[Federal Register Volume 59, Number 208 (Friday, October 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26722]


[Federal Register: October 28, 1994]


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Part IV





Department of Housing and Urban Development





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Office of the Secretary



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24 CFR Part 81



Federal National Mortgage Association; Continuation of Regulations for 
Book-Entry Securities; Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 81

[Docket No. R-94-1757: FR-3809-F-01]


Federal National Mortgage Association; Continuation of 
Regulations for Book-Entry Securities

AGENCY: Office of the Secretary, HUD.

ACTION: Continuation of regulations.

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SUMMARY: The final rule continues in effect without change 24 CFR 81.41 
through 81.49, the book entry provisions of the Secretary's regulations 
governing the Federal National Mortgage Association (Fannie Mae). This 
final rule authorizes the issuance and trading in book-entry form of 
mortgage-backed and debt securities of Fannie Mae. The Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (``the 1992 
Act'') provides for a transition period during which all rules 
promulgated by the Secretary under the Fannie Mae Charter Act prior to 
October 28, 1992, are to remain in effect. Under the 1992 Act, the 
transition period expires November 28, 1994, which is 18 months 
following the appointment of the Director of the Office of Federal 
Housing Enterprises Oversight. Today's action is an emergency 
regulation to continue the existing book-entry provisions of the 
regulations in order to avoid disruption to Fannie Mae's continued 
authority for book-entry issuance and trading of Fannie Mae securities.

EFFECTIVE DATE: Effective November 28, 1994, 24 CFR part 81, subpart E, 
continues in effect.

FOR FURTHER INFORMATION CONTACT: Harold Bunce, Acting Director, 
Financial Institutions Regulation, Office of Policy Development and 
Research, telephone (202) 708-2770 or (202) 708-0770 (TDD). For legal 
questions, contact Kenneth A. Markison, Assistant General Counsel for 
Government-Sponsored Enterprises/RESPA, Office of General Counsel, 
telephone (202) 708-3137. The address for both of these persons is: 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410. A telecommunications device for deaf persons 
(TDD) is available at (202) 708-9300. (These are not toll-free 
telephone numbers.)

SUPPLEMENTARY INFORMATION:

I. Justification for Final Rulemaking

    In general, the Department publishes a rule for public comment 
before issuing a rule for effect, in accordance with its own 
regulations on rulemaking, 24 CFR part 10. However, part 10 does 
provide for exceptions from that general rule where the agency finds 
good cause to omit advance notice and public participation. The good 
cause requirement is satisfied when prior public procedure is 
``impracticable, unnecessary, or contrary to the public interest.'' (24 
CFR 10.1) The Department finds that good cause exists to publish this 
rule for effect without first soliciting public comment, in that prior 
public procedure is impracticable, unnecessary, and contrary to public 
interest.
    No new substantive regulations are being adopted through this 
rulemaking; rather, the Secretary is merely continuing in effect rules 
that were not affected by any substantive statutory change under the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(``1992 Act''), enacted as Title XIII of the Housing and Community 
Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992; 
codified generally at 12 U.S.C. 4501-4641). The rules continued in 
effect do not include any changes in the statutory authority of the 
Secretary made by the 1992 Act. This rule serves the critical need to 
ensure continued authority for book-entry trading of the large volume 
of Fannie Mae debt and mortgage-backed securities issues. At the same 
time, the rule does not impose any additional burden on the public.

II. Background

    The 1992 Act significantly revised the regulatory requirements and 
structure for the Federal National Mortgage Association (Fannie Mae), 
including its Charter Act (the Federal National Mortgage Association 
Charter Act, 12 U.S.C. 1716 et seq.). Section 1356 of the 1992 Act 
includes provisions for a transition period during which all rules 
promulgated by the Secretary under the Fannie Mae Charter Act prior to 
October 28, 1992, the date of enactment of the Act, are to remain in 
effect. The transition period is to expire 18 months following the 
appointment of the Director of the Office of Federal Housing 
Enterprises Oversight; at such time, both the Secretary's and the 
Director's rules under the Act were to have been proposed for public 
comment and completed in final. The OFHEO Director's appointment was 
confirmed by the Senate May 28, 1993; therefore, the 18-month period 
referenced in Section 1356 expires November 28, 1994.
    The Secretary will soon propose comprehensive regulations 
implementing the Secretary's responsibilities under the 1992 Act, but 
such regulations will not be effective until after the expiration of 
the 18-month transition period. The rules due for automatic expiration 
on November 28, 1994, include regulations promulgated by the Secretary 
in 1978 that authorize book-entry procedures for issuance and trading 
of securities of Fannie Mae (24 CFR 81.41-81.49).
    Today, virtually all of Fannie Mae's debt and mortgage-backed 
securities (MBS) issuances and trading market depend on book-entry 
procedures. As of September 30, 1994, Fannie Mae debt outstanding was 
$239.3 billion and Fannie Mae MBS were $523.5 billion.
    The 1978 book-entry rules assure the efficient trading of Fannie 
Mae securities and enhance the secondary mortgage market. To ensure 
that Fannie Mae may use book-entry procedures, the Secretary issues 
this emergency regulation to continue in effect the 1978 book-entry 
rules. The Department of the Treasury requires that book-entry 
regulations be in force for agencies whose securities are recorded 
under the book-entry procedures of the Federal Reserve System. This 
recodification is required, therefore, to assure continued authority 
for trading of Fannie Mae securities in book-entry form after November 
28, 1994. Failure to extend these regulations may be disruptive to the 
financial markets.
    Prior to the issuance of book-entry regulations, Fannie Mae, 
investors, brokers, and dealers incurred increased administrative 
expenses because of the lack of such authority. Accordingly, the 1978 
regulations imposed book-entry requirements that enhance Fannie Mae's 
charter purpose of assisting the secondary mortgage market by improving 
the distribution of investment capital available for home financing (12 
U.S.C. 1716(3)-(4)).
    The Secretary is empowered to recodify these regulations under 
section 1321(a) of the 1992 Act (12 U.S.C. 4541), which confers on the 
Secretary general regulatory authority and the authority to ``make such 
rules and regulations as shall be necessary and proper'' to ensure that 
the purposes of the 1992 Act and the Fannie Mae Charter Act are 
accomplished.
    Accordingly, effective November 28, 1994, 24 CFR part 81, subpart 
E, continues in effect.

    Dated: October 24, 1994.
Henry G. Cisneros,
Secretary.
[FR Doc. 94-26722 Filed 10-27-94; 8:45 am]
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