[Federal Register Volume 83, Number 200 (Tuesday, October 16, 2018)]
[Rules and Regulations]
[Pages 52115-52118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22451]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / 
Rules and Regulations  

[[Page 52115]]



FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1290

RIN 2590-AA96


Federal Home Loan Bank Community Support Program--Administrative 
Amendments

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a final 
rule amending its community support regulation to require that FHFA 
establish relevant dates for FHFA's biennial community support review 
by written notice to the Federal Home Loan Banks (Banks). The 
amendments do not affect the substantive requirements of the regulation 
and do not change the criteria for determining member compliance with 
the community support standards and eligibility for access to long-term 
Bank advances.

DATES: This final rule will take effect on November 15, 2018.

FOR FURTHER INFORMATION CONTACT: Ted Wartell, Manager, Office of 
Housing and Community Investment, 202-649-3157, [email protected]; 
Deattra Perkins, Senior Policy Analyst, Office of Housing and Community 
Investment, 202-649-3133, [email protected]; or Marshall Adam 
Pecsek, Senior Counsel, Office of General Counsel, 202-649-3380, 
[email protected]. (These are not toll-free numbers.) The 
telephone number for the Telecommunications Device for the Hearing 
Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Community Support Regulation Established Under the Bank Act

    Section 10(g) of the Federal Home Loan Bank Act (Bank Act) requires 
FHFA to adopt regulations establishing standards of community 
investment or service for members of Banks to maintain access to long-
term Bank advances. 12 U.S.C. 1430(g). Section 10(g) states that such 
regulations ``shall take into account factors such as a member's 
performance under the Community Reinvestment Act of 1977 (CRA) and the 
member's record of lending to first-time homebuyers.''
    FHFA's current community support regulation implements section 
10(g). 12 CFR part 1290. The regulation details the CRA and first-time 
homebuyer standards that have been established pursuant to section 
10(g). Each Bank member, except as provided in the regulation, must 
meet these standards in order to maintain access to long-term Bank 
advances.\1\ A long-term advance is defined as an advance with a term 
to maturity greater than one year. 12 CFR 1290.1. The regulation sets 
forth the process that FHFA follows in reviewing, evaluating, and 
communicating each member's community support performance. The 
regulation also requires each Bank to establish and maintain a 
community support program that includes providing technical assistance 
to its members.
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    \1\ The regulation excepts non-depository Community Development 
Financial Institutions, and excepts new members. 12 CFR 1290.2(d), 
(e).
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B. Review Schedule Under the Current Regulation

    Under the current community support regulation, each Bank member 
subject to community support review must submit to FHFA a completed 
Community Support Statement once every two years. The regulation 
establishes December 31 of each odd-numbered year as the submission 
deadline. FHFA provides instructions to the Banks each review cycle 
with detailed requirements for submissions, including the start date 
for the submission period. 12 CFR 1290.2(b)(1). For the 2017 review 
cycle, the instructions indicated that FHFA would begin accepting 
submissions on April 1, 2017.
    The regulation also establishes two notice obligations for the 
Banks. Each Bank is required to provide notice to each of its members 
subject to community support review of the member's obligation to 
submit a Community Support Statement. Each Bank is also required to 
provide notice to its Advisory Council and other interested parties of 
the opportunity to submit comments on the activities of Bank members 
subject to community support review. The Banks are required to provide 
these notices by March 31 of each odd-numbered year.

II. Analysis of Final Rule

A. Establishment of Review Schedule Via Written Notice

Submission Deadline
    Under the current community support regulation, each Bank member 
subject to community support review must submit its completed Community 
Support Statement by December 31 of the applicable review year. 12 CFR 
1290.2(b)(1). Many members submit their Community Support Statements 
close to the end of the calendar year. In the 2017 review, for example, 
2,584 of the 6,690 Community Support Statements submitted by December 
31 were submitted on or after November 1. This influx of submissions 
comes when both the Banks and FHFA face holiday-related staffing 
shortages and multiple end-of-year obligations, including those related 
to community support review. For example, the Banks must provide 
requested technical assistance to members in completing the Community 
Support Statements. 12 CFR 1290.2(a). FHFA must review each submitted 
Community Support Statement and notify the Bank of its determination, 
and the Bank must then promptly notify each member of FHFA's 
determination. 12 CFR 1290.4.
    FHFA expects that many Bank members subject to community support 
review are likely to continue to submit their Community Support 
Statements near the submission deadline. Moving the submission deadline 
away from the year-end holidays will reduce the burden on FHFA and the 
Banks. However, the most appropriate deadline for future review cycles 
may change based on FHFA's experience and based on feedback from the 
Banks and Bank members. Codifying a specific date in the regulation 
would unnecessarily limit FHFA's flexibility. Therefore, the final rule 
replaces the December 31 Community Support Statement submission 
deadline with a requirement that FHFA establish the submission deadline 
for each biennial community support review by written notice to the 
Banks. The final rule does not change

[[Page 52116]]

the requirement that members subject to community support review be 
reviewed once every two years.
Notice Deadlines
    The current regulation establishes March 31 of each odd-numbered 
year as the date by which each Bank must provide written notice to each 
of its members subject to community support review of the member's 
obligation to submit a Community Support Statement by the submission 
deadline. 12 CFR 1290.2(a). Because this date establishes the beginning 
of the biennial review cycle, retaining it in the regulation would 
limit FHFA's ability to provide an appropriate amount of time for 
members to submit their Community Support Statements. Therefore, the 
final rule replaces the March 31 date with a requirement that FHFA 
establish, via written notice to the Banks, the date by which each Bank 
must provide written notice to each of its members subject to community 
support review of the member's obligation to submit a Community Support 
Statement by the submission deadline.
    The current regulation also establishes March 31 of each odd-
numbered year as the date by which each Bank must provide notice to its 
Advisory Council and other interested parties of the opportunity to 
submit comments on the activities of Bank members subject to community 
support review. 12 CFR 1290.2(c)(1). This date need not coincide with 
the deadline for the Banks to notify their members. However, these two 
dates currently coincide, and FHFA would like to retain the ability to 
continue this practice in future review cycles. Therefore, the final 
rule replaces this date with a requirement that the deadline for notice 
to Advisory Councils and other interested parties also be established 
by FHFA via written notice to the Banks.
Submission Acceptance Date
    The current regulation does not provide a date by which FHFA will 
begin accepting Community Support Statements for a particular biennial 
review cycle. For the 2017 community support review, FHFA began 
accepting Community Support Statements on April 1, 2017. While members 
that are on probation or restriction may submit a Community Support 
Statement at any time to demonstrate compliance with the requirements 
of the regulation, most members will submit only one Community Support 
Statement in each biennial review cycle. Proper administration of the 
community support review process requires the establishment of a 
starting point for each biennial review. Otherwise, submission at the 
discretion of the submitting members would effectively dictate the 
review schedule. Therefore, FHFA will continue to establish a date by 
which it will begin accepting Community Support Statements for review 
for each review cycle. The final rule requires that members submit 
their Community Support Statements in accordance with the submission 
dates designated by FHFA in the written notice to the Banks 
establishing the submission and notice deadlines.
Timing of FHFA Notice Establishing Review Schedule
    While the final rule provides substantial flexibility for FHFA to 
establish appropriate deadlines for each step in the community support 
review process, FHFA recognizes that the Banks and Bank members will 
need adequate advance notice to allow them to prepare to meet their 
respective obligations under the regulation. To ensure that the Banks 
and members continue to have adequate time to prepare for the 
submission period, the final rule requires that FHFA notify the Banks 
of the applicable dates for the review period at least 90 days before 
the deadline for the Banks to notify their members.
2019 Community Support Review
    For the 2019 biennial community support review, FHFA will issue the 
written notice establishing the applicable deadlines concurrently with 
or shortly after publication of this final rule in the Federal 
Register. FHFA intends to establish April 1, 2019 as the date on which 
FHFA will begin accepting Community Support Statements submitted for 
the 2019 review period. FHFA intends to establish October 31, 2019 as 
the date by which each member subject to community support review must 
submit a completed Community Support Statement for the 2019 review 
period. FHFA intends to establish March 29, 2019 as the date by which 
each Bank must notify each of its members subject to community support 
review of its obligation to submit a completed Community Support 
Statement by the submission deadline. Finally, March 29, 2019 would 
also be the date by which each Bank must provide notice to its Advisory 
Council and other interested parties of the opportunity to submit 
comments on the activities of Bank members subject to community support 
review.

B. Clarifications and Updates

    The final rule makes certain clarifying revisions to the community 
support regulation and removes outdated text.
Clarifications
    The current regulation provides that the Banks must provide a blank 
Community Support Statement form to each member, and that FHFA will 
maintain a blank copy of the form on its website. 12 CFR 1290.2(a). 
Starting with the 2017 review cycle, FHFA has established an online 
process for submission of the Community Support Statements. Members are 
strongly encouraged to use the online submission system for submitting 
their Community Support Statements, although FHFA will accept hard copy 
submissions from members experiencing technical difficulties in 
submitting via the online process. The final rule amends the regulation 
to remove the outdated requirement to provide blank forms to each 
member, and to require instead that Banks provide a copy of the blank 
form upon request. In addition, FHFA maintains an informational version 
of the form on its website, but it is overlaid with explanatory text 
and therefore not a blank version of the form which any member could 
complete and submit. The blank form referenced in the regulation is 
transmitted directly by FHFA to the Banks. The final rule amends the 
regulation to align with this practice.
Conforming Changes
    The final rule removes an outdated transition provision in Sec.  
1290.2 that clarified the community support review obligations for the 
2014-2015 review cycle of members who had already been selected for 
community support review during that review cycle. 12 CFR 1290.2(b)(2). 
The final rule also updates a cross-reference in Sec.  1290.5 to 
reflect the revised paragraph numbering in Sec.  1290.2.

C. Section-by-Section Analysis of Final Rule

Section 1290.2
Paragraph (a)
    The final rule removes all references to specific dates in 
paragraph (a) and provides that the applicable deadline will be 
established pursuant to new paragraph (f). The final rule removes the 
reference to FHFA's website, providing instead that the referenced 
blank Community Support Statement form will be provided by FHFA to the 
Banks. The final rule also removes the requirement that each Bank 
provide a

[[Page 52117]]

blank copy of the Community Support Statement form to its members, 
replacing it with a requirement that each Bank provide the form upon 
request.
Paragraph (b)
    The final rule removes all references to specific dates in 
paragraph (b)(1) and provides that the applicable deadline will be 
established pursuant to new paragraph (f). The final rule removes 
paragraph (b)(2) and redesignates paragraph (b)(1) as paragraph (b).
Paragraph (c)(1)
    The final rule removes all references to specific dates in 
paragraph (c)(1) and provides that the applicable deadline will be 
established pursuant to new paragraph (f).
Paragraph (f)
    The final rule adds new paragraph (f), which provides that FHFA 
will designate applicable dates for each biennial community support 
review via written notice to the Banks. Paragraph (f) provides that 
this notice will designate the dates referenced in paragraphs (a), (b) 
and (c)(1), and will be issued at least 90 days before the date by 
which each Bank must notify members of their community support review 
obligations under paragraph (a).

III. Notice and Public Participation

    Section 553(b)(A) of the Administrative Procedures Act provides 
that when a regulation involves matters of agency organization, 
procedure, or practice, the agency may publish the regulation in final 
form without prior public notice and comment. 5 U.S.C. 553(b)(A). This 
final rule involves matters of agency procedure and practice. The final 
rule does not make any change to the substantive standards for 
compliance with the community support regulation. The changes in the 
final rule are limited to administrative changes in the process that 
FHFA uses to evaluate members. As a result, the final rule is exempt 
from the public notice and comment provisions of section 553.

IV. Considerations of Differences Between the Banks and the Enterprises

    Section 1313(f) of the Safety and Soundness Act requires the FHFA 
Director, when promulgating regulations ``of general applicability and 
future effect'' relating to the Banks, to consider the differences 
between the Banks and the Enterprises as they may relate to the Banks' 
cooperative ownership structure, mission of providing liquidity to 
members, affordable housing and community development mission, capital 
structure, and joint and several liability. In preparing this final 
rule, the Director considered the differences between the Banks and the 
Enterprises as they relate to these factors. The rule would apply only 
to the Banks. There is no direct Enterprise-specific analog to the 
Banks' community support requirements. Under the existing community 
support regulation, it is possible that a Bank member's access to long-
term advances may be restricted as a result of a failure to meet the 
community support standards. While such restrictions may affect an 
individual member's access through the Bank to liquidity for home 
mortgage financing, they do not fundamentally change the role of the 
Banks in providing such liquidity, and the restriction is mandated by 
the Bank Act in such a case. See 12 U.S.C. 1430(g). In any case, the 
final rule would not make any substantive change to these provisions 
governing member restriction. Consequently, the Director has determined 
the rule to be appropriate.

V. Regulatory Impacts

A. Paperwork Reduction Act

    FHFA currently collects information from Bank members regarding 
their compliance with the community support requirements 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 requirements to apply directly to FHFA to remove the 
restriction under certain circumstances. The current collection of 
information has been approved by the Office of Management and Budget 
(OMB), and the control number, OMB No. 2590-0005, will expire on March 
31, 2020. The final rule amends the community support provisions in 
part 1290 but does not substantively or materially modify the approved 
information collection with respect to the members' information 
collection burden.

B. 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 this final 
rule under the Regulatory Flexibility Act. FHFA certifies that this 
final rule will not 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.

VI. Congressional Review Act

    FHFA has determined that this regulatory action does not qualify as 
a ``rule'' under the Congressional Review Act. See 5 U.S.C. 804(3).

List of Subjects in 12 CFR Part 1290

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

    Accordingly, for the reasons stated in the preamble, FHFA is 
amending title 12, chapter XII, part 1290, of the Code of Federal 
Regulations as follows:

PART 1290--COMMUNITY SUPPORT REQUIREMENTS

0
1. The authority citation for part 1290 is revised to read as follows:

    Authority: 12 U.S.C. 1430(g).


0
2. Revise Sec.  1290.2 to read as follows:


Sec.  1290.2   Community support requirements.

    (a) Bank notice to members. By a date designated by FHFA notice 
pursuant to paragraph (f) of this section, each Bank must provide 
written notice to each of its members subject to community support 
review that each such member must submit to FHFA a completed Community 
Support Statement in accordance with the requirements of paragraph (b) 
of this section. Unless instructed otherwise by FHFA, the Bank must 
provide to each member a blank Community Support Statement Form upon 
request by the member. FHFA will provide a copy of this blank form to 
the Bank. Upon a member's request, the Bank must provide assistance to 
the member in completing the Community Support Statement.
    (b) Community Support Statement submission requirements. Except as 
provided in paragraphs (d) and (e) of this section, in each odd-
numbered year, each member must submit to FHFA a completed Community 
Support Statement (and any other related information FHFA may require) 
in accordance with the submission dates designated by FHFA notice 
pursuant to paragraph (f) of this section. The member's completed 
Community

[[Page 52118]]

Support Statement must be executed by an appropriate senior officer of 
the member and must be submitted to FHFA pursuant to FHFA's submission 
instructions.
    (c) Notice to public.--(1) By the Banks. By a date designated by 
FHFA notice pursuant to paragraph (f) of this section, each Bank must 
provide written notice to its Advisory Council, and to interested 
nonprofit housing developers, community groups, and other interested 
parties in its district, and include a notice on its public website, of 
the opportunity to submit comments on the community support programs 
and activities of Bank members, with the name and address of each 
member subject to community support review, and the deadline and FHFA 
contact information for submission of any comments to FHFA.
    (2) By FHFA. FHFA may publish a notice in the Federal Register 
notifying the public of the opportunity to submit comments on the 
community support programs and activities of Bank members, with the 
deadline and FHFA contact information for submission of any comments to 
FHFA.
    (3) Consideration of comments. In reviewing a member for compliance 
with the community support requirements, FHFA will take into 
consideration any public comments it has received concerning the 
member.
    (d) Non-Depository Community Development Financial Institutions. A 
member that has been certified as a community development financial 
institution 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 
requirements of section 10(g) of the Federal Home Loan Bank Act (12 
U.S.C. 1430(g)) and this part, by virtue of that certification. Such 
non-depository CDFIs, therefore, are not required to submit Community 
Support Statements to FHFA under paragraph (b) of this section and are 
not subject to community support review under this part.
    (e) New Bank members. A member of a Bank is not required to submit 
a Community Support Statement under paragraph (b) of this section if 
the institution has been a member of a Bank for a total of less than 
one year as of March 31 of the year in which submissions are due under 
paragraph (b) of this section.
    (f) Designation of submission and notice dates. FHFA will designate 
applicable dates for each biennial review cycle via written notice to 
the Banks. The notice will designate the date by which FHFA will begin 
accepting Community Support Statements and the date by which Community 
Support Statements must be submitted, as well as the dates by which the 
Banks must notify members under paragraph (a) of this section and the 
public under paragraph (c)(1) of this section. FHFA's written notice to 
the Banks will be issued at least 90 days prior to the date by which 
the Banks must notify members under paragraph (a).


Sec.  1290.5   [Amended]

0
3. Amend Sec.  1290.5 by removing ``Sec.  1290.2(b)(1)'' in paragraph 
(b)(1) and adding in its place ``Sec.  1290.2(b).''

    Dated: October 2, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018-22451 Filed 10-15-18; 8:45 am]
 BILLING CODE 8070-01-P