[Federal Register Volume 67, Number 249 (Friday, December 27, 2002)]
[Rules and Regulations]
[Pages 78959-78961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32753]


=======================================================================
-----------------------------------------------------------------------

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 906

[No. 2002-62]
RIN 3069-AB23


Procedure for Conducting Monthly Survey of Rates and Terms on 
Conventional One-Family Non-farm Mortgage Loans

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Housing Finance Board (Finance Board) is making 
certain technical amendments to its regulation setting forth the 
practices and procedures for conducting the Monthly Survey of Rates and 
Terms on Conventional One-Family, Non-farm Mortgage Loans (Monthly 
Interest Rate Survey or MIRS). The amendments are being adopted solely 
to conform the text of the rule to the revised practices and

[[Page 78960]]

procedures for MIRS sampling and weighting methodology, which are the 
subject of a Notice published elsewhere in this issue of the Federal 
Register.

EFFECTIVE DATE: This rule will become effective on January 27, 2003.

FOR FURTHER INFORMATION CONTACT: Joseph A. McKenzie, Deputy Chief 
Economist, (202) 408-2845 or [email protected]; Charlotte A. Reid, 
Special Counsel, Office of General Counsel (202) 408-2510 or 
[email protected]; Federal Housing Finance Board, 1777 F Street, NW., 
Washington, DC 20006.

SUPPLEMENTARY INFORMATION: On September 26, 2000, the Finance Board 
published in the Federal Register (65 FR 57813) a notice proposing 
several changes to the Monthly Interest Rate Survey (preliminary 
notice). MIRS provides a statistical base for certain housing finance 
benchmarks, such as the annual adjustments to the maximum dollar limits 
for the purchase of conventional mortgages by Fannie Mae and Freddie 
Mac. See 12 U.S.C. 1717(b)(2), 1454(a)(2), respectively.\1\
---------------------------------------------------------------------------

    \1\ 1 The Housing and Community Development Act of 1980 tied the 
Fannie Mae and Freddie Mac conforming loan limits to MIRS. See Pub. 
L. 96-399, Title III, Section 313(a), (b), 94 Stat. 1644-45 (Oct. 8, 
1980). Specifically, Fannie Mae and Freddie Mac are required by 
their respective statutes, which are nearly identical, to base the 
annual dollar limit on the ``the national one-family house price in 
the monthly survey of all major lenders conducted by the [Finance 
Board].'' See 12 U.S.C. 1717(b)(2), 1454(a)(2) (conforming loan 
limit provisions). The Finance Board inherited the task of 
conducting MIRS from the former Federal Home Loan Bank Board (FHLBB) 
pursuant to section 402(e)(3) of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (``FIRREA''), Pub. L. 101-73, 
Title VII, Section 402(e)(3), 103 Stat. 183 (1989), and was 
substituted for the former FHLBB in the conforming loan limit 
provisions pursuant to Sec. Sec.  731(f)(1)(B) and (f)(2)(B) of 
FIRREA.
---------------------------------------------------------------------------

    The preliminary notice recommended revising the sampling and 
weighting methodology from one based on lender type and region to one 
based solely on lender size, eliminating the monthly table of mortgage 
interest rates and terms by lender type (Table III of the monthly MIRS 
release), and adjusting the quarterly table of mortgage rates and terms 
by metropolitan area by adding and deleting several metropolitan areas 
so that only the largest 32 metropolitan areas would be reported (Table 
IV of the January, April, July, and October MIRS releases).
    Changes to MIRS are authorized under Federal Home Loan Bank Act 
(Act) provisions that require the on-going availability of indexes used 
to calculate the interest rates on adjustable rate mortgages (ARMs).\2\ 
The Act expressly permits the Chairperson of the Finance Board to 
approve changes to the methodology that affect the availability of 
adjustable rate mortgage indexes. Additionally, the Finance Board may 
substitute substantially similar indexes if it can no longer make an 
index available and ``if the * * * Chairperson of the Finance Board * * 
* determines, after notice and opportunity for comment, that: (A) The 
new index is based on data substantially similar to that of the 
original index; and (B) the substitution of the new index will result 
in an interest rate substantially similar to the rate in effect at the 
time the original index became unavailable.'' See 12 U.S.C. 1437 note.
---------------------------------------------------------------------------

    \2\ Section 402(e)(3) of FIRREA amended the Act to specify that 
the Chairperson of the Finance Board ``shall take such action as may 
be necessary to assure that the indexes prepared by the * * * 
Federal Home Loan Bank Board * * * immediately prior to the 
enactment of this subsection and used to calculate the interest rate 
on adjustable-rate mortgage instruments continue to be available.'' 
See 12 U.S.C. 1437 note.
---------------------------------------------------------------------------

    Under this authority, and in response to the comments on the 
preliminary notice received by the Finance Board, the Chairman of the 
Finance Board has authorized certain changes to MIRS data sampling and 
weighting methodology and the designation of substitute indexes. These 
changes are set forth in a final Notice that is published elsewhere in 
this issue of the Federal Register. In accordance with the final 
Notice, MIRS data will use a sampling and weighting methodology based 
on lender size and lender type. There will be four lender-size classes 
and three lender-type classes (commercial banks, mortgage companies, 
and savings institutions). Table III of the monthly MIRS release will 
continue to be made available, but the ``Savings and Loan Association'' 
and ``Mutual Savings Bank'' categories will be collapsed in to a single 
``Savings Institutions'' category. The final Notice also will adjust 
the quarterly table of mortgage rates and terms by metropolitan area by 
adding and deleting several metropolitan areas so that only the largest 
32 metropolitan areas would be reported (Table IV of the January, 
April, July, and October MIRS releases). Additionally, the Notice will 
designate certain substitute indexes.
    Accordingly, section 906.3 of the Finance Board's regulations, 
which sets forth the existing practice and procedures for conducting 
MIRS, is being revised to reflect these changes. The final rule will 
replace the reference to savings and loan associations and mutual 
savings banks with a collective reference to ``savings institutions,'' 
and delete the reference to the number of lenders sampled. The final 
rule also adds a sentence stating that the preliminary MIRS weights are 
based on lender type and lender size. Other MIRS changes, such as the 
revision of Table IV and the designation of successor ARM index rates, 
do not require any textual changes to section 906.3 of the Finance 
Board's regulations.
    The Finance Board is adopting these revisions in Sec.  906.3 to 
ensure that the text of the rule is fully consistent with MIRS practice 
and procedures, as revised pursuant to the final Notice. The revisions 
in the rule are minimal and technical in nature, and are intended to 
achieve consistency in the descriptive terminology governing MIRS 
sampling and weighting methodology. Additionally, the Finance Board is 
deleting the provisions that are set forth in paragraph (c) of Sec.  
906.3 and in section 906.4 of the Finance Board's regulations, as 
obsolete. None of the rule text changes are intended to implement any 
regulatory changes to any substantive rights.
    The changes to MIRS sampling and weighting methodology will be 
implemented in January 2003 and will be published in late February 
2003. Changes to the published MIRS tables also will occur with the 
publication of the January 2003 data in late February. The January 2003 
implementation will allow MIRS data to be weighted using a consistent 
methodology within each calendar year. The amendments to Sec. Sec.  
906.3 and 906.4 of the Finance Board's regulations also will be 
effective January 2003.

III. Regulatory Flexibility Act

    The final rule applies only to the Finance Board, which does not 
come within the meaning of ``small entities,'' as defined in the 
Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, in 
accordance with section 605(b) of the RFA, see id. at 605(b), the 
Finance Board hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities.

IV. Paperwork Reduction Act

    The final rule does not contain any substantive changes to MIRS 
data collection form or other information under the Paperwork Reduction 
Act of 1995. See 44 U.S.C. 3501 et seq. The current Office of 
Management and Budget clearance for the form is set to expire on June 
30, 2004.

List of Subjects in 12 CFR Part 906

    Organizational functions (Government agencies).

    Accordingly, the Finance Board hereby amends title 12, chapter IX, 
Code of Federal Regulations as follows:

[[Page 78961]]

PART 906--OPERATIONS.

    1. The authority citation for part 906 continues to read as 
follows:

    Authority: 12 U.S.C. 1422a, 1422b, and 1437 note.

    2. Revise Sec.  906.3 to read as follows:


Sec.  906.3  Monthly interest rate survey.

    The Finance Board conducts its Monthly Survey of Rates and Terms on 
Conventional One-Family Non-farm Mortgage Loans in the following 
manner:
    (a) Initial survey. Each month, the Finance Board samples savings 
institutions, commercial banks, and mortgage loan companies, and asks 
them to report the terms and conditions on all conventional mortgages 
(i.e., those not federally insured or guaranteed) used to purchase 
single-family homes that each such lender closes during the last five 
working days of the month. In most cases, the information is reported 
electronically in a format similar to Finance Board Form FHFB 10-91. 
The initial weights are based on lender type and lender size. The data 
also is weighted so that the pattern of weighted responses matches the 
actual pattern of mortgage originations by lender type and by region. 
The Finance Board tabulates the data and publishes standard data tables 
late in the following month.
    (b) Adjustable-rate mortgage index. The weighted data, tabulated 
and published pursuant to paragraph (a) of this section, is used to 
compile the Finance Board's adjustable-rate mortgage index, entitled 
the ``National Average Contract Mortgage Rate for the Purchase of 
Previously Occupied Homes by Combined Lenders.'' This index is the 
successor to the index maintained by the former Federal Home Loan Bank 
Board and is used for determining the movement of the interest rate on 
renegotiable-rate mortgages and on some other adjustable-rate 
mortgages.


Sec.  906.4  [Removed and Reserved]

    3. Remove and reserve Sec.  906.4.

    Dated: December 20, 2002.

    By the Board of Directors of the Federal Housing Finance Board.
John T. Korsmo,
Chairman.
[FR Doc. 02-32753 Filed 12-26-02; 8:45 am]
BILLING CODE 6725-01-P