83_FR_55327 83 FR 55114 - Federal Home Loan Bank Housing Goals Amendments

83 FR 55114 - Federal Home Loan Bank Housing Goals Amendments

FEDERAL HOUSING FINANCE AGENCY

Federal Register Volume 83, Issue 213 (November 2, 2018)

Page Range55114-55133
FR Document2018-23890

The Federal Housing Finance Agency (FHFA) is proposing to amend the existing Federal Home Loan Bank Housing Goals regulation. FHFA proposes to replace the existing four separate retrospective housing goals with a single prospective mortgage purchase housing goal as well as establish a separate small member participation housing goal. The proposed rule would also allow the Banks to request FHFA approval of alternative target levels for the proposed goals. Finally, FHFA is proposing to eliminate the existing $2.5 billion volume threshold that triggers the application of housing goals for each Bank.

Federal Register, Volume 83 Issue 213 (Friday, November 2, 2018)
[Federal Register Volume 83, Number 213 (Friday, November 2, 2018)]
[Proposed Rules]
[Pages 55114-55133]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-23890]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1281

RIN 2590-AA82


Federal Home Loan Bank Housing Goals Amendments

AGENCY: Federal Housing Finance Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing to 
amend the existing Federal Home Loan Bank Housing Goals regulation. 
FHFA proposes to replace the existing four separate retrospective 
housing goals with a single prospective mortgage purchase housing goal 
as well as establish a separate small member participation housing 
goal. The proposed rule would also allow the Banks to request FHFA 
approval of alternative target levels for the proposed goals. Finally, 
FHFA is proposing to eliminate the existing $2.5 billion volume 
threshold that triggers the application of housing goals for each Bank.

DATES: Written comments must be received on or before January 31, 2019.

ADDRESSES: You may submit your comments, identified by regulatory 
information number (RIN) 2590-AA82, by any of the following methods:
     Agency website: www.fhfa.gov/open-for-comment-or-input.
     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 email 
to FHFA at [email protected] to ensure timely receipt by FHFA. 
Please include ``Comments/RIN 2590-AA82'' in the subject line of the 
submission.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA82, 
Federal Housing Finance Agency, Eighth Floor, 400 7th Street SW, 
Washington, DC 20219. The package should be delivered at the 7th Street 
entrance 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-AA82, Federal 
Housing Finance Agency, Eighth Floor, 400 7th Street SW, Washington, DC 
20219. Please note that all mail sent to FHFA via U.S. Mail is

[[Page 55115]]

routed through a national irradiation facility, a process that may 
delay delivery by approximately two weeks.

FOR FURTHER INFORMATION CONTACT: Ted Wartell, Manager, Housing & 
Community Investment, (202) 649-3157 or Ethan Handelman, Senior Policy 
Analyst, Office of Housing and Community Investment, (202) 649-3264. 
These are not toll-free numbers. The telephone number for the Hearing 
Impaired is (800) 877-8339. The mailing address for each contact is: 
Federal Housing Finance Agency, 400 7th Street SW, Washington, DC 
20219.

SUPPLEMENTARY INFORMATION: 

I. Comments

    FHFA invites comments on all aspects of the proposed rule and will 
consider all comments before issuing the final rule. FHFA will post for 
public inspection all comments received by the deadline without change, 
including any personal information you provide, such as your name, 
address, email address, and telephone number. All comments received 
will be available for examination by the public through the electronic 
rulemaking docket for this proposed rule located on the FHFA website at 
http://www.fhfa.gov.

II. Background

A. The Federal Home Loan Bank System

    The eleven Federal Home Loan Banks (Banks) are wholesale financial 
institutions organized under the Federal Home Loan Bank Act (Bank 
Act).\1\ The Banks are cooperatives; only members of a Bank may 
purchase the capital stock of a Bank, and only members or certain 
eligible housing associates (such as state housing finance agencies) 
may obtain access to secured loans, known as advances, or other 
products provided by a Bank.\2\ Any eligible institution (generally, a 
federally insured depository institution or state-regulated insurance 
company) may become a member of a Bank if it satisfies certain criteria 
and purchases a specified amount of the Bank's capital stock.\3\
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    \1\ See 12 U.S.C. 1423, 1432(a).
    \2\ See 12 U.S.C. 1426(a)(4), 1430(a), 1430b.
    \3\ See 12 U.S.C. 1424; 12 CFR part 1263.
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    As government-sponsored enterprises, the Banks have certain 
privileges under federal law, which allow them to borrow funds at 
spreads over the rates on U.S. Treasury securities of comparable 
maturity that are narrower than those available to corporate borrowers 
generally. The Banks pass along their funding advantage to their 
members and housing associates--and ultimately to consumers--by 
providing advances \4\ and other financial services at rates that would 
not otherwise be available to their members. Among those financial 
services are the Banks' Acquired Member Assets (AMA) programs, under 
which the Banks provide financing for members' housing finance 
activities by purchasing mortgage loans.
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    \4\ Members are required to pledge specific collateral, mainly 
mortgages or other real estate related assets, to secure any advance 
taken down from a Bank. See 12 CFR 1266.7.
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B. AMA Programs

    FHFA's AMA regulation authorizes the Banks to acquire certain 
assets from their members and housing associates as a means of 
advancing their housing finance mission, and prescribes the parameters 
within which the Banks may do so.\5\ Through the acquisition of AMA, 
the Banks provide a source of liquidity to their members and housing 
associates, to further mission-related lending.
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    \5\ See 12 CFR part 1268.
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    FHFA's AMA regulation authorizes each Bank, at its discretion, to 
invest in assets that qualify as AMA subject to the requirements of the 
rule. Currently, each of the eleven Banks except the Atlanta Bank 
offers an AMA program to its members, albeit at varying levels. As of 
June 30, 2018, the System's total outstanding AMA mortgages were $57.3 
billion and represented 5 percent of total System assets. In contrast, 
the System's outstanding advances, their primary business line, 
represented 65 percent of total assets. Outstanding mortgages relative 
to total assets at the Banks offering AMA programs to its members 
ranged from a high of 17 percent and 15 percent at the Indianapolis and 
Topeka Banks, respectively, to less than 2 percent at the New York and 
Dallas Banks. Further, as a point of comparison, in 2017 the 
Enterprises' mortgage purchases represented 62 percent of the secondary 
mortgage market comprising the Federal National Mortgage Association 
(Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), 
the Government National Mortgage Association (Ginnie Mae), and the 
Banks, while the Banks' share represented less than 1 percent.
    The two AMA programs that the Banks are currently offering to their 
members are the Mortgage Purchase Program (MPP) and the Mortgage 
Partnership Finance (MPF) program. The Banks generally acquire 15- to 
30-year conventional conforming fixed-rate mortgage loans secured by 1- 
to 4-unit residential mortgages in addition to loans guaranteed or 
insured by a department or agency of the U.S. government.

C. Overview of the Existing Bank Housing Goals Regulation

    The existing Bank housing goals regulation has been in effect since 
January 2011.\6\ The regulation implements section 10C(a) of the Bank 
Act, which requires the Director of FHFA to ``establish housing goals 
with respect to the purchase of mortgages, if any, by the [Banks].'' 
\7\ Section 10C(b) requires that the Bank housing goals be ``consistent 
with'' the housing goals established by FHFA for Fannie Mae and 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), taking into consideration ``the unique 
mission and ownership structure of the [Banks].'' \8\
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    \6\ 75 FR 81096 (Dec. 27, 2010).
    \7\ 12 U.S.C. 1430c(a).
    \8\ 12 U.S.C. 1430c(b).
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    The existing Bank housing goals regulation provides that a Bank 
will be subject to the housing goals if its AMA mortgage purchases in a 
given year exceed a volume threshold of $2.5 billion. The regulation 
establishes three single-family owner-occupied purchase money mortgage 
goals and one single-family refinancing mortgage goal applicable to the 
Banks' purchases under their AMA programs. The goals for purchase money 
mortgages separately measure performance on purchase money mortgages 
for (1) low-income families, (2) families in low-income areas, and (3) 
very low-income families. The goal for refinancing mortgages measures 
performance on refinancing mortgages for low-income families. The 
levels of the housing goals are established retrospectively using Home 
Mortgage Disclosure Act (HMDA) data to calculate the percentage of 
single-family originations in the Bank's district that qualify for each 
of the housing goals.
    Each year, FHFA determines whether any of the Banks have exceeded 
the volume threshold. For each Bank that has exceeded the volume 
threshold, FHFA determines the Bank's performance under the housing 
goals. FHFA evaluates performance by calculating the percentage share 
of a Bank's AMA mortgage purchases that qualify for each housing goal. 
A Bank meets a housing goal if its performance is equal to or greater 
than the level of the housing goal established by FHFA based on HMDA 
data for that year.

[[Page 55116]]

III. Summary of Proposed Rule

    This proposed rule would replace the existing Bank housing goals 
with new, streamlined goals that reflect the Banks' unique mission 
while supporting affordable lending. The proposed rule would provide 
certainty for the Banks by informing them of the housing goal levels in 
advance and would provide clarity and flexibility for the Banks by 
consolidating multiple goals into a more straightforward measurement of 
performance. The proposed rule would also establish a new housing goal 
that would measure the extent to which smaller members are 
participating in AMA programs.

A. New Process for Setting Housing Goal Levels

    The proposed rule would revise the Bank housing goals regulation to 
remove the existing process for FHFA to establish the levels of the 
housing goals retrospectively based on HMDA data. The proposed rule 
would establish levels for each of the housing goals in advance, in the 
regulation itself. This would eliminate any uncertainty about the 
levels of the housing goals from year-to-year. The proposed rule would 
also allow the Banks to request FHFA approval of an alternative goal 
level. Finally, the proposed rule would eliminate the existing $2.5 
billion volume threshold that triggers the application of housing goals 
for each Bank.

B. Prospective Mortgage Purchase Housing Goal

    The proposed rule would revise the Bank housing goals regulation to 
remove the separate housing goals for home-purchase mortgages for low-
income families, home-purchase mortgages for low-income areas, home-
purchase mortgages for very low-income families, and refinancing 
mortgages for low-income families. The proposed rule would replace the 
four separate housing goals with a single, overall measurement of 
performance. This new housing goal would include each of the categories 
currently covered by the Bank housing goals, but it would not include 
separate targets for each category. The proposed rule would establish 
the prospective mortgage purchase housing goal target level at 20 
percent of a Bank's AMA mortgage purchases.

C. New Housing Goal for Small Member Participation

    The proposed rule would establish a separate goal for participation 
by smaller members in Bank AMA programs.
    The proposed rule would establish the small member participation 
housing goal target level at 50 percent.

D. Phase-in of New Housing Goals

    The proposed rule would establish a three-year phase-in for 
enforcement of the new housing goals.

E. Other Changes

    The proposed rule would revise and simplify the criteria and 
requirements under which mortgages are either included or excluded from 
FHFA's measurement of a Bank's performance under the housing goals. The 
proposed rule would also revise the reporting requirements to reflect 
the new structure of the Bank housing goals.

IV. New Process for Setting Target Levels for Housing Goals

    The proposed rule would revise the Bank housing goals regulation to 
establish a specific annual target level for each housing goal. The 
proposed rule would also allow a Bank to request FHFA approval of a 
different target level for either of the new housing goals. The Bank 
would be required to submit its proposed target level for the housing 
goal to FHFA for review and approval. Finally, the proposed rule would 
also remove the volume threshold from the Bank housing goals 
regulation. The new housing goals would apply to each Bank every year.

A. Target Levels for Housing Goals Established in Advance

    Under the existing Bank housing goals regulation, FHFA establishes 
the target level for each of the housing goals retrospectively using 
data collected and maintained pursuant to HMDA. This data typically 
becomes publicly available in September of the following year, although 
in 2018 the Bureau of Consumer Financial Protection released 2017 HMDA 
data in May, subject to possible revision.\9\
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    \9\ See Federal Financial Institutions Examination Council, 
``FFIEC Announces Availability of 2017 Data on Mortgage Lending,'' 
(May 7, 2018), available at https://www.ffiec.gov/press/pr050818.htm.
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    A Bank meets a housing goal under the existing rule if its mortgage 
purchases that meet the counting requirements established in the rule, 
as a percentage of its overall AMA purchases, equals or exceeds the 
percentage originated in its district. For example, if 23 percent of 
mortgages originated in a Bank's district were for low-income 
borrowers, then the low-income share of the Bank's purchases must be 23 
percent or greater.
    Because the level of the housing goals is not known until after the 
end of the year being evaluated, it is more difficult for a Bank to 
assess its performance relative to the goal during the year. A Bank may 
therefore have more difficulty adjusting its activities based on its 
performance relative to the goals.
    By setting the target levels for the housing goals in advance, the 
proposed rule would provide certainty for the Banks and would allow the 
Banks to monitor their own performance and, if necessary, take steps in 
advance to ensure that they meet the housing goals.

B. Bank-Proposed Housing Goal Levels

    Under the existing Bank housing goals regulation, FHFA evaluates 
the feasibility of the target levels for the housing goals for a 
particular Bank after the fact. For each Bank that has exceeded the 
volume threshold in a year, FHFA determines whether the Bank met each 
housing goal. If FHFA determines that a Bank has not met one of the 
housing goals, FHFA will also determine whether achievement of the 
target level for the housing goal was feasible, taking into 
consideration any information provided by the Bank, along with market 
and economic conditions. While this process provides FHFA the ability 
to evaluate facts and circumstances for not meeting a goal that may 
weigh against adverse supervisory actions against the Banks, the Banks 
face uncertainty because the feasibility evaluation does not happen 
until FHFA makes its final determination on the Bank's performance, 
after the year being measured is over.
    The proposed rule would address this uncertainty by setting a 
prospective goal, as described above, and by allowing a Bank to propose 
an alternate level for the housing goal. If a Bank's district, 
membership, or affordable housing needs do not fit the proposed goal 
and the Bank believes the goal is infeasible, the Bank would be able to 
propose an alternate level for FHFA review and approval. The Bank would 
be required to provide a justification for the alternate level by 
submitting any information it considers relevant to the feasibility of 
the proposed goal level. FHFA would review the Bank proposal to verify 
the Bank's showing of infeasibility, and to ensure: (1) That the 
proposed goal demonstrates a meaningful contribution to affordable 
housing, and (2) that the proposed goal would be feasible for the 
Bank's AMA program.
    To illustrate, the proposed rule would establish target levels for 
each of the housing goals in advance. The target

[[Page 55117]]

level for the prospective mortgage purchase housing goal would be 20 
percent of a Bank's AMA mortgage purchases, and a 50 percent 
participation rate by small members delivering mortgages to the Bank's 
AMA programs. If a Bank determines that the 20 percent prospective 
mortgage purchase housing goal and the 50 percent small member 
participation housing goal are both feasible for the Bank to achieve, 
the Bank would not need to take any additional action. However, each 
Bank would have the option to propose an alternative for one or both 
goals. The proposed alternatives would address only the target levels 
for the housing goals. A Bank would not be able to change how a goal is 
defined and measured or how the loans meet the counting requirements 
established by the rules. FHFA would consider the Bank's request and 
notify the Bank if the request is approved.
    The proposed rule would establish a three-year cycle for setting 
alternate target levels for the Bank housing goals. In other words, the 
Bank's proposal would cover the target levels for the housing goals for 
the next three years. For the initial three-year housing goals cycle, 
the Bank would submit its request by October 31, 2019. Under special 
circumstances that would trigger application of housing goals, such as 
starting a new AMA program, a Bank would have an opportunity to propose 
a goal alternative.
    If FHFA approves an alternate target level for one or both of the 
housing goals for a Bank, the evaluation process would remain the same. 
At the end of the year, FHFA would evaluate the Bank based on the FHFA 
approved alternative target level and make its determination based on 
whether the Bank's performance met the approved target level for the 
housing goal or goals.
    This new alternative process for setting the target levels of the 
housing goals would ensure that the target levels for the housing goals 
are feasible for each Bank, taking into account the particular programs 
and activities of the Bank.

C. Removing the Volume Threshold

    Under the existing Bank housing goals regulation, a Bank is subject 
to the housing goals only if the total unpaid principal balance (UPB) 
of the Bank's purchases of AMA mortgages in a year exceeds $2.5 billion 
(the ``volume threshold''). Since the 2010 housing goals rule became 
effective, there have been only three instances where a Bank exceeded 
the $2.5 billion annual volume threshold. The three instances were in 
2015 (Indianapolis Bank) and in 2016 (Indianapolis Bank and Cincinnati 
Bank).
    The proposed rule would eliminate the annual volume threshold for 
triggering the application of the housing goals. The housing goals 
would apply to each of the Banks each year, either at the target level 
established by FHFA in the housing goals regulation or a Bank-proposed 
alternative target level approved by FHFA.
    The volume threshold was adopted to avoid adverse impact on Bank 
AMA programs, particularly programs focused on providing liquidity for 
smaller Bank members described at the time of adoption as being a 
relatively low level. Over time, however, the volume threshold has 
instead operated as an upper limit on Bank AMA programs. Banks below 
the volume threshold in effect avoid the housing goals, while Banks 
above the threshold face application of housing goals that AMA programs 
were not designed to, and typically did not, meet.
    Housing goals will better serve their public purpose if they are 
flexible enough to be meaningful and achievable for a variety of Bank 
AMA programs. Instead of the housing goals being a simple binary on-or-
off based on a volume threshold, the proposed rule offers a mechanism 
for goals to apply to all Banks in ways that fit their unique mission. 
The new process for setting the levels of the housing goals would 
accomplish the purpose of the volume threshold by allowing the Banks to 
propose meaningful and achievable target levels based on the nature of 
the AMA program at each Bank.

D. FHFA Discretion and Feasibility Review

    The proposed rule would retain existing provisions that allow FHFA 
to exercise discretion when events out of a Bank's control occur, such 
as unexpected market shifts or member mergers. It would also retain the 
feasibility review that FHFA would undertake before exercising remedies 
if a Bank did not meet either housing goal.

V. Prospective Mortgage Purchase Housing Goal

    The proposed rule would replace the four housing goals in the 
existing Bank housing goals regulation with a prospective mortgage 
purchase housing goal. The new housing goal would include mortgage 
loans that met the criteria for any of the current housing goals. The 
proposed rule would establish the target level for the new goal in the 
regulation at 20 percent of each Bank's total purchases of AMA 
mortgages. The proposed rule would also limit the number of loans to 
higher-income borrowers that could be counted toward this goal. This 
new prospective mortgage purchase housing goal would encourage 
affordable home lending as part of safe, sound, and sustainable 
business growth for the Banks, while providing flexibility to the Banks 
in how they serve borrowers by working with members.

A. Structure of the Prospective Mortgage Purchase Housing Goal

    Under the existing Bank housing goals regulation, there are four 
separate housing goals. Three of the goals measure Bank purchases of 
AMA purchase money mortgages on owner-occupied, single-family housing. 
The current home purchase housing goals require a Bank to meet separate 
targets for mortgages for low-income families (i.e., families with 
incomes at or below 80 percent of area median income), mortgages for 
very low-income families (i.e., families with incomes at or below 50 
percent of area median income), and mortgages for families in low-
income areas. The regulation defines ``families in low-income areas'' 
to include families in low-income census tracts regardless of family 
income, as well as moderate-income families in minority census tracts 
(i.e., census tracts with minority population of at least 30 percent 
and a tract median income less than the area median income) and 
moderate-income families in designated disaster areas. The fourth 
housing goal under the existing Bank housing goals regulation measures 
Bank purchases of AMA refinancing mortgages on owner-occupied, single-
family housing for low-income families.
    The categories of the current Bank housing goals are the same as 
the housing goals for Fannie Mae and Freddie Mac (the Enterprises). The 
Enterprise housing goals include the same single-family housing goals 
as the Bank housing goals, along with separate single-family subgoals 
and multifamily goals that are not included in the Bank housing goals. 
The separate categories for the individual single-family housing goals 
are established by statute for the Enterprises and are designed to 
encourage the Enterprises to target activity in each of the separately 
defined areas. Multiple housing goals targeting specific segments of 
the market are appropriate for the Enterprises, which are large 
institutions operating nationwide and are able to design products and 
programs to support many different segments of the mortgage market.
    The Banks are smaller institutions with mortgage purchase programs 
that

[[Page 55118]]

are much more limited in scope than the broad-based purchase activities 
of the Enterprises. Thus, it is more difficult for the Banks to develop 
products and programs targeting each of the market segments covered by 
the existing Bank housing goals. The proposed rule would replace the 
four separate housing goals for the Banks with a new prospective 
mortgage purchase housing goal including mortgage purchases that meet 
any of the existing housing goal categories. This new goal would 
greatly reduce the complexity of the housing goals and would make it 
easier for the Banks to appropriately target their AMA purchase 
activity based on their individual needs and the needs of their 
members.
    The proposed rule would establish a prospective mortgage purchase 
housing goal, which would include all single-family, first lien AMA 
mortgages purchased by a Bank. Eligible mortgages meeting the income or 
geographic eligibility requirements for any of the current four housing 
goals would continue to be eligible under the proposed goal. This would 
include mortgages for low- or very low-income borrowers and mortgages 
for borrowers living in low-income areas.
    The new housing goal would also include both purchase money 
mortgages and refinancing mortgages. This would include refinancing 
mortgages for low-income families, which currently count only for the 
separate low-income families refinancing goal. By combining the 
different categories into a single, overall goal the proposed rule 
would make refinancing mortgages for families of any income level who 
reside in low-income areas meet the counting requirements established 
by the rule.

B. Proposed Level for the Prospective Mortgage Purchase Housing Goal

    The proposed rule would establish the target level for the new 
prospective mortgage purchase housing goal at 20 percent of the Bank's 
AMA mortgage purchases. In proposing a 20 percent target for the new 
housing goal, FHFA considered how the Banks would have performed under 
this new overall goal in recent years, the ability of the Banks to meet 
the new prospective mortgage purchase housing goal, as well as the 
needs of underserved borrowers.
    Past performance of the Banks. Historically, most of the Banks have 
exceeded the 20 percent goal level. Table 1 below shows how the Banks 
would have performed under the proposed prospective mortgage purchase 
housing goal using 2017 data. For each Bank, the Table shows the 
percent of all AMA loans that were to very low-income (at or below 50 
percent of area median income) borrowers, the percent of all AMA loans 
that were to low-income (above 50 percent and at or below 80 percent of 
area median income) borrowers, and the percent of loans to borrowers 
above low-income but that meet the low-income areas criteria. The low-
income areas contribution to the housing goal is further limited by the 
requirement that no more than 25 percent of the loans counting toward 
the housing goal can be to borrowers above the low-income level.
    The following Chart 1 shows a time series of each Bank's total 
percentage of loans meeting the prospective mortgage purchase housing 
goal over the period 2011-2017. Note that the tables and charts in this 
proposed rule mask the identity of individual Banks to maintain 
confidentiality of Bank data. The letters have been randomized for each 
table and chart (i.e., Bank A may refer to different Banks in different 
tables). Rows may not appear to total due to rounding.
BILLING CODE 8070-01-P
[GRAPHIC] [TIFF OMITTED] TP02NO18.011


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[GRAPHIC] [TIFF OMITTED] TP02NO18.012

BILLING CODE 8070-01-C
    In 2017, the combined housing goals performance for the Bank System 
as a whole (shown as SYS in Chart 1) would have reached 25 percent of 
all AMA mortgages. The performance of the individual Banks varies 
significantly. The variation in performance likely results from the 
volumes of AMA purchased by individual Banks, different focuses by 
different Banks, district-level differences in the housing markets, and 
that Banks under the $2.5 billion threshold are not motivated to meet 
the affordable housing goals. Note that for the three Banks at zero for 
some years, Chart 1 reflects that these Banks did not have active AMA 
programs in those years. The same three Banks are the only Banks that 
would have not met the proposed 20 percent housing goal target in 2017, 
which may be related to having more recent AMA program initiation.
    Feasibility of the proposed goal. In proposing the 20 percent 
target for the new prospective mortgage purchase housing goal, FHFA 
seeks to ensure that the proposed target level for the housing goal 
demonstrates a meaningful contribution to affordable housing while also 
being feasible given the structure of AMA programs. Striking the 
appropriate balance is challenging in part because of the variation in 
performance of the different Banks. A target level for the housing goal 
that is high enough to be meaningful for one Bank may not be feasible 
for another Bank to achieve based on differences between the Bank 
districts and the individual Bank prudential limits on AMA purchases.
    Eight of the eleven Banks would have achieved the proposed housing 
goal level of 20 percent each year since 2011, though the performance 
for several Banks was very close to the 20 percent target in some 
years. The 20 percent housing goal level would be high enough to be 
meaningful for those Banks, while still being feasible for the Banks to 
achieve.
    For the three Banks whose performance would have been below the 20 
percent target level in 2017, it may be possible for the Banks to 
increase their performance. Alternatively, these Banks may elect to 
propose alternate target levels if the 20 percent target is infeasible 
based on the specific circumstances in their respective districts and 
under their existing AMA programs.
    Needs of underserved borrowers. In determining the target level to 
propose, FHFA considered the Nation's affordable housing needs, which 
affect both homeowners and renters, while focusing on homeownership as 
the policy area most directly connected to the Bank housing goals. The 
national homeownership rate declined every year from 2004 to 2017, with 
particularly sharp declines for younger households and African American 
households.\10\ Tight access to mortgage credit is an ongoing factor in 
the lack of access to homeownership, particularly

[[Page 55120]]

in places with lower-cost homes.\11\ Workers in growing sectors like 
healthcare often cannot afford to purchase even modestly priced homes 
in most metropolitan statistical areas. As an example, a typical 
emergency medical technician could afford the median home price in only 
17 out of 203 metropolitan statistical areas in a recent analysis.\12\ 
Improved financing opportunities can help mitigate homeownership 
difficulties for underserved borrowers.
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    \10\ See Joint Center for Housing Studies of Harvard University, 
``The State of the Nation's Housing 2017,'' 23 (2015), available at 
http://www.jchs.harvard.edu/sites/default/files/harvard_jchs_state_of_the_nations_housing_2017_0.pdf.
    \11\ Id.
    \12\ National Housing Conference, ``Paycheck to Paycheck 2017,'' 
3 (Sept. 2017), available at http://www.nhc.org/wp-content/uploads/2017/09/2017-Paycheck-to-Paycheck-Final.pdf.
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    FHFA recognizes these challenges and has considered them in 
proposing a target level for the AMA home purchase housing goal of 20 
percent. The proposed target level encourages the Banks to continue to 
make meaningful contributions to affordable housing, while recognizing 
the limited ability of the Banks to affect the overall housing market.

C. Cap on Mortgages to Higher-Income Borrowers in Low-Income Areas

    As discussed above, the proposed rule would combine each of the 
categories for the four current Bank housing goals into a single 
overall housing goal. These categories include mortgages on properties 
in low-income areas, which may include some mortgages for families with 
incomes above the low-income maximum of 80 percent of area median 
income. The proposed rule would include a limit on the extent to which 
a Bank could rely on mortgages for higher-income families in these 
areas to meet the new housing goal.
    The proposed prospective mortgage purchase housing goal would 
include mortgages for families in low-income areas as one of the 
criteria for loans to be counted toward the new housing goal. The 
proposed rule remains unchanged from the current rule in that it would 
continue to define ``families in low-income areas'' to include (a) 
families in low-income census tracts regardless of family income, (b) 
moderate-income families in minority census tracts (i.e., census tracts 
with minority population of at least 30 percent and a tract median 
income less than the area median income), and (c) moderate-income 
families in designated disaster areas. These criteria are summarized in 
Table 2:

                  Table 2--Low-Income Areas Components
------------------------------------------------------------------------
                        Income requirement       Geographic requirement
------------------------------------------------------------------------
Path 1............  None.....................  Tract Income.
                                               <=80% AMI.
Path 2............  <=100% AMI...............  Minority Census Tract.
                                               (>=30% minority + Tract
                                                Income <100% AMI
Path 3............  <=100% AMI...............  Designated Disaster Area.
------------------------------------------------------------------------

    The definition of families in low-income areas is different from 
the other components included in the proposed housing goal because it 
can include mortgages for families with higher incomes. For properties 
located in low-income census tracts, each mortgage purchase would count 
toward a Bank's achievement of the housing goal, regardless of family 
income. For properties in minority census tracts and for properties in 
designated disaster areas, mortgage purchases would count if family 
income is lower than the area median income, which would include 
families with incomes between 80 percent and 100 percent of area median 
income.
    As a result, it is possible for loans to higher-income households 
in low-income areas to count toward achievement of the housing goal. 
While the proposed rule would not exclude such mortgages for higher-
income families from counting entirely, the proposed rule would limit 
the extent to which a Bank could rely on such loans as the primary 
means of meeting the housing goal. FHFA recognizes an unresolved 
tension between the need for homeownership investment in communities 
that have lacked consistent, large-scale homeownership investment, on 
one hand, and concern about the impact of an influx of higher-income 
households on existing residents, on the other hand.\13\
---------------------------------------------------------------------------

    \13\ For information on the effects of gentrification, see 
generally Federal Reserve Bank of Philadelphia, ``Research Symposium 
on Gentrification and Neighborhood Change'' (May 25, 2016), 
available at https://www.philadelphiafed.org/community-development/events/2016/research-symposium-on-gentrification; Diane K. Levy, 
Jennifer Comey & Sandra Padilla, ``IN THE FACE OF GENTRIFICATION: 
Case Studies of Local Efforts to Mitigate Displacement'' (Urban 
Institute 2006), available at https://www.urban.org/sites/default/files/publication/50791/411294-In-the-Face-of-Gentrification.PDF.
---------------------------------------------------------------------------

    HMDA data on mortgage lending overall suggest that lending to 
higher-income borrowers in low-income census tracts is already a 
growing segment. There is a rising trend from 2010 to 2016 of mortgages 
originated for borrowers with incomes greater than 120 percent of area 
median income in low-income census tracts. This reached a high of 33.4 
percent of all borrowers in low-income census tracts in 2016, as Table 
3 below shows:
[GRAPHIC] [TIFF OMITTED] TP02NO18.013


[[Page 55121]]


    To limit the extent to which a Bank can rely on mortgages for 
higher-income families in meeting the prospective mortgage purchase 
housing goal, the proposed rule would establish a cap on how much of 
the goal a Bank can satisfy with loans to borrowers above the low-
income threshold (i.e., 80 percent of area median income). 
Specifically, the proposed rule would require that at least 75 percent 
of all mortgage purchases that count toward achievement of the 
prospective mortgage purchase housing goal be for borrowers with 
incomes at or below 80 percent of area median income. Stated 
differently, no more than 25 percent of the mortgages a Bank uses to 
qualify for the prospective mortgage purchase housing goal could be to 
borrowers above 80 percent of AMI. This cap would allow Banks to 
provide significant support for low-income areas, including minority 
census tracts and designated disaster areas, while ensuring an overall 
focus on low-income and very low-income borrowers.
    Note that the proposed cap would not prohibit the Banks from 
purchasing mortgages for borrowers with incomes above 80 percent of 
AMI. Rather, it would simply limit the extent to which such mortgages 
could be counted toward achievement of the housing goals.

D. Comparison to Enterprise Housing Goals

    FHFA considered the similarities and differences between the 
Enterprises' mortgage purchases and the Banks' mortgage purchases when 
proposing Bank housing goals. Both the Enterprises and the Banks 
provide valuable sources of liquidity for the secondary mortgage market 
and support for affordable housing. Key differences, however, informed 
the goal structure and levels in this proposed rule.
    The Enterprises are chartered to provide stability and liquidity in 
the secondary market for residential mortgages by purchasing and making 
commitments to purchase residential mortgages. The Banks, in contrast, 
operate AMA programs at their discretion. If a Bank believes housing 
goals are too onerous or require unacceptable risks, it may cease 
purchasing mortgages entirely.
    The Banks' AMA purchases are so small compared to other secondary 
market participants that they do not shape the market in the way the 
Enterprises do. Combined Bank AMA purchases constituted only 1 percent 
of the total unpaid principal balance of secondary market activity 
comprising Fannie Mae, Freddie Mac, Ginnie Mae, and the Banks. The 
Enterprises together represented 62 percent. The Banks are therefore 
market-takers, not market-makers.
    Additionally, unlike Fannie Mae and Freddie Mac, the Banks hold in 
portfolio nearly all loans they purchase and must manage the related 
market risk exposure. While FHFA considers AMA mortgage loans a mission 
asset, it also advises each Bank's board of directors to establish 
prudential limits for the mortgage purchases. The combination of the 
AMA regulatory requirements, the fact that the Banks hold the loans in 
portfolio, and the fact that the decision to offer an AMA program to 
members is at a Bank's discretion (with FHFA approval) all contribute 
to the AMA programs being market-takers.
    Goal levels reflect these differences. The Enterprises have 
different percentage benchmarks for each of their goals and subgoals. 
FHFA also compares Enterprise performance retrospectively to market 
levels. If an Enterprise meets either the benchmark or the market level 
in a particular year, FHFA determines that it has met the goal. These 
goals are appropriate for entities with a market position like the 
Enterprises. In contrast, the goal level for the Banks combines all of 
the eligible categories from the Enterprise goals and reflects the 
market niche the Banks occupy. It is difficult to compare the benchmark 
levels for the Enterprise goals to the proposed target level for the 
prospective Bank housing goal. The Enterprise housing goals measure 
performance in four separate categories. Table 4 below illustrates the 
benchmark levels from 2017 for the Enterprise housing goals (market 
levels are published in the 2018 Annual Housing Report).

                  Table 4--Enterprise Goal Levels, 2017
------------------------------------------------------------------------
                                                             Benchmark
                          Goal                              Level, 2017
                                                                (%)
------------------------------------------------------------------------
Low-Income Home Purchase Goal...........................              24
Very Low-Income Home Purchase Goal......................               6
Low-Income Areas Home Purchase Goal.....................              18
Low-Income Areas Home Purchase Subgoal..................              14
Low-Income Refinance Goal...............................              21
------------------------------------------------------------------------

    The prospective Bank housing goal would combine these four 
categories into a single overall goal, but it is not possible to add 
the benchmark levels together because the categories measured by the 
Enterprise housing goals have significant overlap.
    FHFA invites comment on all proposed changes related to the 
prospective mortgage purchase housing goal including but not limited to 
the following specific questions (please identify the question answered 
by the number assigned below):
    1. Is a prospective mortgage purchase housing goal measured as a 
percentage of each Bank's AMA purchases the optimal way to meaningfully 
and achievably encourage affordable home mortgage purchases? If not, 
what other options would more likely result in attainment of that goal? 
Why?
    2. Is 20 percent the appropriate level? Why or why not? Please 
provide quantitative analysis to support your position when possible.
    3. Is a single percentage goal that includes purchase and refinance 
loans to low-income borrowers, very low-income borrowers, and families 
in low-income areas an appropriate mechanism? Why or why not?
    4. Is the 25 percent cap on AMA mortgages to higher-income 
borrowers in low-income areas that count towards the goal the 
appropriate level? Why or why not? Please provide quantitative analysis 
to support your position when possible.
    5. What changes could Banks make to their AMA products to encourage 
more purchases of affordable home mortgages if needed to meet a goal?
    6. Should the Banks have an additional opportunity to propose a 
revision to the target level for either housing goal, either annually 
or at some other interval? Why or why not?

VI. Proposed Housing Goal for Small Member Participation

    The proposed rule would establish a new small member participation 
housing goal that would require each Bank to ensure that a certain 
percentage of the members participating in the Bank's AMA programs are 
smaller members. The new small member participation housing goal would 
recognize that smaller lenders are well-positioned to reach borrowers 
with affordable housing needs.
    Across the Bank System, a majority of the members participating in 
AMA programs are small with respect to asset size, but a majority of 
the number of AMA mortgages purchased by the Banks come from members 
with larger assets. In 2017, 87 percent of AMA users had total assets 
below $1.173 billion, the current threshold for community financial 
institutions. Those AMA users sold 57 percent of the total number of 
loans purchased by the Banks. Charts 2 and 3 below show the 
distribution of each Bank's AMA users by asset size

[[Page 55122]]

and share of the number of loans purchased. Note that most Banks have a 
large majority of AMA users below the community financial institutions 
threshold--Chart 2 shows the Bank System as a whole had roughly 85 
percent of its AMA users in that category in 2017. Chart 3 shows, for 
instance, that in the Bank System nearly 45 percent of the AMA loans in 
2017 came from AMA users larger than the community financial 
institutions threshold.
[GRAPHIC] [TIFF OMITTED] TP02NO18.014

    In proposing the new small member participation housing goal, FHFA 
considered that one of the benefits of Bank AMA programs is connecting 
members with the secondary mortgage market. This connection has the 
potential to particularly benefit borrowers in rural communities or 
places of persistent poverty where borrowers have less access to 
credit. Small institutions appear more likely to originate loans to 
low-income and very low-income households, as Table 5 below documents. 
It shows that in 2017, participating financial institutions (PFIs) 
above the community financial institutions asset cap produced 17 
percent of their loans for low-income or very low-income borrowers, 
while PFIs that were also community financial institutions produced 21 
percent.

[[Page 55123]]

[GRAPHIC] [TIFF OMITTED] TP02NO18.015

    The proposed small member participation housing goal would align 
with FHFA's policy position embodied in the AMA regulation, which 
considers the cooperative structure of the Banks and that the Banks, as 
government-sponsored enterprises, pass along their funding advantage to 
their members by providing financial services, including AMA programs. 
FHFA recognizes that adding new members to participate in AMA, 
especially smaller members with less staff capacity, requires active 
marketing and outreach with a long sales cycle. As individual AMA user 
participation may vary year-to-year, Banks would have to maintain 
outreach efforts to ensure that small member participation continues at 
or above the target level. Nevertheless, the investment of time and 
effort to bring new members to the program should pay off both in new 
lending to borrowers that may not otherwise receive access to credit 
and in safe and sound business growth for the Banks.

A. Structure of the Small Member Participation Housing Goal

    The existing Bank housing goals regulation does not include a goal 
specifically targeting smaller member participation in the Bank AMA 
programs. However, the Bank housing goals have long recognized the 
importance of smaller members for the Banks, and conversely, the 
importance of the Bank AMA programs for some smaller members. For 
example, the final rule establishing the Bank housing goals included a 
volume threshold in part ``to avoid adverse impact on Bank AMA 
programs, particularly with respect to CFIs [community financial 
institutions].'' \14\
---------------------------------------------------------------------------

    \14\ 75 FR 81096, 81098 (Dec. 27, 2010).
---------------------------------------------------------------------------

    The proposed rule would establish for the first time a new housing 
goal for smaller member participation in Bank AMA programs. The new 
goal would encourage Banks to maintain a focus in their AMA programs on 
small members that are more likely to produce affordable home loans to 
low-income households. Small institutions often rely on their Bank 
membership for a connection to the secondary mortgage market. It is 
reasonable to require the Banks to deploy their federally supported 
funding-cost advantage for the benefit of small members that might 
otherwise have difficulty accessing national capital markets, rather 
than primarily to augment the financial results of large members that 
have no such difficulty.\15\ Small institutions are also an important 
source of credit access for rural areas, places of persistent poverty, 
and other underserved populations.
---------------------------------------------------------------------------

    \15\ For this reason, FHFA grounds the small-member goal not 
just in the housing goals section of the Bank Act, 12 U.S.C. 1430c, 
but also in the statutory basis for the AMA program more generally. 
See 12 U.S.C. 1430, 1430b, 1431; Texas Savings & Community Bankers 
Ass'n v. Federal Housing Finance Board, 201 F.3d 551 (5th Cir. 
2000).
---------------------------------------------------------------------------

    The Banks already serve many small members, so the small member 
participation housing goal would encourage them to maintain that focus 
over time. FHFA anticipates that the working relationships between 
Banks and small members will result in ongoing purchases of mortgages 
to benefit borrowers in need of financing for affordable housing.

B. Proposed Level for the Small Member Participation Housing Goal

    The proposed rule would establish the target level for the new 
small member participation housing goal as having at least 50 percent 
of ``AMA users'' be small members. The proposed rule would define ``AMA 
user'' to include any PFI that sells one or more AMA mortgage(s) to a 
Bank during the year being measured. The proposed rule would define the 
small member participation housing goal by incorporating the definition 
of ``community financial institution'' in the Bank membership 
regulation, which includes institutions with total assets below the 
community financial institution threshold, currently $1.173 
billion.\16\
---------------------------------------------------------------------------

    \16\ 12 CFR 1263.1.
---------------------------------------------------------------------------

    In proposing a 50 percent target for the new small member 
participation housing goal, FHFA considered how the Banks would have 
performed under this goal in recent years and the ability of the Banks 
to meet the new goal.
    Past performance of the Banks. Table 6 below shows how each Bank 
would have performed under the new small member participation housing 
goal in 2017.

[[Page 55124]]

[GRAPHIC] [TIFF OMITTED] TP02NO18.016

    In 2017, nine of the eleven Banks would have met the new small 
member participation housing goal as proposed, with most of the Banks 
being significantly over the proposed 50 percent goal level. Two of the 
eleven Banks would have fallen below the 50 percent goal level. The two 
Banks that would not have met the goal in 2017 are also noteworthy in 
that they had very few AMA users during 2017.
    Feasibility of the proposed goal. In proposing the 50 percent 
target for the new small member participation housing goal, FHFA 
considered the ability of the Banks to meet the new proposed goal. 
Recognizing that some Banks may currently have performance that would 
fall below the proposed goal level, the proposed rule would provide an 
alternate means of achieving the goal. If a Bank's performance under 
the goal falls below the 50 percent goal level, the Bank could also 
comply by increasing its performance under the goal by 300 basis points 
compared to the preceding year. For example, if only 33 percent of a 
Bank's AMA users had been small members in the preceding year, the next 
year the Bank could satisfy the goal if at least 36 percent of its AMA 
users are small members. Once a Bank reaches the 50 percent 
participation rate, it would no longer need to demonstrate annual 
growth.
    FHFA also retains its supervisory discretion if a percentage 
changed due to events outside of a Bank's control, such as a sudden 
drop in participation due to member mergers or failures.
    FHFA invites comments on all aspects of the small member 
participation housing goal and specifically solicits comments on the 
following questions (please identify the question answered by the 
number assigned below):
    7. Is the small member participation housing goal an effective way 
to encourage access to mortgage credit in rural communities or places 
of persistent poverty, or would other approaches be more effective?
    8. Should FHFA consider an alternative level (other than the 
community financial institutions threshold, currently $1.173 billion) 
for defining ``small member?''
    9. Are there any issues that FHFA should consider related to the 
proposed 300 basis point growth rate under the small member 
participation housing goal? If so, please suggest and explain an 
alternative approach.
    10. Is the 50 percent goal too low, considering that nine of the 11 
Banks already meet it?

VII. Phase-in of New Housing Goals

    The proposed rule would establish a phase-in period for enforcement 
of the new housing goals. Although many Banks would be on track for 
immediate compliance based on their 2017 performance, FHFA acknowledges 
that it may take substantial effort for some Banks to comply. A phase-
in period would help the Banks adjust to the

[[Page 55125]]

housing goals and manage risk appropriately.
    The existing Bank housing goals regulation sets forth procedures 
for how FHFA enforces the housing goals.\17\ For each Bank that is 
subject to housing goals, the Director determines whether a Bank 
achieved the goal(s), provides notice to the Bank of the Director's 
preliminary determination, receives a response from the Bank, and 
determines whether goal(s) achievement was feasible.\18\ If the 
Director finds that a Bank has not achieved a goal and the goal was 
feasible, the Director may require the Bank to submit a housing 
plan.\19\
---------------------------------------------------------------------------

    \17\ See 12 CFR 1281.14 and 1281.15.
    \18\ See 12 CFR 1281.14.
    \19\ See 12 CFR 1281.15.
---------------------------------------------------------------------------

    The proposed rule would modify these provisions to specify that not 
meeting a goal in the first or second year in which the new regulation 
is in effect will not result in the Director requiring a housing plan. 
During the first and second year, FHFA would monitor performance using 
existing AMA data collection, notify the Banks of its preliminary 
determination, and then make a final determination as described above, 
including determining whether the goal was feasible. FHFA would not, 
however, require a housing plan for not meeting a goal in the first or 
second year. The Banks should expect full implementation of the rule 
including the possibility of a housing plan if a Bank does not meet a 
housing goal in 2022.
    The phase-in period would not limit the Director's remedies apart 
from imposition of a housing plan due to the housing goals, such as 
through supervisory criticism in the examination process, nor would it 
limit FHFA's discretion with respect to feasibility determinations.

VIII. Other Changes

    The proposed rule would make a number of changes to provisions in 
the current Bank housing goals regulation that address which mortgages 
count for purposes of the housing goals. The proposed rule would revise 
the Bank housing goals regulation to: (a) Permit mortgages guaranteed 
or insured by a department or agency of the U.S. government to count 
for purposes of the Bank housing goals; (b) address the treatment of 
participations among different Banks under the Bank housing goals; and 
(c) remove provisions related to Home Ownership and Equity Protection 
Act (HOEPA) mortgages and mortgages with unacceptable terms and 
conditions.

A. Counting Requirements for Federally Backed Mortgages

    The proposed rule would revise the existing Bank housing goals 
regulation to allow mortgages guaranteed or insured by a department or 
agency of the U.S. government to count for purposes of the Bank housing 
goals.
    The Enterprise housing goals are defined by statute to include only 
conventional loans, i.e., those that are not government-backed. The 
existing Bank housing goals regulation includes the same provisions 
excluding loans guaranteed or insured by a department or agency of the 
U.S. government from counting for purposes of the Bank housing goals. 
The proposed rule would change this provision so that these mortgages 
would be counted for purposes of the Bank housing goals. Non-
conventional loans would continue to be excluded from the Enterprise 
housing goals.
    Federal Housing Administration (FHA), Veterans Administration (VA), 
and Rural Housing Service (RHS) provide mortgage options that can help 
lower-income borrowers and borrowers in low-income areas achieve 
homeownership, for instance, with lower down payments. Some lenders--
and particularly smaller lenders--may lack the economy of scale needed 
for efficiently participating in multiple secondary market options. 
Some depositories have dropped federally backed mortgages from their 
product lines, while nonbanks--which are generally ineligible to be 
members--originate an increasing share of this market.\20\ For many 
PFIs, the Banks are their preferred means of access to the secondary 
market because of the high level of service Bank staff provide and the 
longstanding member relationships. Allowing small institutions to use 
their preferred secondary market channel along with government backing 
through FHA, VA, or RHS means those institutions do not have to choose 
between secondary market executions and loan type and can therefore 
better serve their borrowers.
---------------------------------------------------------------------------

    \20\ According to Ginnie Mae, nonbanks' overall share of Ginnie 
Mae MBS issuances more than doubled from 36 percent in early 2013 to 
over 77 percent as of November 2016. See Ginnie Mae, ``The Role of 
Nonbanks in Expanding Access to Credit,'' 3 (Jan. 2017), available 
at https://www.ginniemae.gov/newsroom/publications/Documents/expand_role_nonbanks.pdf. See also Christopher Whalen, ``No good 
reason for banks to offer more government-backed mortgages,'' 
American Banker (Jan. 22, 2018), available at https://www.americanbanker.com/opinion/no-good-reason-for-banks-to-offer-more-government-backed-mortgages.
---------------------------------------------------------------------------

    The Banks acquire federally backed mortgages through products under 
both the MPF and MPP programs. Under the MPF program, the Banks acquire 
federally backed loans for their ``MPF Government'' and ``MPF 
Government MBS'' products. With ``MPF Government,'' the Bank serves as 
investor and holds the loans on its balance sheet. With ``MPF 
Government MBS,'' the Bank essentially serves as an aggregator, 
purchasing federally backed mortgages (MPF Government loans) and then 
issuing Ginnie Mae securities backed by the mortgages.
    The Banks' purchases of federally backed mortgages have varied 
greatly. In 2017, the Bank System's purchases of federally backed loans 
represented 10 percent of total AMA loans (less than 8 percent measured 
by UPB), but the purchases by individual Banks ranged from 0 percent to 
100 percent, as detailed in the Table 7 below:

[[Page 55126]]

[GRAPHIC] [TIFF OMITTED] TP02NO18.017

    The proposed rule would simplify the rules under which mortgages 
may be counted by including purchases of federally backed mortgages 
under AMA products. This approach would also complement FHFA's AMA 
regulation, provide better secondary market execution for many PFIs, 
and support the needs of underserved borrowers.

B. Counting Participations

    The current Bank housing goals regulation does not explicitly 
address the treatment of ``participations.'' A participation exists 
where two or more institutions each acquire a percentage interest in a 
mortgage. The proposed rule would incorporate existing FHFA guidance on 
the treatment of participations into the regulation.
    FHFA has addressed the Bank housing goals treatment of 
participations under two different scenarios. Under the first scenario, 
a Bank would purchase a mortgage and later sell a participation 
interest in the mortgage to another Bank. FHFA addressed this scenario 
in the Supplementary Information to the 2010 final rule establishing 
the Bank housing goals. In this scenario, FHFA stated that ``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.'' \21\ The proposed rule would codify in the 
regulation that participations among Banks that are executed after the 
mortgage was first acquired by a Bank should not be counted as 
``mortgage purchases'' for purposes of the Bank housing goals 
regulation. This exclusion would apply even if the participation were 
executed on the same day as the original acquisition by a Bank.
---------------------------------------------------------------------------

    \21\ See 75 FR 81096, 81103 (Dec. 27, 2010), available at 
https://www.thefederalregister.org/fdsys/pkg/FR-2010-12-27/pdf/2010-32350.pdf.
---------------------------------------------------------------------------

    Under a second scenario, two or more Banks would each purchase 
participation interests in the same mortgage simultaneously. FHFA has 
interpreted the existing Bank housing goals regulation to require that 
such transactions be counted on a pro rata basis according to each 
Bank's percentage interests in the mortgage. The proposed rule would 
codify in the regulation that participations among Banks that are 
entered simultaneously pursuant to an existing participation agreement 
should be counted as ``mortgage purchases'' based on the pro rata 
number of mortgages according to each Bank's percentage interests for 
purposes of the Bank housing goals regulation.

C. HOEPA Mortgages and Mortgages With Unacceptable Terms and Conditions

    The current Bank housing goals regulation counts purchases of 
``HOEPA mortgages'' and ``mortgages with unacceptable terms and 
conditions'' in the housing goals denominator, but makes them 
ineligible for the numerator.\22\ This category generally encompasses 
mortgages with excessive points and fees, the financing of single 
premium, credit life insurance, and high prepayment penalties.\23\
---------------------------------------------------------------------------

    \22\ See 12 CFR 1281.1.
    \23\ Id.
---------------------------------------------------------------------------

    FHFA has issued other guidance to the Banks covering purchases of 
mortgages with predatory features or accepting such mortgages as 
collateral for advances.\24\ The prohibition on goals eligibility in 
the current regulation is largely redundant with that guidance, and the 
Banks have demonstrated no interest in purchasing such mortgages. The 
proposed rule would remove the restriction from the Bank housing goals 
regulation. FHFA would instead rely on existing supervisory and 
regulatory authorities and procedures to address any concerns about 
particular types of mortgages.
---------------------------------------------------------------------------

    \24\ See generally ``Federal Home Loan Bank Collateral for 
Advances and Interagency Guidance on Nontraditional Mortgage 
Products, Notice of study and recommendations and request for 
comment,'' 74 FR 38618 (Aug. 4, 2009), available at https://www.thefederalregister.org/fdsys/pkg/FR-2009-08-04/pdf/E9-18545.pdf. In removing 
the exclusion for ``mortgages with unacceptable terms and 
conditions'' from the Enterprises' housing goals regulation, FHFA 
noted that it ``has regulatory authority to directly prohibit 
purchases by the Enterprises of any types of mortgages it determines 
are unsuitable.'' See ``2015-2017 Enterprise Housing Goals,'' 80 FR 
53392, 53427 (Sept. 3, 2015), available at https://www.thefederalregister.org/fdsys/pkg/FR-2015-09-03/pdf/2015-20880.pdf.
---------------------------------------------------------------------------

IX. Section-by-Section Analysis of Proposed Rule

    The proposed rule would also revise other provisions of the Bank 
housing goals regulation, as discussed below.

A. Changes to Definitions--Proposed Sec.  1281.1

    The proposed rule includes changes to definitions used in the 
current Bank housing goals regulation. The proposed rule would add new 
definitions of ``AMA mortgage,'' ``AMA program,'' ``AMA user,'' ``CFI 
asset cap,'' and ``community financial institution or CFI,'' and would 
revise the definitions of ``dwelling unit,'' ``families in low-income 
areas,'' ``median income,'' ``metropolitan area,'' ``mortgage,'' and

[[Page 55127]]

``non-metropolitan area.'' The proposed rule would also remove the 
definitions of ``Acquired Member Assets (AMA) program,'' ``AMA-approved 
mortgage,'' ``conforming mortgage,'' ``conventional mortgage,'' 
``HMDA,'' ``HOEPA mortgage,'' ``HUD,'' ``mortgage data,'' ``mortgage 
with unacceptable terms or conditions,'' ``owner-occupied housing,'' 
``residential mortgage,'' and ``second mortgage.''
1. Definition of ``AMA Mortgage''
    The current Bank housing goals regulation defines ``AMA-approved 
mortgage'' as a mortgage that meets the requirements of an AMA program, 
with cross-references to the Acquired Member Assets regulation (12 CFR 
part 1268) and the New Business Activities regulation (12 CFR part 
1272). The proposed rule would replace the term ``AMA-approved 
mortgage'' with ``AMA mortgage'' as a technical, non-substantive 
change. ``AMA mortgage'' is more consistent with typical usage for the 
AMA program. In addition, because the proposed rule would define the 
term ``AMA program'' by cross-referencing the Acquired Member Assets 
regulation, it is not necessary to include additional cross-references 
in the proposed definition of ``AMA mortgage.''
2. Definition of ``AMA program''
    The current Bank housing goals regulation defines ``Acquired Member 
Assets (AMA) program'' as a program that authorizes a Bank to hold 
assets acquired from a member by a purchase or funding transaction 
subject to the requirements of parts 1268 (Acquired Member Assets) and 
1272 (New Business Activities). At the time the current Bank housing 
goals regulation was adopted, the term ``AMA program'' was not a 
defined term in the Acquired Member Assets regulation. A definition for 
the term ``AMA program'' was added to the Acquired Member Assets 
regulation in 2016.\25\ There is no substantive difference between the 
definition of ``Acquired Member Assets (AMA) program'' under the Bank 
housing goals regulation and the definition of ``AMA program'' under 
the Acquired Member Assets regulation. The proposed rule would replace 
the definition of ``Acquired Member Assets (AMA) program'' in the Bank 
housing goals regulation with a new definition of ``AMA program'' that 
would cross-reference the definition in the Acquired Member Assets 
regulation.
---------------------------------------------------------------------------

    \25\ 12 CFR 1268.1.
---------------------------------------------------------------------------

3. Definition of ``AMA user''
    The proposed rule would add a new definition for the term ``AMA 
user,'' to mean any participating financial institution from which a 
Bank purchased at least one AMA mortgage during the year being 
measured.
    The Acquired Member Assets regulation generally defines 
``participating financial institution'' as a member or housing 
associate of a Bank that is authorized to sell, credit enhance, or 
service mortgage loans to or for a Bank through an AMA program. This 
definition includes all members that are authorized to sell mortgages 
through an AMA program, regardless of whether the member actually sells 
such a mortgage in any particular year. The proposed rule would define 
the term ``AMA user'' more narrowly than the definition of a 
participating financial institution. An ``AMA user'' would be defined 
as a participating financial institution from which the Bank purchased 
at least one AMA mortgage during the year being measured. The proposed 
new small member participation housing goal would be limited only to 
AMA users, i.e., those participating financial institutions that sold 
at least one mortgage loan to the Bank in question in the year being 
measured.
4. Definition of ``CFI Asset Cap''
    The proposed rule would add a new definition for the term ``CFI 
asset cap.'' The proposed rule would define the term ``CFI asset cap'' 
to have the same meaning as defined in the Bank membership 
regulation.\26\ The term ``CFI asset cap'' is defined in the Bank 
membership regulation to mean $1 billion, as adjusted annually by FHFA 
based on changes in the Consumer Price Index.
---------------------------------------------------------------------------

    \26\ See 12 CFR 1263.1.
---------------------------------------------------------------------------

    The new small member participation housing goal would measure the 
percentage of AMA users for a Bank with assets that are below the CFI 
asset cap. The proposed rule would define the term ``CFI asset cap'' by 
cross-referencing the existing definition in the Bank membership 
regulation.
5. Definition of ``Community Financial Institution or CFI''
    The proposed rule would add a new definition for the term 
``community financial institution or CFI.'' The proposed rule would 
define the term ``community financial institution or CFI'' to have the 
same meaning as defined in the Bank membership regulation.\27\ The term 
``community financial institution or CFI'' is defined in the Bank 
membership regulation to mean an institution (1) the deposits of which 
are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et 
seq.); and (2) the total assets of which, as of the date of a 
particular transaction, are less than the CFI asset cap, with total 
assets being calculated as an average of total assets over three years, 
with such average being based on the institution's regulatory financial 
reports filed with its appropriate regulator for the most recent 
calendar quarter and the immediately preceding 11 calendar quarters. 
The proposed rule would define the term ``community financial 
institution or CFI'' by cross-referencing the existing definition in 
the Bank membership regulation.
---------------------------------------------------------------------------

    \27\ Id.
---------------------------------------------------------------------------

6. Definition of ``Conforming Mortgage''
    The current Bank housing goals regulation defines ``conforming 
mortgage'' as a conventional, AMA-approved single-family mortgage with 
an original principal obligation that does not exceed the dollar 
limitation under the Acquired Member Assets regulation or under the 
Freddie Mac conforming loan limits. The Bank housing goals are already 
limited to purchases of mortgages under AMA programs, which include 
limits on the size of mortgages that can be purchased by a Bank. It is 
not necessary for the Bank housing goals to include a separate limit on 
the size of mortgages that may be counted for purposes of the Bank 
housing goals. The proposed rule would remove the definition of 
``conforming mortgage'' from the Bank housing goals regulation as 
unnecessary.
7. Definition of ``Conventional Mortgage''
    The current Bank housing goals regulation defines ``conventional 
mortgage'' as any mortgage that does not include a guaranty, insurance 
or other obligation by the United States or any of its agencies or 
instrumentalities. The definition of ``conventional mortgage'' is 
included in the Bank housing goals regulation because the Bank housing 
goals are currently limited to conventional mortgages. The proposed 
rule would expand the coverage of the Bank housing goals to include all 
AMA mortgages, including both conventional mortgages and non-
conventional mortgages. Because the proposed rule would no longer limit 
the Bank housing goals to conventional mortgages, the proposed rule 
would remove the definition of ``conventional mortgage'' from the Bank 
housing goals regulation as unnecessary.

[[Page 55128]]

8. Definition of ``Dwelling Unit''
    The current Bank housing goals regulation defines ``dwelling unit'' 
to mean a room or unified combination of rooms intended for use, in 
whole or in part, as a dwelling by one or more persons, and includes a 
dwelling unit in a single-family property, multifamily property, or 
other residential or mixed-use property. In its 2015 final rule 
amending the Enterprise housing goals regulation, FHFA revised the 
analogous definition in the Enterprise housing goals regulation to 
exclude a combination of rooms without plumbing or kitchen 
facilities.\28\ The proposed rule would revise the definition of 
``dwelling unit'' to align with the definition of ``dwelling unit'' 
provided in the Enterprise housing goals regulation.
---------------------------------------------------------------------------

    \28\ See 80 FR 53392 (Sept. 3, 2015), codified at 12 CFR 1282.1.
---------------------------------------------------------------------------

9. Definition of ``Families in Low-income Areas''
    The current Bank housing goals regulation defines ``families in 
low-income areas'' to mean (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. 
In its 2015 final rule amending the Enterprise housing goals 
regulation, FHFA amended the analogous provision in the Enterprise 
housing goals regulation (12 CFR 1282.1) by removing the reference to 
``block numbering areas'' to conform to the terminology used by the 
U.S. Census Bureau.\29\ The proposed rule would amend the Bank housing 
goals regulation by making a conforming revision to the definition of 
``families in low-income areas.''
---------------------------------------------------------------------------

    \29\ Id. at 53423.
---------------------------------------------------------------------------

10. Definition of ``HMDA''
    The current Bank housing goals regulation defines ``HMDA'' as the 
Home Mortgage Disclosure Act of 1975, as amended. The definition of 
``HMDA'' is included in the current Bank housing goals regulation 
because the Bank housing goals are currently evaluated based on a 
retrospective market measurement calculated using HMDA data. The 
proposed rule would remove the retrospective market measurement from 
the Bank housing goals and instead establish goal levels prospectively 
in the regulation. Because the proposed rule would no longer include a 
market calculation based on HMDA data, the proposed rule would remove 
the definition of ``HMDA'' from the Bank housing goals regulation as 
unnecessary.
11. Definition of ``HOEPA Mortgage''
    The current Bank housing goals regulation defines ``HOEPA 
mortgage'' as a mortgage covered by the definition of ``high-cost 
mortgage'' under the Truth in Lending Act. The definition of ``HOEPA 
mortgage'' is included in the current Bank housing goals regulation 
because the Bank housing goals do not allow HOEPA mortgages to be 
counted toward achievement of the Bank housing goals. The proposed rule 
would remove the provision excluding HOEPA mortgages from counting for 
purposes of the Bank housing goals. Therefore, the proposed rule would 
remove the definition of ``HOEPA mortgages'' from the Bank housing 
goals regulation as unnecessary.
12. Definition of ``HUD,'' ``Median Income,'' ``Metropolitan Area,'' 
and ``Non-Metropolitan Area''
    The current Bank housing goals regulation defines ``median 
income,'' with respect to an area, as the unadjusted median family 
income for the area as determined by HUD. The current definition 
further provides that 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. FHFA's practice is to calculate the applicable 
median income figures for both metropolitan and non-metropolitan areas 
and to provide the median income information to the Banks. The proposed 
rule would align the definition of ``median income'' with FHFA's 
practice, by revising it to mean, with respect to an area, the 
unadjusted median family income for the area as determined by FHFA. The 
proposed rule would also revise the definition to provide that FHFA 
will provide the Banks annually with information specifying how the 
median family income estimates for metropolitan and non-metropolitan 
areas are to be applied for purposes of determining median income.
    The current Bank housing goals regulation defines ``metropolitan 
area'' as 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. The regulation defines ``non-
metropolitan area'' as 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. The proposed rule would align the 
definition of ``metropolitan area'' with FHFA's practice by revising it 
to mean an MSA, or a portion of such an area, including Metropolitan 
Divisions, for which median incomes are determined by FHFA. The 
proposed rule would align the definition of ``non-metropolitan area'' 
with FHFA's practice by revising it to mean a county, or a portion of a 
county, including those counties that comprise Micropolitan Statistical 
Areas, located outside any metropolitan area, for which median incomes 
are determined by FHFA.
    The current Bank housing goals regulation defines ``HUD'' as the 
United States Department of Housing and Urban Development. The term 
``HUD'' is used only in the definitions of ``median income,'' 
``metropolitan area,'' and ``non-metropolitan area'' in the current 
Bank housing goals regulation. The proposed rule would revise those 
definitions to remove each reference to ``HUD,'' and the proposed rule 
would therefore remove the definition of ``HUD'' from the Bank housing 
goals regulation as unnecessary.
13. Definition of ``Mortgage''
    The current Bank housing goals regulation defines ``mortgage'' to 
include all loans secured by real estate and any interests in such 
mortgages. The current definition is based on the definition of 
``mortgage'' in the Enterprise housing goals regulation and excludes 
chattel loans on manufactured housing. The proposed rule would revise 
the definition of ``mortgage'' in the Bank housing goals regulation to 
include chattel loans on manufactured housing. The AMA regulation 
allows the Banks to acquire chattel loans on manufactured housing. 
Adding such loans to the definition of ``mortgage'' in the Bank housing 
goals regulation would further align the coverage of the Bank housing 
goals with the AMA regulation and would make it easier for the Banks to 
assess their own housing goals performance during the year. Chattel 
mortgages on manufactured housing are a significant means by which 
lower-income households obtain housing, and are therefore appropriate 
to be included in the Bank housing goals calculation.
14. Definition of ``Mortgage With Unacceptable Terms or Conditions''
    The current Bank housing goals regulation defines ``mortgage with 
unacceptable terms or conditions'' as a

[[Page 55129]]

mortgage that has one or more of a series of terms or conditions that 
FHFA determined to be harmful to borrowers. The definition of 
``mortgage with unacceptable terms or conditions'' is included in the 
current Bank housing goals regulation because the Bank housing goals do 
not allow mortgages with unacceptable terms or conditions to be counted 
toward achievement of the Bank housing goals. The proposed rule would 
remove the provision excluding mortgages with unacceptable terms or 
conditions from counting for purposes of the Bank housing goals. 
Therefore, the proposed rule would remove, as unnecessary, the 
definition of ``mortgage with unacceptable terms or conditions'' from 
the Bank housing goals regulation.
15. Definition of ``Owner-Occupied Housing''
    The current Bank housing goals regulation defines ``owner-occupied 
housing'' as 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. The definition of ``owner-occupied 
housing'' is included in the Bank housing goals regulation because the 
Bank housing goals are currently limited to mortgages on owner-occupied 
housing. The proposed rule would expand the coverage of the Bank 
housing goals to include all AMA mortgages, including mortgages on 
owner-occupied and investor-owned single-family properties. The 
proposed rule would not establish separate criteria for evaluating 
whether a mortgage on an investor-owned property could be counted for 
purposes of the housing goals. Any such mortgages would be evaluated 
based on the income of the mortgagor in the same manner as the 
evaluation of a mortgage on an owner-occupied property. Because the 
proposed rule would no longer limit the Bank housing goals to mortgages 
on owner-occupied housing, the proposed rule would remove the 
definition of ``owner-occupied housing'' from the Bank housing goals 
regulation as unnecessary.
16. Definition of ``Residential Mortgage''
    The current Bank housing goals regulation defines ``residential 
mortgage'' as a mortgage on single-family housing. The term 
``residential mortgage'' is not used anywhere else in the current Bank 
housing goals regulation, and the proposed rule would not include any 
use of the term either. The proposed rule would remove the definition 
of ``residential mortgage'' from the Bank housing goals regulation as 
unnecessary.
17. Definition of ``Second Mortgage''
    The current Bank housing goals regulation defines ``second 
mortgage'' as any mortgage that has a lien position subordinate only to 
the lien of the first mortgage. This term is used in Sec.  
1281.13(b)(8), which provides that ``purchases of subordinate lien 
mortgages (second mortgages),'' do not count for purposes of housing 
goals credit. The proposed rule would clarify that this prohibition 
would apply to all mortgages that are subordinate to the first 
mortgages, not only second mortgages. Because ``second mortgage'' would 
no longer appear in the regulation, this definition is unnecessary and 
would be removed.

B. Changes to General--Proposed Sec.  1281.10

    The proposed rule would revise Sec.  1281.10 to reflect the new 
housing goals that would be defined by the proposed rule.
    The current regulation states that the subpart establishes three 
single-family housing goals for purchase money mortgages and one 
single-family housing goal for refinancing mortgages. The current 
regulation also states that the subpart establishes a volume threshold 
for the Bank housing goals.
    The proposed rule would revise the structure of the Bank housing 
goals to remove the volume threshold and to replace the existing 
housing goals with a new prospective mortgage purchase housing goal and 
a new small member participation housing goal. The proposed rule would 
revise Sec.  1281.10 to reflect these changes.

C. Changes to Bank Housing Goals--Proposed Sec. Sec.  1281.11 and 
1281.14

    The proposed rule would revise Sec.  1281.11 to define the new 
prospective mortgage purchase housing goal and small member 
participation housing goal, and would make conforming changes to Sec.  
1281.14.
    The current regulation establishes three single-family housing 
goals for purchase money mortgages and one single-family housing goal 
for refinancing mortgages. The proposed rule would revise Sec.  1281.11 
in its entirety to replace the existing Bank housing goals with two new 
housing goals: a prospective mortgage purchase housing goal and a small 
member participation housing goal.
    The current regulation establishes a volume threshold that a Bank 
must exceed before it is subject to the housing goals. The threshold is 
$2.5 billion in unpaid principal balance in a single year. The proposed 
rule would remove the volume threshold provision so that the new Bank 
housing goals would apply to each Bank regardless of the volume of AMA 
mortgages purchased by the Bank. The proposed rule would also make a 
conforming change to Sec.  1281.14(a) by eliminating Bank volume 
thresholds as a consideration in determining whether the Director 
evaluates annual performance of Bank performance under each housing 
goal.
    The current regulation establishes criteria for determining the 
target level for each goal based on HMDA data for the year being 
measured, i.e., retrospectively. The proposed rule would define the 
prospective mortgage purchase housing goal as the percentage of a 
Bank's AMA mortgages acquired during the calendar year that are for 
very low-income families, low-income families, or families in low-
income areas. The proposed rule would establish a target level of 20 
percent for the prospective mortgage purchase housing goal. The 
proposed rule would also require that at least 75 percent of the 
mortgages that are counted toward a Bank's achievement of the 
prospective mortgage purchase housing goal must be for low-income or 
very low-income families.
    The proposed rule would define the small member participation 
housing goal as the percentage of AMA users with assets that do not 
exceed the CFI asset cap. The proposed rule would establish the target 
level for the small member participation housing goal as the lesser of 
50 percent or 300 basis points greater than the percentage of the 
Bank's AMA users with assets that do not exceed the CFI cap from the 
preceding year.
    The proposed rule would also establish a process for a Bank to 
propose a different target level for the prospective mortgage purchase 
housing goal, the small member participation housing goal, or both. The 
proposed rule would require that this Bank-specific housing goal 
proposal be submitted to FHFA by October 31, 2019, and by October 31 
every third year thereafter, or at some other appropriate time as may 
be determined by FHFA, for example if a Bank, in the middle of a three-
year cycle, resumes purchasing AMA mortgages under a dormant AMA 
program. The proposed rule would require that a Bank-specific housing 
goal proposal include proposed targets for each of the three years 
following the year in which the Bank's proposal is submitted, and that 
the proposal include a detailed explanation of (i) why the 
corresponding housing goal

[[Page 55130]]

provided in the regulation is infeasible, (ii) why the proposed goal is 
achievable, and (iii) how the proposed goal meaningfully furthers 
affordable housing mortgage lending in the Bank's district.

D. Changes to General Counting Eequirements--Proposed Sec.  1281.12

    The current Bank housing goals regulation defines the ``numerator'' 
and ``denominator'' used to calculate performance under the current 
housing goals. The new housing goals are clearly defined in the 
proposed rule. The proposed rule would delete paragraph (a) as 
unnecessary in light of the mortgage goal calculation standards 
reflected in proposed Sec.  1281.11. The current Bank housing goals 
regulation also provides that mortgages with missing data or 
information necessary for counting would be included in the denominator 
when calculating a Bank's performance, but not in the numerator. This 
effectively penalizes a Bank's performance by treating mortgages with 
missing data or information as if they were loans that did not meet the 
applicable criteria. The proposed rule would remove paragraph (b)(1), 
so that mortgages with missing data or information would be disregarded 
for purposes of measuring a Bank's performance on the housing goals. 
Finally, paragraph (c), which provides that a mortgage may only count 
once towards achievement of a current housing goal even if it satisfies 
more than one goal, would be redesignated as paragraph (b) and revised 
to permit each mortgage to be counted only once toward achievement of 
the prospective mortgage purchase housing goal, even if it satisfies 
multiple criteria. The changes to this paragraph would be consistent 
with the revised structure of the prospective mortgage purchase housing 
goal established in proposed Sec.  1281.11. The proposed rule would 
make conforming redesignations of paragraphs throughout the remainder 
of Sec.  1281.12.

E. Changes to Special Counting Requirements--Proposed Sec.  1281.13

    Paragraph (b) of Sec.  1281.13 currently enumerates categories of 
transactions or activities that are not counted for purposes of the 
housing goals and are not included in the numerator or the denominator 
in calculating a Bank's housing goals performance. The proposed rule 
would amend this paragraph by removing the references to ``numerator'' 
and ``denominator.'' This language would be unnecessary in light of the 
simplified calculation methodology provided in proposed Sec.  1281.11.
    Paragraph (b)(1) currently excludes non-conventional single family 
mortgages from counting towards housing goals credit. The proposed rule 
would allow loans guaranteed or insured by a department or agency of 
the U.S. government to count towards housing goals credit for the 
prospective mortgage purchase housing goal. Paragraph (b)(1) would be 
revised to codify FHFA's current treatment of mortgage participation 
interests. The proposed rule would exclude participation interests in 
AMA mortgages that are purchased from another Bank, except where two or 
more Banks acquire a participation interest in the same mortgage 
simultaneously. The proposed rule would add new paragraph (e) to 
clarify that where two or more Banks acquire a participation interest 
in the same mortgage simultaneously, the mortgage would be counted on a 
pro rata basis for each Bank.
    Paragraph (b)(8) would be revised to clarify that all mortgages 
which are subordinate to the first mortgage are excluded from counting 
for purposes of the Bank housing goals.

F. Changes to Determination of Compliance With Housing Goals; Notice of 
Determination--Proposed Sec.  1281.14

    The proposed rule would amend Sec.  1281.14(a) by removing the 
reference to the volume threshold, which would be moot in light of the 
threshold's elimination under proposed Sec.  1281.11. The proposed rule 
would also amend Sec.  1281.14(a) to require that FHFA publish the 
annual determination of compliance. The proposed rule would describe 
the data that would be included in the published determination.

G. Changes to Housing Plans--Proposed Sec.  1281.15

    The proposed rule would revise Sec.  1281.15 to provide that the 
Director may only require that a Bank submit a housing plan for any 
year after 2021. This would reflect the phase-in period for the new 
housing goals, eliminating possibility of a housing plan during the 
first two years in which the proposed prospective and small member 
participation housing goals are operative. Because a Bank may be 
required to submit a housing plan while awaiting FHFA's response to a 
Bank-specific housing goal proposal, the proposed rule would amend 
Sec.  1281.15 by adding new paragraph (b)(5) to require that the 
housing plan address any Bank-specific housing goals the Bank is 
proposing.

H. Changes to Reporting Requirements--Proposed Sec. Sec.  1281.1 and 
1281.20.

    The proposed rule would revise Subpart C to simplify and clarify 
the reporting requirements for the Banks under the new housing goals.
    The current Bank housing goals regulation sets out a number of 
specific reporting requirements for the Banks. Section 1281.20 of the 
current regulation describes the matters that are covered by Subpart C, 
``Reporting Requirements.'' Section 1281.21 of the current regulation 
describes the reporting requirements including the required timing and 
format of the data to be submitted. Section 1281.22 of the current 
regulation permits FHFA to require additional reports, information, and 
data as it determines appropriate. Finally, Sec.  1281.23 of the 
current regulation requires a senior officer of each Bank to certify 
the data submitted under the Bank housing goals regulation and allows 
FHFA to address errors, omissions or discrepancies in data reported by 
a Bank by adjusting the Bank's official housing goals performance 
figures and in certain circumstances increasing a Bank's housing goal 
in a later year.
    The proposed rule would revise the reporting requirements in 
Subpart C to reflect the new housing goals structure and to eliminate 
provisions that are either duplicative of or potentially inconsistent 
with the existing Bank reporting requirements under FHFA's Data 
Reporting Manual (DRM). The DRM is issued by FHFA containing reporting 
requirements for the Banks and is amended from time to time. The DRM 
includes detailed requirements about the data elements that the Banks 
must report and the timing and format of the required reporting. The 
proposed rule would remove reporting requirements from the Bank housing 
goals regulation that are duplicative of and potentially inconsistent 
with the DRM.
    The proposed rule would consolidate the four sections that 
currently exist in Subpart C of the Bank housing goals regulation into 
a single section. Sections 1281.21, 1281.22 and 1281.23 would be 
removed from the regulation. Section 1281.20 would include the new 
reporting requirements for the Bank housing goals regulation. As 
revised, Sec.  1281.20(a) would require the Banks to submit to FHFA any 
data that FHFA determines to be necessary to evaluate transactions and 
activities under the Bank housing goals. Section 1281.20(b)

[[Page 55131]]

and (c) would set out the data reporting requirements for the 
prospective mortgage purchase housing goal and the small member 
participation housing goal, respectively, and would require such 
submissions to be made in accordance with the DRM. Section 1281.20(d) 
would continue to permit FHFA to require a Bank to provide such 
additional reports, information, and data as FHFA may request from time 
to time.
    In addition to the above clarifications of the existing Bank 
reporting requirements, the proposed rule would also remove the 
provision in the current Bank housing goals regulation that addresses 
errors, omissions or discrepancies in the data reported by a Bank. This 
provision is unnecessary in light of FHFA's existing supervisory and 
regulatory authorities and procedures, and the proposed rule would 
remove the provision.
    Finally, the proposed rule would remove the definition of 
``mortgage data'' from Sec.  1281.1. The current Bank housing goals 
regulation defines ``mortgage data'' as data obtained from the Banks 
under the Data Reporting Manual. The revisions to the reporting 
requirements in Subpart C would remove all references to the term 
``mortgage data.'' The proposed rule would therefore remove the 
definition of ``mortgage data'' from the Bank housing goals regulation 
as unnecessary.

X. Considerations of Differences Between the Banks and the Enterprises

    When promulgating regulations relating to the Banks, section 
1313(f) of the Safety and Soundness Act 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. FHFA, in preparing this proposed rule, considered the 
differences between the Banks and the Enterprises as they relate to the 
above factors. FHFA also considered these differences in light of 
section 10C of the Bank Act, which requires that the Bank housing goals 
be consistent with the Enterprise housing goals, with consideration of 
the unique mission and ownership structure of the Banks.\30\ FHFA 
requests comments from the public about whether these differences 
should result in any revisions to the proposed rule.
---------------------------------------------------------------------------

    \30\ See 12 U.S.C. 1430c.
---------------------------------------------------------------------------

XI. Paperwork Reduction Act

    The proposed rule would not contain any information collection 
requirement that would require the approval of OMB under the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.). Therefore, FHFA has not 
submitted any information to OMB for review.

XII. 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 entities because the regulation applies to the Federal 
Home Loan 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.

Authority and Issuance

    For the reasons stated in the SUPPLEMENTARY INFORMATION, under the 
authority of 12 U.S.C. 4526, FHFA proposes to amend part 1281 of Title 
12 of the Code of Federal Regulations as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

SUBCHAPTER E--HOUSING GOALS AND MISSION

PART 1281--FEDERAL HOME LOAN BANK HOUSING GOALS

0
1. Revise the authority citation for part 1281 to read as follows:

    Authority: 12 U.S.C. 1430, 1430b, 1430c, 1431.

0
2. Amend Sec.  1281.1 by:
0
a. Removing the definitions of ``Acquired Member Assets (AMA) program'' 
and ``AMA-approved mortgage'';
0
b. Adding definitions for ``AMA mortgage'', ``AMA program'', and ``AMA 
user'' in alphabetical order;
0
c. Removing the definitions of ``Conforming mortgage'' and 
``Conventional mortgage'';
0
d. Adding definitions for ``CFI asset cap'' and ``Community financial 
institution or CFI'' in alphabetical order;
0
e. Revising the definition of ``Dwelling unit'' and paragraph (1) of 
the definition of ``Families in low-income areas'';
0
f. Removing the definitions of ``HMDA'', ``HOEPA mortgage'', and 
``HUD'';
0
g. Revising the definitions of ``Median income'', ``Metropolitan 
area'', and ``Mortgage'';
0
h. Removing the definitions of ``Mortgage data'' and ``Mortgage with 
unacceptable terms or conditions'';
0
i. Revising the definition of ``Non-metropolitan area''; and
0
j. Removing the definitions of ``Owner-occupied housing'', 
``Residential mortgage'', and ``Second mortgage''.
    The revisions and additions read as follows:


Sec.  1281.1  Definitions.

* * * * *
    AMA mortgage means a mortgage that was purchased by a Bank under an 
AMA program.
    AMA program has the meaning set forth in Sec.  1268.1 of this 
chapter.
    AMA user means any participating financial institution, as defined 
in Sec.  1268.1 of this chapter, from which the Bank purchased at least 
one AMA mortgage during the year for which the housing goals are being 
measured.
* * * * *
    CFI asset cap has the meaning set forth in Sec.  1263.1 of this 
chapter.
    Community financial institution or CFI has the meaning set forth in 
Sec.  1263.1 of this chapter.
* * * * *
    Dwelling unit means a room or unified combination of rooms with 
plumbing and kitchen facilities intended for use, in whole or in part, 
as a dwelling by one or more persons, and includes a dwelling unit in a 
single-family property, multifamily property, or other residential or 
mixed-use property.
    Families in low-income areas * * *
    (1) Any family that resides in a census tract in which the median 
income does not exceed 80 percent of the area median income;
* * * * *
    Median income means, with respect to an area, the unadjusted median 
family income for the area as determined by FHFA. FHFA will provide the 
Banks annually with information specifying how the median family income 
estimates for

[[Page 55132]]

metropolitan and non-metropolitan areas are to be applied for purposes 
of determining median income.
    Metropolitan area means a metropolitan statistical area (MSA), or a 
portion of such an area, including Metropolitan Divisions, for which 
median incomes are determined by FHFA.
* * * * *
    Mortgage means a member of such classes of liens, including 
subordinate liens, as are commonly given or are legally effective to 
secure advances on, or the unpaid purchase price of, real estate under 
the laws of the State in which the real estate is located, or a 
manufactured home that is personal property under the laws of the State 
in which the manufactured home is located, together with the credit 
instruments, if any, secured thereby, and includes interests in 
mortgages. Mortgage includes a mortgage, lien, including a subordinate 
lien, or other security interest on the stock or membership certificate 
issued to a tenant-stockholder or resident-member by a cooperative 
housing corporation, as defined in section 216 of the Internal Revenue 
Code of 1986, and on the proprietary lease, occupancy agreement, or 
right of tenancy in the dwelling unit of the tenant-stockholder or 
resident-member in such cooperative housing corporation.
* * * * *
    Non-metropolitan 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 incomes are 
determined by FHFA.
* * * * *
0
3. Amend Sec.  1281.10 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1281.10  General.

* * * * *
    (a) A prospective mortgage purchase housing goal;
    (b) A small member participation housing goal;
* * * * *
0
4. Revise Sec.  1281.11 to read as follows:


Sec.  1281.11  Bank housing goals.

    (a) Prospective mortgage purchase housing goal. For each calendar 
year, the percentage of a Bank's AMA mortgages acquired during the 
calendar year that are for very low-income families, low-income 
families, or families in low-income areas must meet or exceed either:
    (1) 20 percent; or
    (2) A percentage target approved under paragraph (d) of this 
section.
    (b) Cap on low-income areas loans counted toward goal. At least 75 
percent of the mortgages that are counted toward a Bank's achievement 
of the prospective mortgage purchase housing goal must be for low-
income or very low-income families.
    (c) Small member participation housing goal. For each calendar 
year, the percentage of all AMA users that are AMA users with assets 
that do not exceed the CFI asset cap must meet or exceed either:
    (1) 50 percent;
    (2) A percentage that is three percentage points greater than the 
percentage of the Bank's AMA users with assets that do not exceed the 
CFI cap from the preceding year; or
    (3) A percentage target approved under paragraph (d) of this 
section.
    (d) Bank-specific housing goals. (1) A Bank may submit a written 
request for FHFA approval of different target percentages for the 
prospective mortgage purchase housing goal, the small member 
participation housing goal, or both. A Bank request under this 
paragraph must include proposed target percentages for three 
consecutive years following the calendar year in which the proposal is 
submitted. A Bank is not required to propose the same target percentage 
for each of the three years.
    (2) A Bank's request under this paragraph must include a detailed 
explanation of:
    (i) Why the goal in paragraphs (a) and (b) of this section, as 
applicable, is infeasible;
    (ii) Why the Bank's proposed goal is achievable; and
    (iii) How the Bank's proposed goal meaningfully furthers affordable 
housing mortgage lending in its district.
    (3) A proposal under this paragraph may only be submitted once 
every three years, or under the circumstances described in paragraph 
(d)(4) of this section. The deadline for submitting a proposal under 
this section is October 31, 2019, and October 31 for every third year 
after 2019. FHFA will review each Bank proposal that is received by the 
deadline and will notify the Bank in writing if the Bank proposal is 
approved. If FHFA does not notify a Bank that its proposal is approved, 
the Bank will remain subject to the percentage goals in paragraphs (a) 
and (b) of this section, as applicable.
    (4) FHFA may require a Bank to propose a target percentage for 
either or both housing goals to address discontinuation of an AMA 
program or approval of a new AMA program.
0
5. Revise Sec.  1281.12 to read as follows:


Sec.  1281.12  General counting requirements.

    (a) General. Mortgage purchases financing 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., low- or very low-income), the income of the mortgagor is 
compared to the median income for the area at the time the mortgage was 
originated, using the appropriate percentage factor provided under 
Sec.  1281.1.
    (b) No double-counting. A mortgage may be counted only once toward 
the achievement of the prospective mortgage purchase housing goal, even 
if it satisfies multiple criteria for the prospective mortgage purchase 
housing goal.
    (c) Application of median income. For purposes of determining an 
area's median income under Sec.  1281.1, the area is:
    (1) The metropolitan area, if the residence that secures 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 non-metropolitan median income is 
higher than the county's median income, the area is the State non-
metropolitan area.
    (d) Sampling not permitted. Performance under the housing goals for 
each year shall be based on a tabulation of each mortgage during that 
year; a sampling of such purchases is not acceptable.
0
6. Amend Sec.  1281.13 by:
0
a. Revising the introductory text of paragraph (b);
0
b. Revising paragraphs (b)(1) and (b)(8);
0
c. Removing paragraph (d);
0
d. Redesignating paragraph (e) as paragraph (d); and
0
e. Adding new paragraph (e).
    The revisions and additions read as follows:


Sec.  1281.13  Special counting requirements.

* * * * *
    (b) Not counted. The following transactions or activities shall not 
be counted for purposes of the housing goals, even if the transaction 
or activity would otherwise be counted under paragraph (c) of this 
section:
    (1) Purchases of participation interests in AMA mortgages from 
another Bank, except as provided in paragraph (e) of this section;
* * * * *
    (8) Purchases of subordinate lien mortgages;
* * * * *

[[Page 55133]]

    (e) Mortgage participation transactions. Where two or more Banks 
acquire a participation interest in the same mortgage simultaneously, 
the mortgage will be counted on a pro rata basis for the prospective 
mortgage purchase housing goal for each Bank with a participation 
interest.
0
7. Amend Sec.  1281.14 by revising paragraph (a) to read as follows:


Sec.  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 each Bank's performance under each 
housing goal and will publish the final determinations. FHFA will 
publish its final determination including the numbers and percentages 
for each Bank's AMA purchases that meet each of the housing goals 
criteria, including loans to low-income families, loans to very low-
income families, and loans to families in low-income areas, including 
by each of the defined categories. FHFA's determination will include 
these numbers in total and separated into purchase money mortgages, 
refinancing mortgages, conventional mortgages, and non-conventional 
mortgages.
* * * * *
0
8. Amend Sec.  1281.15 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1281.15  Housing plans.

    (a) Housing plan requirement. For any year after 2021, 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;
    (4) Address any additional matters relevant to the housing plan as 
required, in writing, by the Director; and
    (5) Address any Bank-specific housing goals the Bank is proposing.
* * * * *
0
9. Revise Subpart C to read as follows:

Subpart C--Reporting Requirements


Sec.  1281.20  Reporting requirements.

    (a) General. Each Bank must collect and submit to FHFA any data 
that FHFA determines to be necessary for FHFA to evaluate transactions 
and activities under the Bank housing goals.
    (b) Reporting for prospective mortgage purchase housing goal. Each 
Bank must collect data on each AMA mortgage purchased by the Bank. The 
data must include any data elements specified by FHFA. On no less 
frequent than an annual basis, each Bank must submit such data to FHFA 
in accordance with the DRM.
    (c) Reporting for small member participation housing goal. Each 
Bank must collect data on AMA user asset size. On no less frequent than 
an annual basis, each Bank must submit such data to FHFA in accordance 
with the DRM.
    (d) Other reporting. Each Bank must provide to FHFA such additional 
reports, information and data as FHFA may request from time to time.

    Dated: October 29, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018-23890 Filed 11-1-18; 8:45 am]
 BILLING CODE 8070-01-P



     55114                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     related to this petition by any of the                  petitioner also requests that the rule                FEDERAL HOUSING FINANCE
     following methods:                                      change be actively considered in the                  AGENCY
        • Federal Rulemaking Website: Go to                  NRC’s fiscal year 2019 rulemaking for
     http://www.regulations.gov and search                   its fee regulations.                                  12 CFR Part 1281
     for Docket ID NRC–2018–0172. Address                                                                          RIN 2590–AA82
     questions about NRC dockets to Carol                    III. Discussion of the Petition
     Gallagher; telephone: 301–415–3463;                        The petitioner requests that the NRC               Federal Home Loan Bank Housing
     email: Carol.Gallagher@nrc.gov. For                                                                           Goals Amendments
                                                             amend its regulations to re-categorize
     technical questions, contact the
                                                             WRT as a licensee that does not require               AGENCY: Federal Housing Finance
     individual listed in the FOR FURTHER
                                                             full-cost recovery for fees billed to it              Agency.
     INFORMATION CONTACT section of this
     document.                                               during the life of its license under 10               ACTION: Notice of proposed rulemaking.
        • NRC’s Agencywide Documents                         CFR part 170, address consistency
     Access and Management System                            issues between 10 CFR parts 170 and                   SUMMARY:   The Federal Housing Finance
     (ADAMS): You may obtain publicly                        171 for small entities, and consider this             Agency (FHFA) is proposing to amend
     available documents online in the                       rule change during the FY 2019 revision               the existing Federal Home Loan Bank
     ADAMS Public Documents collection at                    of the fee rule. The petitioner assists               Housing Goals regulation. FHFA
     http://www.nrc.gov/reading-rm/                          small community water systems with                    proposes to replace the existing four
     adams.html. To begin the search, select                 compliance with the uranium drinking                  separate retrospective housing goals
     ‘‘ADAMS Public Documents’’ and then                     water standard: ‘‘WRT’s license                       with a single prospective mortgage
     select ‘‘Begin Web-based ADAMS                          operations are not intended to process                purchase housing goal as well as
     Search.’’ For problems with ADAMS,                      source material for its commercial value              establish a separate small member
     please contact the NRC’s Public                         thereby reducing the financial benefit to             participation housing goal. The
     Document Room (PDR) reference staff at                  the licensee as compared to uranium                   proposed rule would also allow the
     1–800–397–4209, 301–415–4737, or by                                                                           Banks to request FHFA approval of
                                                             recovery facilities that process ores
     email to pdr.resource@nrc.gov. The                                                                            alternative target levels for the proposed
                                                             primarily for their source material
     ADAMS accession number for each                                                                               goals. Finally, FHFA is proposing to
                                                             content.’’ The petitioner suggests that
     document referenced (if it is available in                                                                    eliminate the existing $2.5 billion
                                                             the NRC should further ease the                       volume threshold that triggers the
     ADAMS) is provided the first time that                  financial burden on community water
     it is mentioned in this document. The                                                                         application of housing goals for each
                                                             systems so that they may comply with                  Bank.
     petition, PRM–170–7, is available in                    the uranium drinking water standard.
     ADAMS under Accession No.                               The petitioner also notes NRC actions                 DATES:  Written comments must be
     ML18214A757.                                            that seem to agree with his                           received on or before January 31, 2019.
        • NRC’s PDR: You may examine and                                                                           ADDRESSES: You may submit your
                                                             recommendation.
     purchase copies of public documents at                                                                        comments, identified by regulatory
     the NRC’s PDR, Room O1–F21, One                            The petitioner also requests                       information number (RIN) 2590–AA82,
     White Flint North, 11555 Rockville                      additional conforming and related                     by any of the following methods:
     Pike, Rockville, Maryland 20852.                        changes. The petitioner asserts that the                 • Agency website: www.fhfa.gov/
     FOR FURTHER INFORMATION CONTACT:                        NRC should consider addressing                        open-for-comment-or-input.
     Renu Suri, Office of the Chief Financial                consistency issues between 10 CFR                        • Federal eRulemaking Portal: http://
     Officer, U.S. Nuclear Regulatory                        parts 170 and 171 fees for uranium                    www.regulations.gov. Follow the
     Commission, Washington, DC 20555–                       water treatment licensees that are                    instructions for submitting comments. If
     0001; telephone: 301–415–0161, email:                   recognized by the NRC as small entities.              you submit your comment to the
     Renu.Suri@nrc.gov.                                      The petitioner also requested that the                Federal eRulemaking Portal, please also
     SUPPLEMENTARY INFORMATION:                              NRC consider amending language under                  send it by email to FHFA at
                                                             § 170.11 to extend the time within                    RegComments@fhfa.gov to ensure
     I. The Petitioner                                       which a licensee may appeal the                       timely receipt by FHFA. Please include
        Mr. Christopher S. Pugsley, Esq. (the                assessment of fees and apply for a fee                ‘‘Comments/RIN 2590–AA82’’ in the
     petitioner) submitted this petition on                  exemption. The petitioner notes that                  subject line of the submission.
     behalf of WRT, requesting that the NRC                  NRC could approve the petition as an                     • Hand Delivered/Courier: The hand
     amend its regulations to re-categorize                  alternative to revising the NRC’s fee                 delivery address is: Alfred M. Pollard,
     licensees performing water treatment                    recovery requirements during the next                 General Counsel, Attention: Comments/
     services from a full-cost recovery                      revision of the annual fee rule.                      RIN 2590–AA82, Federal Housing
     category to a category with a fixed                                                                           Finance Agency, Eighth Floor, 400 7th
     annual fee.                                             IV. Conclusion                                        Street SW, Washington, DC 20219. The
                                                                                                                   package should be delivered at the 7th
     II. The Petition                                          The NRC will examine the issues                     Street entrance Guard Desk, First Floor,
        The petitioner is requesting that the                raised in PRM–170–7 to determine                      on business days between 9 a.m. and 5
     NRC revise parts 170 and 171 of title 10                whether they should be considered in                  p.m.
     of the Code of Federal Regulations (10                  rulemaking.                                              • U.S. Mail, United Parcel Service,
     CFR) to re-categorize WRT as a licensee                   Dated at Rockville, Maryland, this 29th day         Federal Express, or Other Mail Service:
     that does not require full-cost recovery                of October, 2018.                                     The mailing address for comments is:
     for fees billed to it during the life of its              For the Nuclear Regulatory Commission.              Alfred M. Pollard, General Counsel,
     license, address consistency issues                     Annette L. Vietti-Cook,
                                                                                                                   Attention: Comments/RIN 2590–AA82,
     between 10 CFR parts 170 and 171 for                                                                          Federal Housing Finance Agency,
                                                             Secretary of the Commission.
     small entities, and extend the timeframe                                                                      Eighth Floor, 400 7th Street SW,
     in which a request for a fee exemption                  [FR Doc. 2018–24002 Filed 11–1–18; 8:45 am]           Washington, DC 20219. Please note that
     must be submitted under § 170.11. The                   BILLING CODE 7590–01–P                                all mail sent to FHFA via U.S. Mail is


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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                           55115

     routed through a national irradiation                   advances 4 and other financial services               department or agency of the U.S.
     facility, a process that may delay                      at rates that would not otherwise be                  government.
     delivery by approximately two weeks.                    available to their members. Among
                                                                                                                   C. Overview of the Existing Bank
     FOR FURTHER INFORMATION CONTACT: Ted                    those financial services are the Banks’
                                                                                                                   Housing Goals Regulation
     Wartell, Manager, Housing &                             Acquired Member Assets (AMA)
     Community Investment, (202) 649–3157                    programs, under which the Banks                          The existing Bank housing goals
     or Ethan Handelman, Senior Policy                       provide financing for members’ housing                regulation has been in effect since
     Analyst, Office of Housing and                          finance activities by purchasing                      January 2011.6 The regulation
     Community Investment, (202) 649–                        mortgage loans.                                       implements section 10C(a) of the Bank
     3264. These are not toll-free numbers.                  B. AMA Programs                                       Act, which requires the Director of
     The telephone number for the Hearing                                                                          FHFA to ‘‘establish housing goals with
     Impaired is (800) 877–8339. The mailing                    FHFA’s AMA regulation authorizes                   respect to the purchase of mortgages, if
     address for each contact is: Federal                    the Banks to acquire certain assets from              any, by the [Banks].’’ 7 Section 10C(b)
     Housing Finance Agency, 400 7th Street                  their members and housing associates as               requires that the Bank housing goals be
                                                             a means of advancing their housing                    ‘‘consistent with’’ the housing goals
     SW, Washington, DC 20219.
                                                             finance mission, and prescribes the                   established by FHFA for Fannie Mae
     SUPPLEMENTARY INFORMATION:                              parameters within which the Banks may                 and Freddie Mac (collectively, the
     I. Comments                                             do so.5 Through the acquisition of                    Enterprises) under sections 1331
                                                             AMA, the Banks provide a source of                    through 1334 of the Federal Housing
        FHFA invites comments on all aspects
                                                             liquidity to their members and housing                Enterprises Financial Safety and
     of the proposed rule and will consider
                                                             associates, to further mission-related                Soundness Act of 1992 (Safety and
     all comments before issuing the final
                                                             lending.                                              Soundness Act), taking into
     rule. FHFA will post for public                            FHFA’s AMA regulation authorizes
     inspection all comments received by the                                                                       consideration ‘‘the unique mission and
                                                             each Bank, at its discretion, to invest in
     deadline without change, including any                                                                        ownership structure of the [Banks].’’ 8
                                                             assets that qualify as AMA subject to the
     personal information you provide, such                  requirements of the rule. Currently, each                The existing Bank housing goals
     as your name, address, email address,                   of the eleven Banks except the Atlanta                regulation provides that a Bank will be
     and telephone number. All comments                      Bank offers an AMA program to its                     subject to the housing goals if its AMA
     received will be available for                          members, albeit at varying levels. As of              mortgage purchases in a given year
     examination by the public through the                   June 30, 2018, the System’s total                     exceed a volume threshold of $2.5
     electronic rulemaking docket for this                   outstanding AMA mortgages were $57.3                  billion. The regulation establishes three
     proposed rule located on the FHFA                       billion and represented 5 percent of                  single-family owner-occupied purchase
     website at http://www.fhfa.gov.                         total System assets. In contrast, the                 money mortgage goals and one single-
                                                             System’s outstanding advances, their                  family refinancing mortgage goal
     II. Background
                                                             primary business line, represented 65                 applicable to the Banks’ purchases
     A. The Federal Home Loan Bank System                    percent of total assets. Outstanding                  under their AMA programs. The goals
       The eleven Federal Home Loan Banks                    mortgages relative to total assets at the             for purchase money mortgages
     (Banks) are wholesale financial                         Banks offering AMA programs to its                    separately measure performance on
     institutions organized under the Federal                members ranged from a high of 17                      purchase money mortgages for (1) low-
     Home Loan Bank Act (Bank Act).1 The                     percent and 15 percent at the                         income families, (2) families in low-
     Banks are cooperatives; only members                    Indianapolis and Topeka Banks,                        income areas, and (3) very low-income
     of a Bank may purchase the capital                      respectively, to less than 2 percent at               families. The goal for refinancing
     stock of a Bank, and only members or                    the New York and Dallas Banks.                        mortgages measures performance on
     certain eligible housing associates (such               Further, as a point of comparison, in                 refinancing mortgages for low-income
     as state housing finance agencies) may                  2017 the Enterprises’ mortgage                        families. The levels of the housing goals
     obtain access to secured loans, known                   purchases represented 62 percent of the               are established retrospectively using
     as advances, or other products provided                 secondary mortgage market comprising                  Home Mortgage Disclosure Act (HMDA)
     by a Bank.2 Any eligible institution                    the Federal National Mortgage                         data to calculate the percentage of
     (generally, a federally insured                         Association (Fannie Mae), the Federal                 single-family originations in the Bank’s
     depository institution or state-regulated               Home Loan Mortgage Corporation                        district that qualify for each of the
     insurance company) may become a                         (Freddie Mac), the Government National                housing goals.
     member of a Bank if it satisfies certain                Mortgage Association (Ginnie Mae), and                   Each year, FHFA determines whether
     criteria and purchases a specified                      the Banks, while the Banks’ share                     any of the Banks have exceeded the
     amount of the Bank’s capital stock.3                    represented less than 1 percent.                      volume threshold. For each Bank that
       As government-sponsored enterprises,                     The two AMA programs that the                      has exceeded the volume threshold,
     the Banks have certain privileges under                 Banks are currently offering to their                 FHFA determines the Bank’s
     federal law, which allow them to                        members are the Mortgage Purchase                     performance under the housing goals.
     borrow funds at spreads over the rates                  Program (MPP) and the Mortgage                        FHFA evaluates performance by
     on U.S. Treasury securities of                          Partnership Finance (MPF) program.                    calculating the percentage share of a
     comparable maturity that are narrower                   The Banks generally acquire 15- to 30-                Bank’s AMA mortgage purchases that
     than those available to corporate                       year conventional conforming fixed-rate               qualify for each housing goal. A Bank
     borrowers generally. The Banks pass                     mortgage loans secured by 1- to 4-unit                meets a housing goal if its performance
     along their funding advantage to their                  residential mortgages in addition to                  is equal to or greater than the level of
     members and housing associates—and                      loans guaranteed or insured by a                      the housing goal established by FHFA
     ultimately to consumers—by providing                                                                          based on HMDA data for that year.
                                                               4 Members are required to pledge specific

                                                             collateral, mainly mortgages or other real estate
       1 See 12 U.S.C. 1423, 1432(a).                                                                                6 75 FR 81096 (Dec. 27, 2010).
                                                             related assets, to secure any advance taken down
       2 See 12 U.S.C. 1426(a)(4), 1430(a), 1430b.           from a Bank. See 12 CFR 1266.7.                         7 12 U.S.C. 1430c(a).
       3 See 12 U.S.C. 1424; 12 CFR part 1263.                 5 See 12 CFR part 1268.                               8 12 U.S.C. 1430c(b).




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     55116                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     III. Summary of Proposed Rule                             The proposed rule would establish                      Because the level of the housing goals
        This proposed rule would replace the                 the small member participation housing                is not known until after the end of the
                                                             goal target level at 50 percent.                      year being evaluated, it is more difficult
     existing Bank housing goals with new,
                                                                                                                   for a Bank to assess its performance
     streamlined goals that reflect the Banks’               D. Phase-in of New Housing Goals
                                                                                                                   relative to the goal during the year. A
     unique mission while supporting
                                                               The proposed rule would establish a                 Bank may therefore have more difficulty
     affordable lending. The proposed rule
                                                             three-year phase-in for enforcement of                adjusting its activities based on its
     would provide certainty for the Banks
                                                             the new housing goals.                                performance relative to the goals.
     by informing them of the housing goal                                                                            By setting the target levels for the
     levels in advance and would provide                     E. Other Changes                                      housing goals in advance, the proposed
     clarity and flexibility for the Banks by                                                                      rule would provide certainty for the
                                                                The proposed rule would revise and
     consolidating multiple goals into a more                                                                      Banks and would allow the Banks to
                                                             simplify the criteria and requirements
     straightforward measurement of                                                                                monitor their own performance and, if
                                                             under which mortgages are either
     performance. The proposed rule would                                                                          necessary, take steps in advance to
                                                             included or excluded from FHFA’s
     also establish a new housing goal that                                                                        ensure that they meet the housing goals.
                                                             measurement of a Bank’s performance
     would measure the extent to which
                                                             under the housing goals. The proposed                 B. Bank-Proposed Housing Goal Levels
     smaller members are participating in
                                                             rule would also revise the reporting
     AMA programs.                                                                                                    Under the existing Bank housing goals
                                                             requirements to reflect the new
     A. New Process for Setting Housing Goal                 structure of the Bank housing goals.                  regulation, FHFA evaluates the
     Levels                                                                                                        feasibility of the target levels for the
                                                             IV. New Process for Setting Target                    housing goals for a particular Bank after
        The proposed rule would revise the                   Levels for Housing Goals                              the fact. For each Bank that has
     Bank housing goals regulation to remove                                                                       exceeded the volume threshold in a
                                                               The proposed rule would revise the
     the existing process for FHFA to                                                                              year, FHFA determines whether the
                                                             Bank housing goals regulation to
     establish the levels of the housing goals                                                                     Bank met each housing goal. If FHFA
                                                             establish a specific annual target level
     retrospectively based on HMDA data.                                                                           determines that a Bank has not met one
                                                             for each housing goal. The proposed
     The proposed rule would establish                                                                             of the housing goals, FHFA will also
                                                             rule would also allow a Bank to request
     levels for each of the housing goals in                                                                       determine whether achievement of the
                                                             FHFA approval of a different target level
     advance, in the regulation itself. This                                                                       target level for the housing goal was
                                                             for either of the new housing goals. The
     would eliminate any uncertainty about                                                                         feasible, taking into consideration any
                                                             Bank would be required to submit its
     the levels of the housing goals from                                                                          information provided by the Bank, along
                                                             proposed target level for the housing
     year-to-year. The proposed rule would                                                                         with market and economic conditions.
                                                             goal to FHFA for review and approval.
     also allow the Banks to request FHFA                                                                          While this process provides FHFA the
                                                             Finally, the proposed rule would also
     approval of an alternative goal level.                                                                        ability to evaluate facts and
                                                             remove the volume threshold from the
     Finally, the proposed rule would                                                                              circumstances for not meeting a goal
                                                             Bank housing goals regulation. The new
     eliminate the existing $2.5 billion                                                                           that may weigh against adverse
                                                             housing goals would apply to each Bank
     volume threshold that triggers the                                                                            supervisory actions against the Banks,
                                                             every year.
     application of housing goals for each                                                                         the Banks face uncertainty because the
     Bank.                                                   A. Target Levels for Housing Goals                    feasibility evaluation does not happen
                                                             Established in Advance                                until FHFA makes its final
     B. Prospective Mortgage Purchase
                                                                                                                   determination on the Bank’s
     Housing Goal                                              Under the existing Bank housing goals
                                                                                                                   performance, after the year being
       The proposed rule would revise the                    regulation, FHFA establishes the target
                                                                                                                   measured is over.
     Bank housing goals regulation to remove                 level for each of the housing goals                      The proposed rule would address this
     the separate housing goals for home-                    retrospectively using data collected and              uncertainty by setting a prospective
     purchase mortgages for low-income                       maintained pursuant to HMDA. This                     goal, as described above, and by
     families, home-purchase mortgages for                   data typically becomes publicly                       allowing a Bank to propose an alternate
     low-income areas, home-purchase                         available in September of the following               level for the housing goal. If a Bank’s
     mortgages for very low-income families,                 year, although in 2018 the Bureau of                  district, membership, or affordable
     and refinancing mortgages for low-                      Consumer Financial Protection released                housing needs do not fit the proposed
     income families. The proposed rule                      2017 HMDA data in May, subject to                     goal and the Bank believes the goal is
     would replace the four separate housing                 possible revision.9                                   infeasible, the Bank would be able to
     goals with a single, overall measurement                  A Bank meets a housing goal under                   propose an alternate level for FHFA
     of performance. This new housing goal                   the existing rule if its mortgage                     review and approval. The Bank would
     would include each of the categories                    purchases that meet the counting                      be required to provide a justification for
     currently covered by the Bank housing                   requirements established in the rule, as              the alternate level by submitting any
     goals, but it would not include separate                a percentage of its overall AMA                       information it considers relevant to the
     targets for each category. The proposed                 purchases, equals or exceeds the                      feasibility of the proposed goal level.
     rule would establish the prospective                    percentage originated in its district. For            FHFA would review the Bank proposal
     mortgage purchase housing goal target                   example, if 23 percent of mortgages                   to verify the Bank’s showing of
     level at 20 percent of a Bank’s AMA                     originated in a Bank’s district were for              infeasibility, and to ensure: (1) That the
     mortgage purchases.                                     low-income borrowers, then the low-                   proposed goal demonstrates a
                                                             income share of the Bank’s purchases                  meaningful contribution to affordable
     C. New Housing Goal for Small Member                    must be 23 percent or greater.                        housing, and (2) that the proposed goal
     Participation
                                                                                                                   would be feasible for the Bank’s AMA
                                                               9 See Federal Financial Institutions Examination
       The proposed rule would establish a                                                                         program.
                                                             Council, ‘‘FFIEC Announces Availability of 2017
     separate goal for participation by                      Data on Mortgage Lending,’’ (May 7, 2018),
                                                                                                                      To illustrate, the proposed rule would
     smaller members in Bank AMA                             available at https://www.ffiec.gov/press/             establish target levels for each of the
     programs.                                               pr050818.htm.                                         housing goals in advance. The target


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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                          55117

     level for the prospective mortgage                      2016 (Indianapolis Bank and Cincinnati                also limit the number of loans to higher-
     purchase housing goal would be 20                       Bank).                                                income borrowers that could be counted
     percent of a Bank’s AMA mortgage                           The proposed rule would eliminate                  toward this goal. This new prospective
     purchases, and a 50 percent                             the annual volume threshold for                       mortgage purchase housing goal would
     participation rate by small members                     triggering the application of the housing             encourage affordable home lending as
     delivering mortgages to the Bank’s AMA                  goals. The housing goals would apply to               part of safe, sound, and sustainable
     programs. If a Bank determines that the                 each of the Banks each year, either at                business growth for the Banks, while
     20 percent prospective mortgage                         the target level established by FHFA in               providing flexibility to the Banks in
     purchase housing goal and the 50                        the housing goals regulation or a Bank-               how they serve borrowers by working
     percent small member participation                      proposed alternative target level                     with members.
     housing goal are both feasible for the                  approved by FHFA.
                                                                The volume threshold was adopted to                A. Structure of the Prospective Mortgage
     Bank to achieve, the Bank would not
                                                             avoid adverse impact on Bank AMA                      Purchase Housing Goal
     need to take any additional action.
     However, each Bank would have the                       programs, particularly programs focused                  Under the existing Bank housing goals
     option to propose an alternative for one                on providing liquidity for smaller Bank               regulation, there are four separate
     or both goals. The proposed alternatives                members described at the time of                      housing goals. Three of the goals
     would address only the target levels for                adoption as being a relatively low level.             measure Bank purchases of AMA
     the housing goals. A Bank would not be                  Over time, however, the volume                        purchase money mortgages on owner-
     able to change how a goal is defined and                threshold has instead operated as an                  occupied, single-family housing. The
     measured or how the loans meet the                      upper limit on Bank AMA programs.                     current home purchase housing goals
     counting requirements established by                    Banks below the volume threshold in                   require a Bank to meet separate targets
     the rules. FHFA would consider the                      effect avoid the housing goals, while                 for mortgages for low-income families
     Bank’s request and notify the Bank if the               Banks above the threshold face                        (i.e., families with incomes at or below
     request is approved.                                    application of housing goals that AMA                 80 percent of area median income),
       The proposed rule would establish a                   programs were not designed to, and                    mortgages for very low-income families
     three-year cycle for setting alternate                  typically did not, meet.                              (i.e., families with incomes at or below
     target levels for the Bank housing goals.                  Housing goals will better serve their              50 percent of area median income), and
     In other words, the Bank’s proposal                     public purpose if they are flexible                   mortgages for families in low-income
     would cover the target levels for the                   enough to be meaningful and achievable                areas. The regulation defines ‘‘families
     housing goals for the next three years.                 for a variety of Bank AMA programs.                   in low-income areas’’ to include
     For the initial three-year housing goals                Instead of the housing goals being a                  families in low-income census tracts
     cycle, the Bank would submit its request                simple binary on-or-off based on a                    regardless of family income, as well as
     by October 31, 2019. Under special                      volume threshold, the proposed rule                   moderate-income families in minority
     circumstances that would trigger                        offers a mechanism for goals to apply to              census tracts (i.e., census tracts with
     application of housing goals, such as                   all Banks in ways that fit their unique               minority population of at least 30
     starting a new AMA program, a Bank                      mission. The new process for setting the              percent and a tract median income less
     would have an opportunity to propose                    levels of the housing goals would                     than the area median income) and
     a goal alternative.                                     accomplish the purpose of the volume                  moderate-income families in designated
       If FHFA approves an alternate target                  threshold by allowing the Banks to                    disaster areas. The fourth housing goal
     level for one or both of the housing                    propose meaningful and achievable                     under the existing Bank housing goals
     goals for a Bank, the evaluation process                target levels based on the nature of the              regulation measures Bank purchases of
     would remain the same. At the end of                    AMA program at each Bank.                             AMA refinancing mortgages on owner-
     the year, FHFA would evaluate the Bank                                                                        occupied, single-family housing for low-
     based on the FHFA approved alternative                  D. FHFA Discretion and Feasibility                    income families.
     target level and make its determination                 Review                                                   The categories of the current Bank
     based on whether the Bank’s                               The proposed rule would retain                      housing goals are the same as the
     performance met the approved target                     existing provisions that allow FHFA to                housing goals for Fannie Mae and
     level for the housing goal or goals.                    exercise discretion when events out of                Freddie Mac (the Enterprises). The
       This new alternative process for                      a Bank’s control occur, such as                       Enterprise housing goals include the
     setting the target levels of the housing                unexpected market shifts or member                    same single-family housing goals as the
     goals would ensure that the target levels               mergers. It would also retain the                     Bank housing goals, along with separate
     for the housing goals are feasible for                  feasibility review that FHFA would                    single-family subgoals and multifamily
     each Bank, taking into account the                      undertake before exercising remedies if               goals that are not included in the Bank
     particular programs and activities of the               a Bank did not meet either housing goal.              housing goals. The separate categories
     Bank.                                                                                                         for the individual single-family housing
                                                             V. Prospective Mortgage Purchase                      goals are established by statute for the
     C. Removing the Volume Threshold                        Housing Goal                                          Enterprises and are designed to
       Under the existing Bank housing goals                   The proposed rule would replace the                 encourage the Enterprises to target
     regulation, a Bank is subject to the                    four housing goals in the existing Bank               activity in each of the separately defined
     housing goals only if the total unpaid                  housing goals regulation with a                       areas. Multiple housing goals targeting
     principal balance (UPB) of the Bank’s                   prospective mortgage purchase housing                 specific segments of the market are
     purchases of AMA mortgages in a year                    goal. The new housing goal would                      appropriate for the Enterprises, which
     exceeds $2.5 billion (the ‘‘volume                      include mortgage loans that met the                   are large institutions operating
     threshold’’). Since the 2010 housing                    criteria for any of the current housing               nationwide and are able to design
     goals rule became effective, there have                 goals. The proposed rule would                        products and programs to support many
     been only three instances where a Bank                  establish the target level for the new                different segments of the mortgage
     exceeded the $2.5 billion annual                        goal in the regulation at 20 percent of               market.
     volume threshold. The three instances                   each Bank’s total purchases of AMA                       The Banks are smaller institutions
     were in 2015 (Indianapolis Bank) and in                 mortgages. The proposed rule would                    with mortgage purchase programs that


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     55118                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     are much more limited in scope than the                   The new housing goal would also                     proposed prospective mortgage
     broad-based purchase activities of the                  include both purchase money mortgages                 purchase housing goal using 2017 data.
     Enterprises. Thus, it is more difficult for             and refinancing mortgages. This would                 For each Bank, the Table shows the
     the Banks to develop products and                       include refinancing mortgages for low-                percent of all AMA loans that were to
     programs targeting each of the market                   income families, which currently count                very low-income (at or below 50 percent
     segments covered by the existing Bank                   only for the separate low-income                      of area median income) borrowers, the
     housing goals. The proposed rule would                  families refinancing goal. By combining               percent of all AMA loans that were to
     replace the four separate housing goals                 the different categories into a single,               low-income (above 50 percent and at or
     for the Banks with a new prospective                    overall goal the proposed rule would                  below 80 percent of area median
     mortgage purchase housing goal                          make refinancing mortgages for families               income) borrowers, and the percent of
     including mortgage purchases that meet                  of any income level who reside in low-                loans to borrowers above low-income
     any of the existing housing goal                        income areas meet the counting                        but that meet the low-income areas
     categories. This new goal would greatly                 requirements established by the rule.                 criteria. The low-income areas
     reduce the complexity of the housing                                                                          contribution to the housing goal is
                                                             B. Proposed Level for the Prospective
     goals and would make it easier for the                                                                        further limited by the requirement that
                                                             Mortgage Purchase Housing Goal
     Banks to appropriately target their AMA                                                                       no more than 25 percent of the loans
                                                               The proposed rule would establish                   counting toward the housing goal can be
     purchase activity based on their
                                                             the target level for the new prospective              to borrowers above the low-income
     individual needs and the needs of their
                                                             mortgage purchase housing goal at 20                  level.
     members.
                                                             percent of the Bank’s AMA mortgage                      The following Chart 1 shows a time
        The proposed rule would establish a                  purchases. In proposing a 20 percent                  series of each Bank’s total percentage of
     prospective mortgage purchase housing                   target for the new housing goal, FHFA                 loans meeting the prospective mortgage
     goal, which would include all single-                   considered how the Banks would have                   purchase housing goal over the period
     family, first lien AMA mortgages                        performed under this new overall goal                 2011–2017. Note that the tables and
     purchased by a Bank. Eligible mortgages                 in recent years, the ability of the Banks             charts in this proposed rule mask the
     meeting the income or geographic                        to meet the new prospective mortgage                  identity of individual Banks to maintain
     eligibility requirements for any of the                 purchase housing goal, as well as the                 confidentiality of Bank data. The letters
     current four housing goals would                        needs of underserved borrowers.                       have been randomized for each table
     continue to be eligible under the                         Past performance of the Banks.                      and chart (i.e., Bank A may refer to
     proposed goal. This would include                       Historically, most of the Banks have                  different Banks in different tables).
     mortgages for low- or very low-income                   exceeded the 20 percent goal level.                   Rows may not appear to total due to
     borrowers and mortgages for borrowers                   Table 1 below shows how the Banks                     rounding.
     living in low-income areas.                             would have performed under the                        BILLING CODE 8070–01–P




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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                                  55119




     BILLING CODE 8070–01–C                                  the proposed target level for the housing             their performance. Alternatively, these
       In 2017, the combined housing goals                   goal demonstrates a meaningful                        Banks may elect to propose alternate
     performance for the Bank System as a                    contribution to affordable housing while              target levels if the 20 percent target is
     whole (shown as SYS in Chart 1) would                   also being feasible given the structure of            infeasible based on the specific
     have reached 25 percent of all AMA                      AMA programs. Striking the appropriate                circumstances in their respective
     mortgages. The performance of the                       balance is challenging in part because of             districts and under their existing AMA
     individual Banks varies significantly.                  the variation in performance of the                   programs.
     The variation in performance likely                     different Banks. A target level for the
     results from the volumes of AMA                                                                                  Needs of underserved borrowers. In
                                                             housing goal that is high enough to be                determining the target level to propose,
     purchased by individual Banks,                          meaningful for one Bank may not be
     different focuses by different Banks,                                                                         FHFA considered the Nation’s
                                                             feasible for another Bank to achieve                  affordable housing needs, which affect
     district-level differences in the housing               based on differences between the Bank
     markets, and that Banks under the $2.5                                                                        both homeowners and renters, while
                                                             districts and the individual Bank                     focusing on homeownership as the
     billion threshold are not motivated to                  prudential limits on AMA purchases.
     meet the affordable housing goals. Note                                                                       policy area most directly connected to
                                                               Eight of the eleven Banks would have
     that for the three Banks at zero for some                                                                     the Bank housing goals. The national
                                                             achieved the proposed housing goal
     years, Chart 1 reflects that these Banks                                                                      homeownership rate declined every
                                                             level of 20 percent each year since 2011,
     did not have active AMA programs in                                                                           year from 2004 to 2017, with
                                                             though the performance for several
     those years. The same three Banks are                                                                         particularly sharp declines for younger
                                                             Banks was very close to the 20 percent
     the only Banks that would have not met                  target in some years. The 20 percent                  households and African American
     the proposed 20 percent housing goal                    housing goal level would be high                      households.10 Tight access to mortgage
     target in 2017, which may be related to                 enough to be meaningful for those                     credit is an ongoing factor in the lack of
     having more recent AMA program                          Banks, while still being feasible for the             access to homeownership, particularly
     initiation.                                             Banks to achieve.
                                                                                                                     10 See Joint Center for Housing Studies of Harvard
       Feasibility of the proposed goal. In                    For the three Banks whose
                                                                                                                   University, ‘‘The State of the Nation’s Housing
     proposing the 20 percent target for the                 performance would have been below the                 2017,’’ 23 (2015), available at http://
     new prospective mortgage purchase                       20 percent target level in 2017, it may               www.jchs.harvard.edu/sites/default/files/harvard_
                                                                                                                                                                          EP02NO18.012</GPH>




     housing goal, FHFA seeks to ensure that                 be possible for the Banks to increase                 jchs_state_of_the_nations_housing_2017_0.pdf.



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     55120                   Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     in places with lower-cost homes.11                      mortgages for families in low-income                      regardless of family income. For
     Workers in growing sectors like                         areas as one of the criteria for loans to                 properties in minority census tracts and
     healthcare often cannot afford to                       be counted toward the new housing                         for properties in designated disaster
     purchase even modestly priced homes                     goal. The proposed rule remains                           areas, mortgage purchases would count
     in most metropolitan statistical areas.                 unchanged from the current rule in that                   if family income is lower than the area
     As an example, a typical emergency                      it would continue to define ‘‘families in                 median income, which would include
     medical technician could afford the                     low-income areas’’ to include (a)                         families with incomes between 80
     median home price in only 17 out of                     families in low-income census tracts                      percent and 100 percent of area median
     203 metropolitan statistical areas in a                 regardless of family income, (b)                          income.
     recent analysis.12 Improved financing                   moderate-income families in minority
     opportunities can help mitigate                         census tracts (i.e., census tracts with                      As a result, it is possible for loans to
     homeownership difficulties for                          minority population of at least 30                        higher-income households in low-
     underserved borrowers.                                  percent and a tract median income less                    income areas to count toward
       FHFA recognizes these challenges and                  than the area median income), and (c)                     achievement of the housing goal. While
     has considered them in proposing a                      moderate-income families in designated                    the proposed rule would not exclude
     target level for the AMA home purchase                  disaster areas. These criteria are                        such mortgages for higher-income
     housing goal of 20 percent. The                         summarized in Table 2:                                    families from counting entirely, the
     proposed target level encourages the                                                                              proposed rule would limit the extent to
     Banks to continue to make meaningful                          TABLE 2—LOW-INCOME AREAS                            which a Bank could rely on such loans
     contributions to affordable housing,                                 COMPONENTS                                   as the primary means of meeting the
     while recognizing the limited ability of                                                                          housing goal. FHFA recognizes an
     the Banks to affect the overall housing                                 Income                 Geographic         unresolved tension between the need for
     market.                                                               requirement              requirement        homeownership investment in
                                                                                                                       communities that have lacked
     C. Cap on Mortgages to Higher-Income                    Path 1     None ..................   Tract Income.
     Borrowers in Low-Income Areas                                                                ≤80% AMI.
                                                                                                                       consistent, large-scale homeownership
                                                             Path 2     ≤100% AMI. .......        Minority Census      investment, on one hand, and concern
       As discussed above, the proposed rule                                                                           about the impact of an influx of higher-
                                                                                                    Tract.
     would combine each of the categories                                                         (≥30% minority +     income households on existing
     for the four current Bank housing goals                                                        Tract Income       residents, on the other hand.13
     into a single overall housing goal. These                                                      <100% AMI
     categories include mortgages on                         Path 3     ≤100% AMI ........        Designated Dis-         HMDA data on mortgage lending
     properties in low-income areas, which                                                          aster Area.        overall suggest that lending to higher-
     may include some mortgages for                                                                                    income borrowers in low-income census
     families with incomes above the low-                      The definition of families in low-                      tracts is already a growing segment.
     income maximum of 80 percent of area                    income areas is different from the other                  There is a rising trend from 2010 to
     median income. The proposed rule                        components included in the proposed                       2016 of mortgages originated for
     would include a limit on the extent to                  housing goal because it can include                       borrowers with incomes greater than
     which a Bank could rely on mortgages                    mortgages for families with higher                        120 percent of area median income in
     for higher-income families in these areas               incomes. For properties located in low-                   low-income census tracts. This reached
     to meet the new housing goal.                           income census tracts, each mortgage                       a high of 33.4 percent of all borrowers
       The proposed prospective mortgage                     purchase would count toward a Bank’s                      in low-income census tracts in 2016, as
     purchase housing goal would include                     achievement of the housing goal,                          Table 3 below shows:




       11 Id.                                                   13 For information on the effects of gentrification,   Sandra Padilla, ‘‘IN THE FACE OF
       12 NationalHousing Conference, ‘‘Paycheck to          see generally Federal Reserve Bank of Philadelphia,       GENTRIFICATION: Case Studies of Local Efforts to
     Paycheck 2017,’’ 3 (Sept. 2017), available at http://   ‘‘Research Symposium on Gentrification and                Mitigate Displacement’’ (Urban Institute 2006),
                                                             Neighborhood Change’’ (May 25, 2016), available at        available at https://www.urban.org/sites/default/
     www.nhc.org/wp-content/uploads/2017/09/2017-
                                                             https://www.philadelphiafed.org/community-
     Paycheck-to-Paycheck-Final.pdf.                                                                                   files/publication/50791/411294-In-the-Face-of-
                                                             development/events/2016/research-symposium-on-
                                                                                                                       Gentrification.PDF.
                                                                                                                                                                           EP02NO18.013</GPH>




                                                             gentrification; Diane K. Levy, Jennifer Comey &



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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                          55121

       To limit the extent to which a Bank                   and the Banks. The Enterprises together                  FHFA invites comment on all
     can rely on mortgages for higher-income                 represented 62 percent. The Banks are                 proposed changes related to the
     families in meeting the prospective                     therefore market-takers, not market-                  prospective mortgage purchase housing
     mortgage purchase housing goal, the                     makers.                                               goal including but not limited to the
     proposed rule would establish a cap on                     Additionally, unlike Fannie Mae and                following specific questions (please
     how much of the goal a Bank can satisfy                 Freddie Mac, the Banks hold in                        identify the question answered by the
     with loans to borrowers above the low-                  portfolio nearly all loans they purchase              number assigned below):
     income threshold (i.e., 80 percent of                   and must manage the related market risk                  1. Is a prospective mortgage purchase
     area median income). Specifically, the                  exposure. While FHFA considers AMA                    housing goal measured as a percentage
     proposed rule would require that at                     mortgage loans a mission asset, it also               of each Bank’s AMA purchases the
     least 75 percent of all mortgage                        advises each Bank’s board of directors to             optimal way to meaningfully and
     purchases that count toward                             establish prudential limits for the                   achievably encourage affordable home
     achievement of the prospective                          mortgage purchases. The combination of                mortgage purchases? If not, what other
     mortgage purchase housing goal be for                   the AMA regulatory requirements, the                  options would more likely result in
     borrowers with incomes at or below 80                   fact that the Banks hold the loans in                 attainment of that goal? Why?
     percent of area median income. Stated                   portfolio, and the fact that the decision                2. Is 20 percent the appropriate level?
     differently, no more than 25 percent of                 to offer an AMA program to members is                 Why or why not? Please provide
     the mortgages a Bank uses to qualify for                at a Bank’s discretion (with FHFA                     quantitative analysis to support your
     the prospective mortgage purchase                       approval) all contribute to the AMA                   position when possible.
     housing goal could be to borrowers                      programs being market-takers.                            3. Is a single percentage goal that
     above 80 percent of AMI. This cap                          Goal levels reflect these differences.             includes purchase and refinance loans
     would allow Banks to provide                            The Enterprises have different                        to low-income borrowers, very low-
     significant support for low-income                      percentage benchmarks for each of their               income borrowers, and families in low-
     areas, including minority census tracts                 goals and subgoals. FHFA also compares                income areas an appropriate
     and designated disaster areas, while                    Enterprise performance retrospectively                mechanism? Why or why not?
     ensuring an overall focus on low-                       to market levels. If an Enterprise meets                 4. Is the 25 percent cap on AMA
     income and very low-income borrowers.                   either the benchmark or the market level              mortgages to higher-income borrowers
       Note that the proposed cap would not                  in a particular year, FHFA determines                 in low-income areas that count towards
     prohibit the Banks from purchasing                      that it has met the goal. These goals are             the goal the appropriate level? Why or
     mortgages for borrowers with incomes                    appropriate for entities with a market                why not? Please provide quantitative
     above 80 percent of AMI. Rather, it                     position like the Enterprises. In contrast,           analysis to support your position when
     would simply limit the extent to which                  the goal level for the Banks combines all             possible.
     such mortgages could be counted                         of the eligible categories from the                      5. What changes could Banks make to
     toward achievement of the housing                       Enterprise goals and reflects the market              their AMA products to encourage more
     goals.                                                  niche the Banks occupy. It is difficult to            purchases of affordable home mortgages
                                                             compare the benchmark levels for the                  if needed to meet a goal?
     D. Comparison to Enterprise Housing                                                                              6. Should the Banks have an
     Goals                                                   Enterprise goals to the proposed target
                                                             level for the prospective Bank housing                additional opportunity to propose a
       FHFA considered the similarities and                                                                        revision to the target level for either
                                                             goal. The Enterprise housing goals
     differences between the Enterprises’                                                                          housing goal, either annually or at some
                                                             measure performance in four separate
     mortgage purchases and the Banks’                                                                             other interval? Why or why not?
                                                             categories. Table 4 below illustrates the
     mortgage purchases when proposing
                                                             benchmark levels from 2017 for the                       VI. Proposed Housing Goal for Small
     Bank housing goals. Both the
                                                             Enterprise housing goals (market levels                  Member Participation
     Enterprises and the Banks provide
                                                             are published in the 2018 Annual                            The proposed rule would establish a
     valuable sources of liquidity for the
                                                             Housing Report).                                         new small member participation
     secondary mortgage market and support
     for affordable housing. Key differences,                                                                         housing goal that would require each
                                                              TABLE 4—ENTERPRISE GOAL LEVELS, Bank to ensure that a certain percentage
     however, informed the goal structure
     and levels in this proposed rule.                                                  2017                          of the members participating in the
       The Enterprises are chartered to                                                                               Bank’s AMA programs are smaller
                                                                                                        Benchmark
     provide stability and liquidity in the                                Goal                         Level, 2017   members. The new small member
     secondary market for residential                                                                      (%)        participation housing goal would
     mortgages by purchasing and making                                                                               recognize that smaller lenders are well-
     commitments to purchase residential                     Low-Income Home Purchase                                 positioned to reach borrowers with
     mortgages. The Banks, in contrast,                        Goal ...................................           24 affordable housing needs.
     operate AMA programs at their                           Very Low-Income Home Pur-                                   Across the Bank System, a majority of
                                                               chase Goal ........................                  6 the members participating in AMA
     discretion. If a Bank believes housing                  Low-Income Areas Home
     goals are too onerous or require                          Purchase Goal ..................                   18
                                                                                                                      programs are small with respect to asset
     unacceptable risks, it may cease                        Low-Income Areas Home                                    size, but a majority of the number of
     purchasing mortgages entirely.                            Purchase Subgoal .............                     14 AMA mortgages purchased by the Banks
       The Banks’ AMA purchases are so                       Low-Income Refinance Goal                            21 come from members with larger assets.
     small compared to other secondary                                                                                In 2017, 87 percent of AMA users had
     market participants that they do not                      The prospective Bank housing goal                      total assets below $1.173 billion, the
     shape the market in the way the                         would combine these four categories                      current threshold for community
     Enterprises do. Combined Bank AMA                       into a single overall goal, but it is not                financial institutions. Those AMA users
     purchases constituted only 1 percent of                 possible to add the benchmark levels                     sold 57 percent of the total number of
     the total unpaid principal balance of                   together because the categories                          loans purchased by the Banks. Charts 2
     secondary market activity comprising                    measured by the Enterprise housing                       and 3 below show the distribution of
     Fannie Mae, Freddie Mac, Ginnie Mae,                    goals have significant overlap.                          each Bank’s AMA users by asset size


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     55122                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     and share of the number of loans                        System as a whole had roughly 85                      came from AMA users larger than the
     purchased. Note that most Banks have a                  percent of its AMA users in that                      community financial institutions
     large majority of AMA users below the                   category in 2017. Chart 3 shows, for                  threshold.
     community financial institutions                        instance, that in the Bank System nearly
     threshold—Chart 2 shows the Bank                        45 percent of the AMA loans in 2017




       In proposing the new small member                     borrowers in rural communities or                     participating financial institutions
     participation housing goal, FHFA                        places of persistent poverty where                    (PFIs) above the community financial
     considered that one of the benefits of                  borrowers have less access to credit.                 institutions asset cap produced 17
     Bank AMA programs is connecting                         Small institutions appear more likely to              percent of their loans for low-income or
     members with the secondary mortgage                     originate loans to low-income and very                very low-income borrowers, while PFIs
     market. This connection has the                         low-income households, as Table 5                     that were also community financial
     potential to particularly benefit                       below documents. It shows that in 2017,               institutions produced 21 percent.
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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                                 55123




        The proposed small member                            of the Bank AMA programs for some                     working relationships between Banks
     participation housing goal would align                  smaller members. For example, the final               and small members will result in
     with FHFA’s policy position embodied                    rule establishing the Bank housing goals              ongoing purchases of mortgages to
     in the AMA regulation, which considers                  included a volume threshold in part ‘‘to              benefit borrowers in need of financing
     the cooperative structure of the Banks                  avoid adverse impact on Bank AMA                      for affordable housing.
     and that the Banks, as government-                      programs, particularly with respect to
                                                                                                                   B. Proposed Level for the Small Member
     sponsored enterprises, pass along their                 CFIs [community financial
                                                                                                                   Participation Housing Goal
     funding advantage to their members by                   institutions].’’ 14
     providing financial services, including                    The proposed rule would establish for                 The proposed rule would establish
     AMA programs. FHFA recognizes that                      the first time a new housing goal for                 the target level for the new small
     adding new members to participate in                    smaller member participation in Bank                  member participation housing goal as
     AMA, especially smaller members with                    AMA programs. The new goal would                      having at least 50 percent of ‘‘AMA
     less staff capacity, requires active                    encourage Banks to maintain a focus in                users’’ be small members. The proposed
     marketing and outreach with a long                      their AMA programs on small members                   rule would define ‘‘AMA user’’ to
     sales cycle. As individual AMA user                     that are more likely to produce                       include any PFI that sells one or more
     participation may vary year-to-year,                    affordable home loans to low-income                   AMA mortgage(s) to a Bank during the
     Banks would have to maintain outreach                   households. Small institutions often                  year being measured. The proposed rule
     efforts to ensure that small member                     rely on their Bank membership for a                   would define the small member
     participation continues at or above the                 connection to the secondary mortgage                  participation housing goal by
     target level. Nevertheless, the                         market. It is reasonable to require the               incorporating the definition of
     investment of time and effort to bring                  Banks to deploy their federally                       ‘‘community financial institution’’ in
     new members to the program should                       supported funding-cost advantage for                  the Bank membership regulation, which
     pay off both in new lending to                          the benefit of small members that might               includes institutions with total assets
     borrowers that may not otherwise                        otherwise have difficulty accessing                   below the community financial
     receive access to credit and in safe and                national capital markets, rather than                 institution threshold, currently $1.173
     sound business growth for the Banks.                    primarily to augment the financial                    billion.16
                                                             results of large members that have no                    In proposing a 50 percent target for
     A. Structure of the Small Member                                                                              the new small member participation
                                                             such difficulty.15 Small institutions are
     Participation Housing Goal                                                                                    housing goal, FHFA considered how the
                                                             also an important source of credit access
       The existing Bank housing goals                       for rural areas, places of persistent                 Banks would have performed under this
     regulation does not include a goal                      poverty, and other underserved                        goal in recent years and the ability of
     specifically targeting smaller member                   populations.                                          the Banks to meet the new goal.
     participation in the Bank AMA                              The Banks already serve many small                    Past performance of the Banks. Table
     programs. However, the Bank housing                     members, so the small member                          6 below shows how each Bank would
     goals have long recognized the                          participation housing goal would                      have performed under the new small
     importance of smaller members for the                   encourage them to maintain that focus                 member participation housing goal in
     Banks, and conversely, the importance                   over time. FHFA anticipates that the                  2017.




       14 75
          FR 81096, 81098 (Dec. 27, 2010).                   of the Bank Act, 12 U.S.C. 1430c, but also in the     Housing Finance Board, 201 F.3d 551 (5th Cir.
       15 For
           this reason, FHFA grounds the small-              statutory basis for the AMA program more              2000).
     member goal not just in the housing goals section       generally. See 12 U.S.C. 1430, 1430b, 1431; Texas       16 12 CFR 1263.1.
                                                                                                                                                                    EP02NO18.015</GPH>




                                                             Savings & Community Bankers Ass’n v. Federal



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     55124                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules




        In 2017, nine of the eleven Banks                    year. For example, if only 33 percent of                 8. Should FHFA consider an
     would have met the new small member                     a Bank’s AMA users had been small                     alternative level (other than the
     participation housing goal as proposed,                 members in the preceding year, the next               community financial institutions
     with most of the Banks being                            year the Bank could satisfy the goal if               threshold, currently $1.173 billion) for
     significantly over the proposed 50                      at least 36 percent of its AMA users are              defining ‘‘small member?’’
     percent goal level. Two of the eleven                   small members. Once a Bank reaches                       9. Are there any issues that FHFA
     Banks would have fallen below the 50                    the 50 percent participation rate, it                 should consider related to the proposed
     percent goal level. The two Banks that                  would no longer need to demonstrate                   300 basis point growth rate under the
     would not have met the goal in 2017 are                 annual growth.                                        small member participation housing
     also noteworthy in that they had very                      FHFA also retains its supervisory                  goal? If so, please suggest and explain
     few AMA users during 2017.                              discretion if a percentage changed due                an alternative approach.
        Feasibility of the proposed goal. In                 to events outside of a Bank’s control,
     proposing the 50 percent target for the                 such as a sudden drop in participation                   10. Is the 50 percent goal too low,
     new small member participation                          due to member mergers or failures.                    considering that nine of the 11 Banks
     housing goal, FHFA considered the                          FHFA invites comments on all aspects               already meet it?
     ability of the Banks to meet the new                    of the small member participation                     VII. Phase-in of New Housing Goals
     proposed goal. Recognizing that some                    housing goal and specifically solicits
     Banks may currently have performance                    comments on the following questions                      The proposed rule would establish a
     that would fall below the proposed goal                 (please identify the question answered                phase-in period for enforcement of the
     level, the proposed rule would provide                  by the number assigned below):                        new housing goals. Although many
     an alternate means of achieving the goal.                  7. Is the small member participation               Banks would be on track for immediate
     If a Bank’s performance under the goal                  housing goal an effective way to                      compliance based on their 2017
     falls below the 50 percent goal level, the              encourage access to mortgage credit in                performance, FHFA acknowledges that
     Bank could also comply by increasing                    rural communities or places of                        it may take substantial effort for some
     its performance under the goal by 300                   persistent poverty, or would other                    Banks to comply. A phase-in period
                                                                                                                                                              EP02NO18.016</GPH>




     basis points compared to the preceding                  approaches be more effective?                         would help the Banks adjust to the


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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                                55125

     housing goals and manage risk                           that address which mortgages count for                lines, while nonbanks—which are
     appropriately.                                          purposes of the housing goals. The                    generally ineligible to be members—
       The existing Bank housing goals                       proposed rule would revise the Bank                   originate an increasing share of this
     regulation sets forth procedures for how                housing goals regulation to: (a) Permit               market.20 For many PFIs, the Banks are
     FHFA enforces the housing goals.17 For                  mortgages guaranteed or insured by a                  their preferred means of access to the
     each Bank that is subject to housing                    department or agency of the U.S.                      secondary market because of the high
     goals, the Director determines whether a                government to count for purposes of the               level of service Bank staff provide and
     Bank achieved the goal(s), provides                     Bank housing goals; (b) address the                   the longstanding member relationships.
     notice to the Bank of the Director’s                    treatment of participations among                     Allowing small institutions to use their
     preliminary determination, receives a                   different Banks under the Bank housing                preferred secondary market channel
     response from the Bank, and determines                  goals; and (c) remove provisions related              along with government backing through
     whether goal(s) achievement was                         to Home Ownership and Equity                          FHA, VA, or RHS means those
     feasible.18 If the Director finds that a                Protection Act (HOEPA) mortgages and                  institutions do not have to choose
     Bank has not achieved a goal and the                    mortgages with unacceptable terms and                 between secondary market executions
     goal was feasible, the Director may                     conditions.                                           and loan type and can therefore better
     require the Bank to submit a housing                                                                          serve their borrowers.
                                                             A. Counting Requirements for Federally
     plan.19
       The proposed rule would modify                        Backed Mortgages                                         The Banks acquire federally backed
     these provisions to specify that not                       The proposed rule would revise the                 mortgages through products under both
     meeting a goal in the first or second year              existing Bank housing goals regulation                the MPF and MPP programs. Under the
     in which the new regulation is in effect                to allow mortgages guaranteed or                      MPF program, the Banks acquire
     will not result in the Director requiring               insured by a department or agency of                  federally backed loans for their ‘‘MPF
     a housing plan. During the first and                    the U.S. government to count for                      Government’’ and ‘‘MPF Government
     second year, FHFA would monitor                         purposes of the Bank housing goals.                   MBS’’ products. With ‘‘MPF
     performance using existing AMA data                        The Enterprise housing goals are                   Government,’’ the Bank serves as
     collection, notify the Banks of its                     defined by statute to include only                    investor and holds the loans on its
     preliminary determination, and then                     conventional loans, i.e., those that are              balance sheet. With ‘‘MPF Government
     make a final determination as described                 not government-backed. The existing                   MBS,’’ the Bank essentially serves as an
     above, including determining whether                    Bank housing goals regulation includes                aggregator, purchasing federally backed
     the goal was feasible. FHFA would not,                  the same provisions excluding loans                   mortgages (MPF Government loans) and
     however, require a housing plan for not                 guaranteed or insured by a department                 then issuing Ginnie Mae securities
     meeting a goal in the first or second                   or agency of the U.S. government from                 backed by the mortgages.
     year. The Banks should expect full                      counting for purposes of the Bank                        The Banks’ purchases of federally
     implementation of the rule including                    housing goals. The proposed rule would                backed mortgages have varied greatly. In
     the possibility of a housing plan if a                  change this provision so that these                   2017, the Bank System’s purchases of
     Bank does not meet a housing goal in                    mortgages would be counted for                        federally backed loans represented 10
     2022.                                                   purposes of the Bank housing goals.                   percent of total AMA loans (less than 8
       The phase-in period would not limit                   Non-conventional loans would continue                 percent measured by UPB), but the
     the Director’s remedies apart from                      to be excluded from the Enterprise                    purchases by individual Banks ranged
     imposition of a housing plan due to the                 housing goals.                                        from 0 percent to 100 percent, as
     housing goals, such as through                             Federal Housing Administration                     detailed in the Table 7 below:
     supervisory criticism in the examination                (FHA), Veterans Administration (VA),
     process, nor would it limit FHFA’s                      and Rural Housing Service (RHS)                          20 According to Ginnie Mae, nonbanks’ overall

     discretion with respect to feasibility                  provide mortgage options that can help                share of Ginnie Mae MBS issuances more than
     determinations.                                         lower-income borrowers and borrowers                  doubled from 36 percent in early 2013 to over 77
                                                             in low-income areas achieve                           percent as of November 2016. See Ginnie Mae, ‘‘The
     VIII. Other Changes                                     homeownership, for instance, with                     Role of Nonbanks in Expanding Access to Credit,’’
                                                                                                                   3 (Jan. 2017), available at https://www.ginniemae.
       The proposed rule would make a                        lower down payments. Some lenders—                    gov/newsroom/publications/Documents/expand_
     number of changes to provisions in the                  and particularly smaller lenders—may                  role_nonbanks.pdf. See also Christopher Whalen,
     current Bank housing goals regulation                   lack the economy of scale needed for                  ‘‘No good reason for banks to offer more
                                                             efficiently participating in multiple                 government-backed mortgages,’’ American Banker
                                                                                                                   (Jan. 22, 2018), available at https://
       17 See 12 CFR 1281.14 and 1281.15.                    secondary market options. Some                        www.americanbanker.com/opinion/no-good-
       18 See 12 CFR 1281.14.                                depositories have dropped federally                   reason-for-banks-to-offer-more-government-backed-
       19 See 12 CFR 1281.15.                                backed mortgages from their product                   mortgages.




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     55126                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules




       The proposed rule would simplify the                  regulation. This exclusion would apply                 for advances.24 The prohibition on goals
     rules under which mortgages may be                      even if the participation were executed                eligibility in the current regulation is
     counted by including purchases of                       on the same day as the original                        largely redundant with that guidance,
     federally backed mortgages under AMA                    acquisition by a Bank.                                 and the Banks have demonstrated no
     products. This approach would also                         Under a second scenario, two or more                interest in purchasing such mortgages.
     complement FHFA’s AMA regulation,                       Banks would each purchase                              The proposed rule would remove the
     provide better secondary market                         participation interests in the same                    restriction from the Bank housing goals
     execution for many PFIs, and support                    mortgage simultaneously. FHFA has                      regulation. FHFA would instead rely on
     the needs of underserved borrowers.                     interpreted the existing Bank housing                  existing supervisory and regulatory
                                                             goals regulation to require that such                  authorities and procedures to address
     B. Counting Participations
                                                             transactions be counted on a pro rata                  any concerns about particular types of
        The current Bank housing goals                       basis according to each Bank’s                         mortgages.
     regulation does not explicitly address                  percentage interests in the mortgage.
     the treatment of ‘‘participations.’’ A                                                                         IX. Section-by-Section Analysis of
                                                             The proposed rule would codify in the                  Proposed Rule
     participation exists where two or more                  regulation that participations among
     institutions each acquire a percentage                  Banks that are entered simultaneously                    The proposed rule would also revise
     interest in a mortgage. The proposed                    pursuant to an existing participation                  other provisions of the Bank housing
     rule would incorporate existing FHFA                    agreement should be counted as                         goals regulation, as discussed below.
     guidance on the treatment of                            ‘‘mortgage purchases’’ based on the pro                A. Changes to Definitions—Proposed
     participations into the regulation.                     rata number of mortgages according to
        FHFA has addressed the Bank                                                                                 § 1281.1
                                                             each Bank’s percentage interests for                      The proposed rule includes changes
     housing goals treatment of
                                                             purposes of the Bank housing goals                     to definitions used in the current Bank
     participations under two different
                                                             regulation.                                            housing goals regulation. The proposed
     scenarios. Under the first scenario, a
     Bank would purchase a mortgage and                      C. HOEPA Mortgages and Mortgages                       rule would add new definitions of
     later sell a participation interest in the              With Unacceptable Terms and                            ‘‘AMA mortgage,’’ ‘‘AMA program,’’
     mortgage to another Bank. FHFA                          Conditions                                             ‘‘AMA user,’’ ‘‘CFI asset cap,’’ and
     addressed this scenario in the                                                                                 ‘‘community financial institution or
                                                               The current Bank housing goals                       CFI,’’ and would revise the definitions
     Supplementary Information to the 2010
                                                             regulation counts purchases of ‘‘HOEPA                 of ‘‘dwelling unit,’’ ‘‘families in low-
     final rule establishing the Bank housing
                                                             mortgages’’ and ‘‘mortgages with                       income areas,’’ ‘‘median income,’’
     goals. In this scenario, FHFA stated that
                                                             unacceptable terms and conditions’’ in                 ‘‘metropolitan area,’’ ‘‘mortgage,’’ and
     ‘‘each mortgage will be assigned to the
                                                             the housing goals denominator, but
     Bank that initially acquired the
                                                             makes them ineligible for the                            24 See generally ‘‘Federal Home Loan Bank
     mortgage regardless of whether an
                                                             numerator.22 This category generally                   Collateral for Advances and Interagency Guidance
     interest in the mortgage was later sold
                                                             encompasses mortgages with excessive                   on Nontraditional Mortgage Products, Notice of
     to another Bank.’’ 21 The proposed rule                                                                        study and recommendations and request for
                                                             points and fees, the financing of single
     would codify in the regulation that                                                                            comment,’’ 74 FR 38618 (Aug. 4, 2009), available
                                                             premium, credit life insurance, and high               at https://www.gpo.gov/fdsys/pkg/FR-2009-08-04/
     participations among Banks that are
                                                             prepayment penalties.23                                pdf/E9-18545.pdf. In removing the exclusion for
     executed after the mortgage was first                                                                          ‘‘mortgages with unacceptable terms and
                                                               FHFA has issued other guidance to
     acquired by a Bank should not be                                                                               conditions’’ from the Enterprises’ housing goals
                                                             the Banks covering purchases of
     counted as ‘‘mortgage purchases’’ for                                                                          regulation, FHFA noted that it ‘‘has regulatory
                                                             mortgages with predatory features or                   authority to directly prohibit purchases by the
     purposes of the Bank housing goals
                                                             accepting such mortgages as collateral                 Enterprises of any types of mortgages it determines
                                                                                                                    are unsuitable.’’ See ‘‘2015–2017 Enterprise
       21 See 75 FR 81096, 81103 (Dec. 27, 2010),                                                                   Housing Goals,’’ 80 FR 53392, 53427 (Sept. 3, 2015),
                                                               22 See   12 CFR 1281.1.
     available at https://www.gpo.gov/fdsys/pkg/FR-                                                                 available at https://www.gpo.gov/fdsys/pkg/FR-
                                                                                                                                                                           EP02NO18.017</GPH>




     2010-12-27/pdf/2010-32350.pdf.                            23 Id.                                               2015-09-03/pdf/2015-20880.pdf.



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                             Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                            55127

     ‘‘non-metropolitan area.’’ The proposed                  3. Definition of ‘‘AMA user’’                          financial institution or CFI’’ is defined
     rule would also remove the definitions                      The proposed rule would add a new                   in the Bank membership regulation to
     of ‘‘Acquired Member Assets (AMA)                        definition for the term ‘‘AMA user,’’ to               mean an institution (1) the deposits of
     program,’’ ‘‘AMA-approved mortgage,’’                    mean any participating financial                       which are insured under the Federal
     ‘‘conforming mortgage,’’ ‘‘conventional                  institution from which a Bank                          Deposit Insurance Act (12 U.S.C. 1811 et
     mortgage,’’ ‘‘HMDA,’’ ‘‘HOEPA                            purchased at least one AMA mortgage                    seq.); and (2) the total assets of which,
     mortgage,’’ ‘‘HUD,’’ ‘‘mortgage data,’’                  during the year being measured.                        as of the date of a particular transaction,
     ‘‘mortgage with unacceptable terms or                       The Acquired Member Assets                          are less than the CFI asset cap, with
     conditions,’’ ‘‘owner-occupied                           regulation generally defines                           total assets being calculated as an
     housing,’’ ‘‘residential mortgage,’’ and                 ‘‘participating financial institution’’ as a           average of total assets over three years,
     ‘‘second mortgage.’’                                     member or housing associate of a Bank                  with such average being based on the
                                                              that is authorized to sell, credit                     institution’s regulatory financial reports
     1. Definition of ‘‘AMA Mortgage’’                        enhance, or service mortgage loans to or               filed with its appropriate regulator for
                                                              for a Bank through an AMA program.                     the most recent calendar quarter and the
        The current Bank housing goals                                                                               immediately preceding 11 calendar
                                                              This definition includes all members
     regulation defines ‘‘AMA-approved                                                                               quarters. The proposed rule would
                                                              that are authorized to sell mortgages
     mortgage’’ as a mortgage that meets the                  through an AMA program, regardless of                  define the term ‘‘community financial
     requirements of an AMA program, with                     whether the member actually sells such                 institution or CFI’’ by cross-referencing
     cross-references to the Acquired                         a mortgage in any particular year. The                 the existing definition in the Bank
     Member Assets regulation (12 CFR part                    proposed rule would define the term                    membership regulation.
     1268) and the New Business Activities                    ‘‘AMA user’’ more narrowly than the
     regulation (12 CFR part 1272). The                                                                              6. Definition of ‘‘Conforming Mortgage’’
                                                              definition of a participating financial
     proposed rule would replace the term                     institution. An ‘‘AMA user’’ would be                    The current Bank housing goals
     ‘‘AMA-approved mortgage’’ with ‘‘AMA                     defined as a participating financial                   regulation defines ‘‘conforming
     mortgage’’ as a technical, non-                          institution from which the Bank                        mortgage’’ as a conventional, AMA-
     substantive change. ‘‘AMA mortgage’’ is                  purchased at least one AMA mortgage                    approved single-family mortgage with
     more consistent with typical usage for                   during the year being measured. The                    an original principal obligation that
     the AMA program. In addition, because                    proposed new small member                              does not exceed the dollar limitation
     the proposed rule would define the term                  participation housing goal would be                    under the Acquired Member Assets
     ‘‘AMA program’’ by cross-referencing                     limited only to AMA users, i.e., those                 regulation or under the Freddie Mac
     the Acquired Member Assets regulation,                   participating financial institutions that              conforming loan limits. The Bank
     it is not necessary to include additional                sold at least one mortgage loan to the                 housing goals are already limited to
     cross-references in the proposed                         Bank in question in the year being                     purchases of mortgages under AMA
     definition of ‘‘AMA mortgage.’’                          measured.                                              programs, which include limits on the
                                                              4. Definition of ‘‘CFI Asset Cap’’                     size of mortgages that can be purchased
     2. Definition of ‘‘AMA program’’                                                                                by a Bank. It is not necessary for the
                                                                 The proposed rule would add a new                   Bank housing goals to include a separate
        The current Bank housing goals                        definition for the term ‘‘CFI asset cap.’’
     regulation defines ‘‘Acquired Member                                                                            limit on the size of mortgages that may
                                                              The proposed rule would define the                     be counted for purposes of the Bank
     Assets (AMA) program’’ as a program                      term ‘‘CFI asset cap’’ to have the same                housing goals. The proposed rule would
     that authorizes a Bank to hold assets                    meaning as defined in the Bank                         remove the definition of ‘‘conforming
     acquired from a member by a purchase                     membership regulation.26 The term                      mortgage’’ from the Bank housing goals
     or funding transaction subject to the                    ‘‘CFI asset cap’’ is defined in the Bank               regulation as unnecessary.
     requirements of parts 1268 (Acquired                     membership regulation to mean $1
     Member Assets) and 1272 (New                             billion, as adjusted annually by FHFA                  7. Definition of ‘‘Conventional
     Business Activities). At the time the                    based on changes in the Consumer Price                 Mortgage’’
     current Bank housing goals regulation                    Index.
                                                                 The new small member participation                     The current Bank housing goals
     was adopted, the term ‘‘AMA program’’
                                                              housing goal would measure the                         regulation defines ‘‘conventional
     was not a defined term in the Acquired
                                                              percentage of AMA users for a Bank                     mortgage’’ as any mortgage that does not
     Member Assets regulation. A definition                                                                          include a guaranty, insurance or other
     for the term ‘‘AMA program’’ was added                   with assets that are below the CFI asset
                                                              cap. The proposed rule would define                    obligation by the United States or any of
     to the Acquired Member Assets                                                                                   its agencies or instrumentalities. The
     regulation in 2016.25 There is no                        the term ‘‘CFI asset cap’’ by cross-
                                                              referencing the existing definition in the             definition of ‘‘conventional mortgage’’ is
     substantive difference between the                                                                              included in the Bank housing goals
     definition of ‘‘Acquired Member Assets                   Bank membership regulation.
                                                                                                                     regulation because the Bank housing
     (AMA) program’’ under the Bank                           5. Definition of ‘‘Community Financial                 goals are currently limited to
     housing goals regulation and the                         Institution or CFI’’                                   conventional mortgages. The proposed
     definition of ‘‘AMA program’’ under the                     The proposed rule would add a new                   rule would expand the coverage of the
     Acquired Member Assets regulation.                       definition for the term ‘‘community                    Bank housing goals to include all AMA
     The proposed rule would replace the                      financial institution or CFI.’’ The                    mortgages, including both conventional
     definition of ‘‘Acquired Member Assets                   proposed rule would define the term                    mortgages and non-conventional
     (AMA) program’’ in the Bank housing                      ‘‘community financial institution or                   mortgages. Because the proposed rule
     goals regulation with a new definition of                CFI’’ to have the same meaning as                      would no longer limit the Bank housing
     ‘‘AMA program’’ that would cross-                        defined in the Bank membership                         goals to conventional mortgages, the
     reference the definition in the Acquired                 regulation.27 The term ‘‘community                     proposed rule would remove the
     Member Assets regulation.                                                                                       definition of ‘‘conventional mortgage’’
                                                                26 See   12 CFR 1263.1.                              from the Bank housing goals regulation
       25 12   CFR 1268.1.                                      27 Id.                                               as unnecessary.


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     55128                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     8. Definition of ‘‘Dwelling Unit’’                      would no longer include a market                      Micropolitan Statistical Areas, located
        The current Bank housing goals                       calculation based on HMDA data, the                   outside any metropolitan area for which
     regulation defines ‘‘dwelling unit’’ to                 proposed rule would remove the                        median family income estimates are
     mean a room or unified combination of                   definition of ‘‘HMDA’’ from the Bank                  published annually by HUD. The
     rooms intended for use, in whole or in                  housing goals regulation as unnecessary.              proposed rule would align the
     part, as a dwelling by one or more                                                                            definition of ‘‘metropolitan area’’ with
                                                             11. Definition of ‘‘HOEPA Mortgage’’
     persons, and includes a dwelling unit in                                                                      FHFA’s practice by revising it to mean
                                                                The current Bank housing goals                     an MSA, or a portion of such an area,
     a single-family property, multifamily
                                                             regulation defines ‘‘HOEPA mortgage’’                 including Metropolitan Divisions, for
     property, or other residential or mixed-
                                                             as a mortgage covered by the definition               which median incomes are determined
     use property. In its 2015 final rule
                                                             of ‘‘high-cost mortgage’’ under the Truth             by FHFA. The proposed rule would
     amending the Enterprise housing goals
                                                             in Lending Act. The definition of                     align the definition of ‘‘non-
     regulation, FHFA revised the analogous
                                                             ‘‘HOEPA mortgage’’ is included in the                 metropolitan area’’ with FHFA’s
     definition in the Enterprise housing
                                                             current Bank housing goals regulation                 practice by revising it to mean a county,
     goals regulation to exclude a
                                                             because the Bank housing goals do not                 or a portion of a county, including those
     combination of rooms without plumbing
                                                             allow HOEPA mortgages to be counted                   counties that comprise Micropolitan
     or kitchen facilities.28 The proposed
                                                             toward achievement of the Bank                        Statistical Areas, located outside any
     rule would revise the definition of
                                                             housing goals. The proposed rule would                metropolitan area, for which median
     ‘‘dwelling unit’’ to align with the
                                                             remove the provision excluding HOEPA                  incomes are determined by FHFA.
     definition of ‘‘dwelling unit’’ provided
                                                             mortgages from counting for purposes of                  The current Bank housing goals
     in the Enterprise housing goals
                                                             the Bank housing goals. Therefore, the                regulation defines ‘‘HUD’’ as the United
     regulation.
                                                             proposed rule would remove the                        States Department of Housing and
     9. Definition of ‘‘Families in Low-                     definition of ‘‘HOEPA mortgages’’ from                Urban Development. The term ‘‘HUD’’ is
     income Areas’’                                          the Bank housing goals regulation as                  used only in the definitions of ‘‘median
        The current Bank housing goals                       unnecessary.                                          income,’’ ‘‘metropolitan area,’’ and
     regulation defines ‘‘families in low-                   12. Definition of ‘‘HUD,’’ ‘‘Median                   ‘‘non-metropolitan area’’ in the current
     income areas’’ to mean (1) any family                   Income,’’ ‘‘Metropolitan Area,’’ and                  Bank housing goals regulation. The
     that resides in a census tract or block                 ‘‘Non-Metropolitan Area’’                             proposed rule would revise those
     numbering area in which the median                                                                            definitions to remove each reference to
                                                                The current Bank housing goals                     ‘‘HUD,’’ and the proposed rule would
     income does not exceed 80 percent of
                                                             regulation defines ‘‘median income,’’                 therefore remove the definition of
     the area median income; (2) any family
                                                             with respect to an area, as the                       ‘‘HUD’’ from the Bank housing goals
     with an income that does not exceed
                                                             unadjusted median family income for                   regulation as unnecessary.
     area median income that resides in a
                                                             the area as determined by HUD. The
     minority census tract; and (3) any family                                                                     13. Definition of ‘‘Mortgage’’
                                                             current definition further provides that
     with an income that does not exceed
                                                             FHFA will provide the Banks annually                    The current Bank housing goals
     area median income that resides in a
                                                             with information specifying how the                   regulation defines ‘‘mortgage’’ to
     designated disaster area. In its 2015
                                                             median family income estimates for                    include all loans secured by real estate
     final rule amending the Enterprise
                                                             metropolitan areas are to be applied for              and any interests in such mortgages.
     housing goals regulation, FHFA
                                                             the purposes of determining median                    The current definition is based on the
     amended the analogous provision in the
                                                             family income. FHFA’s practice is to                  definition of ‘‘mortgage’’ in the
     Enterprise housing goals regulation (12
                                                             calculate the applicable median income                Enterprise housing goals regulation and
     CFR 1282.1) by removing the reference
                                                             figures for both metropolitan and non-                excludes chattel loans on manufactured
     to ‘‘block numbering areas’’ to conform
                                                             metropolitan areas and to provide the                 housing. The proposed rule would
     to the terminology used by the U.S.
                                                             median income information to the                      revise the definition of ‘‘mortgage’’ in
     Census Bureau.29 The proposed rule
                                                             Banks. The proposed rule would align                  the Bank housing goals regulation to
     would amend the Bank housing goals
                                                             the definition of ‘‘median income’’ with              include chattel loans on manufactured
     regulation by making a conforming
                                                             FHFA’s practice, by revising it to mean,              housing. The AMA regulation allows
     revision to the definition of ‘‘families in
                                                             with respect to an area, the unadjusted               the Banks to acquire chattel loans on
     low-income areas.’’
                                                             median family income for the area as                  manufactured housing. Adding such
     10. Definition of ‘‘HMDA’’                              determined by FHFA. The proposed                      loans to the definition of ‘‘mortgage’’ in
        The current Bank housing goals                       rule would also revise the definition to              the Bank housing goals regulation
     regulation defines ‘‘HMDA’’ as the                      provide that FHFA will provide the                    would further align the coverage of the
     Home Mortgage Disclosure Act of 1975,                   Banks annually with information                       Bank housing goals with the AMA
     as amended. The definition of ‘‘HMDA’’                  specifying how the median family                      regulation and would make it easier for
     is included in the current Bank housing                 income estimates for metropolitan and                 the Banks to assess their own housing
     goals regulation because the Bank                       non-metropolitan areas are to be applied              goals performance during the year.
     housing goals are currently evaluated                   for purposes of determining median                    Chattel mortgages on manufactured
     based on a retrospective market                         income.                                               housing are a significant means by
     measurement calculated using HMDA                          The current Bank housing goals                     which lower-income households obtain
     data. The proposed rule would remove                    regulation defines ‘‘metropolitan area’’              housing, and are therefore appropriate
     the retrospective market measurement                    as a metropolitan statistical area (MSA),             to be included in the Bank housing
     from the Bank housing goals and instead                 or a portion of such an area, including               goals calculation.
     establish goal levels prospectively in the              Metropolitan Divisions, for which
                                                             median family income estimates are                    14. Definition of ‘‘Mortgage With
     regulation. Because the proposed rule                                                                         Unacceptable Terms or Conditions’’
                                                             determined by HUD. The regulation
       28 See 80 FR 53392 (Sept. 3, 2015), codified at 12    defines ‘‘non-metropolitan area’’ as a                  The current Bank housing goals
     CFR 1282.1.                                             county, or a portion of a county,                     regulation defines ‘‘mortgage with
       29 Id. at 53423.                                      including those counties that comprise                unacceptable terms or conditions’’ as a


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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                          55129

     mortgage that has one or more of a series               from the Bank housing goals regulation                unpaid principal balance in a single
     of terms or conditions that FHFA                        as unnecessary.                                       year. The proposed rule would remove
     determined to be harmful to borrowers.                                                                        the volume threshold provision so that
                                                             17. Definition of ‘‘Second Mortgage’’
     The definition of ‘‘mortgage with                                                                             the new Bank housing goals would
     unacceptable terms or conditions’’ is                      The current Bank housing goals                     apply to each Bank regardless of the
     included in the current Bank housing                    regulation defines ‘‘second mortgage’’ as             volume of AMA mortgages purchased
     goals regulation because the Bank                       any mortgage that has a lien position                 by the Bank. The proposed rule would
     housing goals do not allow mortgages                    subordinate only to the lien of the first             also make a conforming change to
     with unacceptable terms or conditions                   mortgage. This term is used in                        § 1281.14(a) by eliminating Bank
     to be counted toward achievement of                     § 1281.13(b)(8), which provides that                  volume thresholds as a consideration in
     the Bank housing goals. The proposed                    ‘‘purchases of subordinate lien                       determining whether the Director
     rule would remove the provision                         mortgages (second mortgages),’’ do not                evaluates annual performance of Bank
     excluding mortgages with unacceptable                   count for purposes of housing goals                   performance under each housing goal.
     terms or conditions from counting for                   credit. The proposed rule would clarify                 The current regulation establishes
     purposes of the Bank housing goals.                     that this prohibition would apply to all              criteria for determining the target level
     Therefore, the proposed rule would                      mortgages that are subordinate to the                 for each goal based on HMDA data for
     remove, as unnecessary, the definition                  first mortgages, not only second                      the year being measured, i.e.,
     of ‘‘mortgage with unacceptable terms or                mortgages. Because ‘‘second mortgage’’                retrospectively. The proposed rule
     conditions’’ from the Bank housing                      would no longer appear in the                         would define the prospective mortgage
     goals regulation.                                       regulation, this definition is                        purchase housing goal as the percentage
                                                             unnecessary and would be removed.                     of a Bank’s AMA mortgages acquired
     15. Definition of ‘‘Owner-Occupied                                                                            during the calendar year that are for
     Housing’’                                               B. Changes to General—Proposed                        very low-income families, low-income
                                                             § 1281.10                                             families, or families in low-income
        The current Bank housing goals
                                                                The proposed rule would revise                     areas. The proposed rule would
     regulation defines ‘‘owner-occupied
                                                             § 1281.10 to reflect the new housing                  establish a target level of 20 percent for
     housing’’ as single-family housing in
                                                             goals that would be defined by the                    the prospective mortgage purchase
     which a mortgagor resides, including
                                                             proposed rule.                                        housing goal. The proposed rule would
     two- to four-unit owner-occupied
                                                                The current regulation states that the             also require that at least 75 percent of
     properties where one or more units are
                                                             subpart establishes three single-family               the mortgages that are counted toward a
     used for rental purposes. The definition
                                                             housing goals for purchase money                      Bank’s achievement of the prospective
     of ‘‘owner-occupied housing’’ is
                                                             mortgages and one single-family                       mortgage purchase housing goal must be
     included in the Bank housing goals
                                                             housing goal for refinancing mortgages.               for low-income or very low-income
     regulation because the Bank housing
                                                             The current regulation also states that               families.
     goals are currently limited to mortgages                                                                        The proposed rule would define the
                                                             the subpart establishes a volume
     on owner-occupied housing. The                                                                                small member participation housing
                                                             threshold for the Bank housing goals.
     proposed rule would expand the                             The proposed rule would revise the                 goal as the percentage of AMA users
     coverage of the Bank housing goals to                   structure of the Bank housing goals to                with assets that do not exceed the CFI
     include all AMA mortgages, including                    remove the volume threshold and to                    asset cap. The proposed rule would
     mortgages on owner-occupied and                         replace the existing housing goals with               establish the target level for the small
     investor-owned single-family properties.                a new prospective mortgage purchase                   member participation housing goal as
     The proposed rule would not establish                   housing goal and a new small member                   the lesser of 50 percent or 300 basis
     separate criteria for evaluating whether                participation housing goal. The                       points greater than the percentage of the
     a mortgage on an investor-owned                         proposed rule would revise § 1281.10 to               Bank’s AMA users with assets that do
     property could be counted for purposes                  reflect these changes.                                not exceed the CFI cap from the
     of the housing goals. Any such                                                                                preceding year.
     mortgages would be evaluated based on                   C. Changes to Bank Housing Goals—                       The proposed rule would also
     the income of the mortgagor in the same                 Proposed §§ 1281.11 and 1281.14                       establish a process for a Bank to propose
     manner as the evaluation of a mortgage                    The proposed rule would revise                      a different target level for the
     on an owner-occupied property.                          § 1281.11 to define the new prospective               prospective mortgage purchase housing
     Because the proposed rule would no                      mortgage purchase housing goal and                    goal, the small member participation
     longer limit the Bank housing goals to                  small member participation housing                    housing goal, or both. The proposed rule
     mortgages on owner-occupied housing,                    goal, and would make conforming                       would require that this Bank-specific
     the proposed rule would remove the                      changes to § 1281.14.                                 housing goal proposal be submitted to
     definition of ‘‘owner-occupied housing’’                  The current regulation establishes                  FHFA by October 31, 2019, and by
     from the Bank housing goals regulation                  three single-family housing goals for                 October 31 every third year thereafter,
     as unnecessary.                                         purchase money mortgages and one                      or at some other appropriate time as
     16. Definition of ‘‘Residential Mortgage’’              single-family housing goal for                        may be determined by FHFA, for
                                                             refinancing mortgages. The proposed                   example if a Bank, in the middle of a
       The current Bank housing goals                        rule would revise § 1281.11 in its                    three-year cycle, resumes purchasing
     regulation defines ‘‘residential                        entirety to replace the existing Bank                 AMA mortgages under a dormant AMA
     mortgage’’ as a mortgage on single-                     housing goals with two new housing                    program. The proposed rule would
     family housing. The term ‘‘residential                  goals: a prospective mortgage purchase                require that a Bank-specific housing
     mortgage’’ is not used anywhere else in                 housing goal and a small member                       goal proposal include proposed targets
     the current Bank housing goals                          participation housing goal.                           for each of the three years following the
     regulation, and the proposed rule would                   The current regulation establishes a                year in which the Bank’s proposal is
     not include any use of the term either.                 volume threshold that a Bank must                     submitted, and that the proposal
     The proposed rule would remove the                      exceed before it is subject to the housing            include a detailed explanation of (i)
     definition of ‘‘residential mortgage’’                  goals. The threshold is $2.5 billion in               why the corresponding housing goal


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     55130                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     provided in the regulation is infeasible,               methodology provided in proposed                      any Bank-specific housing goals the
     (ii) why the proposed goal is achievable,               § 1281.11.                                            Bank is proposing.
     and (iii) how the proposed goal                           Paragraph (b)(1) currently excludes                 H. Changes to Reporting
     meaningfully furthers affordable                        non-conventional single family                        Requirements—Proposed §§ 1281.1 and
     housing mortgage lending in the Bank’s                  mortgages from counting towards                       1281.20.
     district.                                               housing goals credit. The proposed rule
                                                             would allow loans guaranteed or                          The proposed rule would revise
     D. Changes to General Counting                                                                                Subpart C to simplify and clarify the
     Eequirements—Proposed § 1281.12                         insured by a department or agency of
                                                             the U.S. government to count towards                  reporting requirements for the Banks
        The current Bank housing goals                       housing goals credit for the prospective              under the new housing goals.
                                                             mortgage purchase housing goal.                          The current Bank housing goals
     regulation defines the ‘‘numerator’’ and
                                                                                                                   regulation sets out a number of specific
     ‘‘denominator’’ used to calculate                       Paragraph (b)(1) would be revised to
                                                                                                                   reporting requirements for the Banks.
     performance under the current housing                   codify FHFA’s current treatment of
                                                                                                                   Section 1281.20 of the current
     goals. The new housing goals are clearly                mortgage participation interests. The
                                                                                                                   regulation describes the matters that are
     defined in the proposed rule. The                       proposed rule would exclude
                                                                                                                   covered by Subpart C, ‘‘Reporting
     proposed rule would delete paragraph                    participation interests in AMA
                                                                                                                   Requirements.’’ Section 1281.21 of the
     (a) as unnecessary in light of the                      mortgages that are purchased from
                                                                                                                   current regulation describes the
     mortgage goal calculation standards                     another Bank, except where two or more
                                                                                                                   reporting requirements including the
     reflected in proposed § 1281.11. The                    Banks acquire a participation interest in
                                                                                                                   required timing and format of the data
     current Bank housing goals regulation                   the same mortgage simultaneously. The
                                                                                                                   to be submitted. Section 1281.22 of the
     also provides that mortgages with                       proposed rule would add new                           current regulation permits FHFA to
     missing data or information necessary                   paragraph (e) to clarify that where two               require additional reports, information,
     for counting would be included in the                   or more Banks acquire a participation                 and data as it determines appropriate.
     denominator when calculating a Bank’s                   interest in the same mortgage                         Finally, § 1281.23 of the current
     performance, but not in the numerator.                  simultaneously, the mortgage would be                 regulation requires a senior officer of
     This effectively penalizes a Bank’s                     counted on a pro rata basis for each                  each Bank to certify the data submitted
     performance by treating mortgages with                  Bank.                                                 under the Bank housing goals regulation
     missing data or information as if they                    Paragraph (b)(8) would be revised to                and allows FHFA to address errors,
     were loans that did not meet the                        clarify that all mortgages which are                  omissions or discrepancies in data
     applicable criteria. The proposed rule                  subordinate to the first mortgage are                 reported by a Bank by adjusting the
     would remove paragraph (b)(1), so that                  excluded from counting for purposes of                Bank’s official housing goals
     mortgages with missing data or                          the Bank housing goals.                               performance figures and in certain
     information would be disregarded for                                                                          circumstances increasing a Bank’s
     purposes of measuring a Bank’s                          F. Changes to Determination of
                                                             Compliance With Housing Goals; Notice                 housing goal in a later year.
     performance on the housing goals.                                                                                The proposed rule would revise the
     Finally, paragraph (c), which provides                  of Determination—Proposed § 1281.14
                                                                                                                   reporting requirements in Subpart C to
     that a mortgage may only count once                        The proposed rule would amend                      reflect the new housing goals structure
     towards achievement of a current                        § 1281.14(a) by removing the reference                and to eliminate provisions that are
     housing goal even if it satisfies more                  to the volume threshold, which would                  either duplicative of or potentially
     than one goal, would be redesignated as                 be moot in light of the threshold’s                   inconsistent with the existing Bank
     paragraph (b) and revised to permit each                elimination under proposed § 1281.11.                 reporting requirements under FHFA’s
     mortgage to be counted only once                        The proposed rule would also amend                    Data Reporting Manual (DRM). The
     toward achievement of the prospective                   § 1281.14(a) to require that FHFA                     DRM is issued by FHFA containing
     mortgage purchase housing goal, even if                 publish the annual determination of                   reporting requirements for the Banks
     it satisfies multiple criteria. The changes             compliance. The proposed rule would                   and is amended from time to time. The
     to this paragraph would be consistent                   describe the data that would be                       DRM includes detailed requirements
     with the revised structure of the                       included in the published                             about the data elements that the Banks
     prospective mortgage purchase housing                   determination.                                        must report and the timing and format
     goal established in proposed § 1281.11.                                                                       of the required reporting. The proposed
     The proposed rule would make                            G. Changes to Housing Plans—Proposed
                                                             § 1281.15                                             rule would remove reporting
     conforming redesignations of                                                                                  requirements from the Bank housing
     paragraphs throughout the remainder of                     The proposed rule would revise                     goals regulation that are duplicative of
     § 1281.12.                                              § 1281.15 to provide that the Director                and potentially inconsistent with the
     E. Changes to Special Counting                          may only require that a Bank submit a                 DRM.
     Requirements—Proposed § 1281.13                         housing plan for any year after 2021.                    The proposed rule would consolidate
                                                             This would reflect the phase-in period                the four sections that currently exist in
        Paragraph (b) of § 1281.13 currently                 for the new housing goals, eliminating                Subpart C of the Bank housing goals
     enumerates categories of transactions or                possibility of a housing plan during the              regulation into a single section. Sections
     activities that are not counted for                     first two years in which the proposed                 1281.21, 1281.22 and 1281.23 would be
     purposes of the housing goals and are                   prospective and small member                          removed from the regulation. Section
     not included in the numerator or the                    participation housing goals are                       1281.20 would include the new
     denominator in calculating a Bank’s                     operative. Because a Bank may be                      reporting requirements for the Bank
     housing goals performance. The                          required to submit a housing plan while               housing goals regulation. As revised,
     proposed rule would amend this                          awaiting FHFA’s response to a Bank-                   § 1281.20(a) would require the Banks to
     paragraph by removing the references to                 specific housing goal proposal, the                   submit to FHFA any data that FHFA
     ‘‘numerator’’ and ‘‘denominator.’’ This                 proposed rule would amend § 1281.15                   determines to be necessary to evaluate
     language would be unnecessary in light                  by adding new paragraph (b)(5) to                     transactions and activities under the
     of the simplified calculation                           require that the housing plan address                 Bank housing goals. Section 1281.20(b)


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                              Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                           55131

     and (c) would set out the data reporting                  XI. Paperwork Reduction Act                           ■  c. Removing the definitions of
     requirements for the prospective                            The proposed rule would not contain                 ‘‘Conforming mortgage’’ and
     mortgage purchase housing goal and the                    any information collection requirement                ‘‘Conventional mortgage’’;
     small member participation housing                        that would require the approval of OMB                ■ d. Adding definitions for ‘‘CFI asset
     goal, respectively, and would require                     under the Paperwork Reduction Act (44                 cap’’ and ‘‘Community financial
     such submissions to be made in                            U.S.C. 3501 et seq.). Therefore, FHFA                 institution or CFI’’ in alphabetical order;
     accordance with the DRM. Section                                                                                ■ e. Revising the definition of ‘‘Dwelling
                                                               has not submitted any information to
     1281.20(d) would continue to permit                       OMB for review.                                       unit’’ and paragraph (1) of the definition
     FHFA to require a Bank to provide such                                                                          of ‘‘Families in low-income areas’’;
     additional reports, information, and                      XII. Regulatory Flexibility Act                       ■ f. Removing the definitions of
     data as FHFA may request from time to                        The Regulatory Flexibility Act (5                  ‘‘HMDA’’, ‘‘HOEPA mortgage’’, and
     time.                                                     U.S.C. 601 et seq.) requires that a                   ‘‘HUD’’;
        In addition to the above clarifications                regulation that has a significant                     ■ g. Revising the definitions of ‘‘Median
     of the existing Bank reporting                            economic impact on a substantial                      income’’, ‘‘Metropolitan area’’, and
     requirements, the proposed rule would                     number of small entities, small                       ‘‘Mortgage’’;
     also remove the provision in the current                  businesses, or small organizations must               ■ h. Removing the definitions of
     Bank housing goals regulation that                        include an initial regulatory flexibility             ‘‘Mortgage data’’ and ‘‘Mortgage with
     addresses errors, omissions or                            analysis describing the regulation’s                  unacceptable terms or conditions’’;
     discrepancies in the data reported by a                   impact on small entities. Such an                     ■ i. Revising the definition of ‘‘Non-
     Bank. This provision is unnecessary in                    analysis need not be undertaken if the                metropolitan area’’; and
     light of FHFA’s existing supervisory and                  agency has certified that the regulation              ■ j. Removing the definitions of
     regulatory authorities and procedures,                    will not have a significant economic                  ‘‘Owner-occupied housing’’,
     and the proposed rule would remove                        impact on a substantial number of small               ‘‘Residential mortgage’’, and ‘‘Second
     the provision.                                            entities. (5 U.S.C. 605(b)). FHFA has                 mortgage’’.
        Finally, the proposed rule would                       considered the impact of the proposed                    The revisions and additions read as
     remove the definition of ‘‘mortgage                       rule under the Regulatory Flexibility                 follows:
     data’’ from § 1281.1. The current Bank                    Act. The General Counsel of FHFA                      § 1281.1   Definitions.
     housing goals regulation defines                          certifies that the proposed rule, if
     ‘‘mortgage data’’ as data obtained from                   adopted as a final rule, is not likely to             *      *    *     *     *
                                                               have a significant economic impact on                    AMA mortgage means a mortgage that
     the Banks under the Data Reporting
                                                               a substantial number of small entities                was purchased by a Bank under an
     Manual. The revisions to the reporting
                                                               because the regulation applies to the                 AMA program.
     requirements in Subpart C would
                                                                                                                        AMA program has the meaning set
     remove all references to the term                         Federal Home Loan Banks, which are
                                                                                                                     forth in § 1268.1 of this chapter.
     ‘‘mortgage data.’’ The proposed rule                      not small entities for purposes of the
                                                                                                                        AMA user means any participating
     would therefore remove the definition                     Regulatory Flexibility Act.
                                                                                                                     financial institution, as defined in
     of ‘‘mortgage data’’ from the Bank
                                                               List of Subjects in 12 CFR Part 1281                  § 1268.1 of this chapter, from which the
     housing goals regulation as unnecessary.
                                                                 Credit, Federal home loan banks,                    Bank purchased at least one AMA
     X. Considerations of Differences                          Housing, Mortgages, Reporting and                     mortgage during the year for which the
     Between the Banks and the Enterprises                     recordkeeping requirements.                           housing goals are being measured.
        When promulgating regulations                                                                                *      *    *     *     *
                                                               Authority and Issuance                                   CFI asset cap has the meaning set
     relating to the Banks, section 1313(f) of
     the Safety and Soundness Act requires                       For the reasons stated in the                       forth in § 1263.1 of this chapter.
     the Director of FHFA to consider the                      SUPPLEMENTARY INFORMATION, under the                     Community financial institution or
     differences between the Banks and the                     authority of 12 U.S.C. 4526, FHFA                     CFI has the meaning set forth in § 1263.1
     Enterprises with respect to the Banks’                    proposes to amend part 1281 of Title 12               of this chapter.
     cooperative ownership structure;                          of the Code of Federal Regulations as                 *      *    *     *     *
     mission of providing liquidity to                         follows:                                                 Dwelling unit means a room or unified
     members; affordable housing and                           CHAPTER XII—FEDERAL HOUSING                           combination of rooms with plumbing
     community development mission;                            FINANCE AGENCY                                        and kitchen facilities intended for use,
     capital structure; and joint and several                  SUBCHAPTER E—HOUSING GOALS AND
                                                                                                                     in whole or in part, as a dwelling by one
     liability. FHFA, in preparing this                        MISSION                                               or more persons, and includes a
     proposed rule, considered the                                                                                   dwelling unit in a single-family
     differences between the Banks and the                     PART 1281—FEDERAL HOME LOAN                           property, multifamily property, or other
     Enterprises as they relate to the above                   BANK HOUSING GOALS                                    residential or mixed-use property.
     factors. FHFA also considered these                                                                                Families in low-income areas * * *
     differences in light of section 10C of the                ■ 1. Revise the authority citation for part              (1) Any family that resides in a census
     Bank Act, which requires that the Bank                    1281 to read as follows:                              tract in which the median income does
     housing goals be consistent with the                        Authority: 12 U.S.C. 1430, 1430b, 1430c,            not exceed 80 percent of the area
     Enterprise housing goals, with                            1431.                                                 median income;
     consideration of the unique mission and                   ■ 2. Amend § 1281.1 by:                               *      *    *     *     *
     ownership structure of the Banks.30                       ■ a. Removing the definitions of                         Median income means, with respect
     FHFA requests comments from the                           ‘‘Acquired Member Assets (AMA)                        to an area, the unadjusted median
     public about whether these differences                    program’’ and ‘‘AMA-approved                          family income for the area as
     should result in any revisions to the                     mortgage’’;                                           determined by FHFA. FHFA will
     proposed rule.                                            ■ b. Adding definitions for ‘‘AMA                     provide the Banks annually with
                                                               mortgage’’, ‘‘AMA program’’, and ‘‘AMA                information specifying how the median
       30 See   12 U.S.C. 1430c.                               user’’ in alphabetical order;                         family income estimates for


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     55132                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules

     metropolitan and non-metropolitan                         (b) Cap on low-income areas loans                   § 1281.12   General counting requirements.
     areas are to be applied for purposes of                 counted toward goal. At least 75 percent                 (a) General. Mortgage purchases
     determining median income.                              of the mortgages that are counted                     financing single-family properties shall
        Metropolitan area means a                            toward a Bank’s achievement of the                    be evaluated based on the income of the
     metropolitan statistical area (MSA), or a               prospective mortgage purchase housing                 mortgagors and the area median income
     portion of such an area, including                      goal must be for low-income or very                   at the time the mortgage was originated.
     Metropolitan Divisions, for which                       low-income families.                                  To determine whether mortgages may be
     median incomes are determined by                          (c) Small member participation                      counted under a particular family
     FHFA.                                                   housing goal. For each calendar year,                 income level (i.e., low- or very low-
     *     *      *     *    *                               the percentage of all AMA users that are              income), the income of the mortgagor is
        Mortgage means a member of such                      AMA users with assets that do not                     compared to the median income for the
     classes of liens, including subordinate                 exceed the CFI asset cap must meet or                 area at the time the mortgage was
     liens, as are commonly given or are                     exceed either:                                        originated, using the appropriate
     legally effective to secure advances on,                  (1) 50 percent;                                     percentage factor provided under
     or the unpaid purchase price of, real                     (2) A percentage that is three                      § 1281.1.
     estate under the laws of the State in                   percentage points greater than the                       (b) No double-counting. A mortgage
     which the real estate is located, or a                  percentage of the Bank’s AMA users                    may be counted only once toward the
     manufactured home that is personal                      with assets that do not exceed the CFI                achievement of the prospective
     property under the laws of the State in                 cap from the preceding year; or                       mortgage purchase housing goal, even if
     which the manufactured home is                                                                                it satisfies multiple criteria for the
                                                               (3) A percentage target approved
     located, together with the credit                                                                             prospective mortgage purchase housing
     instruments, if any, secured thereby,                   under paragraph (d) of this section.
                                                                                                                   goal.
     and includes interests in mortgages.                      (d) Bank-specific housing goals. (1) A                 (c) Application of median income. For
     Mortgage includes a mortgage, lien,                     Bank may submit a written request for                 purposes of determining an area’s
     including a subordinate lien, or other                  FHFA approval of different target                     median income under § 1281.1, the area
     security interest on the stock or                       percentages for the prospective                       is:
     membership certificate issued to a                      mortgage purchase housing goal, the                      (1) The metropolitan area, if the
     tenant-stockholder or resident-member                   small member participation housing                    residence that secures the mortgage is in
     by a cooperative housing corporation, as                goal, or both. A Bank request under this              a metropolitan area; and
     defined in section 216 of the Internal                  paragraph must include proposed target                   (2) In all other areas, the county in
     Revenue Code of 1986, and on the                        percentages for three consecutive years               which the property is located, except
     proprietary lease, occupancy agreement,                 following the calendar year in which the              that where the State non-metropolitan
     or right of tenancy in the dwelling unit                proposal is submitted. A Bank is not                  median income is higher than the
     of the tenant-stockholder or resident-                  required to propose the same target                   county’s median income, the area is the
     member in such cooperative housing                      percentage for each of the three years.               State non-metropolitan area.
     corporation.                                              (2) A Bank’s request under this                        (d) Sampling not permitted.
     *     *      *     *    *                               paragraph must include a detailed                     Performance under the housing goals for
        Non-metropolitan area means a                        explanation of:                                       each year shall be based on a tabulation
     county, or a portion of a county,                         (i) Why the goal in paragraphs (a) and              of each mortgage during that year; a
     including those counties that comprise                  (b) of this section, as applicable, is                sampling of such purchases is not
     Micropolitan Statistical Areas, located                 infeasible;                                           acceptable.
     outside any metropolitan area, for                        (ii) Why the Bank’s proposed goal is                ■ 6. Amend § 1281.13 by:
     which median incomes are determined                     achievable; and                                       ■ a. Revising the introductory text of
     by FHFA.                                                  (iii) How the Bank’s proposed goal                  paragraph (b);
                                                                                                                   ■ b. Revising paragraphs (b)(1) and
     *     *      *     *    *                               meaningfully furthers affordable
                                                             housing mortgage lending in its district.             (b)(8);
     ■ 3. Amend § 1281.10 by revising
                                                                                                                   ■ c. Removing paragraph (d);
     paragraphs (a) and (b) to read as follows:                (3) A proposal under this paragraph                 ■ d. Redesignating paragraph (e) as
                                                             may only be submitted once every three                paragraph (d); and
     § 1281.10   General.
                                                             years, or under the circumstances                     ■ e. Adding new paragraph (e).
     *     *    *     *     *                                described in paragraph (d)(4) of this                    The revisions and additions read as
       (a) A prospective mortgage purchase                   section. The deadline for submitting a                follows:
     housing goal;                                           proposal under this section is October
       (b) A small member participation                      31, 2019, and October 31 for every third              § 1281.13   Special counting requirements.
     housing goal;                                           year after 2019. FHFA will review each                *      *    *     *     *
     *     *    *     *     *                                Bank proposal that is received by the                    (b) Not counted. The following
     ■ 4. Revise § 1281.11 to read as follows:               deadline and will notify the Bank in                  transactions or activities shall not be
     § 1281.11   Bank housing goals.                         writing if the Bank proposal is                       counted for purposes of the housing
       (a) Prospective mortgage purchase                     approved. If FHFA does not notify a                   goals, even if the transaction or activity
     housing goal. For each calendar year,                   Bank that its proposal is approved, the               would otherwise be counted under
     the percentage of a Bank’s AMA                          Bank will remain subject to the                       paragraph (c) of this section:
                                                             percentage goals in paragraphs (a) and                   (1) Purchases of participation interests
     mortgages acquired during the calendar
                                                             (b) of this section, as applicable.                   in AMA mortgages from another Bank,
     year that are for very low-income
                                                               (4) FHFA may require a Bank to                      except as provided in paragraph (e) of
     families, low-income families, or
                                                             propose a target percentage for either or             this section;
     families in low-income areas must meet
     or exceed either:                                       both housing goals to address                         *      *    *     *     *
       (1) 20 percent; or                                    discontinuation of an AMA program or                     (8) Purchases of subordinate lien
       (2) A percentage target approved                      approval of a new AMA program.                        mortgages;
     under paragraph (d) of this section.                    ■ 5. Revise § 1281.12 to read as follows:             *      *    *     *     *


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                            Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Proposed Rules                                          55133

        (e) Mortgage participation                           determines to be necessary for FHFA to                   • Federal eRulemaking Portal: Go to
     transactions. Where two or more Banks                   evaluate transactions and activities                  http://www.regulations.gov and follow
     acquire a participation interest in the                 under the Bank housing goals.                         the online instructions for sending your
     same mortgage simultaneously, the                         (b) Reporting for prospective mortgage              comments electronically.
     mortgage will be counted on a pro rata                  purchase housing goal. Each Bank must                    • Mail: Send comments to Docket
     basis for the prospective mortgage                      collect data on each AMA mortgage                     Operations, M–30; U.S. Department of
     purchase housing goal for each Bank                     purchased by the Bank. The data must                  Transportation (DOT), 1200 New Jersey
     with a participation interest.                          include any data elements specified by                Avenue SE, Room W12–140, West
     ■ 7. Amend § 1281.14 by revising                        FHFA. On no less frequent than an                     Building Ground Floor, Washington, DC
     paragraph (a) to read as follows:                       annual basis, each Bank must submit                   20590–0001.
                                                             such data to FHFA in accordance with                     • Hand Delivery or Courier: Take
     § 1281.14 Determination of compliance                                                                         comments to Docket Operations in
                                                             the DRM.
     with housing goals; notice of determination.
                                                               (c) Reporting for small member                      Room W12–140 of the West Building
        (a) Determination of compliance with                 participation housing goal. Each Bank                 Ground Floor at 1200 New Jersey
     housing goals. On an annual basis, the                  must collect data on AMA user asset                   Avenue SE, Washington, DC, between 9
     Director shall determine each Bank’s                    size. On no less frequent than an annual              a.m. and 5 p.m., Monday through
     performance under each housing goal                     basis, each Bank must submit such data                Friday, except Federal holidays.
     and will publish the final                              to FHFA in accordance with the DRM.                      • Facsimile: Fax comments to Docket
     determinations. FHFA will publish its                     (d) Other reporting. Each Bank must                 Operations at (202) 493–2251.
     final determination including the                       provide to FHFA such additional                          Privacy: In accordance with 5 U.S.C.
     numbers and percentages for each                        reports, information and data as FHFA                 553(c), DOT solicits comments from the
     Bank’s AMA purchases that meet each                     may request from time to time.                        public to better inform its rulemaking
     of the housing goals criteria, including                                                                      process. DOT posts these comments,
     loans to low-income families, loans to                    Dated: October 29, 2018.
                                                                                                                   without edit, including any personal
     very low-income families, and loans to                  Melvin L. Watt,
                                                                                                                   information the commenter provides, to
     families in low-income areas, including                 Director, Federal Housing Finance Agency.
                                                                                                                   www.regulations.gov, as described in
     by each of the defined categories.                      [FR Doc. 2018–23890 Filed 11–1–18; 8:45 am]           the system of records notice (DOT/ALL–
     FHFA’s determination will include                       BILLING CODE 8070–01–P                                14 FDMS), which can be reviewed at
     these numbers in total and separated                                                                          www.dot.gov/privacy.
     into purchase money mortgages,                                                                                   Docket: Background documents or
     refinancing mortgages, conventional                     DEPARTMENT OF TRANSPORTATION                          comments received may be read at
     mortgages, and non-conventional                                                                               http://www.regulations.gov at any time.
     mortgages.                                              Federal Aviation Administration                       Follow the online instructions for
     *      *    *    *     *                                                                                      accessing the docket or go to the Docket
     ■ 8. Amend § 1281.15 by revising                        14 CFR Part 93                                        Operations in Room W12–140 of the
     paragraphs (a) and (b) to read as follows:                                                                    West Building Ground Floor at 1200
                                                             [Docket No.: FAA–2018–0954]
                                                                                                                   New Jersey Avenue SE, Washington,
     § 1281.15   Housing plans.
                                                             Request for Comments on                               DC, between 9 a.m. and 5 p.m., Monday
       (a) Housing plan requirement. For any                                                                       through Friday, except Federal holidays.
     year after 2021, if the Director                        Requirement for Helicopters To Use
                                                             the New York North Shore Helicopter                   FOR FURTHER INFORMATION CONTACT: For
     determines that a Bank has failed to
                                                             Route                                                 questions concerning this action,
     meet any housing goal and that the
                                                                                                                   contact Sheri Edgett-Baron, Airspace
     achievement of the housing goal was                     AGENCY:  Federal Aviation                             Policy Group, Air Traffic Organization,
     feasible, the Director may require the                  Administration (FAA), U.S. Department                 AJV–11, Federal Aviation
     Bank to submit a housing plan for                       of Transportation (DOT).                              Administration, 800 Independence
     approval by the Director.
                                                             ACTION: Request for comments.                         Avenue SW, Washington, DC 20591;
       (b) Nature of plan. If the Director
     requires a housing plan, the housing                                                                          telephone: (202) 267–8783; email:
                                                             SUMMARY:   The FAA Reauthorization Act                sheri.edgett-baron@faa.gov.
     plan shall:                                             of 2018 directs the FAA to provide
       (1) Be feasible;                                                                                            SUPPLEMENTARY INFORMATION:
                                                             notice of, and an opportunity for, at
       (2) Be sufficiently specific to enable                least 60 days of public comment with                  Background
     the Director to monitor compliance                      respect to the regulations mandating
     periodically;                                                                                                    In response to concerns from a large
                                                             that pilots operating civil helicopters               number of local residents regarding
       (3) Describe the specific actions that                under Visual Flight Rules use the New
     the Bank will take to achieve the                                                                             noise from helicopters operating over
                                                             York North Shore Helicopter Route                     Long Island, the FAA issued the New
     housing goal for the next calendar year;                when operating along that area of Long
       (4) Address any additional matters                                                                          York North Shore Helicopter Route final
                                                             Island, New York. The Act further states              rule (77 FR 39911, July 6, 2012). The
     relevant to the housing plan as required,               the FAA shall hold a public hearing in
     in writing, by the Director; and                                                                              Rule, as set forth in subpart H of part 93
                                                             order to solicit feedback on the                      of Title 14 of the Code of Federal
       (5) Address any Bank-specific housing                 regulations from impacted communities.
     goals the Bank is proposing.                                                                                  Regulations, requires civil helicopter
                                                             Such an opportunity will be provided                  pilots operating under Visual Flight
     *     *     *     *     *                               and additional meeting information will
     ■ 9. Revise Subpart C to read as follows:
                                                                                                                   Rules (VFR), whose route of flight takes
                                                             be announced.                                         them over the north shore of Long
                                                             DATES: Written comments must be                       Island between the Visual Point Lloyd
     Subpart C—Reporting Requirements
                                                             received on or before January 2, 2019.                Harbor (VPLYD) waypoint and Orient
     § 1281.20   Reporting requirements.                     ADDRESSES: Send comments identified                   Point (VPOLT), to use the North Shore
       (a) General. Each Bank must collect                   by docket number FAA–2018–0954                        Helicopter Route, as published in the
     and submit to FHFA any data that FHFA                   using any of the following methods:                   New York Helicopter Chart (‘‘the


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Document Created: 2018-11-02 01:09:33
Document Modified: 2018-11-02 01:09:33
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking.
DatesWritten comments must be received on or before January 31, 2019.
ContactTed Wartell, Manager, Housing & Community Investment, (202) 649-3157 or Ethan Handelman, Senior Policy Analyst, Office of Housing and Community Investment, (202) 649-3264. These are not toll-free numbers. The telephone number for the Hearing
FR Citation83 FR 55114 
RIN Number2590-AA82
CFR AssociatedCredit; Federal Home Loan Banks; Housing; Mortgages and Reporting and Recordkeeping Requirements

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