[Federal Register Volume 65, Number 2 (Tuesday, January 4, 2000)]
[Rules and Regulations]
[Pages 203-204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-37]


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FEDERAL HOUSING FINANCE BOARD

12 CFR Part 960

[No. 99-68]
RIN 3069-AA82


Amendment of Affordable Housing Program Regulation

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) is adopting 
as final, with no changes, the May 5, 1999 Interim Final Rule which 
amended its regulation governing the operation of the Affordable 
Housing Program (AHP or Program) to make certain technical revisions 
clarifying Program requirements and improving the operation of the AHP.

EFFECTIVE DATE: The final rule shall be effective on January 4, 2000.

FOR FURTHER INFORMATION CONTACT: Janet M. Fronckowiak, Acting Deputy 
Director, Program Assistance Division, Office of Policy, Research and 
Analysis, (202) 408-2575; or Sharon B. Like, Senior Attorney-Advisor, 
Office of General Counsel, (202) 408-2930, Federal Housing Finance 
Board, 1777 F Street, N.W., Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    Section 10(j)(1) of the Federal Home Loan Bank Act (Bank Act) 
requires each Federal Home Loan Bank (Bank) to establish a Program to 
subsidize the interest rate on advances to members of the Federal Home 
Loan Bank System engaged in lending for long-term, low-and moderate-
income, owner-occupied and affordable rental housing at subsidized 
interest rates. See 12 U.S.C. 1430(j)(1) (1994). The Finance Board is 
required to promulgate regulations governing the operation of the 
Program. See id.
    On August 4, 1997, the Finance Board published a final AHP 
regulation adopting comprehensive revisions to the Program, see 12 CFR 
part 960, which, among other changes, authorized the 12 Banks, rather 
than the Finance Board, to approve applications for AHP subsidies 
beginning January 1, 1998. See 62 FR 41812 (Aug. 4, 1997). On May 20, 
1998, the Finance Board published an Interim Final Rule amending the 
regulation to make certain technical revisions clarifying Program 
requirements and improving the operation of the AHP. See 63 FR 27668 
(May 20, 1998). The Interim Final Rule was adopted as a final rule, 
with several changes, and became effective on June 1, 1999.
    In the course of implementing the changes to the Program under the 
recent revisions to the AHP regulation, the Banks and Finance Board 
staff identified a number of additional technical issues whose 
resolution would clarify Program requirements and improve the 
effectiveness of the Program. Accordingly, on May 5, 1999, the Finance 
Board published another Interim Final Rule amending the AHP regulation, 
effective June 4, 1999, to address these additional issues. The May 5, 
1999 Interim Final Rule provided for a 60-day comment period, which 
closed on July 6, 1999.
    The Finance Board received one comment letter on the May 5, 1999 
Interim Final Rule from a financial institutions trade association, 
which generally supported several provisions in the Interim Final Rule 
and noted one potential concern which is discussed below.

II. Analysis of the Final Rule

Requirement for Independent Appraisals from State Certified or Licensed 
Appraisers for Member Real Estate Owned (REO) Properties and Properties 
Upon Which a Member Holds a Mortgage or Lien--Sec. 960.5(b)(2)(ii)(B)

    The May 5, 1999 Interim Final Rule amended Sec. 960.5(b)(2)(ii)(B) 
of the AHP regulation to require that an independent appraisal of the 
AHP property be obtained within six months prior to the date the Bank 
disburses AHP subsidy to the project. The Interim

[[Page 204]]

Final Rule also amended this section to require that the independent 
appraisal be completed by a State certified or licensed appraiser, as 
defined in 12 CFR 564.2(j) and (k), in order to ensure a more accurate 
evaluation of the property value. The commenter generally supported 
these amendments, but noted that for projects valued at less than 
$250,000, the cost of such an appraisal may be burdensome in some 
cases.
    The Finance Board believes that the AHP regulatory appraisal 
requirement generally would not impose an additional cost on AHP 
projects. First, it is likely that most projects, regardless of the 
value of the projects, would be required by at least one of their other 
funding sources to obtain an appraisal completed by a State certified 
or licensed appraiser. Second, the AHP regulation does not require that 
the appraisal be in narrative form, which should keep the cost of the 
appraisal down. Third, if an appraisal of the project by a State 
certified or licensed appraiser was completed prior to the six-month 
period preceding AHP funding, only an update or addendum to the 
original appraisal need be obtained, which should further limit costs 
to the project. Accordingly, no change has been made to the appraisal 
requirement in the final rule.

III. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this final 
rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) do not apply. Moreover, the final rule applies only to the Banks, 
which do not come within the meaning of ``small entities,'' as defined 
in the Regulatory Flexibility Act. See id. Sec. 601(6).

IV. Paperwork Reduction Act

    This final rule does not contain any collections of information 
pursuant to the Paperwork Reduction Act of 1995. See 44 U.S.C. 3501 et 
seq. Therefore, the Finance Board has not submitted any information to 
the Office of Management and Budget for review.
    Accordingly, under the authority of 12 U.S.C. 1430(j) (1994), the 
Interim Final Rule amending 12 CFR part 960, published at 64 FR 24025 
(May 5, 1999), is adopted as final without changes.

    Dated: December 20, 1999.

    By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 00-37 Filed 1-3-00; 8:45 am]
BILLING CODE 6725-01-P