 

and receive a 50 percent risk weight and 

some of which otherwise receive a 100 

percent risk weight under the agencies’ 

general risk-based capital rules.4

Servicers who elect to participate in the 

Program are required to modify all 

eligible loans 5 in accordance with the 

Program guidelines unless explicitly 

prohibited by the governing pooling and 

servicing agreement and/or other lender 

servicing agreements. The Program 

guidelines require the lender to first 

reduce payments on eligible first-lien 

loans to an amount representing no 

greater than a 38 percent initial frontend debt-to-income ratio.6 Treasury 

then will match further reductions in 

monthly payments with the lender 

dollar-for-dollar to achieve a 31 percent 

front-end debt-to-income ratio.7

Borrowers whose back-end debt-toincome ratio exceeds 55 percent must 

agree to work with a foreclosure 

prevention counselor approved by the 

Department of Housing and Urban 

Development.8

In addition to the incentives for 

lenders, servicers are eligible for other 

incentive payments to encourage 

participation in the Program; borrowers 

can likewise receive incentive payments 

for remaining current on their monthly 

payments. Servicers will receive an upfront servicer incentive payment of 

$1,000 for each eligible first-lien 

modification. Lenders and servicers are 

eligible for one-time incentive payments 

of $1,500 and $500, respectively, for 

early modifications of first-lien 

mortgages—that is, modifications made 

while a borrower is still current on 

mortgage payments but at risk of 

imminent default. To encourage ongoing 

performance of modified loans, 

servicers also will receive ‘‘Pay for 

Success’’ incentive payments of up to 

$1,000 per year for up to three years for 

first-lien mortgages as long as borrowers 

remain in the program. Borrowers can 

likewise receive ‘‘Pay for Performance 

Success’’ incentive payments that 

reduce the principal balance on their 

first-lien mortgage up to $1,000 per year 

for up to five years in exchange for 

remaining current on monthly payments 

on their modified first-lien mortgages. 

Lenders also may receive a home price 

depreciation reserve payment to offset 

any losses if a modified loan 

subsequently defaults. 

For second-lien mortgages, lenders are 

eligible to receive incentive payments 

based on the difference between the 

interest rate on the modified first-lien 

mortgage and the reduced interest rate 

(either 1 percent or 2 percent) on the 

second-lien mortgage following 

modification.9 Services may receive a 

one-time $500 incentive payment for 

successful second-lien modifications, as 

well as additional incentive payments of 

up to $250 per year for up to three years 

for second-lien mortgages as long as 

both the modified first-lien and secondlien mortgages remain current. A 

borrower also may receive incentive 

payments of up to $250 dollars per year 

for a modified second-lien mortgage 

loan for up to five years for remaining 

current on the loan, which amounts will 

be paid to reduce the unpaid principal 

of the first-lien mortgage. However, 

second-lien modification incentives 

only will be paid with respect to a given 

property if the first-lien mortgage on the 

property also is modified under the 

Program.10

Treatment Under Risk-Based Capital 

Rules 

Under the agencies’ general risk-based 

capital rules, loans that are fully secured 

by first liens on one-to-four family 

residential properties, either owneroccupied or rented, and that meet 

certain prudential criteria (qualifying 

mortgage loans) are risk-weighted at 50 

percent. If a banking organization holds 

both a first-lien and a junior-lien 

mortgage on the same property, and no 

other party holds an intervening lien, 

the loans are treated as a single loan 

secured by a first-lien mortgage and 

risk-weighted at 50 percent if the two 

loans, when aggregated, meet the 

conditions to be a qualifying mortgage 

loan.11 Other junior-lien mortgage loans 

are risk-weighted at 100 percent.12

In general, to qualify for a 50 percent 

risk weight, a mortgage loan must have 

been made in accordance with prudent 

underwriting standards and may not be 

90 days or more past due or carried in 

nonaccrual status. Mortgage loans that 

do not qualify for a 50 percent risk 

weight are assigned a 100 percent risk 


rmajette on PRODPC74 with RULES
Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 31163 

13 12 CFR part 3, Appendix A, section 3(a)(3)(iii) 

(OCC). 14 12 CFR parts 208 and 225, Appendix A, section 

III.C.3. (Board). 15 12 CFR Part 325, Appendix A, section II.C. 

(FDIC) 

16 12 CFR 567.1 (OTS). 17See 5 U.S.C. 553(b) and (d). 

weight. Under the OCC’s general riskbased capital rules for national banks, 

‘‘not restructured’’ is listed among the 

criteria that mortgage loans must meet 

in order to receive a 50 percent risk 

weight.13 Under the Board’s general 

risk-based capital rules for bank holding 

companies and state member banks, 

mortgage loans must be ‘‘performing in 

accordance with their original terms’’ in 

order to receive a 50 percent risk 

weight.14 Generally, mortgage loans that 

have been modified are considered to 

have been restructured (OCC), or are not 

considered to be performing in 

accordance with their original terms 

(Board). Therefore, under the OCC’s and 

Board’s current general risk-based 

capital rules, such loans must be risk 

weighted at 100 percent. 

Under the FDIC’s general risk-based 

capital rules, a state nonmember bank 

may assign a 50 percent risk weight to 

any modified mortgage loan, so long as 

the loan, as modified, is not 90 days or 

more past due or in nonaccrual status 

and meets other applicable criteria for a 

50 percent risk weight.15 Under the 

OTS’s general risk-based capital rules, a 

savings bank may assign a 50 percent 

risk weight to any modified residential 

mortgage loan, so long as the loan, as 

modified, is not 90 days or more past 

due and meets other applicable criteria 

for a 50 percent risk weight.16 Thus, the 

revisions provided under this interim 

final rule relative to the FDIC’s and 

OTS’s risk-based capital rules are 

clarifying in nature. 

After carefully considering the 

specific features of the Program, the 

agencies have adopted this interim final 

rule to provide that mortgage loans 

modified under the Program will retain 

the risk weight appropriate to the 

mortgage loan prior to the modification, 

as long as other applicable prudential 

criteria remain satisfied. Accordingly, 

under the interim final rule, a qualifying 

mortgage loan appropriately risk 

weighted at 50 percent before 

modification under the Program would 

continue to be risk weighted at 50 

percent after modification, and a 

mortgage loan risk weighted at 100 

percent prior to modification under the 

Program would continue to be risk 

weighted at 100 percent after 

modification. Consistent with the 

agencies’ current treatment, if a 

mortgage loan were to become 90 days 

or more past due or carried in nonaccrual status or otherwise restructured 

after being modified under the Program, 

the loan would be assigned a risk weight 

of 100 percent. Also consistent with 

current practice, the agencies intend to 

continue to allow past due and 

nonaccrual loans that receive a 100 

percent risk weight to return to a 50 

percent risk weight under certain 

circumstances, including after 

demonstration of a sustained period of 

repayment performance. 

If a banking organization holds both a 

qualifying first-lien mortgage loan and a 

second-lien mortgage loan on the same 

property, with no intervening lien, and 

both loans are modified under the 

Program, the banking organization may 

continue to apply the risk weights 

appropriate to the loans prior to the 

modification, as long as other prudential 

criteria remain satisfied. Additionally, 

in certain circumstances under the 

general risk-based capital rules (as with, 

for example, a direct credit substitute or 

recourse obligation), a banking 

organization is permitted to look 

through an exposure to the risk weight 

of a residential mortgage loan 

underlying that exposure. In these cases, 

the banking organization would follow 

the capital treatment provided in this 

interim final rule in the event that the 

underlying residential mortgage loan 

has been modified pursuant to the 

Program. 

The agencies believe that treating 

mortgage loans modified under the 

Program in the manner described above 

is appropriate in light of the special and 

unique incentive features of the Program 

and the fact that the Program is offered 

by the U.S. government in order to 

achieve the public policy objective of 

promoting sustainable loan 

modifications for homeowners at risk of 

foreclosure in a way that balances the 

interests of borrowers, servicers, and 

lenders. As previously described, the 

Program requires that a borrower’s frontend debt-to-income ratio on a first-lien 

mortgage modified under the Program 

be reduced to no greater than 31 

percent—which should improve the 

borrower’s ability to repay the modified 

loan—and, importantly, provides for 

Treasury to match reductions in 

monthly payments dollar-for-dollar to 

reduce the borrower’s front-end debt-toincome ratio from 38 percent to 31 

percent. In addition, as described above, 

the Program provides material financial 

incentives for servicers and lenders to 

take actions to reduce the likelihood of 

defaults, as well as to servicers and 

borrowers designed to help borrowers 

remain current on modified loans. The 

structure and amount of these cash 

payments meaningfully align the 

financial incentives of servicers, 

lenders, and borrowers to encourage and 

increase the likelihood of participating 

borrowers remaining current on their 

mortgages. Each of these incentives is 

important to the agencies’ determination 

with respect to the appropriate 

regulatory capital treatment of mortgage 

loans modified under the Program. 

For the reasons discussed above, the 

agencies have adopted this interim final 

rule. 

The agencies seek comment on all 

aspects of this interim final rule. 

Regulatory Analysis 

Administrative Procedure Act 

Pursuant to sections 553(b) and (d) of 

the Administrative Procedure Act,17 the 

agencies find that there is good cause for 

issuing this interim final rule and 

making the rule effective immediately 

upon publication, and that it is 

impracticable, unnecessary, or contrary 

to the public interest to issue a notice 

of proposed rulemaking and provide an 

opportunity to comment before the 

effective date. The agencies have 

adopted the rule in light of, and to help 

address, the continuing stressed 

conditions in the housing and financial 

markets and the continuing unusual and 

urgent needs of homeowners. The rule 

will allow banking organizations to 

continue to risk weight loans modified 

under the Program at their premodification risk weights, thereby 

promoting stability in the banking and 

financial markets and promoting 

sustainable modifications of mortgages 

on owner-occupied residential 

properties. The agencies believe it is 

important to address immediately the 

risk-based capital treatment of mortgage 

loans modified under the Program in 

order to facilitate timely 

implementation and acceptance of the 

Program. The agencies note again that 

the Program has already been adopted 

and is in effect. The agencies are 

soliciting comment on all aspects of the 

rule and will make such changes that 

they consider appropriate or necessary 

after review of any comments received. 

Riegle Community Development and 

Regulatory Improvement Act 

Section 302 of Riegle Community 

Development and Regulatory 

Improvement Act generally requires that 

regulations that impose additional 

reporting, disclosure, or other 

requirements on insured depository 

institutions take effect on the first day 

of a calendar quarter unless the relevant 

agency finds good cause that the 


rmajette on PRODPC74 with RULES
31164 Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 

18See 12 U.S.C. 4802(b)(1). Other exceptions to 

this calendar-quarter requirement also exist that are 

not relevant here. 

19See 5 U.S.C. 603(a). 

20See 13 CFR 121.201. 21See Public Law 104–4. 

regulations should become effective 

sooner and publishes its finding with 

the rule.18 For the reasons discussed 

above, the agencies find good cause for 

making this interim final rule effective 

immediately. In addition, making the 

rule effective immediately will allow 

affected insured depository institutions 

and bank holding companies to take 

advantage of the rule in calculating their 

risk-based capital ratios at the end of the 

second quarter 2009. If banking 

organizations are required to hold 

residential mortgage loans modified 

pursuant to the Program at a 100 percent 

risk weight, the resulting risk-based 

capital requirements could be excessive 

in light of the risks associated with 

those assets. This interim final rule will 

ensure that banking organizations 

maintain appropriate risk-based capital 

levels with respect to modified 

residential mortgage loans in calculating 

their risk-based capital ratios for the 

second quarter 2009. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act, 5 

U.S.C. 601 et seq. (RFA), generally 

requires that, in connection with a 

notice of proposed rulemaking, an 

agency prepare and make available for 

public comment an initial regulatory 

flexibility analysis that describes the 

impact of a proposed rule on small 

entities.19 Under regulations issued by 

the Small Business Administration,20 a 

small entity includes a commercial 

bank, bank holding company, or savings 

association with assets of $175 million 

or less (a small banking organization). 

As of December 31, 2008, there were 

approximately 2,586 small bank holding 

companies, 394 small savings 

associations, 850 small national banks, 

432 small State member banks, and 

3,116 small State nonmember banks. As 

a general matter, the Board’s general 

risk-based capital rules apply only to a 

bank holding company that has 

consolidated assets of $500 million or 

more. Therefore, the changes to the 

Board’s capital adequacy guidelines for 

bank holding companies will not affect 

small bank holding companies. 

This rulemaking does not involve the 

issuance of a notice of proposed 

rulemaking and, therefore, the 

requirements of the RFA do not apply. 

However, the agencies note that the rule 

does not impose any additional 

obligations, restrictions, burdens, or 

reporting, recordkeeping or compliance 

requirements on banks or savings 

associations, including small banking 

organizations, nor does it duplicate, 

overlap or conflict with other Federal 

rules. The rule also will benefit small 

banking organizations that are subject to 

the agencies’ general risk-based capital 

rules by allowing mortgage loans 

modified under the Program to retain 

the risk weight assigned to the loan 

prior to the modification. Further, the 

agencies are requesting public comment 

on this rule and will modify the rule as 

appropriate after reviewing the 

comments. 

Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3506), the agencies have 

reviewed the interim final rule to assess 

any information collections. There are 

no collections of information as defined 

by the Paperwork Reduction Act in the 

final rule. 

OCC/OTS Executive Order 12866 

Executive Order 12866 requires 

Federal agencies to prepare a regulatory 

impact analysis for agency actions that 

are found to be ‘‘significant regulatory 

actions.’’ Significant regulatory actions 

include, among other things, 

rulemakings that ‘‘have an annual effect 

on the economy of $100 million or more 

or adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities.’’ The OCC and the OTS 

each determined that its portion of the 

interim final rule is not a significant 

regulatory action under Executive Order 

12866. 

OCC/OTS Unfunded Mandates Reform 

Act of 1995 Determination 

The Unfunded Mandates Reform Act 

of 1995 21 (UMRA) requires that an 

agency prepare a budgetary impact 

statement before promulgating a rule 

that includes a Federal mandate that 

may result in the expenditure by State, 

local, and tribal governments, in the 

aggregate, or by the private sector of 

$100 million or more (adjusted annually 

for inflation) in any one year. If a 

budgetary impact statement is required, 

section 205 of the UMRA also requires 

an agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating a rule. 

The OCC and the OTS each have 

determined that its interim final rule 

will not result in expenditures by State, 

local, and tribal governments, in the 

aggregate, or by the private sector, of 

$100 million or more in any one year. 

Accordingly, neither the OCC nor the 

OTS has prepared a budgetary impact 

statement or specifically addressed the 

regulatory alternatives considered. 

Solicitation of Comments on Use of 

Plain Language 

Section 722 of the GLBA required the 

agencies to use plain language in all 

proposed and final rules published after 

January 1, 2000. The agencies invite 

comment on how to make this proposed 

rule easier to understand. For example: 

• Have the agencies organized the 

material to suit your needs? If not, how 

could they present the rule more 

clearly? 

• Are the requirements in the rule 

clearly stated? If not, how could the rule 

be more clearly stated? 

• Do the regulations contain technical 

language or jargon that is not clear? If 

so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? If so, what 

changes would achieve that? 

• Is this section format adequate? If 

not, which of the sections should be 

changed and how? 

• What other changes can the 

agencies incorporate to make the 

regulation easier to understand? 

List of Subjects 

12 CFR Part 3 

Administrative practice and 

procedure, Banks, Banking, Capital, 

National banks, Reporting and 

recordkeeping requirements, Risk. 

12 CFR Part 208 

Confidential business information, 

Crime, Currency, Federal Reserve 

System, Mortgages, Reporting and 

recordkeeping requirements, Risk. 

12 CFR Part 225 

Administrative practice and 

Procedure, Banks, Banking, Federal 

Reserve System, Holding companies, 

Reporting and recordkeeping 

requirements, Securities. 

12 CFR Part 325 

Administrative practice and 

procedure, Banks, Banking, Capital 

adequacy, Reporting and recordkeeping 

requirements, Savings associations, 

State nonmember banks. 

12 CFR Part 567 

Capital, Reporting and recordkeeping 

requirements, Risk, Savings 

associations. 


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Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 31165 

41 If a bank holds the first and junior lien(s) on 

a residential property and no other party holds an 

intervening lien, the transaction is treated as a 

single loan secured by a first lien for the purposes 

of determining the loan-to-value ratio and assigning 

a risk weight. 

42 Loans that qualify as loans secured by 1-to 4- 

family residential properties or multifamily 

residential properties are listed in the instructions 

to the commercial bank Call Report. In addition, for 

risk-based capital purposes, loans secured by 1- to 

4-family residential properties include loans to 

builders with substantial project equity for the 

construction of 1- to 4-family residences that have 

been presold under firm contracts to purchasers 

who have obtained firm commitments for 

permanent qualifying mortgage loans and have 

made substantial earnest money deposits. Such 

loans to builders will be considered prudently 

underwritten only if the bank has obtained 

sufficient documentation that the buyer of the home 

intends to purchase the home (i.e., has a legally 

binding written sales contract) and has the ability 

to obtain a mortgage loan sufficient to purchase the 

home (i.e., has a firm written commitment for 

permanent financing of the home upon 

completion). 

43 Residential property loans that do not meet all 

the specified criteria or that are made for the 

purpose of speculative property development are 

placed in the 100 percent risk category. 

44 Prudent underwriting standards include a 

conservative ratio of the current loan balance to the 

value of the property. In the case of a loan secured 

by multifamily residential property, the loan-tovalue ratio is not conservative if it exceeds 80 

percent (75 percent if the loan is based on a floating 

interest rate). Prudent underwriting standards also 

dictate that a loan-to-value ratio used in the case of 

originating a loan to acquire a property would not 

be deemed conservative unless the value is based 

on the lower of the acquisition cost of the property 

or appraised (or if appropriate, evaluated) value. 

Otherwise, the loan-to-value ratio generally would 

be based upon the value of the property as 

determined by the most current appraisal, or if 

appropriate, the most current evaluation. All 

appraisals must be made in a manner consistent 

with the Federal banking agencies’ real estate 

appraisal regulations and guidelines and with the 

bank’s own appraisal guidelines. 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

12 CFR Chapter I 

Authority and Issuance 

■ For the reasons stated in the common 

preamble, the Office of the Comptroller 

of the Currency amends Part 3 of 

chapter I of Title 12, Code of Federal 

Regulations as follows: 

PART 3—MINIMUM CAPITAL RATIOS; 

ISSUANCE OF DIRECTIVES 

■ 1. The authority citation for part 3 

continues to read as follows: 

Authority: 12 U.S.C. 93a, 161, 1818, 

1828(n), 1828 note, 1831n note, 1835, 3907, 

and 3909. 

■ 2. In appendix A to part 3, in section 

3, revise paragraph (a)(3)(iii) to read as 

follows: 

Appendix A to Part 3—Risk-Based 

Capital Guidelines 

Section 3. Risk Categories/Weights for OnBalance Sheet Assets and Off-Balance Sheet 

Items 

* * * * * 

(a) * * * 

(3) * * * 

(iii) Loans secured by first mortgages on 

one-to-four family residential properties, 

either owner occupied or rented, provided 

that such loans are not otherwise 90 days or 

more past due, or on nonaccrual or 

restructured. It is presumed that such loans 

will meet the prudent underwriting 

standards. For the purposes of the risk-based 

capital guidelines, a loan modified solely 

pursuant to the U.S. Department of 

Treasury’s Making Home Affordable Program 

will not be considered to have been 

restructured. 

* * * * * 

Board of Governors of the Federal 

Reserve System 

12 CFR Chapter II 

Authority and Issuance 

■ For the reasons stated in the common 

preamble, the Board of Governors of 

Federal Reserve System amends parts 

208 and 225 of Chapter II of title 12 of 

the Code of Federal Regulations as 

follows: 

PART 208—MEMBERSHIP OF STATE 

BANKING INSTITUTIONS IN THE 

FEDERAL RESERVE SYSTEM 

(REGULATION H) 

■ 3. The authority citation for part 208 

continues to read as follows: 

Authority : 12 U.S.C. 24, 36, 92a, 93a, 

248(a), 248(c), 321–338a, 371d, 461, 481–486, 

601, 611, 1814, 1816, 1818, 1820(d)(9), 

1833(j), 1828(o), 1831, 1831o, 1831p–1, 

1831r–1, 1831w, 1831x, 1835a, 1882, 2901– 

2907, 3105, 3310, 3331–3351, and 3905– 

3909; 15 U.S.C. 78b, 78I(b), 78l(i), 780– 

4(c)(5), 78q, 78q–1, and 78w, 1681s, 1681w, 

6801, and 6805; 31 U.S.C. 5318; 42 U.S.C. 

4012a, 4104a, 4104b, 4106 and 4128. 

■ 4. In appendix A to part 208, revise 

Section III. C.3., to read as follows: 

Appendix A to Part 208–Capital 

Adequacy Guidelines for State Member 

Banks: Risk-Based Measure 

* * * * * 

III. * * * 

C. * * * 

3. Category 3: 50 percent. This category 

includes loans fully secured by first liens 41

on 1- to 4-family residential properties, either 

owner-occupied or rented, or on multifamily 

residential properties,42 that meet certain 

criteria.43 Loans included in this category 

must have been made in accordance with 

prudent underwriting standards; 44 be 

performing in accordance with their original 

terms; and not be 90 days or more past due 

or carried in nonaccrual status. For purposes 

of this 50 percent risk weight category, a loan 

modified solely pursuant to the U. S. 

Department of Treasury’s Making Home 

Affordable Program will be considered to be 

performing in accordance with its original 

terms. The following additional criteria must 

also be applied to a loan secured by a 

multifamily residential property that is 

included in this category: all principal and 

interest payments on the loan must have 

been made on time for at least the year 

preceding placement in this category, or in 

the case where the existing property owner 

is refinancing a loan on that property, all 

principal and interest payments on the loan 

being refinanced must have been made on 

time for at least the year preceding placement 

in this category; amortization of the principal 

and interest must occur over a period of not 

more than 30 years and the minimum 

original maturity for repayment of principal 

must not be less than 7 years; and the annual 

net operating income (before debt service) 

generated by the property during its most 

recent fiscal year must not be less than 120 

percent of the loan’s current annual debt 

service (115 percent if the loan is based on 

a floating interest rate) or, in the case of a 

cooperative or other not-for-profit housing 

project, the property must generate sufficient 

cash flow to provide comparable protection 

to the institution. Also included in this 

category are privately-issued mortgagebacked securities provided that 

(1) The structure of the security meets the 

criteria described in section III(B)(3) above; 

(2) If the security is backed by a pool of 

conventional mortgages, on 1- to 4-family 

residential or multifamily residential 

properties each underlying mortgage meets 

the criteria described above in this section for 

eligibility for the 50 percent risk category at 

the time the pool is originated; 

(3) If the security is backed by privately 

issued mortgage-backed securities, each 

underlying security qualifies for the 50 

percent risk category; and 

(4) If the security is backed by a pool of 

multifamily residential mortgages, principal 

and interest payments on the security are not 

30 days or more past due. 

Privately-issued mortgage-backed 

securities that do not meet these criteria or 

that do not qualify for a lower risk weight are 

generally assigned to the 100 percent risk 

category. 

Also assigned to this category are revenue 

(non-general obligation) bonds or similar 

obligations, including loans and leases, that 

are obligations of states or other political 

subdivisions of the U.S. (for example, 

municipal revenue bonds) or other countries 

of the OECD-based group, but for which the 

government entity is committed to repay the 

debt with revenues from the specific projects 

financed, rather than from general tax funds. 

Credit equivalent amounts of derivative 

contracts involving standard risk obligors 

(that is, obligors whose loans or debt 

securities would be assigned to the 100 

percent risk category) are included in the 50 

percent category, unless they are backed by 

collateral or guarantees that allow them to be 

placed in a lower risk category. 

The instructions to the Call Report also 

discuss the treatment of loans, including 

multifamily housing loans, that are sold 


rmajette on PRODPC74 with RULES
31166 Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 

48 If a banking organization holds the first and 

junior lien(s) on a residential property and no other 

party holds an intervening lien, the transaction is 

treated as a single loan secured by a first lien for 

the purposes of determining the loan-to-value ratio 

and assigning a risk weight. 

49Loans that qualify as loans secured by 1- to 4- 

family residential properties or multifamily 

residential properties are listed in the instructions 

to the FR Y–9C Report. In addition, for risk-based 

capital purposes, loans secured by 1- to 4-family 

residential properties include loans to builders with 

substantial project equity for the construction of 1- 

to 4-family residences that have been presold under 

firm contracts to purchasers who have obtained 

firm commitments for permanent qualifying 

mortgage loans and have made substantial earnest 

money deposits. Such loans to builders will be 

considered prudently underwritten only if the bank 

holding company has obtained sufficient 

documentation that the buyer of the home intends 

to purchase the home (i.e., has a legally binding 

written sales contract) and has the ability to obtain 

a mortgage loan sufficient to purchase the home 

(i.e., has a firm written commitment for permanent 

financing of the home upon completion). 

50Residential property loans that do not meet all 

the specified criteria or that are made for the 

purpose of speculative property development are 

placed in the 100 percent risk category. 

51Prudent underwriting standards include a 

conservative ratio of the current loan balance to the 

value of the property. In the case of a loan secured 

by multifamily residential property, the loan-tovalue ratio is not conservative if it exceeds 80 

percent (75 percent if the loan is based on a floating 

interest rate). Prudent underwriting standards also 

dictate that a loan-to-value ratio used in the case of 

originating a loan to acquire a property would not 

be deemed conservative unless the value is based 

on the lower of the acquisition cost of the property 

or appraised (or if appropriate, evaluated) value. 

Otherwise, the loan-to-value ratio generally would 

be based upon the value of the property as 

determined by the most current appraisal, or if 

appropriate, the most current evaluation. All 

appraisals must be made in a manner consistent 

with the Federal banking agencies’ real estate 

appraisal regulations and guidelines and with the 

banking organization’s own appraisal guidelines. 

subject to a pro rata loss sharing arrangement. 

Such an arrangement should be treated by 

the selling bank as sold (and excluded from 

balance sheet assets) to the extent that the 

sales agreement provides for the purchaser of 

the loan to share in any loss incurred on the 

loan on a pro rata basis with the selling bank. 

In such a transaction, from the standpoint of 

the selling bank, the portion of the loan that 

is treated as sold is not subject to the riskbased capital standards. In connection with 

sales of multifamily housing loans in which 

the purchaser of a loan shares in any loss 

incurred on the loan with the selling 

institution on other than a pro rata basis, 

these other loss sharing arrangements are 

taken into account for purposes of 

determining the extent to which such loans 

are treated by the selling bank as sold (and 

excluded from balance sheet assets) under 

the risk-based capital framework in the same 

as prescribed for reporting purposes in the 

instructions to the Call Report. 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 5. The authority for part 225 

continues to read as follows: 

Authority : 12 U.S.C. 1817(j)(13), 1818, 

1828(o), 1831i, 1831p-1, 1843(c)(8), 1844(b), 

1972(1), 3106, 3108, 3310, 3331–3351, 3907, 

and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 

6805. 

■ 6. In appendix A to part 225, revise 

section III.C.3., to read as follows: 

Appendix A to Part 225–Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure 

* * * * * 

III. * * * 

C. * * * 

3. Category 3: 50 percent. This category 

includes loans fully secured by first liens 48

on 1- to 4-family residential properties, either 

owner-occupied or rented, or on multifamily 

residential properties,49 that meet certain 

criteria.50 Loans included in this category 

must have been made in accordance with 

prudent underwriting standards;51 be 

performing in accordance with their original 

terms; and not be 90 days or more past due 

or carried in nonaccrual status. For purposes 

of this 50 percent risk weight category, a loan 

modified or restructured solely pursuant to 

the U.S. Department of Treasury’s Making 

Home Affordable Program will be considered 

to be performing in accordance with its 

original terms. The following additional 

criteria must also be applied to a loan 

secured by a multifamily residential property 

that is included in this category: all principal 

and interest payments on the loan must have 

been made on time for at least the year 

preceding placement in this category, or in 

the case where the existing property owner 

is refinancing a loan on that property, all 

principal and interest payments on the loan 

being refinanced must have been made on 

time for at least the year preceding placement 

in this category; amortization of the principal 

and interest must occur over a period of not 

more than 30 years and the minimum 

original maturity for repayment of principal 

must not be less than 7 years; and the annual 

net operating income (before debt service) 

generated by the property during its most 

recent fiscal year must not be less than 120 

percent of the loan’s current annual debt 

service (115 percent if the loan is based on 

a floating interest rate) or, in the case of a 

cooperative or other not-for-profit housing 

project, the property must generate sufficient 

cash flow to provide comparable protection 

to the institution. Also included in this 

category are privately-issued mortgagebacked securities provided that: 

(1) The structure of the security meets the 

criteria described in section III(B)(3) above; 

(2) if the security is backed by a pool of 

conventional mortgages, on 1- to 4-family 

residential or multifamily residential 

properties, each underlying mortgage meets 

the criteria described above in this section for 

eligibility for the 50 percent risk category at 

the time the pool is originated; 

(3) If the security is backed by privatelyissued mortgage-backed securities, each 

underlying security qualifies for the 50 

percent risk category; and 

(4) If the security is backed by a pool of 

multifamily residential mortgages, principal 

and interest payments on the security are not 

30 days or more past due. Privately-issued 

mortgage-backed securities that do not meet 

these criteria or that do not qualify for a 

lower risk weight are generally assigned to 

the 100 percent risk category. 

Also assigned to this category are revenue 

(non-general obligation) bonds or similar 

obligations, including loans and leases, that 

are obligations of states or other political 

subdivisions of the U.S. (for example, 

municipal revenue bonds) or other countries 

of the OECD-based group, but for which the 

government entity is committed to repay the 

debt with revenues from the specific projects 

financed, rather than from general tax funds. 

Credit equivalent amounts of derivative 

contracts involving standard risk obligors 

(that is, obligors whose loans or debt 

securities would be assigned to the 100 

percent risk category) are included in the 50 

percent category, unless they are backed by 

collateral or guarantees that allow them to be 

placed in a lower risk category. 

* * * * * 

* * * * * 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority for Issuance 

■ For the reasons stated in the common 

preamble, the Federal Deposit Insurance 

Corporation amends Part 325 of Chapter 

III of Title 12, Code of the Federal 

Regulations as follows: 

PART 325—CAPITAL MAINTENANCE 

■ 7. The authority citation for part 325 

continues to read as follows: 

Authority: 12 U.S.C. 1814(a), 1815(b), 

1816, 1818(a), 1818(b), 1815, 1818(a), 

1818(b), 1818(t), 1819(Tenth), 1828(c), 

1828(d), 1828(i), 1828(n), 1828(o), 1835, 

3907, 3909, 4808; Pub. L. 102–233, 105 Stat. 

1761, 1789, 1790, (12 U.S.C. 1831n, note); 

Pub. L. 102–242, 105 Stat. 2236, 2355, 2386 

(12 U.S.C. 1828 note). 

■ 8. Amend Appendix A to part 325 by 

revising footnote 39 to read as follows: 

Appendix A to Part 325—Statement of 

Policy on Risk Based Capital 

* * * * * 

II * * * 

C. * * * 

* * * * * 39This category would also include a firstlien residential mortgage loan on a one-tofour family property that was appropriately 

assigned a 50 percent risk weight pursuant to 

this section immediately prior to 

modification under the Making Home 

Affordable Program established by the U.S. 

Department of Treasury, so long as the loan, 

as modified, is not 90 days or more past due 

or in nonaccrual status and meets other 

applicable criteria for a 50 percent risk 


rmajette on PRODPC74 with RULES
Federal Register / Vol. 74, No. 124 / Tuesday, June 30, 2009 / Rules and Regulations 31167 

weight. In addition, real estate loans that do 

not meet all of the specified criteria or that 

are made for the purpose of property 

development are placed in the 100 percent 

risk category. 

Department of the Treasury 

Office of Thrift Supervision 

12 CFR Chapter V 

■ For reasons set forth in the common 

preamble, the Office of Thrift 

Supervision amends part 567 of Chapter 

V of title 12 of the Code of Federal 

Regulations as follows: 

PART 567—CAPITAL 

■ 9. The authority citation for part 567 

continues to read as follows: 

Authority: 12 U.S.C. 1462, 1462a, 1463, 

1464, 1467a, 1828 (note). 

■ 10. Section 576.1 is amended by 

adding paragraph (4) to the definition 

Qualifying mortgage loan to read as 

follows: 

§ 576.1 Definitions. 

* * * * * 

Qualifying mortgage loan. 

* * * * * 

(4) A loan that meets the requirements 

of this section prior to modification 

under the U.S. Department of Treasury’s 

Making Home Affordable Program may 

be included as a qualifying mortgage 

loan, so long as the loan is not 90 days 

or more past due. 

* * * * * 

Dated: June 15, 2009. 

John C. Dugan, 

Comptroller of Currency. 

By order of the Board of Governors of the 

Federal Reserve System, June 24, 2009. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated at Washington DC, this 23rd day of 

June 2009. 

Federal Deposit Insurance Corporation. 

Valerie J. Best, 

Assistant Executive Secretary. 

Dated: June 17, 2009. 

By the Office of the Thrift Supervision. 

John E. Bowman, 

Acting Director. 

[FR Doc. E9–15507 Filed 6–29–09; 8:45 am] 

BILLING CODE 6210–02–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2009–0544; Directorate 

Identifier 2009–NE–17–AD; Amendment 39– 

15952; AD 2009–12–51] 

RIN 2120–AA64 

Airworthiness Directives; Turbomeca 

S.A. Arriel 1A1, 1A2, 1B, 1C, 1C1, 1C2, 

1D, 1D1, 1E2, 1K1, 1S, and 1S1 

Turboshaft Engines 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule; request for 

comments. 

SUMMARY: This document publishes in 

the Federal Register an amendment 

adopting emergency airworthiness 

directive (AD) 2009–12–51 that was sent 

previously to all known U.S. owners 

and operators of Turbomeca S.A. Arriel 

1A1, 1A2, 1B, 1C, 1C1, 1C2, 1D, 1D1, 

1E2, 1K1, 1S, and 1S1 turboshaft 

engines. This AD requires initial and 

repetitive visual inspections of certain 

reduction gearboxes (module M05) for 

oil leakage, repair if leaking, and repair 

of all affected modules as terminating 

action to the repetitive inspections. This 

AD results from reports of oil leaks from 

certain reduction gearbox (module M05) 

front casings. The engine manufacturer 

reported that the lubrication duct plug 

was not properly bonded/glued in place. 

We are issuing this AD to prevent 

uncommanded in-flight engine 

shutdown, possible engine fire, and an 

emergency autorotation landing. 

DATES: This AD becomes effective July 

15, 2009 to all persons except those 

persons to whom it was made 

immediately effective by emergency AD 

2009–12–51, issued on June 4, 2009, 

which contained the requirements of 

this amendment. The Director of the 

Federal Register approved the 

incorporation by reference of certain 

publications listed in the regulations as 

of July 15, 2009. 

We must receive any comments on 

this AD by August 31, 2009. 

ADDRESSES: Use one of the following 

addresses to comment on this AD. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov and follow 

the instructions for sending your 

comments electronically. 

• Mail: Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Avenue, SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

• Fax: (202) 493–2251. 

Contact Turbomeca, 40220 Tarnos, 

France; telephone (33) 05 59 74 40 00, 

fax (33) 05 59 74 45 15 for the service 

information identified in this AD. 

FOR FURTHER INFORMATION CONTACT: 

James Lawrence, Aerospace Engineer, 

Engine Certification Office, FAA, Engine 

and Propeller Directorate, 12 New 

England Executive Park, Burlington, MA 

01803; e-mail: james.lawrence@faa.gov; 

telephone (781) 238–7176; fax (781) 

238–7199. 

SUPPLEMENTARY INFORMATION: On June 4, 

2009, the FAA issued emergency AD 

2009–12–51, that applies to Turbomeca 

S.A. Arriel 1A1, 1A2, 1B, 1C, 1C1, 1C2, 

1D, 1D1, 1E2, 1K1, 1S, and 1S1 

turboshaft engines. That AD requires 

initial and repetitive visual inspections 

of certain reduction gearboxes (module 

M05) for oil leakage, repair if leaking, 

and repair of all affected modules as 

terminating action to the repetitive 

inspections. This condition, if not 

corrected, could result in 

uncommanded in-flight engine 

shutdown, possible engine fire, and an 

emergency autorotation landing. 

Relevant Service Information 

We have reviewed and approved the 

technical contents of Turbomeca S.A. 

Mandatory Service Bulletin (MSB) No. 

A292 72 0825, Version A, dated May 27, 

2009, that describes procedures for 

visual inspections of affected reduction 

gearboxes (module M05) for oil leakage, 

repair if leaking, and repair of all 

affected modules as terminating action 

to the repetitive inspections. 

FAA’s Determination and Requirements 

of This AD 

Since the unsafe condition described 

is likely to exist or develop on other 

engines of the same type design, we 

issued emergency AD 2009–12–51 to 

prevent uncommanded in-flight engine 

shutdown, possible engine fire, and an 

emergency autorotation landing. This 

AD requires initial and repetitive visual 

inspections of certain reduction 

gearboxes (module M05) for oil leakage, 

repair if leaking, and repair of all 

affected modules as terminating action 

to the repetitive inspections. You must 

use the service information described 

previously to perform the actions 

required by this AD. 

FAA’s Determination of the Effective 

Date 

Since an unsafe condition exists that 

requires the immediate adoption of this 


rmajette on PRODPC74 with RULES