[Federal Register Volume 71, Number 75 (Wednesday, April 19, 2006)]
[Rules and Regulations]
[Pages 19985-19986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3762]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 71, No. 75 / Wednesday, April 19, 2006 / 
Rules and Regulations  

[[Page 19985]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

12 CFR Chapter XVII


Office of Federal Housing Enterprise Oversight; Notice of 
Regulatory Review

AGENCY: Office of Federal Housing Enterprise Oversight, HUD.

ACTION: Response to comments.

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

SUMMARY: On September 7, 2005, the Office of Federal Housing Enterprise 
Oversight (OFHEO) issued a notice of regulatory review (Notice), and 
request for comments under OFHEO Policy Guidance 01-001 (April 2, 
2001).\1\ OFHEO requested public comment as to whether existing 
regulations have become inefficient or create unwarranted burden. This 
document summarizes the comments that were received.
---------------------------------------------------------------------------

    \1\ 70 FR 53105 (September 7, 2005).

DATES: Written comments on the Notice were required to be received no 
---------------------------------------------------------------------------
later than November 7, 2005.

FOR FURTHER INFORMATION CONTACT: David A. Felt, Acting General Counsel, 
telephone (202) 414-3750 (not a toll-free number); or Tina Dion, 
Associate General Counsel, telephone (202) 414-3838 (not a toll-free 
number); Office of Federal Housing Enterprise Oversight, Fourth Floor, 
1700 G Street, NW., Washington, DC 20552. The telephone number for the 
Telecommunications Device for the Deaf is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

Background

    The Federal Housing Enterprises Safety and Soundness Act of 1992, 
Title XIII of Pub. L. 102-550, empowers the Director of OFHEO to 
undertake rulemaking and such other actions as the Director determines 
to be appropriate to oversee the activities and operations of Freddie 
Mac and Fannie Mae (the Enterprises). In the course of exercising such 
authority, the Director has promulgated regulations and issued 
guidelines and supervisory policies.
    OFHEO Policy Guidance 01-001 for regulatory review creates a 
process for routine review and, where appropriate, revision of 
regulations by OFHEO. Such a process provides for planned reviews of 
the regulatory infrastructure and consideration of information under 
uniform criteria to assist in determinations of whether an unnecessary 
regulatory burden exists. Once a review is completed, the Director 
determines what steps may be necessary to relieve any unnecessary 
burden, including amendment to or repeal of existing regulations or 
issuance of less formal guidance.
    The review process is conducted by the Office of General Counsel, 
under the direction of the General Counsel, and includes internal 
consultation with other OFHEO offices and staff, guidance provided by 
the Director, as well as consideration of public comments. A review and 
report of findings and recommendations are provided to the Director. 
The report of findings and recommendations is privileged and 
confidential.
    The regulatory review conducted under the Policy Guidance is not a 
formal or informal rulemaking proceeding under the Administrative 
Procedure Act and creates no right of action against OFHEO. Moreover, 
the determination of OFHEO to conduct or not to conduct a review of a 
regulation and any determination, finding, or recommendation resulting 
from any review under the Policy Guidance are not final agency actions 
and, as such, are not subject to judicial review.

Regulations Under Review

    The regulations of OFHEO that were subject to the regulatory review 
described in the Notice are codified in Title 12, Chapter XVII, 
Subchapters A, C, and D, Parts 1700-1780 of the Code of Federal 
Regulations (CFR). In addition to being found in the CFR, the 
regulations (as well as the Policy Guidance referenced in this Notice) 
are available on the OFHEO Web site, http://www.ofheo.gov, by clicking 
on the ``Regulations and Policy Guidance'' category on the left side of 
the webpage.

Request for Comments

    The Office of the General Counsel invited comments on all aspects 
of the proposed regulatory review, including legal and policy 
considerations, and took all comments into consideration before issuing 
its report of findings to the Director. The comment period was set at 
60 days to afford ample opportunity for comment. All comments received 
were made available to the public in the OFHEO Public Reading Room and 
were posted on the OFHEO Web site at http://www.ofheo.gov.

Comments Received

    Comments were received from Freddie Mac; the Mortgage Insurance 
Companies of America (MICA); and the Consumer Mortgage Coalition (CMC), 
a trade association of national mortgage lenders, servicers, and 
service providers. A discussion of significant comments follows.
    Freddie Mac commented that the Minimum Capital regulation (12 CFR 
part 1750 subpart A) should be updated. OFHEO concurs that revisions to 
the regulation are in order and currently is considering whether to 
propose an amended regulation that would address FAS 133 and other 
mark-to-market accounting pronouncements. Any proposed amendments would 
be issued for public comment.
    Also addressing capital regulation, MICA commented that OFHEO 
should change the categorization of loan-to-value ratios (LTVs) for 
risk-based capital purposes from the current approach, which does not 
distinguish a first mortgage made concurrently with a second lien and 
one without, to an approach based on the combined LTV of all loans 
outstanding on a property, to the extent known (RBC Rule) (12 CFR part 
1250 subpart B).
    Freddie Mac commented that OFHEO should amend the Prompt 
Supervisory Response and Corrective Action regulation (12 CFR part 
1777) to eliminate provisions relating to the one-year transition 
period that followed the effective date of the RBC rule. OFHEO is aware 
that Subpart B of the regulation contains an out-of-date section and 
would propose appropriate updates under a proposal for notice and 
comment.
    Commenting on the OFHEO Safety and Soundness regulation (12 CFR 
part 1720), MICA stated that OFHEO should,

[[Page 19986]]

by regulation, bar the Enterprises from purchase of mortgages or 
mortgage-backed securities that exceed the 80% LTV. However, the 
Enterprises are already limited to the purchase of mortgages and 
mortgage-backed securities that are similar in risk to those with an 
80% LTV. Further, this proposal would not reduce regulatory burden, 
which was the subject of this document.
    CMC also commented on the Safety and Soundness regulation, stating 
that OFHEO should augment the policy guidance on internal controls to 
clarify that ultra vires acts also represent a failure of internal 
controls. OFHEO would consider addressing this comment within the 
context of corporate governance oversight as either a rule or guidance. 
CMC further commented that OFHEO should augment the Safety and 
Soundness regulation to include prohibitions on anticompetitive, 
deceptive or unfair practices. OFHEO, as a matter or practice, would 
refer such behavior if detected for review and determination by the 
appropriate regulatory agency.
    CMC commented that OFHEO should use two rating agencies to review 
the Enterprises on a biennial basis, and a stand-alone basis. OFHEO 
notes that it has such statutory authority under 12 U.S.C. 4519 to 
employ such agencies and that this is a regulatory decision in the 
discretion of the Director.

Consideration of Comments

    All comments were taken into consideration, and where appropriate, 
may be considered within the context of changes to OFHEO regulations or 
new guidance. Some comments received, but not discussed here, would 
require legislative changes and may not be acted upon under OFHEO's 
current authority. OFHEO, nevertheless, appreciated comment on all 
aspects of its regulatory program that may pose a burden.

    Dated: April 14, 2006.
Stephen A. Blumenthal,
Acting Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 06-3762 Filed 4-18-06; 8:45 am]
BILLING CODE 4220-01-P