[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Proposed Rules]
[Pages 47495-47499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19424]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1213

RIN 2590-AA20


Office of the Ombudsman

AGENCY: Federal Housing Finance Agency.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is seeking comment 
on a proposed regulation to implement section 1317(i) of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4517(i)). The proposed regulation would establish within FHFA an 
Office of the Ombudsman, which would be responsible for considering 
complaints and appeals from the Federal National Mortgage Association, 
the Federal Home Loan Mortgage Corporation, the Federal Home Loan Banks 
(collectively, regulated entities), the Office of Finance, and any 
person that has a business relationship with a regulated entity or the 
Office of Finance, regarding any matter relating to the regulation and 
supervision of the regulated entities or Office of Finance by FHFA.

DATES: Written comments on the proposed regulation must be received on 
or before September 7, 2010. For additional information, see 
SUPPLEMENTARY INFORMATION.

ADDRESSES: You may submit your comments on the proposed regulation, 
identified by regulatory information number ``RIN 2590-AA20,'' by any 
of the following methods:
     E-mail: Comments to Alfred M. Pollard, General Counsel, 
may be sent by e-mail to [email protected]. Please include ``RIN 
2590-AA20'' in the subject line of the message.
     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 e-
mail to FHFA at [email protected] to ensure timely receipt by the 
Agency. Please include ``RIN 2590-AA20'' in the subject line of the 
message.
     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-AA20, Federal 
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, 
DC 20552.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA20, 
Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., 
Washington, DC 20552. The package should be logged at the Guard Desk, 
First Floor, on business days between 9 a.m. and 5 p.m.

FOR FURTHER INFORMATION CONTACT: Sandy Comenetz, Executive Advisor to 
the Chief Operating Officer and Senior Deputy Director, (202) 414-3771, 
or Andra Grossman, Senior Counsel, (202) 343-1313 (not toll-free 
numbers), Federal Housing Finance Agency, 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:

I. Comments

    FHFA invites comments on all aspects of the proposed regulation and 
will take all comments into consideration before issuing the final 
regulation. Copies of all

[[Page 47496]]

comments will be posted without change, including any personal 
information you provide, such as your name and address, on the FHFA Web 
site at http://www.fhfa.gov. In addition, copies of all comments will 
be available for examination by the public on business days between the 
hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, 
Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an 
appointment to inspect comments, please call the Office of General 
Counsel at (202) 414-6924.

II. Background

    The Housing and Economic Recovery Act of 2008 (HERA), Public Law 
110-289, 122 Stat. 2654 (2008), amended the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) 
(Safety and Soundness Act) to establish FHFA as an independent agency 
of the Federal Government.\1\ FHFA was established to oversee the 
prudential operations of the Federal National Mortgage Association and 
the Federal Home Loan Mortgage Corporation (collectively, Enterprises), 
and the Federal Home Loan Banks (FHLBanks); and to ensure that they 
operate in a safe and sound manner; remain adequately capitalized; 
foster liquid, efficient, competitive and resilient national housing 
finance markets; comply with the Safety and Soundness Act and their 
respective authorizing statutes, as well as all rules, regulations, 
guidelines, and orders and carry out their missions through activities 
that are authorized by their respective statutes and are consistent 
with the public interest. FHFA also has regulatory authority over the 
Office of Finance under section 1311(b)(2) of the Safety and Soundness 
Act (12 U.S.C. 4511(b)(2)).
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    \1\ See Division A, titled the ``Federal Housing Finance 
Regulatory Reform Act of 2008,'' Title I, Section 1101 of HERA.
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III. Proposed Regulation

    Section 1105(e) of HERA amended section 1317(i) of the Safety and 
Soundness Act (12 U.S.C. 4517(i)) by requiring the Director of FHFA to 
establish, by regulation, an Office of the Ombudsman (Office). The 
Office is to be headed by an Ombudsman who is responsible for 
considering complaints and appeals from any regulated entity and any 
person that has a business relationship with a regulated entity on any 
matter relating to the regulation and supervision of a regulated 
entity. Section 1317(i) (12 U.S.C. 4517(i)) further provides that the 
regulation must specify the authority and duties of the Office. FHFA 
proposes this regulation to implement section 1317(i) (12 U.S.C. 
4517(i)) by establishing the Office and setting forth the authorities 
and duties of the Ombudsman.
    In developing this proposed regulation, FHFA considered the role, 
scope, and function of the ombudsman across the federal banking 
agencies and the rest of the federal government. FHFA found there was 
no one, uniform approach followed. The approach taken in this proposed 
regulation draws from these various practices.
    The Office of Finance is a joint office of the FHLBanks that was 
established by a predecessor to FHFA. The Office of Finance is governed 
by a board of directors consisting of all of the FHLBank presidents and 
five independent members. Under the regulations of FHFA, the Office of 
Finance is subject to the same regulatory oversight authority and 
enforcement powers as are the FHLBanks and their respective directors, 
officers, and employees.\2\ The Office of Finance is also subject to 
the cease-and-desist authority of FHFA and its directors, officers and 
management are subject to the removal and prohibition authority of 
FHFA.\3\ Although the Office of Finance is not directly covered by the 
Safety and Soundness Act, it is subject to the Director's ``general 
regulatory authority'' under section 1311(b)(2) of the Safety and 
Soundness Act (12 U.S.C. 4511(b)(2)), as amended by HERA. The Director 
is required to exercise that authority as necessary to ensure that the 
purposes of the Safety and Soundness Act, the authorizing statutes, and 
other applicable law are carried out. Based on its general regulatory 
authority over the Office of Finance, FHFA is proposing that this 
regulation apply to the Office of Finance.
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    \2\ 12 CFR 1273.4 and 1273.7.
    \3\ 12 U.S.C. 4631(a) and 4636a(a).
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    Section 1313(f) of the Safety and Soundness Act (12 U.S.C. 
4513(f)), requires the Director, when promulgating regulations relating 
to the Banks, to consider the differences between the FHLBanks and the 
Enterprises with respect to the FHLBanks' cooperative ownership 
structure, liquidity mission, affordable housing and community 
development mission, capital structure, and joint and several 
liabilities. The Director may also consider any other differences that 
are deemed appropriate. In preparing the proposed regulation, the 
Director considered the differences between the FHLBanks and the 
Enterprises as they relate to the above factors. The Director believes 
that none of the unique factors relating to the FHLBanks warrants 
establishing different treatment under the proposed regulation. 
Nonetheless, the Director requests comments about whether it would be 
appropriate to include in a final rule any provisions relating to the 
differences between the FHLBanks and the Enterprises.

IV. Section-by-Section Analysis

Section 1213.1 Purpose and Scope

    Proposed Sec.  1213.1 would provide that the purpose of the 
proposed part is to establish the Office under section 1317(i) of the 
Safety and Soundness Act (12 U.S.C. 4517(i)) and to set forth the 
authorities and duties of the Ombudsman. The proposed part would also 
apply to complaints and appeals regarding any matter relating to the 
regulation and supervision of any regulated entity or the Office of 
Finance. The proposed establishment of the Office would not alter or 
limit any other right or procedure associated with appeals, complaints, 
or administrative matters submitted by a person regarding any matter 
relating to the regulation and supervision of a regulated entity or the 
Office of Finance under any other law or regulation.

Section 1213.2 Definitions

    This proposed section would set forth definitions applicable to 
this part.
    Business relationship would mean a relationship or potential 
relationship between a person and a regulated entity or the Office of 
Finance that involves the provision of goods or services. The term 
business relationship would not mean a relationship between a mortgagor 
and a regulated entity that directly or indirectly owns, purchased, 
guarantees, or sold the mortgage.
    Director would mean the Director of FHFA or his or her designee.
    FHFA would mean the Federal Housing Finance Agency.
    Office of Finance would mean the Office of Finance of the Federal 
Home Loan Bank System.
    Person would mean an organization, business entity, or individual 
that has a business relationship with a regulated entity or the Office 
of Finance, or that represents directly or indirectly the interests of 
a person that has a business relationship with a regulated entity or 
the Office of Finance. The term person would not include an individual 
borrower.
    Regulated entity would mean the Federal National Mortgage 
Association and any affiliate, the Federal Home Loan Mortgage 
Corporation and any affiliate, or any Federal Home Loan Bank. The term 
regulated entities would

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mean, collectively, the Federal National Mortgage Association and any 
affiliate, the Federal Home Loan Mortgage Corporation and any 
affiliate, and the Federal Home Loan Banks.
    Safety and Soundness Act would mean the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, (12 U.S.C. 4501 et seq.), 
as amended by the Housing and Economic Recovery Act of 2008, Public Law 
No. 110-289, 122 Stat. 2654 (2008).

Section 1213.3 Authorities and Duties of the Ombudsman

    Proposed Sec.  1213.3 would provide that the Office be headed by an 
Ombudsman. The Ombudsman would be required to consider complaints or 
appeals submitted by a regulated entity, the Office of Finance, or any 
person regarding any matter relating to the regulation and supervision 
of the regulated entity or the Office of Finance by FHFA.
    In considering any complaint or appeal, the proposed section would 
authorize the Ombudsman to (i) conduct inquiries and make findings of 
fact and nonbinding recommendations to the Director concerning the 
complaint or appeal, and (ii) act as a facilitator and mediator for the 
resolution of the complaint or appeal. Proposed duties of the Ombudsman 
would be to (i) establish procedures for carrying out the functions of 
the Office, (ii) establish and publish procedures for the submission of 
complaints and appeals, and (iii) report annually to the Director on 
the activities of the Office, or more frequently, as determined by the 
Director.

Section 1213.4 Complaints and Appeals by a Regulated Entity or the 
Office of Finance

    Proposed Sec.  1213.4 would provide that FHFA encourages informal 
resolution of matters in dispute between a regulated entity or the 
Office of Finance and FHFA. If a matter could not be resolved 
informally, a regulated entity or the Office of Finance may submit a 
complaint or appeal. As proposed, any regulated entity or the Office of 
Finance may submit a complaint in accordance with procedures 
established by the Ombudsman regarding any matter relating to the 
regulation and supervision of a regulated entity or the Office of 
Finance that is not a matter subject to appeal. Proposed Sec.  1213.4 
would provide that the Ombudsman may further define what matters are 
subject to complaint.
    Proposed Sec.  1213.4 would further provide that any regulated 
entity or the Office of Finance may submit an appeal in accordance with 
procedures established by the Ombudsman on any final written regulatory 
or supervisory conclusion, decision, or examination rating by FHFA. The 
proposed section also would provide that the Ombudsman may further 
define what matters are subject to appeal. Section 1213.4, as proposed 
would provide that for matters for which there is an existing avenue of 
appeal or for which there is another forum, and non-final decisions or 
conclusions may not be appealed to the Ombudsman. Such matters would 
include, but would not be limited to, appointments of conservators or 
receivers, preliminary examination conclusions, formal enforcement 
decisions, formal and informal rulemakings, Freedom of Information Act 
appeals, final FHFA decisions subject to judicial review, and matters 
within the jurisdiction of the FHFA Inspector General. In addition, the 
proposed section would provide that the Ombudsman may further define 
what matters are not subject to appeal.
    Finally, proposed Sec.  1213.4 would provide that an appeal would 
not excuse a regulated entity or the Office of Finance from complying 
with any regulatory or supervisory decision while the appeal is 
pending. The proposed section would provide that the Director, upon 
written request, may relieve a regulated entity or the Office of 
Finance of the obligation to comply with a regulatory or supervisory 
decision or action while an appeal is pending.

Section 1213.5 Complaints by a Person

    Proposed Sec.  1213.5 would allow any person to submit a complaint 
in accordance with procedures established by the Ombudsman regarding 
any matter relating to the regulation and supervision of a regulated 
entity or the Office of Finance. The proposed section also would 
provide that the Ombudsman may further define what matters are subject 
to complaints.

Section 1213.6 No Retaliation

    Under proposed Sec.  1213.6, neither FHFA nor any FHFA employee 
would be permitted to retaliate against a regulated entity, the Office 
of Finance, or a person for submitting a complaint or appeal. The 
proposed section would require the Ombudsman to receive and address 
complaints of retaliation and investigate the basis of the alleged 
retaliation. Upon completion of the investigation, the Ombudsman would 
report the findings to the Director with recommendations, including a 
recommendation to take disciplinary action against any FHFA employee 
found to have retaliated.

Section 1213.7 Confidentiality

    Proposed Sec.  1213.7 would require the Ombudsman to ensure that 
safeguards exist to preserve confidentiality. If a party requests that 
information and materials remain confidential, the Ombudsman would be 
required not to disclose the information and materials, without 
approval of the party, except to appropriate reviewing or investigating 
officials, or as required by law. The proposed section notes that the 
resolution of certain complaints (such as complaints of retaliation 
against a regulated entity or the Office of Finance) may not be 
possible if the identity of the party remains confidential and thus 
would require the Ombudsman to discuss with the party the circumstances 
limiting confidentiality.

Regulatory Impact

Paperwork Reduction Act

    The proposed regulation does not contain any information collection 
requirement that requires the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

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 hereby certifies that the proposed 
regulation is not likely to have a significant economic impact on a 
substantial number of small entities for purposes of the Regulatory 
Flexibility Act.

List of Subjects

12 CFR Part 1213

    Administrative practice and procedure, Federal home loan banks, 
Government-sponsored enterprises.

Authority and Issuance

    Accordingly, for the reasons stated in the preamble, under the 
authority of 12 U.S.C. 4511(b)(2), 4517(i), and 4526, the Federal 
Housing Finance Agency proposes to amend Chapter XII of Title 12, Code 
of Federal Regulations, by adding a new part 1213 to subchapter A to 
read as follows:

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PART 1213--OFFICE OF THE OMBUDSMAN

Sec.
1213.1 Purpose and scope.
1213.2 Definitions.
1213.3 Authorities and duties of the Ombudsman.
1213.4 Complaints and appeals by a regulated entity or the Office of 
Finance.
1213.5 Complaints by a person.
1213.6 No retaliation.
1213.7 Confidentiality.

    Authority: 12 U.S.C. 4511(b)(2), 4517(i), and 4526.


Sec.  1213.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish within FHFA 
the Office of the Ombudsman (Office) under section 1317(i) of the 
Safety and Soundness Act (12 U.S.C. 4517(i)) and to set forth the 
authorities and duties of the Ombudsman.
    (b) Scope.--(1) This part applies to complaints and appeals 
regarding any matter relating to the regulation and supervision of any 
regulated entity or the Office of Finance.
    (2) The establishment of the Office does not alter or limit any 
other right or procedure associated with appeals, complaints, or 
administrative matters submitted by a person regarding any matter 
relating to the regulation and supervision of a regulated entity or the 
Office of Finance under any other law or regulation.


Sec.  1213.2  Definitions.

    For purposes of this part, the term:
    Business relationship means a relationship or potential 
relationship between a person and a regulated entity or the Office of 
Finance that involves the provision of goods or services. The term 
business relationship does not mean a relationship between a mortgagor 
and a regulated entity that directly or indirectly owns, purchased, 
guarantees, or sold the mortgage.
    Director means the Director of FHFA or his or her designee.
    FHFA means the Federal Housing Finance Agency.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Person means an organization, business entity, or individual that 
has a business relationship with a regulated entity or the Office of 
Finance, or that represents directly or indirectly the interests of a 
person that has a business relationship with a regulated entity or the 
Office of Finance. The term person does not include an individual 
borrower.
    Regulated entity means the Federal National Mortgage Association 
and any affiliate, the Federal Home Loan Mortgage Corporation and any 
affiliate, or any Federal Home Loan Bank. The term regulated entities 
means, collectively, the Federal National Mortgage Association and any 
affiliate, the Federal Home Loan Mortgage Corporation and any 
affiliate, and the Federal Home Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as 
amended by the Housing and Economic Recovery Act of 2008, Public Law 
No. 110-289, 122 Stat. 2654 (2008).


Sec.  1213.3  Authorities and duties of the Ombudsman.

    (a) General. The Office shall be headed by an Ombudsman, who shall 
consider complaints or appeals submitted by a regulated entity, the 
Office of Finance, or any person regarding any matter relating to the 
regulation and supervision of the regulated entities or the Office of 
Finance by FHFA. In considering any complaint or appeal submitted under 
this part, the Ombudsman may:
    (1) Conduct inquiries and make findings of fact and nonbinding 
recommendations to the Director concerning the complaint or appeal, and
    (2) Act as a facilitator and mediator for the resolution of the 
complaint or appeal.
    (b) Other duties. The Ombudsman shall:
    (1) Establish procedures for carrying out the functions of the 
Office.
    (2) Establish and publish procedures for the submission of 
complaints and appeals, and
    (3) Report annually to the Director on the activities of the 
Office, or more frequently, as determined by the Director.


Sec.  1213.4  Complaints and appeals by a regulated entity or the 
Office of Finance.

    (a) Informal resolution. FHFA encourages informal resolution of 
matters in dispute between a regulated entity or the Office of Finance 
and FHFA. If a matter cannot be resolved informally, a regulated entity 
or the Office of Finance may submit a complaint or appeal, as 
appropriate, to the Ombudsman for consideration under procedures 
established by the Ombudsman.
    (b) Complaints.--(1) General. Any regulated entity or the Office of 
Finance may submit a complaint in accordance with procedures 
established by the Ombudsman.
    (2) Matters subject to complaint. A regulated entity or the Office 
of Finance may submit a complaint regarding any matter relating to the 
regulation and supervision of a regulated entity or the Office of 
Finance that is not a matter subject to appeal. The Ombudsman may 
further define what matters are subject to complaint.
    (c) Appeals.--(1) General. Any regulated entity or the Office of 
Finance may submit an appeal in accordance with procedures established 
by the Ombudsman.
    (2) Matters subject to appeal. A regulated entity or the Office of 
Finance may submit an appeal on any final written regulatory or 
supervisory conclusion, decision, or examination rating by FHFA. The 
Ombudsman may further define what matters are subject to appeal.
    (3) Matters not subject to appeal. Matters for which there is an 
existing avenue of appeal or for which there is another forum, and non-
final decisions or conclusions may not be appealed. Such matters 
include but are not limited to appointments of conservators or 
receivers, preliminary examination conclusions, formal enforcement 
decisions, formal and informal rulemakings, Freedom of Information Act 
appeals, final FHFA decisions subject to judicial review, and matters 
within the jurisdiction of the FHFA Inspector General. The Ombudsman 
may further define what matters are not subject to appeal.
    (4) Effect of initiating an appeal. An appeal under this section 
does not excuse a regulated entity or the Office of Finance from 
complying with any regulatory or supervisory decision while the appeal 
is pending. The Director, upon written request, may relieve a regulated 
entity or the Office of Finance of the obligation to comply with a 
regulatory or supervisory decision or action while the appeal is 
pending.


Sec.  1213.5  Complaints by a person.

    (a) General. Any person may submit a complaint in accordance with 
procedures established by the Ombudsman.
    (b) Matters subject to complaint. A person may submit a complaint 
regarding any matter relating to the regulation and supervision of a 
regulated entity or the Office of Finance. The Ombudsman may further 
define what matters are subject to complaints.


Sec.  1213.6  No retaliation.

    Neither FHFA nor any FHFA employee may retaliate against a 
regulated entity, the Office of Finance, or a person for submitting a 
complaint or appeal under this part. The Ombudsman shall receive and 
address

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complaints of retaliation. Upon receiving a complaint, the Ombudsman 
shall investigate the basis of the alleged retaliation. Upon completion 
of the investigation, the Ombudsman shall report the findings to the 
Director with recommendations, including a recommendation to take 
disciplinary action against any FHFA employee found to have retaliated.


Sec.  1213.7  Confidentiality.

    The Ombudsman shall ensure that safeguards exist to preserve 
confidentiality. If a party requests that information and materials 
remain confidential, the Ombudsman shall not disclose the information 
and materials, without approval of the party, except to appropriate 
reviewing or investigating officials, or as required by law. However, 
the resolution of certain complaints (such as complaints of retaliation 
against a regulated entity or the Office of Finance) may not be 
possible if the identity of the party remains confidential. In such 
cases, the Ombudsman shall discuss with the party the circumstances 
limiting confidentiality.

     Dated: August 1, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2010-19424 Filed 8-5-10; 8:45 am]
BILLING CODE 8070-01-P