[Federal Register Volume 78, Number 119 (Thursday, June 20, 2013)]
[Rules and Regulations]
[Pages 37101-37103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-14676]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1209

RIN 2590-AA57


Rules of Practice and Procedure: Enterprise and Federal Home Loan 
Bank Housing Goals Related Enforcement Amendment

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is amending its 
Rules of Practice and Procedure (RPP) to specify that the rules of 
practice and procedure for hearings on the record in Subpart C therein 
shall apply to any cease and desist or civil money penalty proceedings 
brought against the Federal National Mortgage Association (Fannie Mae), 
the Federal Home Loan Mortgage Corporation (Freddie Mac), or the 
Federal Home Loan Banks (Banks) for failure to submit or follow a 
housing plan or failure of an Enterprise to submit information on its 
housing activities. An exception is provided where such rules are 
inconsistent with related statutory provisions, in which case the 
statutory provisions shall apply.

DATES: This final rule is effective on July 22, 2013.

FOR FURTHER INFORMATION CONTACT: Lyn Abrams, Assistant General Counsel, 
(202) 649-3059; or Sharon Like, Managing Associate General Counsel, 
(202) 649-3057 (these are not toll-free numbers), Office of General 
Counsel, Federal Housing Finance Agency, 400 Seventh Street SW., 
Washington, DC 20024. The telephone number for the Telecommunications 
Device for the Hearing Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory and Regulatory Background

1. Enterprise Enforcement for Housing Plan and Failure To Submit 
Housing Activities Information
    Prior to the enactment of the Housing and Economic Recovery Act of 
2008 (HERA), the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (Safety and Soundness Act) provided the Secretary 
of the U.S. Department of Housing and Urban Development (HUD) with 
specific authority to establish, monitor, and enforce housing goals for 
mortgages purchased by Fannie Mae and Freddie Mac (collectively, the 
Enterprises). In addition, section 309(m) and (n) of the Federal 
National Mortgage Association Charter Act and section 307(e) and (f) of 
the Federal Home Loan Mortgage Corporation Act (collectively, Charter 
Acts) required that each Enterprise submit information on its housing 
activities to the Secretary of HUD, the Committee on Financial Services 
of the House of Representatives, and the Committee on Banking, Housing 
and Urban Affairs of the Senate.\1\ See 12 U.S.C. 1723a(m) and (n); 12 
U.S.C. 1456(e) and (f).
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    \1\ The Charter Acts require that the Enterprises submit 
information on their housing activities to the Committee on Banking, 
Finance and Urban Affairs of the House of Representatives. The 
Enterprises submit this information to that Committee's successor, 
the Committee on Financial Services of the House of Representatives.
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    The Safety and Soundness Act, prior to the HERA amendments, 
authorized HUD to initiate cease and desist proceedings and impose 
civil money penalties against an Enterprise for failure to submit or 
comply with a housing plan or failure to submit information on its 
housing activities. HUD issued regulations implementing its enforcement 
authority against the Enterprises for these violations. See 24 CFR part 
81, Subpart G.
    HERA amended the Safety and Soundness Act in 2008 to create FHFA

[[Page 37102]]

as an independent agency of the federal government and, among other 
things, transferred the responsibility to establish, monitor and 
enforce the housing goals for the Enterprises from HUD to FHFA, and 
required that each Enterprise submit information on its housing 
activities to the Director of FHFA instead of to the Secretary of HUD. 
See Public Law 110-289, 122 Stat. 2654 (2008), codified at 12 U.S.C. 
4501 et seq. The Safety and Soundness Act, as amended, requires the 
Director of FHFA to establish new annual housing goals for mortgages 
purchased by the Enterprises, effective for 2010 and beyond. FHFA 
reviews mortgage purchase data provided by each Enterprise in its 
Annual Housing Activities Report and other mortgage reports, as well as 
other available data, and determines whether the Enterprise has met the 
housing goals.
    Enterprise compliance with the housing goals is enforced under 
section 1336 of the Safety and Soundness Act, which provides that if an 
Enterprise fails to meet a housing goal determined by the Director to 
be feasible, the Director may, in his or her discretion, require the 
Enterprise to submit a housing plan describing the specific actions the 
Enterprise will take to achieve the goal. See 12 U.S.C. 4566.
    Section 1336 further provides that if an Enterprise fails to submit 
an acceptable housing plan or fails to comply with the plan, the 
Director may initiate cease and desist proceedings or impose civil 
money penalties against the Enterprise in accordance with sections 1341 
and 1345, respectively, of the Safety and Soundness Act, exercise other 
appropriate enforcement authority, or seek other appropriate actions. 
See 12 U.S.C. 4566(c)(1) and (c)(7), 4581, 4585. In addition, sections 
1341 and 1345 provide that the Director may initiate cease and desist 
proceedings or impose civil money penalties, respectively, if an 
Enterprise fails to submit information on its housing activities. Id. 
Sections 1341 to 1348 of the Safety and Soundness Act set forth the 
grounds and procedures for the enforcement actions. FHFA's RPP does not 
currently address enforcement proceedings for these violations. See 12 
CFR part 1209.
2. Bank Housing Plan Enforcement
    Section 10C(a) of the Federal Home Loan Bank Act (Bank Act), as 
amended by HERA (12 U.S.C. 1430c(a)), requires the Director of FHFA to 
establish housing goals with respect to the purchase of mortgages, if 
any, by the Banks. Section 10C(a) further states that the goals shall 
be consistent with the goals established for the Enterprises under 
sections 1331 through 1334 of the Safety and Soundness Act, taking into 
consideration the unique mission and ownership structure of the Banks. 
Section 10C(d) provides that the monitoring and enforcement 
requirements of section 1336 of the Safety and Soundness Act shall 
apply to the Banks in the same manner and to the same extent as they 
apply to the Enterprises. Thus, in accordance with section 1336, if a 
Bank fails to submit or follow an acceptable housing plan, the Director 
may initiate cease and desist proceedings or impose civil money 
penalties against the Bank.
    FHFA's Bank housing goals regulation, which implements the 
statutory housing goals requirements, includes housing plan provisions 
similar to those in FHFA's Enterprise housing goals regulation, but 
like the Enterprise housing goals regulation, does not specifically 
address enforcement actions for failure to submit or follow a housing 
plan. See 12 CFR part 1281.

B. Conservatorship

    On September 6, 2008, the Director of FHFA appointed FHFA as 
conservator of the Enterprises to maintain the Enterprises in a safe 
and sound financial condition and to help assure performance of their 
public mission. The Enterprises remain under conservatorship at this 
time.

II. Proposed Rulemaking

    To provide clarity on the rules of practice and procedure that 
would apply should FHFA initiate enforcement actions under sections 
1341 to 1348 of the Safety and Soundness Act, FHFA published a proposed 
amendment to Sec.  1209.1(c) of the RPP in the Federal Register. See 77 
FR 72247 (Dec. 5, 2012). The proposed amendment provided that the rules 
of practice and procedure for hearings on the record in subpart C 
therein would apply to any cease and desist or civil money penalty 
proceedings brought against Fannie Mae, Freddie Mac, or the Banks for 
failure to submit or follow a housing plan or failure of an Enterprise 
to submit information on its housing activities, except where such 
rules are inconsistent with related statutory provisions, in which case 
the statutory provisions would apply. FHFA noted that the hearing 
procedures in the Safety and Soundness Act for adjudicating these 
actions are almost indistinguishable from the statutory procedures for 
adjudicating other enforcement actions against the Enterprises, the 
Banks and their entity-affiliated parties under sections 1371 to 1379D. 
See 12 U.S.C. 4631-4641. Thus, the formal hearing procedures set forth 
in Subpart C of the RPP are well suited to govern enforcement 
proceedings under sections 1341 to 1348. FHFA also noted that amending 
Sec.  1209.1(c) of the RPP would be a simpler and more efficient 
approach than making conforming amendments to each of the affected 
sections of the RPP.
    FHFA received two comments on the proposed amendment. The 
commenters were an individual and the Mortgage Partnership Finance 
Program's Governance Committee of the Banks. Neither comment was 
applicable to the proposed amendment.

III. Final Rule

    For the reasons discussed in the proposed rulemaking and the lack 
of opposing comments, FHFA is adopting as final the proposed amendment 
to Sec.  1209.1(c) of the RPP with no changes.

IV. Consideration of Differences Between the Banks and the Enterprises

    Section 1313(f) of the Safety and Soundness Act, as amended by 
HERA, requires the Director, when promulgating regulations relating to 
the Banks, to consider the differences between the Banks and the 
Enterprises with respect to the Banks': Cooperative ownership 
structure; mission of providing liquidity to members; affordable 
housing and community development mission; capital structure; joint and 
several liability; and any other differences the Director considers 
appropriate. See 12 U.S.C. 4513(f). In preparing the proposed rule, the 
Director considered the differences between the Banks and the 
Enterprises as they relate to the above factors, and determined that 
the Banks should not be treated differently from the Enterprises. FHFA 
requested comment on whether the Banks should be treated differently, 
particularly as section 10C(d) of the Bank Act provides that the 
monitoring and enforcement requirements of section 1336 of the Safety 
and Soundness Act shall apply to the Banks in the same manner and to 
the same extent as they apply to the Enterprises. FHFA did not receive 
any comments responding to that request. Accordingly, no changes were 
made to the final rule as it relates to the Banks.

V. Paperwork Reduction Act

    The final rule 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.). 
Therefore, FHFA has not

[[Page 37103]]

submitted any materials to OMB for review.

VI. 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 final 
rule under the Regulatory Flexibility Act.
    The General Counsel of FHFA certifies that the final rule is not 
likely to have a significant economic impact on a substantial number of 
small entities because the regulation is applicable only to the 
Enterprises and the Banks, which are not small entities for purposes of 
the Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 1209

    Administrative practice and procedure, Federal home loan banks, 
Mortgages, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons stated in the SUPPLEMENTARY INFORMATION, the 
Federal Housing Finance Agency amends part 1209, Subchapter A, Chapter 
XII of title 12 of the Code of Federal Regulations as follows:

PART 1209--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 1209 is revised to read as follows:

    Authority: 5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C. 
1430c(d); 12 U.S.C. 4501, 4502, 4503, 4511, 4513, 4513b, 4517, 4526, 
4566(c)(1) and (c)(7), 4581-4588, 4631-4641; and 28 U.S.C. 2461 
note.


0
2. Amend Sec.  1209.1 by:
0
a. In paragraph (c)(2), remove the word ``and'';
0
b. In paragraph (c)(3), remove ``.'' at the end of the paragraph and 
add in its place ``; and''; and
0
c. Add new paragraph (c)(4) to read as follows:


Sec.  1209.1  Scope.

* * * * *
    (c) * * *
    (4) Enforcement proceedings under sections 1341 through 1348 of the 
Safety and Soundness Act, as amended (12 U.S.C. 4581 through 4588), and 
section 10C of the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1430c), except where the Rules of Practice and Procedure in Subpart C 
are inconsistent with such statutory provisions, in which case the 
statutory provisions shall apply.

    Dated: June 13, 2013.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2013-14676 Filed 6-19-13; 8:45 am]
BILLING CODE 8070-01-P