[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
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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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