[Federal Register Volume 76, Number 218 (Thursday, November 10, 2011)]
[Proposed Rules]
[Pages 70069-70075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29159]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1290

RIN 2590-AA38


Federal Home Loan Bank Community Support Amendments

AGENCY: Federal Housing Finance Agency.

ACTION: Proposed rule; request for comments.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing to 
amend its community support regulation by requiring the Federal Home 
Loan Banks (Banks) to monitor and assess the eligibility of each Bank 
member for access to long-term advances through compliance with the 
regulation's Community Reinvestment Act of 1977 (CRA) and first-time 
homebuyer standards. The proposed rule would also replace the current 
practice in which members submit to FHFA biennial community support 
statements containing their most recent CRA evaluations. Instead, the 
Banks would verify a member's CRA rating from publicly-available 
information from the Federal Financial Institutions Examination Council 
(FFIEC) or the member's primary Federal banking regulatory agency. In 
addition, the Banks would be responsible for overseeing members' 
compliance with first-time homebuyer requirements.

DATES: Written comments must be received on or before February 8, 2012.

ADDRESSES: You may submit your comments, identified by regulatory 
information number (RIN) 2590-AA38, by any of the following methods:
     Email: Comments to Alfred M. Pollard, General Counsel, may 
be sent by email to [email protected]. Please include ``RIN 2590-
AA38'' 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 email 
to FHFA at [email protected] to ensure timely receipt by the Agency. 
Please include ``RIN 2590-AA38'' in the subject line of the message.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA38, 
Federal Housing Finance Agency, Fourth Floor, 1700 G Street NW., 
Washington, DC 20552. The package should be logged in at the Guard 
Desk, First Floor, on business days between 9 a.m. and 5 p.m.
     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-AA38, Federal 
Housing Finance Agency, Fourth Floor, 1700 G Street NW., Washington, DC 
20552.

FOR FURTHER INFORMATION CONTACT: Charles E. McLean, Associate Director, 
(202) 408-2537, or Rafe R. Ellison, Senior Program Analyst, (202) 408-
2968, Brian Doherty, Manager, (202) 408-2991, Office of Housing and 
Regulatory Policy, 1625 Eye Street NW., Washington, DC 20006. (These 
are not toll-free numbers.) For legal matters, contact Kevin Sheehan, 
Assistant General Counsel, (202) 414-8952, or Sharon Like, Managing 
Associate General Counsel, (202) 414-8950, Office of General Counsel, 
Federal Housing Finance Agency, Fourth Floor, 1700 G Street NW., 
Washington, DC 20552. (These are not toll-free numbers.) The telephone 
number for the Telecommunications Device for the Hearing Impaired is 
(800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Comments

    FHFA invites comments on all aspects of the proposed rule, and will 
revise the language of the proposed rule as appropriate after taking 
all comments into consideration. Copies of all comments will be posted 
without change, including any personal information you provide, such as 
your name and address, on the FHFA Internet Web site at http://www.fhfa.gov. In addition, copies of all comments received 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

    Section 10(g) of the Federal Home Loan Bank Act of 1932 (Bank Act), 
as amended by the Financial Institutions Reform, Recovery and 
Enforcement Act of 1989 (FIRREA), requires FHFA to adopt regulations 
establishing standards of community investment or service for members 
of Banks to maintain access to long-term advances. See 12 U.S.C. 
1430(g). Section 10(g) further states that such regulations ``shall 
take into account factors such as a member's performance under the 
Community Reinvestment Act of 1977 and the member's record of lending 
to first-time homebuyers.'' Id.
    Regulations implementing these community support requirements were 
first published on November 21, 1991. See 56 FR 58639 (Nov. 21, 1991). 
The original regulation required members to submit to FHFA community 
support statements comprising CRA evaluation reports and other 
supporting documentation. Members not subject to the CRA were required 
to submit documentation evidencing that they engaged in activities 
related to community support. The community support regulation was 
substantially amended to its current form by a final rule published on 
May 29, 1997. See 62 FR 28983. The amendments streamlined the 
regulatory mandate by requiring members to submit one-page community 
support statements, a significant reduction to the documentation 
standards of the original regulation. Under the community support 
regulation in effect today, FHFA generally reviews, on a biennial 
basis, each member's CRA performance and

[[Page 70070]]

record of lending to first-time homebuyers, to evaluate the member's 
compliance with the community support standards and determine ongoing 
eligibility for access to long-term Bank advances. See 12 CFR part 
1290. A long-term advance is defined as an advance with a term to 
maturity greater than one year. 12 CFR 1290.1. In addition, FHFA 
requires each Bank to establish and maintain a community support 
program that provides technical assistance to its members and promotes 
and expands affordable housing finance. 12 CFR 1290.6.

III. Analysis of Proposed Rule

    The proposed rule would revise the current community support 
regulation to require the Banks, as part of their community support 
programs, to evaluate and determine members' compliance with the 
community support requirements and whether members maintain access to 
long-term Bank advances. The Banks would be required to establish 
policies and procedures for evaluating and determining their members' 
community support compliance under their community support programs.
    The Banks currently are required to adopt Member Product Policies 
addressing the Banks' management of their advances and other products 
offered to members, and are responsible for determining the terms and 
conditions under which they will make advances to their members. See 
Sec.  917.4 of this title, part 1266 of this chapter. Requiring the 
Banks to adopt policies and procedures for community support 
evaluations, to conduct the evaluations, and to make decisions on any 
restrictions on access to long-term advances, would be consistent with 
their general advances underwriting responsibilities.
    While FHFA would no longer be directly involved in determining 
members' community support compliance, FHFA would exercise its general 
regulatory authority to oversee the Banks' compliance with their 
community support program policies and procedures and the community 
support regulation, consistent with how FHFA regularly performs its 
oversight responsibilities with respect to the Banks' other mission-
related activities.
    The specific provisions of the proposed rule are discussed further 
below.

A. Definitions--Proposed Sec.  1290.1

    Proposed Sec.  1290.1 would continue to set forth definitions 
applicable to the community support requirements in part 1290. A number 
of terms that are currently defined in Sec.  1290.1 would remain 
substantially unchanged, including the definitions of ``Advisory 
Council,'' ``appropriate Federal banking agency,'' ``appropriate State 
regulator,'' ``Bank,'' ``CDFI Fund,'' ``community development financial 
institution or CDFI,'' ``CRA,'' ``CRA evaluation,'' ``FHFA,'' ``long-
term advance,'' and ``targeted community lending.'' The term 
``restriction on access to long-term advances'' would no longer be a 
separately defined term because the substance of the existing 
definition would be incorporated into proposed Sec.  1290.3(a).
    Section 1290.1 currently defines ``first-time homebuyer'' to 
include individuals who have not owned a principal residence during the 
three-year period prior to purchasing a home. The definition includes 
displaced homemakers and single parents that would meet this criterion 
but for prior ownership of a home with a spouse or residence in a home 
owned by a spouse. The current definition was based on the definition 
of ``first-time homebuyer'' under section 104 of the Cranston-Gonzalez 
National Affordable Housing Act. See 42 U.S.C. 12704. This statutory 
definition was subsequently amended to include individuals whose 
previous home was either a manufactured home not permanently affixed to 
a permanent foundation or a substandard home that could not be brought 
into compliance with relevant building codes for less than the cost of 
constructing a permanent structure. The current definition of ``first-
time homebuyer'' in Sec.  1290.1 does not reflect those amendments.
    Proposed Sec.  1290.1 would remove the definition of ``first-time 
homebuyer'' in order to be consistent with FHFA's Affordable Housing 
Program (AHP) regulation. The AHP regulation does not define the term, 
leaving the definition to be determined at the discretion of each Bank. 
See 12 CFR 1291.1. Accordingly, the terms ``displaced homemaker'' and 
``single parent,'' which appear only in the ``first-time homebuyer'' 
definition, would also be removed. FHFA specifically requests comment 
on whether the definition of ``first-time homebuyer'' should be 
removed, whether the definition should be maintained in its current 
form, or whether the definition should be revised to reflect the 
statutory amendment that addressed previous ownership of manufactured 
or substandard housing.

B. Bank Community Support Program--Proposed Sec.  1290.2

1. Community Support Program
    Proposed Sec.  1290.2(a) would set forth requirements that appear 
in current Sec.  1290.6 related to the Bank's community support 
program, including that each Bank's program: Provide technical 
assistance to members; promote and expand affordable housing finance; 
and include an annual Targeted Community Lending Plan. See also 12 CFR 
952.4. The proposed rule would add a new paragraph (a)(1) requiring 
each Bank to establish policies and procedures for the Bank's 
evaluation and determination of community support compliance by its 
members under its community support program. Each Bank's community 
support program policies would be required to include a CRA standard 
and a first-time homebuyer standard, as further discussed below. In 
addition, the Bank's community support program policies and procedures 
would include policies and procedures for verifying members' compliance 
with the two community support standards through collection and review 
of members' CRA ratings and their first-time homebuyer support 
statements, as well as any other appropriate information.
2. Evaluation and Determination of Compliance
    Proposed Sec.  1290.2(b) would require each Bank to evaluate and 
determine its members' compliance with the first-time homebuyer 
standard and the CRA standard, as applicable, pursuant to the Bank's 
community support program policies and procedures and the requirements 
of the regulation.
3. Public Comments
    Under current Sec.  1290.2, FHFA notifies the applicable Bank and 
the public by Federal Register notice of specific members selected for 
community support review. The Bank is also required to provide written 
notice to the members selected for community support review, its 
Advisory Council, and to nonprofit housing developers, community 
groups, and other interested parties in its district of the name and 
address of each member within its district that has to submit a 
Community Support Statement Form during the calendar quarter. In 
reviewing a member's Community Support Statement Form for evidence of 
the member's compliance with the community support requirements, FHFA 
is required to take into consideration any public comments received 
concerning members of all 12

[[Page 70071]]

Banks. In the previous two calendar years, FHFA has received only a 
small number of public comments concerning the community support 
programs and activities of members of the 12 Banks.
    Under the proposed rule, the Banks would be required to assess a 
member's compliance with the community support requirements by 
determining whether a member received a CRA rating of Satisfactory or 
above, and determining whether the member engaged in eligible first-
time homebuyer activities. Although the Banks do not publish in the 
Federal Register, solicitation by the Banks of public comments on 
members' community support programs and activities could be implemented 
by the Banks posting notices on their public Web sites. Under such a 
public notification process, each Bank would receive comments only with 
respect to its own members. Accordingly, in view of the importance of 
public engagement, proposed Sec.  1290.2(c) would require the Banks to 
include notices on their Web sites inviting comments on any member's 
community support programs or activities, and to consider any comments 
received in determining the member's compliance. FHFA requests comment 
on whether the public comment process would be enhanced if the Banks 
were required to give public notice when specific members are selected 
for community support review, or whether such notice should be at the 
discretion of each Bank.

C. Restrictions on Access to Long-Term Advances--Proposed Sec.  1290.3

    Under current Sec.  1290.5, if FHFA determines that a member should 
be placed on restriction from long-term advances for failure to meet 
the community support standards, FHFA notifies the Bank and the member 
of its determination and the reasons, and directs the Bank to deny the 
member's requests for long-term advances. Such members would also be 
denied access to the AHP and the Community Investment Cash Advances 
(CICA) Programs. If the member subsequently complies with the community 
support standards, FHFA informs the Bank that the member's access to 
long-term advances should be restored.
    Proposed Sec.  1290.3(a) would replace Sec.  1290.5 and would 
provide that a Bank shall not approve a member's request for long-term 
advances unless the Bank has determined that the member is in 
compliance with the first-time homebuyer standard and the CRA standard, 
as applicable. A member subject to a long-term advance restriction who 
subsequently complies with the community support standards is eligible 
again for long-term advances and the long-term advance restriction 
shall be removed. The Bank would be required to develop policies and 
procedures that it determines are appropriate to ensure that it makes 
timely determinations and communicates with its members as necessary.
    Current Sec.  1290.5(d)(i) permits a member to seek from FHFA an 
exception to a long-term advances restriction if the member's 
appropriate Federal banking or State regulator determines that 
restricting the member's access to advances would adversely affect the 
member's safety and soundness. Since, under the proposed rule, the 
Banks would be determining whether members should be subject to long-
term advances restrictions, proposed Sec.  1290.3(b) would provide that 
members may submit requests for safety and soundness exceptions to 
their Bank, rather than to FHFA, for decision.
    Consistent with the requirements of the current regulation, the 
member's written request shall contain a clear and concise statement of 
the basis for the request, and a statement from the member's 
appropriate Federal banking agency, or the member's appropriate State 
regulator for a member that is not subject to regulation or supervision 
by a Federal regulator, that application of the restriction may 
adversely affect the safety and soundness of the member. The Bank would 
be required to consider each written request within 30 calendar days of 
receipt.
    Consistent with the current regulation, proposed Sec.  1290.3(c) 
would provide that any member that is ineligible for long-term advances 
due to a failure to meet the community support requirements would also 
be ineligible to submit new applications under the Banks' AHP under 12 
CFR part 1291, or under the Bank's CICA programs offered under 12 CFR 
part 952.

D. Exemption for CDFIs--Proposed Sec.  1290.4

    Section 1290.2(e) of the existing regulation provides that a member 
that has been certified as a community development financial 
institution (CDFI) by the CDFI Fund, other than a member that also is 
an insured depository institution or a CDFI credit union (as defined in 
12 CFR 1263.1), is deemed to be in compliance with the community 
support standards by virtue of such certification and shall not be 
subject to community support review by any Bank. The proposed rule 
would relocate this provision unchanged to Sec.  1290.4. For additional 
discussion of this provision, see the final rule entitled ``Federal 
Home Loan Bank Membership for Community Development Financial 
Institutions,'' 75 FR 678, 689-690 (Jan. 5, 2010).

E. CRA Standard--Proposed Sec.  1290.5

1. Verification of CRA Rating
    Proposed Sec.  1290.5(a) would provide that for each member that is 
subject to the requirements of the CRA, the Bank shall, in accordance 
with its community support program policies and procedures, verify the 
member's rating in its most recent CRA evaluation with that member's 
appropriate Federal banking agency or from information made publicly 
available by FFIEC. As under the current regulation, the Banks would 
not be required to evaluate the compliance of credit unions and 
insurance companies under the CRA standard, as they are not subject to 
the CRA and are only subject to the first-time homebuyer standard.
    In complying with proposed Sec.  1290.5(a), the Banks would be 
required to routinely verify members' CRA ratings, which would 
eliminate the current gap in monitoring compliance with the CRA 
standard. Under the current regulation, FHFA reviews each member's CRA 
rating once every two years. This existing practice enables a member to 
maintain access to long-term advances for up two years after receiving 
a rating of ``Substantial Noncompliance.'' For example, if a member 
received a rating of ``Satisfactory'' on its July 2007 CRA evaluation 
and was notified that it needed to submit a community support statement 
in June 2009, the member could report to FHFA the results of the July 
2007 CRA evaluation. However, if this same member then received a 
rating of ``Substantial Noncompliance'' on its July 2009 CRA 
evaluation, it would not have to report this information to FHFA until 
it is required to submit its next community support statement in June 
2011. During this period where the most recent CRA rating is 
``Substantial Noncompliance,'' the member would continue to have access 
to long-term advances.
    FFIEC routinely publishes on its Web site the latest CRA ratings of 
financial institutions supervised by the Federal Reserve Board, Office 
of the Comptroller of the Currency, Federal Deposit Insurance 
Corporation, and Office of Thrift Supervision. The Banks could obtain 
CRA rating information from FFIEC's Web site to ensure that only 
members with ``Satisfactory'' or ``Outstanding'' ratings have access to 
long-term advances. The Banks should

[[Page 70072]]

be able to readily and routinely obtain the necessary CRA ratings 
information from the FFIEC Web site. Under proposed Sec.  1290.2(a)(1), 
each Bank would be required to establish policies and procedures for 
its review of its members' CRA ratings.
2. Compliance With CRA Standard
    Consistent with current Sec.  1290.3(b), proposed Sec.  1290.5(b) 
would provide that a member has met the CRA standard if the member 
received a rating of ``Outstanding'' or ``Satisfactory'' in its most 
recent CRA evaluation. The proposed rule would change the current 
regulation by requiring that the Banks allow access to long-term 
advances only for members with ratings of ``Satisfactory'' or higher on 
their most recent CRA evaluations.
    Current Sec.  1290.3(b)(2) provides that a member with a most 
recent CRA rating of ``Needs to Improve'' continues to have access to 
long-term advances but is placed on probation. If the member's 
subsequent CRA rating is ``Satisfactory'' or ``Outstanding,'' the 
member is removed from probation. A member with a CRA evaluation of 
``Substantial Noncompliance'' on its most recent CRA evaluation, or 
with two consecutive CRA ratings of ``Needs to Improve'' on its most 
recent two CRA evaluations, is required to be placed on restriction 
from access to long-term advances. Current Sec.  1290.5(a) also 
requires FHFA to require that members that fail to submit complete 
community support statements be placed on restriction from access to 
long-term advances. In order for access to long-term advances to be 
restored, a member must receive a CRA rating of ``Satisfactory'' or 
above on its next CRA evaluation and submit a complete community 
support statement.
    FHFA has concluded that requiring at least a ``Satisfactory'' 
rating on a member's most recent CRA evaluation is an appropriate 
standard to be eligible for long-term advances because the standard may 
provide additional incentive for members to consistently meet the 
credit needs of the communities they serve. Additionally, based on 
historical evaluation rating data, removing the probationary period for 
members rated less than ``Satisfactory'' would likely affect or have an 
impact on only a small percentage of members. Slightly more than two 
percent of institutions that were subject to CRA evaluations from 2008 
to 2010 received ratings of ``Needs to Improve.''
    Because the proposed rule would prohibit Banks from making long-
term advances to members after a single CRA rating of ``Needs to 
Improve,'' this policy could restrict a member's ability to use long-
term advances to address the deficiencies that led to the ``Needs to 
Improve'' rating. FHFA specifically requests comment on whether members 
with a single CRA rating of ``Needs to Improve'' should be restricted 
from accessing long-term advances, or whether such members should be 
placed on probation, but maintain access pending their next CRA rating, 
similar to existing practice.

F. First-Time Homebuyer Standard--Proposed Sec.  1290.6

1. Eligible First-Time Homebuyer Programs and Activities
    Current Sec.  1290.3(c)(1) and FHFA's existing Community Support 
Statement Form set forth the specific first-time homebuyer programs and 
activities that are eligible to meet the first-time homebuyer standard. 
Under proposed Sec.  1290.6(a), the following substantially similar 
first-time homebuyer programs and activities would be eligible for 
purposes of meeting the first-time homebuyer standard:
     Member's established record of lending to first-time 
homebuyers;
     In-house first-time homebuyer programs, such as marketing 
plans and outreach programs;
     Other in-house lending products that serve first-time 
homebuyers;
     Underwriting standards that are appropriate for first-time 
homebuyers and consistent with safe and sound lending practices;
     Participation in non-governmental first-time homebuyer 
programs;
     Participation in federal government programs that serve 
first-time homebuyers;
     Participation in state or local government programs 
targeted to first-time homebuyers;
     Financial support or technical assistance to community 
groups or organizations that assist first-time homebuyers;
     Participation in loan consortia that make loans to first-
time homebuyers;
     Participation in or support of special counseling or 
homeownership education targeted to first-time homebuyers; and
     Participation in investments or loans that support first-
time homebuyer programs.

In addition, a Bank would have discretion to determine other first-time 
homebuyer programs and activities as eligible to meet the first-time 
homebuyer standard.

    FHFA requests comment on whether the above list of programs and 
activities should be revised in any way. FHFA also requests comment on 
the degree of discretion the Banks should have in determining what 
first-time homebuyer programs and activities should be eligible for 
purposes of meeting the first-time homebuyer standard. For example, an 
alternative would be to allow each Bank at its discretion to determine 
all eligible first-time homebuyer programs and activities, which may 
enable the Bank to be more responsive to particular housing needs in 
its district. FHFA also requests comment on whether an alternative 
approach giving Banks more discretion to determine eligible first-time 
homebuyer programs and activities should include a requirement that a 
Bank consult with its Advisory Council in making such determination.
2. Compliance With First-Time Homebuyer Standard
    As in the current regulation, proposed Sec.  1290.6(b) would 
provide that a member that has received a rating in its most recent CRA 
evaluation of ``Outstanding'' would be deemed to have satisfied the 
first-time homebuyer standard.
    For those members with a CRA rating below ``Outstanding'', the Bank 
would need to require the member to have engaged in one or more 
eligible first-time homebuyer programs or activities in the period 
covered by the most recent first-time homebuyer support statement to be 
eligible for a long-term advance.
    FHFA requests comment on whether a member should be required to 
engage in more than one eligible first-time homebuyer program or 
activity in order to be in compliance with the first-time homebuyer 
standard, and if so, how many such programs or activities should be 
required. FHFA also requests comment on whether the regulation should 
specify a particular number of such programs or activities, or whether 
each Bank should have discretion to determine that number.
3. First-Time Homebuyer Support Statement
    Under current Sec.  1290.2(c), each member selected by FHFA for 
community support review is required to submit to FHFA a Community 
Support Statement Form prescribed by FHFA that contains both the 
member's CRA evaluation and identification of the member's eligible 
first-time homebuyer programs or activities from the list set forth in 
the Form. Under proposed Sec.  1290.6(c), members would submit to the 
Bank first-time homebuyer support statements in which the member would 
identify and describe the eligible first-time homebuyer programs or 
activities in which it had engaged. Each Bank

[[Page 70073]]

would prescribe the form of the first-time homebuyer support statement, 
which would set forth all of the eligible first-time homebuyer programs 
and activities under proposed Sec.  1290.6(a). Each member would be 
required to submit a completed first-time homebuyer support statement 
to its Bank at least once every two calendar years, which is consistent 
with FHFA's current biennial schedule for reviewing members' community 
support compliance. As in the current regulation, the accuracy of the 
first-time homebuyer support statement would be required to be 
certified by a senior officer of the member.

G. Reports--Proposed Sec.  1290.7

    The proposed rule would add a requirement for each Bank to submit a 
report annually by May 1 to FHFA that identifies the results of the 
Bank's community support compliance determinations for that year, 
including whether any members are subject to restrictions on access to 
long-term advances.

IV. Paperwork Reduction Act

A. Summary of Proposed Information Collection

    FHFA has submitted an analysis of the revisions to the currently 
approved collection of information contained in this proposed rule to 
the Office of Management and Budget (OMB) for review in accordance with 
the Paperwork Reduction Act of 1995. See 44 U.S.C. 3507(d). Potential 
respondents are not required to respond to the collection of 
information unless the regulation collecting the information displays a 
currently valid control number assigned by OMB. See 44 U.S.C. 3512(a).
    FHFA currently collects information biennially from Bank members 
regarding their compliance with the community support standards under 
existing part 1290. Existing part 1290 also permits Bank members whose 
access to long-term advances has been restricted for failure to meet 
the community support standards to apply directly to FHFA to remove the 
restriction under certain circumstances. The current collection of 
information has been approved by OMB, and the control number, OMB No. 
2590-0005, will expire on October 31, 2012. The proposed rule would 
amend the community support requirements in part 1290 and require the 
Banks to collect compliance information from their members and process 
requests to remove restrictions on members' access to advances. The 
changes in the proposed rule would not substantively or materially 
modify the approved information collection with respect to the members' 
information collection burden, although it would materially decrease 
the time and hour burden on FHFA.
    Need for and proposed use of information: Under the proposed rule, 
Bank members would be required to satisfy the community support 
requirements in order to maintain continued access to long-term 
advances. The proposed collection of information from each Bank member 
is necessary to enable the Banks to determine whether their members 
satisfy those community support requirements. Members may also find it 
necessary to submit information to the Banks to request the removal of 
restrictions on the members' access to long-term advances. The 
collection of information contained in part 1290 of the proposed rule 
is described more fully in part III of the SUPPLEMENTARY INFORMATION.
    Respondents: Likely respondents are institutions that are members 
of a Bank.

B. Burden Estimate

    FHFA estimates the total annualized hour burden for all members of 
the proposed information collection to be 4,115 hours. This estimate 
includes the biennial submission of first-time homebuyer support 
statements by all members, as well as any requests by members for 
removal of restrictions on access to long-term advances. FHFA estimates 
that an average of 4,100 members will submit responses each year 
regarding their first-time homebuyer programs and activities. FHFA 
estimates each response will take an average of .75 hours to prepare 
and process, for an annual total of 3,075 hours (4,100 member responses 
x .75 hours = 3,075 hours). FHFA estimates that the responses, on 
average, will take an additional .25 hours for review and certification 
by an appropriate senior officer, for an annual total of 1,025 hours 
(4,100 member responses x .25 hours = 1,025 hours).
    FHFA estimates that an average of 15 members each year will submit 
requests to remove restrictions on access to long-term advances. FHFA 
estimates that these requests, on average, will take .75 hours to 
prepare and process, for an annual total of 11.25 hours (15 member 
requests x .75 hours = 11.25 hours). FHFA estimates that the requests, 
on average, will take an additional .25 hours for review by an 
appropriate senior officer, for an annual total of 3.75 hours (15 
member requests x .25 hours = 3.75 hours).
    Costs: FHFA estimates that there will be no annualized capital/
start-up costs for the members to collect and submit the information.

C. Comment Request

    FHFA will accept written comments concerning the accuracy of the 
burden estimates and suggestions for reducing the burden at the address 
listed above. Comments may also be submitted in writing to OMB (please 
also submit comments to FHFA for timely receipt and review) at the 
following address: Attention: Desk Officer for Federal Housing Finance 
Agency, Office of Information and Regulatory Affairs, Room 10102, New 
Executive Office Building, 725 17th Street NW., Washington, DC 20503.
    Written comments are requested on: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
FHFA functions, including whether the information has practical 
utility; (2) The accuracy of FHFA estimates of the burdens of the 
collection of information; (3) Ways to enhance the quality, utility, 
and clarity of the information collected; and (4) Ways to minimize the 
burden of the proposed collection of information on members, including 
through the use of automated collection techniques or other forms of 
information technology.

V. 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 has considered the impact of the 
proposed rule under the Regulatory Flexibility Act. The General Counsel 
of FHFA certifies that the proposed rule, if adopted as a final rule, 
is not likely to have a significant economic impact on a substantial 
number of small business entities because the regulation is applicable 
only to the Banks, which are not small entities for purposes of the 
Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 1290

    Credit, Federal home loan banks, Housing, Mortgages, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons stated in the SUPPLEMENTARY 
INFORMATION, FHFA

[[Page 70074]]

proposes to amend title 12, chapter XII, of the Code of Federal 
Regulations to read as follows:

PART 1290--COMMUNITY SUPPORT REQUIREMENTS

Sec.
1290.1 Definitions.
1290.2 Bank community support program.
1290.3 Restrictions on access to long-term advances.
1290.4 Exemption for CDFIs.
1290.5 CRA standard.
1290.6 First-time homebuyer standard.
1290.7 Reports.

    Authority: 12 U.S.C. 1430(g), 4511, 4513, 4526.


Sec.  1290.1  Definitions.

    For purposes of this part:
    Advisory Council means the Advisory Council each Bank is required 
to establish pursuant to section 10(j)(11) of the Federal Home Loan 
Bank Act, as amended (12 U.S.C. 1421 through 1449), and part 1291 of 
this chapter.
    Appropriate Federal banking agency has the meaning set forth in 
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) 
and, for federally insured credit unions, means the National Credit 
Union Administration.
    Appropriate State regulator means any State officer, agency, 
supervisor, or other entity that has regulatory authority over, or is 
empowered to institute enforcement action against, a particular 
institution.
    Bank means a Federal Home Loan Bank established under section 12 of 
the Federal Home Loan Bank Act, as amended (12 U.S.C. 1421 through 
1449).
    CDFI Fund means the Community Development Financial Institutions 
Fund established under section 104(a) of the Community Development 
Banking and Financial Institutions Act of 1994 (12 U.S.C. 4703(a)).
    Community development financial institution or CDFI means an 
institution that is certified as a community development financial 
institution by the CDFI Fund under the Community Development Banking 
and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.).
    CRA means the Community Reinvestment Act of 1977, as amended (12 
U.S.C. 2901 et seq.).
    CRA evaluation means the public disclosure portion of the CRA 
performance evaluation provided by a Bank member's appropriate Federal 
banking agency.
    FHFA means Federal Housing Finance Agency.
    Long-term advance means an advance with an original term to 
maturity greater than one year.
    Targeted community lending means providing financing for economic 
development projects for targeted beneficiaries, as defined in part 952 
of this title.


Sec.  1290.2  Bank community support program.

    (a) Requirement. Consistent with the safe and sound operation of 
the Bank, each Bank shall establish and maintain a community support 
program. A Bank shall, under its community support program:
    (1) Establish policies and procedures for the Bank's evaluation and 
determination of community support compliance by the Bank's members;
    (2) Provide technical assistance to members;
    (3) Promote and expand affordable housing financing and financing 
for first-time homebuyers;
    (4) Identify opportunities for members to expand financial and 
credit services in underserved neighborhoods and communities;
    (5) Encourage members to increase their targeted community lending 
and affordable housing finance activities by providing incentives such 
as awards or technical assistance to nonprofit housing developers or 
community groups with outstanding records of participation in targeted 
community lending or affordable housing finance partnerships with 
members; and
    (6) Include an annual Targeted Community Lending Plan, as required 
by Sec.  952.4 of this title, approved by the Bank's board of directors 
and subject to modification, which shall require the Bank to--
    (i) Conduct market research in the Bank's district;
    (ii) Describe how the Bank will address identified credit needs and 
market opportunities in the Bank's district for targeted community 
lending;
    (iii) Consult with its Advisory Council and with members, housing 
associates, and public and private economic development organizations 
in the Bank's district in developing and implementing its Targeted 
Community Lending Plan; and
    (iv) Establish quantitative targeted community lending performance 
goals.
    (b) Bank evaluation and determination of community support 
compliance. Pursuant to the Bank's community support program policies 
and procedures and the requirements of this part, each Bank shall 
evaluate and determine compliance of each of its members with the 
first-time homebuyer standard and the CRA standard, as applicable.
    (c) Public comments. Each Bank shall include a notice on its Web 
site informing the public of the opportunity to submit comments on the 
community support programs and activities of Bank members and 
explaining how to submit such comments. In determining the community 
support compliance of a member, a Bank shall take into consideration 
any public comments it has received concerning the member.


Sec.  1290.3  Restrictions on access to long-term advances.

    (a) Restriction on access to long-term advances. A Bank shall not 
approve a member's request for a long-term advance, including renewal 
of a maturing advance for a term to maturity greater than one year, 
unless the Bank has determined that the member is in compliance with 
the first-time homebuyer standard and the CRA standard, as applicable.
    (b) Safety and soundness exception. A Bank may remove restrictions 
on a member's access to long-term advances imposed under this section 
if the Bank determines that application of the restriction may 
adversely affect the safety and soundness of the member. A member that 
seeks removal from restriction must submit a written request to the 
Bank to remove the restriction under this paragraph (b). Such written 
request shall contain a clear and concise statement of the basis for 
the request, and a statement from the member's appropriate Federal 
banking agency, or the member's appropriate State regulator for a 
member that is not subject to regulation or supervision by a Federal 
regulator, that application of the restriction may adversely affect the 
safety and soundness of the member. The Bank shall consider each 
written request within 30 calendar days of receipt.
    (c) Affordable Housing Program (AHP) and Community Investment Cash 
Advance (CICA) programs. A member that is restricted from access to 
long-term advances under this part is not eligible to participate in 
the AHP under part 1291 of this chapter, or in any CICA program offered 
under part 952 of this title. The restriction in this paragraph (c) 
does not apply to AHP or CICA applications or funding approved before 
the date the restriction is imposed.


Sec.  1290.4  Exemption for CDFIs.

    A member that has been certified as a CDFI by the CDFI Fund, other 
than a member that also is an insured depository institution or a CDFI 
credit union (as defined in Sec.  1263.1 of this chapter), is deemed to 
be in compliance with the community support standards under this part 
by virtue of such certification and shall not be subject to

[[Page 70075]]

community support review by any Bank under this part.


Sec.  1290.5  CRA standard.

    (a) Verification of CRA rating. For each member that is subject to 
the requirements of the CRA, the Bank shall, in accordance with its 
community support program policies and procedures, verify the rating in 
the member's most recent CRA evaluation with that member's appropriate 
Federal banking agency or from information made publicly available by 
the Federal Financial Institutions Examination Council.
    (b) Compliance with CRA standard. A member shall be in compliance 
with the CRA standard if the member received a rating of 
``Outstanding'' or ``Satisfactory'' in its most recent CRA evaluation.


Sec.  1290.6  First-time homebuyer standard.

    (a) Eligible first-time homebuyer programs and activities. The 
following programs and activities are eligible first-time homebuyer 
programs and activities for purposes of determining Bank members' 
compliance with the first-time homebuyer standard:
    (1) An established record of lending to first-time homebuyers;
    (2) In-house first-time homebuyer programs, such as marketing plans 
and outreach programs;
    (3) Other in-house lending products that serve first-time 
homebuyers;
    (4) Underwriting standards that are appropriate for first-time 
homebuyers and consistent with safe and sound lending practices;
    (5) Participation in non-governmental first-time homebuyer 
programs;
    (6) Participation in federal government programs that serve first-
time homebuyers;
    (7) Participation in state or local government programs targeted to 
first-time homebuyers;
    (8) Financial support or technical assistance to community groups 
or organizations that assist first-time homebuyers;
    (9) Participation in loan consortia that make loans to first-time 
homebuyers;
    (10) Participation in or support of special counseling or 
homeownership education targeted to first-time homebuyers;
    (11) Participation in investments or loans that support first-time 
homebuyer programs; and
    (12) Other first-time homebuyer programs or activities, as 
determined by a Bank in its discretion.
    (b) Compliance with first-time homebuyer standard. A member shall 
be in compliance with the first-time homebuyer standard if the member 
has engaged in one or more eligible first-time homebuyer programs or 
activities in the period covered by the most recent first-time 
homebuyer support statement. A member that has received a rating in its 
most recent CRA evaluation of ``Outstanding'' shall be deemed to be in 
compliance with the first-time homebuyer standard.
    (c) First-time homebuyer support statement. Each Bank shall 
prescribe the form of the first-time homebuyer support statement to be 
completed by its members, which shall set forth all of the eligible 
first-time homebuyer programs and activities under paragraph (a) of 
this section. The Bank shall require members to submit a completed 
first-time homebuyer support statement to the Bank at least once every 
two calendar years. The Bank shall require each member to identify and 
describe the eligible first-time homebuyer programs or activities 
engaged in by the member on the first-time homebuyer support statement. 
The accuracy of the first-time homebuyer support statement shall be 
certified by a senior officer of the member. A member that has received 
a rating in its most recent CRA evaluation of ``Outstanding'' shall not 
be required to submit a first-time homebuyer support statement.


Sec.  1290.7  Reports.

    Each Bank shall submit a report annually by May 1 to FHFA that 
identifies the results of the Bank's community support compliance 
determinations for that year, including whether any members are subject 
to long-term advances restrictions.

    Dated: November 4, 2011.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2011-29159 Filed 11-9-11; 8:45 am]
BILLING CODE 8070-01-P