[Federal Register Volume 88, Number 80 (Wednesday, April 26, 2023)]
[Proposed Rules]
[Pages 25293-25309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08602]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1293

RIN 2590-AB29


Fair Lending, Fair Housing, and Equitable Housing Finance Plans

AGENCY: Federal Housing Finance Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is 
seeking comments on a proposed rule that would address barriers to 
sustainable housing opportunities for underserved communities by 
codifying existing FHFA practices in regulation and adding new 
requirements related to fair lending, fair housing, and Equitable 
Housing Finance Plans. The proposed rule would improve FHFA's 
fulfillment of its statutory purposes and its oversight of the Federal 
National Mortgage Association (Fannie Mae), the Federal Home Loan 
Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks 
(Banks) (Fannie Mae and Freddie Mac collectively, the Enterprises; the 
Enterprises and the Banks collectively, regulated entities), and their 
fulfillment of their statutory purposes.

DATES: Comments must be received on or before June 26, 2023.

ADDRESSES: You may submit your comments on the proposed rule, 
identified by regulatory information number (RIN) 2590-AB29, by any one 
of the following methods:
     Agency Website: www.fhfa.gov/open-for-comment-or-input.
     Federal eRulemaking Portal: https://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 FHFA. 
Include the following information in the subject line of your 
submission: Comments/RIN 2590-AB29.
     Hand Delivered/Courier: The hand delivery address is: 
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB29, 
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC 
20219. Deliver the package at the Seventh Street entrance 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: Clinton Jones, 
General Counsel, Attention: Comments/RIN 2590-AB29, Federal Housing 
Finance Agency, 400 Seventh Street SW, Washington, DC 20219. Please 
note that all mail sent to FHFA via U.S. Mail is routed through a 
national irradiation facility, a process that may delay delivery by 
approximately two weeks. For any time-sensitive correspondence, please 
plan accordingly.

FOR FURTHER INFORMATION CONTACT: James Wylie, Associate Director, 
Office of Fair Lending Oversight, (202) 649-3209, [email protected]; 
Leda Bloomfield, Branch Chief for Policy and Equity, Office of Fair 
Lending Oversight, (202) 649-3415, [email protected]; Annalyce 
Shufelt, Branch Chief for Fair Lending Law, Supervision, and 
Enforcement, (202) 717-1164, [email protected]; or Sarah 
Friedman, Examination Specialist (Fair Lending), Office of Fair Lending 
Oversight, (202) 807-9324, [email protected]. These are not toll-
free numbers. For TTY/TRS users with hearing and speech disabilities, 
dial 711 and ask to be connected to any of the contact numbers above.

SUPPLEMENTARY INFORMATION: 

Comments

    FHFA invites comments on all aspects of the proposed rule and will 
take all comments into consideration before issuing a final rule. 
Copies of all comments will be posted without change, and will include 
any personal information you provide such as your name, address, email 
address, and telephone number, on the FHFA website at http://www.fhfa.gov. In addition, copies of all comments received will be 
available for examination by the public through the electronic 
rulemaking docket for this proposed rule also located on the FHFA 
website.

Table of Contents

I. Introduction
II. Background
    A. FHFA, the Regulated Entities, and Their Public Purposes
    B. Barriers to Sustainable Housing Opportunities
    1. Disparities in Homeownership Rates and Wealth

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    2. Disparities Based on Disaggregated Data
    3. Challenges Accessing Sustainable Housing Opportunities
    4. Mortgage Market Disparities
    5. Appraisal and Valuation Disparities
III. The Proposed Rule
    A. FHFA Fair Lending Oversight of the Regulated Entities
    B. Enterprise Equitable Housing Finance Plans
    C. Enterprise Data Collection and Reporting to FHFA
    D. Application of FHFA's Prudential Standard Framework
    E. Policy Purposes for and Benefits of the Proposed Rule
IV. Section-by-Section Analysis
    A. Section 1293.1 General
    B. Section 1293.2 Definitions
    C. Section 1293.3 Compliance and Enforcement
    D. Section 1293.4 Preservation of Authority
    E. Section 1293.11 Regulated Entity Compliance
    F. Section 1293.12 Reports and Data
    G. Section 1293.21 General
    H. Section 1293.22 Plans and Updates
    I. Section 1293.23 Performance Reports
    J. Section 1293.24 Public Engagement
    K. Section 1293.25 Program Standards
    L. Section 1293.26 Enterprise Board Equitable Housing and 
Mission Responsibilities
    M. Section 1293.31 Required Enterprise Data Collection and 
Reporting
    N. Proposed Rule Timing Elements
V. Considerations of Differences Between the Banks and the 
Enterprises
VI. Comments Specifically Requested
VII. Paperwork Reduction Act
VIII. Regulatory Flexibility Act

I. Introduction

    Federal agency oversight of fair housing and fair lending laws, as 
well as strategic planning to address barriers faced by renters and 
borrowers, are important in promoting sustainable housing opportunities 
\1\ for underserved communities.\2\ The proposed rule would address 
barriers to sustainable housing opportunities for underserved 
communities by codifying existing FHFA practices in regulation and 
adding new requirements. Collectively, the actions in the proposed rule 
would improve FHFA's fulfillment of its statutory purposes and its 
oversight of the regulated entities and their fulfillment of their 
statutory purposes.
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    \1\ Sustainable housing opportunity is defined more completely 
later in the proposed rule, but generally encompasses rental or 
homeownership opportunities that include one or more characteristics 
important to the needs of a tenant or homeowner.
    \2\ Underserved community is defined more completely later in 
the proposed rule, but generally encompasses a group of people with 
shared characteristics or an area that is subject to current 
discrimination or has been subjected to past discrimination that has 
or has had continuing adverse effects on the group or area's 
participation in the housing market, historically has received or 
currently receives a lower share of the benefits of Enterprise 
programs and activities providing sustainable housing opportunities, 
or that otherwise has had difficulty accessing these benefits 
compared with groups of people without the shared characteristic or 
other areas.
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    The proposed rule would codify in regulation much of FHFA's 
existing practices and programs regarding fair housing and fair lending 
oversight of its regulated entities, the Equitable Housing Finance Plan 
program for the Enterprises, and requirements for the Enterprises to 
collect and report language preference, homeownership education, and 
housing counseling information. The proposed rule would make changes to 
the Equitable Housing Finance Plan program to promote greater 
accountability for the Enterprises and public transparency, add 
oversight of unfair or deceptive acts or practices to FHFA's fair 
housing and fair lending oversight programs, require additional 
certification of compliance by the Enterprises, and establish more 
precise standards related to fair housing, fair lending, and principles 
of equitable housing for regulated entity boards of directors (boards).

II. Background

A. FHFA, the Regulated Entities, and Their Public Purposes

    Fannie Mae and Freddie Mac are federally chartered housing finance 
enterprises whose purposes include providing stability to the secondary 
market for residential mortgages; providing ongoing assistance to the 
secondary market for residential mortgages (including activities 
related to mortgages on housing for low- and moderate-income families) 
by increasing the liquidity of mortgage investments and improving 
distribution of investment capital available for residential mortgage 
financing; and, promoting access to mortgage credit throughout the 
United States, including central cities, rural areas, and underserved 
areas, by increasing the liquidity of mortgage investments and 
improving the distribution of investment capital available for 
residential mortgage financing.\3\
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    \3\ 12 U.S.C. 1451 (note) and 1716.
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    The Federal Home Loan Bank System (the System) provides a stable 
and reliable source of liquidity for its members and provides support 
for affordable housing and community development for the communities 
they serve. It was established in 1932 by the Federal Home Loan Bank 
Act,\4\ and today consists of 11 regional Federal Home Loan Banks (the 
Banks) and the System's fiscal agent, the Office of Finance. Each Bank 
is a separate, government-chartered, member-owned corporation.
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    \4\ 12 U.S.C. 1421 et seq.
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    Congress established FHFA to oversee the regulated entities to 
ensure that the purposes of the Federal Housing Enterprises Financial 
Safety and Soundness Act of 1992 (Safety and Soundness Act), as 
amended, the authorizing statutes, and any other applicable laws are 
carried out.\5\ In doing so, Congress recognized that the regulated 
entities have important public purposes reflected in their authorizing 
statutes, and that they need to be managed safely and soundly so that 
they continue to accomplish their public missions.\6\
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    \5\ 12 U.S.C. 4511(b).
    \6\ 12 U.S.C. 4501(1) (Enterprises and Federal Home Loan Banks 
have important public missions), (2) (their continued ability to 
accomplish their public missions is important, and effective 
regulation is needed to reduce risk of failure), and (7) 
(Enterprises have affirmative obligation to facilitate financing of 
affordable housing for low- and moderate-income families consistent 
with their public purposes, while maintaining a strong financial 
condition and a reasonable economic return).
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    With respect to the public purposes of the Enterprises, a number of 
statutory and regulatory authorities that apply to FHFA and the 
Enterprises speak to the need to advance equity for homebuyers, 
homeowners, and tenants in the housing market.\7\ FHFA's principal 
duties include ensuring that the Enterprises operate consistent with 
safety and soundness and with the public interest.\8\ FHFA and the 
Enterprises also have statutory and other commitments to advance 
equitable solutions for borrowers and tenants in the housing market. 
The Enterprises' authorizing statutes, for example, provide that one of 
their purposes is to promote access to mortgage credit throughout the 
nation (including central cities, rural areas, and underserved 
areas).\9\ The authorizing

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statutes require the Enterprises, as part of their annual housing 
reports, to assess their underwriting standards, policies, and business 
practices that affect low- and moderate-income families or cause racial 
disparities, along with any revisions to these standards, policies, or 
practices that promote affordable housing or fair lending.\10\
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    \7\ These include providing ongoing assistance to the secondary 
market for residential mortgages, including mortgages on housing for 
low- and moderate-income families involving a reasonable economic 
return that may be less than the return earned on other activities. 
12 U.S.C. 1716(3) and (4) (Fannie Mae charter purposes); 12 U.S.C. 
1451 note (b)(3) and (4) (Freddie Mac charter purposes). They also 
include Enterprise affordable housing Goals, see 12 U.S.C. 4561(a), 
4562, and 4563; 12 CFR part 1282, subpart B, and Enterprise Duty to 
Serve affordable housing needs of certain underserved markets, see 
12 U.S.C. 4565; 12 CFR part 1282, subpart C. In addition, the 
Enterprises are required to report annually to Congress on, among 
other things, assessments of their underwriting standards and 
business practices that affect their purchases of mortgages for low- 
and moderate-income families, and revisions to their standards and 
practices that promote affordable housing or fair lending. 12 U.S.C. 
1723a(n)(2)(G) (Fannie Mae charter), 1456(f)(2)(G) (Freddie Mac 
charter).
    \8\ 12 U.S.C. 4513(a)(1)(B)(i), (v).
    \9\ 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4) 
(Freddie Mac charter).
    \10\ 12 U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
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    The Housing Goals and Duty to Serve requirements are critical 
elements for ensuring that the Enterprises fulfill their mission and 
charters and serve low- and moderate-income families and underserved 
populations.\11\ The Safety and Soundness Act provides that, in meeting 
these requirements, the Enterprises are required to take affirmative 
steps to assist primary lenders to make housing credit available in 
areas with concentrations of low-income and minority families.\12\ The 
Safety and Soundness Act also requires the Enterprises to transfer an 
amount equal to 4.2 basis points for each dollar of unpaid principal 
balance of new purchases to the U.S. Department of Housing and Urban 
Development's (HUD) administration of the Housing Trust Fund and the 
U.S. Department of the Treasury's administration of the Capital Magnet 
Fund.\13\ Both funds are designed to support affordable housing 
initiatives by providing capital for the production or preservation of 
affordable housing and related economic development activities. For the 
2022 year, the Enterprises transferred $545 million into the funds.\14\
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    \11\ 12 U.S.C. 4561(a) (FHFA to establish annual housing goals 
by regulation), 4562 (establishment of required categories of 
single-family housing goals), and 4563 (establishment of required 
multifamily affordable housing goals); 12 U.S.C. 4565 (Enterprise 
duty to facilitate secondary mortgage market for very low-, low-, 
and moderate-income families in certain underserved markets).
    \12\ 12 U.S.C. 4565(b)(3)(A).
    \13\ 12 U.S.C. 4567.
    \14\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-545-Million-for-Affordable-Housing-Programs.aspx.
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    Several provisions of the Federal Home Loan Bank Act denote the 
public purposes of the Banks, including their role in making secured 
long-term advances to members to support residential housing finance, 
specific community support requirements, establishment of a community 
investment program and an affordable housing program, compliance with 
housing goals, and the requirement that certain directors have 
experience in public interest areas.\15\ FHFA launched a comprehensive 
review of the System in August 2022.\16\ Among the areas FHFA has 
explored as part of the review are the Banks' role in promoting 
affordable, sustainable, equitable, and resilient housing and community 
investment, including rental housing, and in addressing the unique 
needs of tribal communities, communities of color, rural communities, 
and other financially vulnerable and underserved communities. Numerous 
commenters during the public input phases of the initiative suggested 
establishing or expanding requirements for housing and community 
development lending plans for the Banks, and these and other 
suggestions are currently under consideration separately and apart from 
this proposed rulemaking.
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    \15\ See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii), 12 U.S.C. 1430(g), 
(i), (j); 12 U.S.C. 1430c.
    \16\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx.
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    Under the Fair Housing Act, all Federal agencies having regulatory 
or supervisory authority over financial institutions, including FHFA, 
are required to administer their programs and activities relating to 
housing and urban development in a manner that affirmatively furthers 
the purposes of the Fair Housing Act, which includes providing for fair 
housing throughout the United States.\17\ FHFA has included 
considerations of fair housing and fair lending in rulemaking since its 
establishment.\18\ FHFA has also issued a policy statement on fair 
lending which describes its regulatory and oversight authorities to 
supervise and enforce fair lending laws with respect to its regulated 
entities.\19\ FHFA has issued orders to Fannie Mae and Freddie Mac for 
regular and special reports related to fair housing and fair 
lending.\20\ FHFA has issued guidance for the Enterprises on fair 
housing and fair lending supervisory expectations.\21\ FHFA coordinates 
with HUD on fair lending and fair housing oversight,\22\ and has 
established a fair lending oversight data system in part to facilitate 
cooperation in interagency fair housing and fair lending oversight.\23\ 
FHFA has also implemented the referral program for potential mortgage 
pricing disparities across mortgage lenders based on the Enterprises' 
data, as required by Congress in section 1128 of the Housing and 
Economic Recovery Act of 2008 (HERA).\24\ FHFA also established the 
Equitable Housing Finance Plan program for the Enterprises to develop a 
framework for addressing barriers to sustainable housing opportunity 
for underserved communities through strategic planning and public 
participation.\25\ FHFA joined other agencies in issuing the 
Interagency Statement on Special Purpose Credit Programs Under the 
Equal Credit Opportunity Act and Regulation B in 2022.\26\
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    \17\ 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
    \18\ See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR 31602, 31603, 
31606 (Jul. 2, 2009), 12 CFR 1254.6(a)(2) and 1254.8(b)(2); 84 FR 
41886, 41905, 41906, 41907 (Aug. 16, 2019), and 12 CFR 1291.23(e); 
83 FR 61186, 61208, 61238 (Nov. 28, 2018).
    \19\ 86 FR 36199 (Jul. 9, 2021).
    \20\ See FHFA Orders In Re: Enterprise Compliance and 
Information Submission with Respect to Fair Lending, Nos. 2021-OR-
FNMA-2 and 2021-OR-FHLMC-2 (FHFA's Fair Lending Orders), available 
at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Fair-
Lending-Oversight-
Program.aspx#:~:text=Fair%20Lending%20Reporting%20Orders&text=The%20o
rders%20require%20the%20Enterprises,lending%20supervision%20and%20mon
itoring%20capabilities.
    \21\ Advisory Bulletin AB-2021-04, Enterprise Fair Lending and 
Fair Housing Compliance (Dec. 20, 2021), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf.
    \22\ Memorandum of Understanding by and between the U.S. 
Department of Housing and Urban Development and the Federal Housing 
Finance Agency regarding Fair Housing and Fair Lending Coordination 
(Aug. 12, 2021), available at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/FHFA-HUD-MOU_8122021.pdf.
    \23\ Fair Lending Oversight Data System of Records Notice, 87 FR 
30947 (May 20, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-05-20/pdf/2022-10798.pdf.
    \24\ Public Law 110-289, 122 Stat. 2696, 2697 (2008) (codified 
at 12 U.S.C. 4561(d)).
    \25\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-
Announces-Equitable-Housing-Finance-Plans_for-Fannie-Mae-and-
Freddie-Mac.aspx.
    \26\ See Interagency Statement on Special Purpose Credit 
Programs Under the Equal Credit Opportunity Act and Regulation B 
(Feb. 22, 2022), available at https://www.federalreserve.gov/supervisionreg/caletters/CA%2022-2%20Attachment%20SPCP_Interagency_Statement_for_release.pdf.
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B. Barriers to Sustainable Housing Opportunities

    Ongoing disparities and challenges in the housing market persist, 
limiting sustainable housing opportunities for underserved communities. 
The following section discusses some of these disparities and 
challenges by way of example. Both Enterprises' 2022-2024 Equitable 
Housing Finance Plans also include extensive discussions of barriers to 
sustainable housing opportunities.\27\ The inclusion or discussion of a 
particular disparity, challenge, or underserved community is not an 
indication of FHFA's views on

[[Page 25296]]

the needs of a community or what actions FHFA's regulated entities 
should take.
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    \27\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan 
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf; Fannie Mae 2022-2024 
Equitable Housing Finance Plan (June 2022), available at https://www.fanniemae.com/media/43636/display.
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1. Disparities in Homeownership Rates and Wealth
    The national homeownership rate has ranged from around 45 percent 
in some eras to around 65 percent in recent years.\28\ However, there 
have been persistent gaps in the homeownership rate by race and 
ethnicity. In the fourth quarter of 2022, the White homeownership rate 
was 74.5 percent, the Black homeownership rate was 44.9 percent, the 
Latino homeownership rate was 48.5 percent, and the Asian, Native 
Hawaiian and Pacific Islander homeownership rate was 61.9 percent.\29\ 
The Black and White homeownership gap, at 29.6 percentage points as of 
the fourth quarter of 2022, has persisted over time, though there have 
been some modest reductions in the gap since 2019. Even when the racial 
homeownership rate is stratified by household income, there continue to 
be significant disparities in homeownership amongst racial groups, even 
in the highest income brackets. For example, for households with an 
income over $150,000, there exists a 10 percentage point gap between 
Black and White families.\30\
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    \28\ See Don Layton, ``The Homeownership Rate and Housing 
Finance Policy, Part 1: Learning from the Rate's History,'' August 
2021, available at https://www.jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_homeownership_rate_layton_2021.pdf.
    \29\ Federal Reserve Economic Data, Federal Reserve Bank of St. 
Louis; Housing and Homeownership: Homeownership Rate (retrieved 
February 11, 2023) available at https://fred.stlouisfed.org/release/tables?rid=296&eid=784188#snid=784199.
    \30\ See Fannie Mae 2022-2024 Equitable Housing Finance Plan 
(June 2022), p. 7, available at https://www.fanniemae.com/media/43636/display.
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    A household's home is often its largest financial asset and key to 
wealth building and intergenerational wealth transfers. The 
homeownership gap therefore contributes significantly to wealth gaps 
for underserved communities. The Federal Reserve, in a 2019 survey, 
found that White families have the highest level of both median and 
mean family wealth: $188,200 and $983,400, respectively.\31\ In 
contrast, Black families' median and mean wealth is less than 15 
percent that of White families, at $24,100 and $142,500, respectively. 
These wealth disparities have grown between 2003 and 2018.\32\ One 
study estimated that the total racial wealth gap is $10.14 
trillion.\33\ This lack of intergenerational wealth transfers reduces 
the likelihood that older generations can assist with down payments, 
educational costs, and unexpected financial events, including natural 
disasters and medical emergencies. Black families are also less likely 
to receive or expect to receive an inheritance, and, if they do, it is, 
on average, less than that of White households.\34\ Moreover, many 
Black, Latino, and Asian households provide financial assistance to 
older generations, which slows their ability to save for a down 
payment.\35\
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    \31\ See Neil Bhutta et al., Board of Governors of the Federal 
Reserve System, ``Disparities in Wealth by Race and Ethnicity in the 
2019 Survey of Consumer Finances,'' (Sept. 28, 2020), available at 
https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.html.
    \32\ See Earl Fitzhugh et al., McKinsey Institute for Black 
Economic Mobility, ``It's time for a new approach to racial 
equity,'' (Dec. 2, 2020), available at https://www.mckinsey.com/bem/our-insights/its-time-for-a-new-approach-to-racial-equity.
    \33\ See Fred Dews, ``Charts of the Week: The racial wealth gap; 
the middle-class income slump,'' Brookings Institution (Jan. 8, 
2021), available at https://www.brookings.edu/blog/brookings-now/2021/01/08/charts-of-the-week-the-racial-wealth-gap-the-middle-class-income-slump/.
    \34\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan 
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf.
    \35\ See Mike Dang, ``Their Children Are Their Retirement 
Plans,'' New York Times (Feb. 24, 2023), available at https://www.nytimes.com/2023/01/21/business/retirement-immigrant-families.html.
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2. Disparities Based on Disaggregated Data
    For many underserved communities, it is critical to examine 
disaggregated data and data at the community level.\36\ Failing to 
disaggregate may result in failure to identify significant disparities 
facing unique race/ethnicity subgroups for the purpose of identifying 
barriers and improving housing policy. For example, although Asians and 
Pacific Islanders as a whole have homeownership rates above 60 percent, 
Korean Americans' homeownership rate is 54 percent and Nepalese 
Americans' homeownership rate is 33 percent.\37\ Geographically, while 
the overall homeownership gap between Black and White homeowners is 
29.6 percentage points, in Minneapolis the gap rises to 50 percentage 
points.\38\
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    \36\ See Leda Bloomfield et al., FHFA Insights Blog, ``Latino 
Diversity and Complexity: The Importance of Data Disaggregation,'' 
(Sept. 23, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Latino-Diversity-and-Complexity-The-Importance-of-Data-Disaggregation.aspx.
    \37\ See Asian Real Estate Association, 2023-2024 State of Asia 
America Report, available at https://areaa.org/resource-asia-america-report.
    \38\ See Alanna McCargo et al., ``Mapping the black 
homeownership gap,'' (Feb. 26, 2018), available at https://www.urban.org/urban-wire/mapping-black-homeownership-gap.
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    There are also disparities in mortgage underwriting that may be 
obscured by looking at aggregated data.\39\ For Latino communities, 
Mexican applicants have slightly higher approval rates than Latino 
applicants as a whole, but Puerto Rican and ``Other Hispanic'' 
applicants have lower approval rates. Among Asian applicants, the 
Vietnamese, Filipino, and ``Other Asian'' communities experience lower 
approval rates than White applicants, despite Asian applicants, as a 
whole, having similar approval rates to White applicants. Similarly, 
when the Pacific Islander group is disaggregated, it becomes clear that 
Samoan and ``Other Pacific Islander'' applicants have significantly 
lower approval rates than Native Hawaiian and Chamorro applicants.
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    \39\ See Leda Bloomfield et al., FHFA Insights Blog, ``Latino 
Diversity and Complexity: The Importance of Data Disaggregation,'' 
(Sept. 23, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Latino-Diversity-and-Complexity-The-Importance-of-Data-Disaggregation.aspx.
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3. Challenges Accessing Sustainable Housing Opportunities
    In addition to racial and ethnic gaps across homeownership and 
wealth, there are other underserved communities experiencing 
significant challenges in accessing sustainable housing opportunities. 
This includes families living on tribal land, in rural areas, and in 
rental homes. Almost half of renters are cost-burdened, paying more 
than 30 percent of their income on housing, compared to only 22 percent 
of homeowners.\40\ As an increasing proportion of households wish to 
age in place, there is often a lack of housing opportunities that 
provide for mobility and other physical impairments. By 2035, the 
population 80 and over is expected to double from its level in 2016. 
More than 10 million households headed by someone over 65 are cost-
burdened, with the median older renter having net wealth under $6,000 
in 2019.\41\ Two percent of total housing inventory is accessible for 
people with mobility disabilities, while 14 percent of Americans have 
mobility disabilities.\42\ Other populations, including persons 
identifying as lesbian, gay, bisexual, transgender, or queer (LGBTQ+), 
continue to report facing challenges in

[[Page 25297]]

accessing the housing finance system. A study found that same-sex 
applicants are 73.12 percent more likely to be denied for a 
mortgage.\43\ Households with limited English proficiency (LEP), or who 
are more comfortable transacting in a language other than English, may 
also experience barriers to housing opportunities and housing 
sustainability. Often, LEP borrowers will rely on their English-
proficient child, who may not be familiar with mortgage lending terms, 
as a translator.\44\ As a result, this can leave the borrower without a 
full understanding of mortgage terms and conditions.
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    \40\ See National Equity Atlas, ``Housing Burden: All residents 
should have access to quality, affordable homes), (retrieved Mar. 5, 
2023) available at https://nationalequityatlas.org/indicators/Housing_burden#/?rentown01=2.
    \41\ See Jennifer Molinsky, ``Housing for America's Older 
Adults: Four Problems We Must Address,'' Joint Center for Housing 
Studies of Harvard University (Aug. 18, 2022), available at https://www.jchs.harvard.edu/blog/housing-americas-older-adults-four-problems-we-must-address.
    \42\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan 
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf.
    \43\ See Hua Sun et al., ``Lending practices to same-sex 
borrowers,'' (Apr. 16, 2019), available at https://www.pnas.org/doi/10.1073/pnas.1903592116.
    \44\ See Freddie Mac and Fannie Mae, ``Language Access for 
Limited English Proficiency Borrowers: Final Report,'' (Apr. 2017), 
available at https://www.fhfa.gov/PolicyProgramsResearch/Policy/Documents/Borrower-Language-Access-Final-Report-June-2017.pdf.
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4. Mortgage Market Disparities
    Disparities are present in the mortgage market for several 
underserved communities. For example, in 2022 Black families comprised 
about 14 percent of the total U.S. population, but only about 7 percent 
of the loans that Fannie Mae and Freddie Mac purchased. American Indian 
and Alaska Native families comprised about 3 percent of the total U.S. 
population, but only about 1 percent of the loans that Fannie Mae and 
Freddie Mac purchased. In contrast, White families comprised about 62 
percent of the U.S. population, but they comprised about 68 percent of 
Fannie Mae and Freddie Mac acquisitions.\45\
---------------------------------------------------------------------------

    \45\ Loan purchase data sourced from Enterprise data released by 
FHFA at https://www.fhfa.gov/DataTools/Downloads/Pages/Fair-Lending-Data.aspx. Total population statistics are drawn from 2020 Census 
data summarized at https://www.census.gov/library/stories/2021/08/improved-race-ethnicity-measures-reveal-united-states-population-much-more-multiracial.html. Total population statistics for White 
are provided as White alone. Total population statistics for Black 
and American Indian and Alaska Native are provided as alone or in 
combination with another race or ethnicity category.
---------------------------------------------------------------------------

    FHFA has released data on Fannie Mae and Freddie Mac's automated 
underwriting systems, presenting gaps in approval rates for applicants 
from certain groups over time compared to other groups. These 
underwriting tools complete credit risk assessments on loan applicants 
to determine whether a loan is eligible for sale to the Enterprises. 
Although the move to a more automated, less subjective system to assess 
creditworthiness in mortgage market underwriting was an important step 
in eliminating bias in subjective underwriting decisions, further 
improvements in automated underwriting to reduce gaps would promote 
better access to sustainable housing opportunities. In 2022, White 
applicants' automated underwriting system applications had approval 
rates of about 84 and 85 percent for the automated underwriting systems 
of Fannie Mae and Freddie Mac, respectively; Black applicants had 
approval rates of about 70 and 69 percent; Latino applicants had 
approval rates of about 78 percent and 73 percent; Asian applicants had 
approval rates of about 84 and 85 percent; American Indian and Alaska 
Native applicants had approval rates of about 78 and 75 percent; and 
Native Hawaiian and Pacific Islander applicants had approval rates of 
about 78 and 74 percent.\46\
---------------------------------------------------------------------------

    \46\ See https://www.fhfa.gov/DataTools/Downloads/Pages/Fair-Lending-Data.aspx.
---------------------------------------------------------------------------

    Home Mortgage Disclosure Act (HMDA) data also shows higher denial 
rates by lenders for many underserved communities. For example, an 
analysis of the 2020 HMDA data found a denial rate of 27.1 percent for 
Black applicants compared to 13.6 percent for White applicants.\47\ The 
trend in higher denial rates has persisted in HMDA data for many 
years.\48\ A 2019 study of mortgage pricing found that Black and Latino 
borrowers pay 7.9 and 3.6 basis points more in interest for mortgages, 
even when controlling for several factors.\49\ FHFA conducts an annual 
screening, preliminary findings, and referral process for lenders 
pursuant to the Safety and Soundness Act and describes the results in 
its Annual Report to Congress. Based on the results of FHFA's 2019 and 
2020 analysis, more than 36 percent of FHFA's preliminary findings were 
based on an annual percentage rate disparity of 10 basis points or 
more, with the most common preliminary findings and referrals for 
Latino and Black borrowers.\50\
---------------------------------------------------------------------------

    \47\ See Jung H. Choi et al., ``What Different Denial Rates Can 
Tell Us About Racial Disparities in the Mortgage Market,'' (Jan. 13, 
2022), available at https://www.urban.org/urban-wire/what-different-denial-rates-can-tell-us-about-racial-disparities-mortgage-market.
    \48\ See Laurie Goodman et al., ``Traditional Mortgage Denial 
Metrics May Misrepresent Racial and Ethnic Discrimination,'' (Aug. 
23, 2018), p. 5, available at https://www.urban.org/urban-wire/traditional-mortgage-denial-metrics-may-misrepresent-racial-and-ethnic-discrimination.
    \49\ See Robert Bartlett et al., Haas School of Business UC 
Berkely, ``Consumer-Lending Discrimination in the FinTech Era,'' 
(Nov. 2019), available at https://faculty.haas.berkeley.edu/morse/research/papers/discrim.pdf.
    \50\ See Federal Housing Finance Agency, 2021 Report to 
Congress, p. 67, available at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2021-Annual-Report-to-Congress.pdf.
---------------------------------------------------------------------------

    The Federal Home Loan Bank of San Francisco entered into a research 
and product development initiative with a research institution to 
address issues related to the racial homeownership gap.\51\ A study 
resulting from this partnership noted that the heavy reliance on 
certain credit attributes in the current mortgage underwriting process 
to the exclusion of other attributes limits opportunities for people of 
color.\52\
---------------------------------------------------------------------------

    \51\ See https://fhlbsf.com/about/newsroom/urban-institute-and-fhlbank-san-francisco-announce-new-efforts-close-racial?f%5B0%5D=authored_on%3A2021.
    \52\ See Jung H. Choi et al., Urban Institute and Federal Home 
Loan Bank of San Francisco, ``Reducing the Black-White Homeownership 
Gap through Underwriting Innovations: The Potential Impact of 
Alternative Data in Mortgage Underwriting,'' available at https://www.urban.org/sites/default/files/2022-10/Reducing%20the%20Black-White%20Homeownership%20Gap%20through%20Underwriting%20Innovations.pdf.
---------------------------------------------------------------------------

    Additional mortgage market disparities and challenges remain with 
respect to rural areas, manufactured housing, and other market 
segments. FHFA's Duty to Serve program works to address many of these 
disparities.\53\
---------------------------------------------------------------------------

    \53\ See https://www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Duty-to-Serve.aspx.
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5. Appraisal and Valuation Disparities
    FHFA's Uniform Appraisal Dataset (UAD) Aggregate Statistics 
highlight that properties located in minority tracts have a higher 
proportion of appraised values less than the contract price. According 
to the 2021 appraisal statistics, 23.3 percent of homes in high 
minority tracts (80.1-100 percent) experienced an appraised value less 
than the contract price.\54\ This is compared to 13.4 percent of homes 
in White tracts (0-50 percent) and 19.2 percent in minority tracts 
(50.1-80 percent).\55\ Additionally, FHFA identified examples with 
direct references to the racial and ethnic composition of the 
neighborhood in appraisal reports.\56\ Freddie Mac's

[[Page 25298]]

research showed that properties in minority tracts are more likely than 
properties in White tracts to receive an appraisal lower than the 
contract price.\57\ A Fannie Mae publication concluded that White 
borrowers' homes were overvalued at higher rates across all 
neighborhoods, but stronger effects were present for White borrowers in 
Black neighborhoods.\58\ Additional research has also highlighted and 
analyzed disparities in property valuation.\59\ Consumer groups have 
begun to conduct fair housing paired testing of appraisers, resulting 
in the filing of complaints.\60\ Rural markets also experience 
challenges related to appraiser availability and appraisal cost.\61\
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    \54\ See Jonathan Liles, ``Exploring Appraisal Bias Using UAD 
Aggregate Statistics,'' FHFA Insights Blog (Nov. 11, 2022), 
available at https://www.fhfa.gov/Media/Blog/Pages/Exploring-Appraisal-Bias-Using-UAD-Aggregate-Statistics.aspx.
    \55\ For 2022, 17.15 percent of home purchase appraisals were 
below contract price in high minority tracts, compared to 14.3 
percent in minority tracts and 11.2% in White tracts. Uniform 
Appraisal Dataset Aggregate Statistics, available at https://www.fhfa.gov/DataTools/Pages/UAD-Dashboards.aspx.
    \56\ See Chandra Broadnax, ``Reducing Valuation Bias by 
Addressing Appraiser and Property Valuation Commentary,'' FHFA 
Insights Blog (Dec. 14, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Reducing-Valuation-Bias-by-Addressing-Appraiser-and-Property-Valuation-Commentary.aspx.
    \57\ See Melissa Narragon et al., ``Racial & Ethnic Valuation 
Gaps in Home Purchase Appraisals--A Modeling Approach,'' (May 2022), 
available at https://www.freddiemac.com/research/insight/20220510-racial-ethnic-valuation-gaps-home-purchase-appraisals-modeling-approach; Freddie Mac, ``Racial and Ethnic Valuation Gaps in Home 
Purchase Appraisals,'' (Sept. 20, 2021), available at https://www.freddiemac.com/research/insight/20210920-home-appraisals.
    \58\ See Jake Williamson et al., ``Appraising the Appraisal,'' 
(Feb. 2022) available at https://www.fanniemae.com/media/42541/display.
    \59\ See, e.g., Andre Perry et al., The Brookings Institution, 
``The Devaluation of Assets in Black Neighborhoods: The Case of 
Residential Property (Nov. 27, 2018), available at https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/; Junia Howell et al., ``Appraised: The Persistent 
Evaluation of White Neighborhoods as More Valuable Than Communities 
of Color,'' (Nov. 2022), available at https://www.eruka.org/appraised; Edward Pinto et al., American Enterprise Institute, ``How 
Common is Appraiser Racial Bias--An Update,'' (May 2022), available 
at https://www.aei.org/wp-content/uploads/2022/06/How-Common-is-Appraiser-Racial-Bias-An-Update-May-2022-FINAL-corrected-1.pdf?x91208.
    \60\ Jake Lilien, National Community Reinvestment Coalition, 
``Faulty Foundations: Mystery-Shopper Testing in Home Appraisals 
Exposes Racial Bias Undermining Black Wealth,'' (Oct. 2022), 
available at https://ncrc.org/faulty-foundations-mystery-shopper-testing-in-home-appraisals-exposes-racial-bias-undermining-black-wealth/.
    \61\ See FHFA, Request for Information on Appraisal-Related 
Policies, Practices, and Processes (Dec. 28, 2020), p. 4, available 
at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/RFI-Appraisal-Related-Policies.pdf.
---------------------------------------------------------------------------

III. The Proposed Rule

A. FHFA Fair Lending Oversight of the Regulated Entities

    The proposed rule would codify in regulation FHFA's existing fair 
lending oversight functions with respect to the regulated entities, 
including conducting supervisory examinations, issuing examination 
findings, requiring regular and special reporting and data, and 
enforcement. The proposed oversight would be substantially the same as 
FHFA's current fair lending oversight functions, but would establish 
FHFA's oversight of potential unfair or deceptive acts or practices by 
the regulated entities and would require the regulated entities to file 
certifications of compliance with fair lending and fair housing laws 
with regular and special reports. It would additionally establish more 
precise standards related to fair housing and fair lending and 
principles of equitable housing for regulated entity boards of 
directors.

B. Enterprise Equitable Housing Finance Plans

    The proposed rule would codify FHFA's current requirements for the 
Enterprises' Equitable Housing Finance Plans. The proposed plan 
requirements would be substantially the same as FHFA's current 
requirements for the Enterprises' plans, but would establish additional 
public disclosure and reporting requirements and expanded program 
requirements. Codifying the Enterprises' plan requirements with 
additions in a regulation would make the Enterprises' obligations more 
explicit and transparent to the public and would also establish greater 
accountability mechanisms through FHFA's statutory enforcement and 
compliance authorities.
    The proposed rule has some similar elements to the HUD's 
affirmatively furthering fair housing rules and requirements.\62\ HUD's 
framework provides helpful guidance and information on an equity 
planning process that affirmatively furthers fair housing. HUD's 
framework has informed FHFA in its development of the proposed rule, 
but FHFA has also taken into account the unique features of the 
Enterprises, its experience in overseeing the program to date, and the 
views of stakeholders as part of FHFA's requests for input and 
listening sessions to develop the proposed rule.
---------------------------------------------------------------------------

    \62\ See, e.g., 24 CFR 5.150 et seq.
---------------------------------------------------------------------------

C. Enterprise Data Collection and Reporting to FHFA

    The proposed rule would require the Enterprises to collect, 
maintain, and report data on language preference, homeownership 
education, and housing counseling for applicants and borrowers. The 
Enterprises collect this data through their automated underwriting 
systems and loan delivery. The Enterprises also provide a standard form 
for collection of the data--the Supplemental Consumer Information Form. 
The proposed rule would codify the FHFA policy announced in May 2022 
for mandatory use of the Supplemental Consumer Information Form.\63\ 
Consistent with current policy, the proposed rule would not require 
applicants and borrowers to respond to a language preference question, 
and applicants and borrowers may be provided with the option to not 
respond to a question about language preference as part of the 
information collection to satisfy the proposed rule.
---------------------------------------------------------------------------

    \63\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
---------------------------------------------------------------------------

D. Application of FHFA's Prudential Standard Framework

    Section 4513b of the Safety and Soundness Act (12 U.S.C. 4513b(b)) 
requires FHFA to establish prudential management and operations 
standards for its regulated entities, authorizes FHFA to establish such 
standards by regulation or guideline, and establishes a corrective 
action framework if a regulated entity fails to meet a prudential 
standard.\64\ To implement section 4513b, FHFA has adopted a Prudential 
Management and Operations Standards (PMOS) regulation, at 12 CFR part 
1236, and an Appendix to that regulation. The PMOS regulation is 
primarily procedural; for example, it addresses FHFA determinations 
that a regulated entity has failed to meet a standard; provides that 
FHFA may base that determination on an examination, inspection, or any 
other information; and addresses the contents and filing deadlines for 
corrective plans.\65\ The PMOS regulation also codifies FHFA's 
authority to require a regulated entity to submit a PMOS corrective 
plan in conjunction with other required submissions.\66\ If a regulated 
entity fails to submit a corrective plan or fails to implement an 
approved corrective plan, the PMOS regulation addresses FHFA's 
statutory authority to order the regulated entity to correct the 
deficiency or to undertake additional corrective or remedial measures 
as FHFA may require.
---------------------------------------------------------------------------

    \64\ 12 U.S.C. 4513b(b)(2)(B).
    \65\ 12 CFR 1236.4(a).
    \66\ 12 CFR 1236.4(c)(2)(ii).
---------------------------------------------------------------------------

    The Appendix sets forth substantive prudential management and 
operational standards (Standards) that FHFA has established as 
guidelines, including a statement on General Responsibilities of the 
Board and Management and ten numbered Standards. These Standards 
contain many elements that are relevant to components of the proposed 
rule, such as responsibilities for boards and senior management with 
respect to appropriate business strategies and policies; standards for 
internal controls and information systems; maintenance of records; 
alignment of the overall risk

[[Page 25299]]

profile with mission objectives; internal audit; compliance with laws, 
regulations, and supervisory guidance; and others. Therefore, 
compliance with the proposed rule, if finalized, would be subject to 
applicable Standards and could be addressed through the PMOS corrective 
framework.
    Separately, the proposed rule would establish Subpart C, Enterprise 
Equitable Housing Finance Planning, except for Sec.  1293.26, as a 
prudential standard within the meaning of section 4513b. FHFA has 
determined that it is legally appropriate and would be sound policy to 
identify that subpart as a prudential standard. The Enterprise 
equitable housing finance planning framework, as discussed above, is 
consistent with the Enterprises' authorizing statute obligations and 
FHFA's statutory charges related to ensuring regulated entities operate 
consistent with the public interest and that FHFA furthers fair housing 
in its oversight of the regulated entities. In addition to the more 
general application of the PMOS framework through the Standards 
discussed above, this designation of the equitable housing finance 
planning framework as a Standard by regulation would provide FHFA 
access to section 4513b corrective measures, if necessary, to address 
deficiencies in equitable housing finance planning or implementation by 
an Enterprise. Section 1293.26 is proposed to be excluded from the 
designation because that section articulates a broader concept related 
to ensuring Enterprise boards appropriately consider the equitable 
housing finance plan alongside other longstanding mission 
responsibilities in their oversight of an Enterprise and not the 
required elements and process for an Equitable Housing Finance Plan.
    Section 4513b makes clear that corrective actions pursuant to the 
PMOS framework are in addition to any enforcement action FHFA would be 
authorized to take, if FHFA determined that an Enterprise has violated 
any regulation.\67\ Thus the PMOS framework does not limit FHFA's 
authorities and FHFA will determine the appropriate supervisory 
response based on the facts and circumstances of any failure or 
violation.
---------------------------------------------------------------------------

    \67\ 12 U.S.C. 4513b(c).
---------------------------------------------------------------------------

E. Policy Purposes for and Benefits of the Proposed Rule

    All communities in the United States deserve access to sustainable 
housing opportunities and well-functioning housing markets. As 
acknowledged through the Duty to Serve requirements, housing goals 
framework, and the Agency and the regulated entities' public purposes, 
enumerated protected classes under fair housing and fair lending laws 
are not the only underserved communities in the United States. The 
proposed rule's incorporation of broad protections for consumers under 
prohibitions against unfair or deceptive acts or practices, and 
defining underserved communities broadly for the purposes of Equitable 
Housing Finance Plans, will help ensure the Agency and the regulated 
entities focus on underserved communities throughout the United States, 
consistent with the Enterprises' Charter Acts, the Agency's public 
interest duty, and the purposes of the Fair Housing Act. The proposed 
rule will add to the Agency's existing set of programs and tools to 
accomplish these goals.
    By codifying many of FHFA's existing requirements and policies 
regarding fair lending oversight, Enterprise Equitable Housing Finance 
Plans, and language preference and homeownership education and housing 
counseling data collection, as well as expanding certain requirements, 
the proposed rule serves a number of policy purposes and would provide 
a number of policy benefits.
    Consistent oversight of fair housing and fair lending, along with 
public participation and accountability, have been key issues that 
impact the fair housing and fair lending compliance by financial 
institutions and housing market actors. Codifying the requirements and 
policies through rulemaking will provide greater public transparency 
and input regarding the existing programs, as well as greater assurance 
of the Agency's commitment. Codifying existing fair housing and fair 
lending requirements and enhancing them will provide greater oversight 
and accountability regarding the regulated entities' fair housing and 
fair lending compliance and therefore benefit the public who are 
ultimately protected by fair housing and fair lending laws.
    Strategic planning for improvements in fair housing has been a key 
component of fulfilling commitments to affirmatively further fair 
housing and is an important way in which progress toward providing for 
fair housing throughout the United States can be made. Codifying 
Equitable Housing Finance Plans in regulation and providing additional 
standards through rulemaking will ensure that fair housing issues can 
be addressed proactively in addition to reactively through supervision 
and examinations.
    Establishing enhanced standards and transparency for fair housing 
and fair lending generally, and for the Equitable Housing Finance 
Plans, may also have the benefit of providing greater market assurance 
with respect to the regulated entities' compliance with applicable 
laws, thereby supporting liquidity in the secondary mortgage market and 
support for underserved communities.

IV. Section-by-Section Analysis

A. Section 1293.1 General

    Subpart A of the proposed rule would provide general information, 
rules, definitions, and compliance and enforcement provisions that 
apply to all of proposed part 1293. Proposed Sec.  1293.1(a) would 
provide general information and rules, including fair lending oversight 
of the regulated entities, equitable housing finance planning by the 
Enterprises, and data collection and reporting by the regulated 
entities (currently only including requirements for the Enterprises). 
Proposed Sec.  1293.1(b) would provide that nothing in proposed part 
1293 permits or requires a regulated entity to engage in any activity 
that would otherwise be inconsistent with the Safety and Soundness Act, 
the authorizing statutes, or other applicable law. FHFA believes it is 
important to reiterate in the proposed rule that activities must be in 
keeping with safety and soundness. Without safety and soundness 
underlying the regulated entities' activities, they cannot truly 
promote fair housing, fair lending, and principles of housing equity. 
As discussed later, FHFA is also adding the prohibition on unfair or 
deceptive acts or practices to the laws it oversees with respect to the 
regulated entities. FHFA believes that underscoring the importance of 
safety and soundness and avoiding unfair or deceptive acts or practices 
complements and enhances the pursuit of solutions that further fair 
housing, fair lending, and principles of housing equity and makes clear 
that predatory products or activities would not be in furtherance of 
the proposed rule. Proposed Sec.  1293.1(c) would provide that nothing 
in proposed part 1293 creates a private right of action.

B. Section 1293.2 Definitions

    Proposed Sec.  1293.2 would provide definitions that apply to 
proposed part 1293.
    The proposed definition of ``Equitable Housing Finance Plan'' 
(plan) is a key component of subpart C of the proposed rule. It is a 
three-year public plan developed with public engagement and adopted by 
each Enterprise describing how each Enterprise will overcome barriers 
to sustainable housing opportunities faced by one or more

[[Page 25300]]

underserved communities through objectives, meaningful actions, and 
measurable goals. The plan is a key element of the proposed rule, and 
its requirements are more fully described in proposed Sec. Sec.  
1293.22 and 1293.25. The proposed definition of ``annual plan update'' 
(update) is a public update to a plan for the second or third year of a 
planning cycle. The proposed definition of ``performance report'' 
(report) is an annual public report by an Enterprise on its performance 
under a plan and other information on equitable housing and fair 
lending that meets the requirements of proposed Sec.  1293.23 and any 
other FHFA requirements.
    The proposed definition of ``barrier'' is an important element of a 
plan. As part of a plan, an Enterprise would be required to identify 
barriers faced by an underserved community. The proposed definition 
includes Enterprise actions, products, or policies as well as aspects 
of the housing market that can reasonably be influenced by an 
Enterprise's actions, products, or policies that contribute to an 
underserved community's limited share of sustainable housing 
opportunities, difficulties in accessing those sustainable housing 
opportunities, or the continuing adverse effects of discrimination 
affecting their participation in the housing market. The proposed 
definition focuses on an Enterprise's own actions, products, or 
policies because these are what an Enterprise can most easily change. 
Including aspects of the housing market that can reasonably be 
influenced by an Enterprise's actions, in addition to an Enterprise's 
own actions, products, or policies, encourages actions that serve the 
public interest, promote access to mortgage credit throughout the 
nation, and further fair housing.
    The proposed definition of ``fair housing and fair lending laws'' 
provides an enumeration of Federal fair housing and fair lending laws 
to which the regulated entities are subject and FHFA oversees pursuant 
to the fair lending oversight described in the proposed rule. The 
``fair housing and fair lending laws'' are the Fair Housing Act, the 
Equal Credit Opportunity Act, and implementing regulations. 
Additionally, with respect to an Enterprise, the ``fair housing and 
fair lending laws'' include 12 U.S.C. 4545 and implementing 
regulations.
    The proposed definition of ``sustainable housing opportunity'' 
relates to the scope and type of the benefits that the plans should 
seek to achieve for underserved communities through meaningful actions. 
The proposed definition includes both rental and homeownership 
opportunities that include one or more characteristics important to the 
needs of a tenant or homeowner within its scope and includes several 
illustrative characteristics of the concept, including affordability, 
habitability, resilience to climate impacts, quality, locational 
benefits, accessibility, long-term sustainability, and accommodations 
for short-term hardships. These are important features of housing 
opportunities that should help focus the Enterprises' plans. Further 
standards related to the proposed definition are provided in proposed 
Sec.  1293.25.
    The proposed definition of ``underserved community'' is an 
important element of a plan. An Enterprise chooses one or more 
underserved communities on which to focus for a planning cycle. 
``Underserved community'' would be defined as a group of people with 
shared characteristics or an area that is subject to current 
discrimination or has been subjected to past discrimination that has or 
has had continuing adverse effects on the group or area's participation 
in the housing market, historically has received or currently receives 
a lower share of the benefits of Enterprise programs and activities 
providing sustainable housing opportunities, or that otherwise has had 
difficulty accessing these benefits compared with groups of people 
without the shared characteristic or other areas. The proposed 
definition includes characteristics protected by fair lending laws 
applicable to the Enterprises, but the definition is not limited to 
such characteristics. The definition provides illustrative examples, if 
supported by adequate information under the requirements of proposed 
Sec.  1293.25. The proposed definition makes clear that a variety of 
groups or areas could be chosen by an Enterprise. The inclusion or 
exclusion of any particular group from the illustrative examples is not 
an indication of FHFA's views about whether or not that group 
constitutes an underserved community or whether it should be the focus 
of a plan.

C. Section 1293.3 Compliance and Enforcement

    Proposed Sec.  1293.3 reiterates general FHFA authority related to 
compliance and enforcement for proposed part 1293, inclusive of all 
aspects of the proposed rule. FHFA has broad authority for compliance 
and enforcement. This section notes FHFA's ability to conduct 
examinations related to proposed part 1293, including fair lending 
compliance, equitable housing finance, and other matters. It also notes 
FHFA's ability to issue adverse examination findings and take various 
forms of enforcement actions and issue civil money penalties under 12 
U.S.C. 4511(b), 4513b, 4631, and 4636. This section is similar to other 
sections of FHFA regulations related to oversight of specific 
programmatic areas \68\ and the FHFA fair lending policy statement.\69\
---------------------------------------------------------------------------

    \68\ See, e.g., 12 CFR 1223.24.
    \69\ See FHFA, ``Policy Statement on Fair Lending,'' (Jul. 9, 
2021), available at https://www.govinfo.gov/content/pkg/FR-2021-07-09/pdf/2021-14438.pdf.
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    Some examples of how FHFA's compliance and enforcement authority 
could be used with respect to fair lending oversight, equitable housing 
finance, or data collection or reporting include, but are not limited 
to:
     If FHFA found that a regulated entity had insufficient 
compliance management around fair lending laws or the proposed rule, 
FHFA could issue adverse examination findings and factor the 
insufficient compliance management into supervisory ratings;
     If FHFA found that a regulated entity had violated the 
Fair Housing Act, FHFA could issue adverse examination findings, factor 
the non-compliance into supervisory ratings, and enter into a consent 
order with the regulated entity requiring corrective action, additional 
remedies, and civil money penalties;
     If an Equitable Housing Finance Plan, annual update, 
performance report, or an Enterprise's actions taken under the program 
did not meet the requirements of this proposed rule, FHFA could issue 
an adverse examination finding, factor non-compliance into supervisory 
ratings, and issue a prudential management operating standard notice 
requiring the entity to submit a corrective plan; and
     If FHFA found that a regulated entity had not complied 
with required data collection or reporting, FHFA could issue an adverse 
examination finding, factor non-compliance into supervisory ratings, 
and enter into a written agreement with the regulated entity.
    Neither this section of the proposed rule or the examples given 
above are intended to limit FHFA's authority in any way. This section 
merely restates some of the most applicable FHFA authority.

D. Section 1293.4 Preservation of Authority

    Proposed Sec.  1293.4 would provide that nothing in the proposed 
rule would in any way limit the authority of the agency under other 
provisions of applicable law and regulations.

[[Page 25301]]

E. Section 1293.11 Regulated Entity Compliance

    Subpart B of the proposed rule applies to all regulated entities 
and provides standards related to compliance, responsibilities of 
boards of directors, reports, data, and certification. Proposed Sec.  
1293.11 addresses regulated entity compliance with fair housing and 
fair lending laws. Proposed Sec.  1293.11(a) states that regulated 
entities must comply with the Fair Housing Act, the Equal Credit 
Opportunity Act, and 12 U.S.C. 4545 for the Enterprises. Proposed Sec.  
1293.11(b) would provide that the regulated entities must comply with 
15 U.S.C. 45 (Section 5 of the Federal Trade Commission Act), which 
prohibits unfair or deceptive acts or practices. The prohibition 
against unfair or deceptive acts or practices is an important 
protection under Federal law for consumers and other market actors 
against predatory and deceptive actions,\70\ and FHFA has determined it 
would be appropriate to oversee the regulated entities for compliance 
with this statute. Violations of these laws by the regulated entities 
would, in addition, violate Sec.  1293.11(a) and (b) as proposed.\71\ 
The Safety and Soundness Act empowers FHFA to oversee its regulated 
entities' compliance with ``other applicable law,'' 12 U.S.C. 
4511(b)(2), and to engage in enforcement for noncompliance with 
law.\72\ Other Federal financial regulators examine and oversee their 
regulated entities on these or similar bases as part of consumer 
protection under similar authority.\73\ While FHFA is including unfair 
or deceptive acts or practices in the proposed rule because they are 
similar to fair lending laws in the intent to ensure fair treatment, 
FHFA understands unfair or deceptive acts or practices to encompass a 
broad scope of activities harmful to individuals that go beyond illegal 
discrimination.
---------------------------------------------------------------------------

    \70\ Kathleen C. Engel et al., A Tale of Three Markets: The Law 
and Economics of Predatory Lending, 80 Tex. L. Rev. 1255, 1260 
(2002) (noting that lending fraud or deceptive practices ``come[ ] 
in endless varieties''). Ngai Pindell, The Fair Housing Act at 
Forty: Predatory Lending and the City As Plaintiff, J. Affordable 
Housing & Community Dev. L., Winter 2009, at 173-75 (describing 
contemporary unfair and predatory lending practices).
    \71\ See, e.g., 12 U.S.C. 4636.
    \72\ 12 U.S.C. 4631. FHFA's cease-and-desist authority is 
similar to Section 8 of the Federal Deposit Insurance Act under 
which the FDIC (for example) enforces unfair and deceptive acts or 
practices.
    \73\ See, e.g., Federal Deposit Insurance Corporation (FDIC) 
Guidance on Unfair or Deceptive Acts or Practices, FIL-57-2002 (May 
30, 2002), available at https://www.fdic.gov/news/inactive-financial-institution-letters/2002/fil0257.html. See also HUD's 
Mortgagee Letter 2014-10 (ML 2014-10), available at https://www.hud.gov/sites/documents/14-10ML.PDF (HUD letter ``remind[ing] 
mortgagees of the Federal Housing Administration's (FHA) 
requirements prohibiting misleading or deceptive advertising'').
---------------------------------------------------------------------------

    Proposed Sec.  1293.11(c) would establish more precise standards 
related to fair housing and fair lending and the prohibition on unfair 
or deceptive acts or practices for regulated entity boards of directors 
in carrying out their existing responsibility under FHFA's Corporate 
Governance regulation (12 CFR part 1239) to direct the operations of 
the regulated entities in conformity with FHFA regulations. FHFA's 
Corporate Governance regulation provides that the ultimate 
responsibility for a regulated entity's oversight rests with the board 
of directors, and that directors have a duty to direct the operations 
of a regulated entity in conformance with the authorizing statutes, the 
Safety and Soundness Act, and FHFA regulations.\74\ Board and 
management oversight of fair housing and fair lending compliance has 
long been recognized as a critical component of a well-functioning 
compliance management system. Federal financial regulators regularly 
examine their regulated entities for sufficient fair lending compliance 
management, and rate regulated entities based in part on Board and 
Management Oversight.\75\ Consent orders for fair housing and fair 
lending violations frequently include specific requirements for 
enhanced Board and Management Oversight.\76\ The standard articulated 
in the proposed rule is intended to provide more clarity and guidance 
to directors in how to incorporate the proposed rule into the pre-
existing duty under the Corporate Governance regulation to direct 
operations in conformity with FHFA regulations. The proposed rule's 
language on ``appropriately considering'' compliance with fair housing 
and fair lending laws and the prohibition on unfair or deceptive acts 
or practices are intended to be flexible and tailored to the particular 
consideration at hand, while reinforcing the broad application of fair 
housing and fair lending laws and the prohibition on unfair or 
deceptive acts or practices on a regulated entity's operations and the 
board's ultimate responsibility for the regulated entity's oversight.
---------------------------------------------------------------------------

    \74\ 12 CFR 1239.4.
    \75\ See, e.g., Federal Financial Institutions Examination 
Council, Uniform Interagency Consumer Compliance Rating System, 81 
FR 79473 (Nov. 14, 2016) (outlining expectations for Board and 
Management Oversight in consumer compliance management, including 
fair lending); Federal Financial Institutions Examination Council, 
Interagency Fair Lending Examination Procedures, available at 
https://www.fdic.gov/regulations/examinations/fairlend.pdf 
(detailing examiners' engagement with management and review of 
management oversight).
    \76\ See, e.g., United States v. Cadence Bank Consent Order, 
available at https://www.justice.gov/crt/case-document/file/1429051/
download#:~:text=%C2%A7%C2%A7%201691%2D1691f.&text=1.,%2C%20color%2C%
20and%20national%20origin.
---------------------------------------------------------------------------

F. Section 1293.12 Reports and Data

    Proposed Sec.  1293.12 would provide that FHFA may require the 
regulated entities to provide to FHFA regular and special reports, 
including the provision of data, concerning fair lending and fair 
housing. FHFA has issued fair lending reporting orders to Fannie Mae 
and Freddie Mac requiring regular reports.\77\ FHFA has not issued fair 
lending reporting orders to the Banks, and FHFA is not proposing to 
require specific reports of the Banks through this proposed rule. FHFA 
would plan to issue such reporting orders at an appropriate time, if 
deemed necessary.
---------------------------------------------------------------------------

    \77\ See FHFA's Fair Lending Orders, available at https://
www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Fair-Lending-
Oversight-
Program.aspx#:~:text=Fair%20Lending%20Reporting%20Orders&text=The%20o
rders%20require%20the%20Enterprises,lending%20supervision%20and%20mon
itoring%20capabilities.
---------------------------------------------------------------------------

    Proposed Sec.  1293.12 also provides that each regular report 
related to fair housing and fair lending shall include a certification 
of the regulated entity's compliance with fair housing and fair lending 
laws and the prohibition on unfair or deceptive acts or practices in 
addition to any other required certification or declaration (such as a 
declaration under 12 U.S.C. 4514(a)(4)). Under FHFA's regular and 
special report authority under 12 U.S.C. 4514(a)(4), each report must 
contain a declaration from an officer that the report is true and 
correct to the best of such officer's knowledge and belief. This 
section would add an additional requirement for a certification that 
the regulated entity complies with fair housing and fair lending laws 
and the prohibition on unfair or deceptive acts or practices for 
reports related to fair housing and fair lending. This certification 
requirement would provide additional incentive to the boards and 
management of the regulated entities to ensure compliance with fair 
housing and fair lending laws in their operations. Both Enterprises 
require their seller/servicers to attest to compliance with fair 
housing and fair lending laws.\78\ Certifications related to

[[Page 25302]]

compliance are commonly used by other Federal agencies, including with 
respect to Federal housing grants, such as Community Development Block 
Grants, and consent decrees and settlement agreements by the Department 
of Justice and HUD in housing and lending discrimination cases.
---------------------------------------------------------------------------

    \78\ See Fannie Mae Selling Guide, Compliance with Laws 
available at https://selling-guide.fanniemae.com/Selling-Guide/Doing-Business-with-Fannie-Mae/Subpart-A3-Getting-Started-with-Fannie-Mae/Chapter-A3-2-Compliance-with-Requirements-and-Laws/1645975681/A3-2-01-Compliance-With-Laws-07-06-2022.htm and Freddie 
Mac Seller/Service Guide, Compliance with Applicable Law available 
at https://guide.freddiemac.com/app/guide/section/1301.2/03-01-2023.
---------------------------------------------------------------------------

    FHFA is not proposing to include the specific certification 
language in the rule, instead merely the general requirement. FHFA 
believes this would allow flexibility for FHFA to make changes to the 
specific certification language when necessary. However, FHFA seeks 
comment on the following certification language: ``[Regulated entity] 
complies and has complied in all material respects with, and maintains 
policies, procedures, and internal controls to assure compliance with 
fair housing and fair lending laws and the prohibition on unfair or 
deceptive acts or practices.'' If a regulated entity did not believe it 
could certify to that or similar language for a particular period, such 
as because FHFA had identified fair lending non-compliance in a 
supervisory examination that the regulated entity was still 
remediating, and the regulated entity would not be able to complete 
remediation by the time of certification, it could notify FHFA in 
advance to discuss additional stipulations to the language.

G. Section 1293.21 General

    Proposed Sec.  1293.21 provides general information that Subpart C 
of the proposed rule, entitled Enterprise Equitable Housing Finance 
Planning, sets forth the Enterprises' duty to engage in equitable 
housing finance planning and establishes standards and procedures 
related to public engagement and FHFA's oversight of the Enterprises' 
planning and actions. It provides for general timing requirements when 
a date falls on a non-business day. It also provides that submission 
requirements and publication dates provided in the proposed rule may be 
altered or waived by the Director by publication of a public order. As 
discussed above, it also designates Subpart C, except for Sec.  
1293.26, as a prudential standard.

H. Section 1293.22 Plans and Updates

    Proposed Sec.  1293.22 provides rules related to plans and updates.
    Proposed Sec.  1293.22(a) would establish the general requirement 
for each Enterprise to adopt a plan covering a three-year period, with 
optional updates in the second and third year of the plan period.
    Proposed Sec.  1293.22(b) establishes general content requirements 
for the plan, including an identification of barriers to sustainable 
housing opportunities faced by one or more underserved communities, 
objectives that define the outcomes the plan seeks to accomplish that 
address the identified barriers, meaningful actions that describe the 
high-impact activities that the Enterprise will undertake to accomplish 
or further the identified objectives, which may span one or more years 
(including extending beyond the period covered by the plan); specific, 
measurable, and time-bound goals for those actions; and summaries of 
the Enterprise's public engagement in developing the plan.
    Proposed Sec.  1293.22(c) would establish a requirement for an 
Enterprise to submit a plan to FHFA for review on or before September 
30 of the year prior to the first year covered by the plan.
    Proposed Sec.  1293.22(d) would establish general content 
requirements for an update, including all changes the Enterprise is 
making to its plan and a summary of any additional public engagement.
    Proposed Sec.  1293.22(e) would establish a requirement for an 
Enterprise to submit an update to FHFA for review on or before February 
15 of the year covered by the update.
    Proposed Sec.  1293.22(f) would establish standards for FHFA's 
review of plans and updates. It would provide that FHFA may review each 
plan and update prior to publication and may require removal of any 
confidential or proprietary information; require removal of any content 
that is not consistent with part 1293, the Safety and Soundness Act, 
the authorizing statutes, or other applicable law; provide any feedback 
for consideration; and exercise any other authority of FHFA. Inclusion 
of confidential or proprietary information in plans and updates would 
be inappropriate and reveal sensitive information that is not required 
under the proposed rule. Further, FHFA's review may identify proposals 
and plan content that are contrary to the Enterprise's authorizing 
statutes, the Safety and Soundness Act, or other applicable law. FHFA 
also retains all other existing authority that may be needed in 
particular circumstances to address issues that arise during the review 
of a plan or update. Given that a plan may only contain limited 
information about a proposed action, FHFA may identify issues with the 
activity through other processes, such as prior approval of new 
products, or its supervision and oversight of the Enterprises. FHFA's 
review of the plan would not preclude using these processes and FHFA's 
full authorities if it were to later identify issues with the action, 
and the public engagement opportunities throughout the plan cycle would 
give FHFA additional information from the public for this purpose.
    Proposed Sec.  1293.22(g) would provide that FHFA's review does not 
constitute a prior approval of a plan or update or any action described 
therein and that all actions included in a plan are subject to all 
applicable FHFA and other requirements and authorities. For example, a 
meaningful action that met the criteria for a new activity or new 
product would be subject to the process described in FHFA's prior 
approval for Enterprise products regulation.\79\ FHFA believes that the 
process established by the proposed rule would help support the prior 
approval for Enterprise products regulation by providing both FHFA and 
the public information about activities being considered by the 
Enterprises that may later trigger the requirements of the regulation.
---------------------------------------------------------------------------

    \79\ 12 CFR part 1253.
---------------------------------------------------------------------------

    Proposed Sec.  1293.22(h) would provide that plans and updates must 
include disclaimer language indicating the implementation of actions 
may be subject to change based on certain factors. The disclaimer 
language in the current plans is: ``DISCLAIMER: Implementation of the 
activities and objectives in [Enterprise]'s Equitable Housing Finance 
Plan may be subject to change based on factors including, without 
limitation, FHFA review for compliance with [Enterprise]'s statutory 
charter, specific FHFA approval requirements and safety and soundness 
standards, FHFA guidance and directives, regulatory requirements, 
Senior Preferred Stock Purchase Agreement obligations, and adverse 
market or economic conditions, as applicable.'' FHFA seeks comment on 
this disclaimer language and any changes that should be made.
    Proposed Sec.  1293.22(i) would provide that each Enterprise shall 
publish its plan on January 15 of the first year covered by the plan, 
and each annual update on April 15 of the second and third year covered 
by the plan. It would also provide that the Enterprise maintain the 
plan on its website thereafter and that it ensures that the

[[Page 25303]]

plans or updates are accessible to persons with disabilities.
    Proposed Sec.  1293.22(j) would provide that from time to time, 
FHFA may issue public guidance on plans and updates.

I. Section 1293.23 Performance Reports

    Proposed Sec.  1293.23 would provide rules related to annual 
performance reports (reports). Proposed Sec.  1293.23(a) would 
establish the general requirement for each Enterprise to publicly 
report on its plan progress and provide other information related to 
equitable housing and fair lending annually for the prior year in a 
report.
    Proposed Sec.  1293.23(b) would establish requirements for the 
contents of the report, including: a narrative assessment about the 
program; performance details for each objective, measurable goal, and 
meaningful action; general outcomes categorized by group; summary of 
resources dedicated to the plan; and an assessment of the Enterprise's 
underwriting that includes several elements. The report section on 
underwriting is similar in nature to the authorizing statutes' 
requirements for assessing underwriting standards that may yield 
disparate results based on the race of the borrower, including 
revisions thereto that may promote fair lending, and reporting on this 
assessment under the Annual Housing Activities Report.\80\ FHFA 
believes that the proposed rule provides an opportunity to incorporate 
this concept into a fair lending-focused report and provide details 
based on it into reporting under the Equitable Housing Finance Plans.
---------------------------------------------------------------------------

    \80\ See, e.g., 12 U.S.C. 1723a(n)(2)(G) (``assess underwriting 
standards, business practices, repurchase requirements, pricing, 
fees, and procedures, that affect the purchase of mortgages for low- 
and moderate-income families, or that may yield disparate results 
based on the race of the borrower, including revisions thereto to 
promote affordable housing or fair lending;'').
---------------------------------------------------------------------------

    Proposed Sec.  1293.23(c) would establish a requirement for an 
Enterprise to submit a report to FHFA for review on or before February 
15 annually.
    Proposed Sec.  1293.23(d) would establish standards for FHFA's 
review of reports. The standards would align with the review standards 
for plans and updates.
    Proposed Sec.  1293.23(e) would establish a requirement for an 
Enterprise to publish its report on April 15 annually. It would also 
require that the report be maintained on the Enterprise's website and 
that the Enterprise ensures that reports are accessible to persons with 
disabilities.
    Proposed Sec.  1293.23(f) would establish that FHFA may issue 
public guidance on reports and also notes that FHFA may require 
additional information in reports through other authorities, such as 
its authority to require regular reports under 12 U.S.C. 4514. FHFA 
believes that this authority may be helpful in establishing reporting 
requirements in an expedited fashion for specific plans given the 
differing nature of underserved communities and activities that may be 
included in plans and the ongoing public engagement that is a part of 
the process established by the proposed rule.

J. Section 1293.24 Public Engagement

    Proposed Sec.  1293.24 establishes requirements related to public 
engagement. Proposed Sec.  1293.24(a) provides that on or before June 
15 annually, FHFA will conduct public engagement to gather public input 
for the Enterprises and for FHFA to consider. FHFA's 2021 request for 
input and listening session on the initial Equitable Housing Finance 
Plan program provided valuable input and the proposed rule would 
therefore codify these or similar types of public engagement as a 
requirement for future plans.\81\
---------------------------------------------------------------------------

    \81\ See FHFA, Enterprise Equitable Housing Finance Plans 
Request for Input, (Sept. 2021), available at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Equitable-Housing-Finance-Plans-RFI.pdf; FHFA Public Listening Session: Enterprise 
Equitable Housing Finance Plans RFI, (Sept. 28, 2021), available at 
https://www.fhfa.gov/Videos/Pages/Enterprise-Equitable-Housing-Finance-Plans-RFI.aspx.
---------------------------------------------------------------------------

    Proposed Sec.  1293.24(b) of the proposed rule would provide that 
the Enterprises are required to consult with stakeholders, including 
members of underserved communities and housing market participants, in 
development of a plan and update and describe such consultation in the 
plan.

K. Section 1293.25 Program Standards

    Proposed Sec.  1293.25 would establish program standards for 
various elements of the Equitable Housing Finance Plan process. These 
requirements are intended to provide a foundational logic model and 
theory of change for a particular plan.\82\
---------------------------------------------------------------------------

    \82\ See, e.g., Leiha Edmonds, Urban Institute, ``Center Racial 
Equity in Measurement and Evaluation: Emerging Lessons and Guidance 
from Human Service Nonprofits,'' (July 2021), available at https://www.urban.org/sites/default/files/publication/104487/centering-racial-equity-in-measurement-and-evaluation_0.pdf.
---------------------------------------------------------------------------

    Proposed Sec.  1293.25(a) would establish requirements for 
selecting one or more underserved communities to be the focus of a 
plan. It would establish a requirement that an Enterprise's choice of 
an underserved community be supported by information and documented in 
the plan. It would also provide several factors that an Enterprise must 
consider in selecting an underserved community, but would also allow 
for the consideration of other factors.
    Proposed Sec.  1293.25(b) would establish requirements for 
objectives. It would require objectives to be logically tied to one or 
more identified barriers and facilitate establishing meaningful actions 
and measurable goals. Objectives establish the overall direction and 
focus for the plan by defining the outcomes the plan seeks to 
accomplish. Given that the definition of an underserved community can 
include both a group of people with a shared characteristic or an area, 
in some cases objectives could seek to provide place-based solutions to 
address the needs of a specific area or may seek to provide people the 
opportunity to obtain sustainable housing opportunities more broadly. 
The U.S. Supreme Court has made clear that both strategies may be 
appropriate and comply with the Fair Housing Act depending on the 
circumstances.\83\ FHFA expects that an Enterprise would choose 
appropriate strategies in developing its objectives after considering 
the needs of an underserved community and feedback from public 
engagement.
---------------------------------------------------------------------------

    \83\ See Tex. Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys. 
Project, Inc., 135 S. Ct. 2507, 2512 (2015).
---------------------------------------------------------------------------

    Examples of objectives, if developed to meet the requirements of 
the proposed rule, could include:
     Developing and providing secondary market support for 
special purpose credit programs that promote sustainable housing 
opportunities for an underserved community;
     Increasing sustainable housing opportunities for 
individuals in the mortgage market, such as by expanding the number of 
qualified borrowers of an underserved community, or making changes to 
underwriting standards, business practices, repurchase requirements, 
pricing, fees, and procedures to promote fair lending or provide 
greater access to sustainable housing opportunities;
     Increasing sustainable housing opportunities for renters 
of an underserved community living in or seeking to live in multifamily 
properties financed by the Enterprise's loan purchases, such as by 
prohibiting source of income discrimination (including rental subsidies 
and vouchers), providing other tenant protections, or requiring 
reporting of on-time payments;

[[Page 25304]]

     Reducing the homeownership gap for an underserved 
community with a significant homeownership rate disparity;
     Reducing disparities in acceptance rates for an 
underserved community with a significant disparity in the Enterprise's 
automated underwriting system;
     Reducing disparities in the share of loans acquired by the 
Enterprise that serve an underserved community with a significant 
disparity in the share of loans acquired by the Enterprise compared to 
the share of loans originated to members of that underserved community 
in the overall mortgage market;
     Reducing disparities in negative outcomes for an 
underserved community in servicing, loan modifications, and loss 
mitigation;
     Reducing disparities in negative outcomes for an 
underserved community in tenant screening, repayment options, and 
evictions;
     Increasing the supply of, and equitable access to, high-
quality affordable rental housing for an underserved community;
     Reducing underinvestment and undervaluation in formerly 
redlined areas or areas that are otherwise underserved or undervalued;
     Increasing the supply of, and equitable access to, high-
quality affordable and accessible housing for persons with disabilities 
and that is available in the most integrated setting appropriate to the 
needs of an individual with a disability;
     Increasing the supply of, and equitable access to, high-
quality affordable housing for families with children in areas with 
access to high-quality educational, transportation, economic, and other 
important opportunities;
     Increasing sustainable housing opportunities for veterans;
     Promoting or requiring improvements in: fair lending 
standards and compliance, marketing and outreach to members of an 
underserved community who are less likely to apply for certain housing 
opportunities, the estimation of race and ethnicity for mortgage 
applicants or housing market participants where race and ethnicity data 
has not been self-reported, and fair lending self-testing by primary 
lenders or other market participants that do business with the 
Enterprises;
     Conducting, and making available publicly, research on 
advancing equity and sustainable housing opportunities for an 
underserved community;
     Conducting ethnographic or consumer research on how to 
effectively serve an underserved community and disseminating it to 
market participants to improve quality of communications and increase 
community trust;
     Releasing data publicly on how an Enterprise or the market 
is performing in serving an underserved community, the effects of an 
Enterprise's policies on an underserved community, and how an 
Enterprise's actions may improve performance or address such effects; 
and
     Providing support to HUD program participants in 
affirmatively furthering fair housing.
    The inclusion or exclusion of any particular objective from the 
illustrative list is not an indication of FHFA's views about whether or 
not that objective should or should not be undertaken as part of a 
plan. The list is intended to illustrate the flexibility of the 
proposed rule.
    Proposed Sec.  1293.25(c) would establish requirements for 
meaningful actions. It would require that meaningful actions be 
logically tied to one or more measurable goals and one or more 
objectives for an identified underserved community and that they 
support sustainable housing opportunities. It would also require that 
meaningful actions reflect significant additional action above and 
beyond actions that also serve other Enterprise objectives and goals 
and reflect more than de minimis action. It would also require that 
meaningful actions reflect a commitment commensurate with an 
Enterprise's prominence in the housing market, its available resources, 
its dedication of resources to other important efforts, the needs of 
underserved communities, market conditions, and safety and soundness. 
It would also require that meaningful actions comply with the Safety 
and Soundness Act, the authorizing statutes, and other applicable law. 
Finally, it would require that meaningful actions not be actions that 
are required to remediate supervisory findings or required as a result 
of enforcement actions.
    Proposed Sec.  1293.25(d) would establish requirements for 
measurable goals. It would require measurable goals to be logically 
tied to one or more meaningful actions in a plan, be specific, be time-
bound, be focused on outcomes, and facilitate measuring Enterprise 
progress, comparing Enterprise performance, and ensuring public 
accountability.

L. Section 1293.26 Enterprise Board Equitable Housing and Mission 
Responsibilities

    Proposed Sec.  1293.26 would provide equitable housing and other 
mission-related responsibilities for Enterprise boards. As discussed 
above, board oversight is an important element of successful corporate 
governance, and FHFA's Corporate Governance regulation establishes a 
requirement for directors to direct the operations of regulated 
entities in conformity with FHFA regulations. The proposal would 
provide that Enterprise boards appropriately consider the objectives, 
actions, and goals of the Enterprise's Equitable Housing Finance Plan, 
while also appropriately considering its affordable housing goals and 
Duty to Serve plans and targets, and its other mission-related 
obligations, in the board's oversight of the Enterprise and the 
Enterprise's business activities. The proposed rule's language on 
``appropriately considering'' the equitable housing and other mission 
responsibilities is intended to be flexible and tailored to the 
particular consideration at hand, while reinforcing that the plan 
should work in concert with the Enterprise's other mission activities 
and operations as a whole. This proposed section helps clearly 
articulate the ultimate responsibility of the board for oversight of 
the Equitable Housing Finance Plan, the Enterprise's affordable housing 
goals and Duty to Serve plans and targets, and its other mission-
related obligations, and that they should work in concert with the 
Enterprise's operations as a whole.\84\
---------------------------------------------------------------------------

    \84\ See, e.g., Leiha Edmonds et al., Urban Institute, 
``Centering Racial Equity in Measurement and evaluation,'' (July 
2021), available at https://www.urban.org/sites/default/files/publication/104487/centering-racial-equity-in-measurement-and-evaluation_0.pdf.
---------------------------------------------------------------------------

M. Section 1293.31 Required Enterprise Data Collection and Reporting

    Proposed Sec.  1293.31 provides for certain required Enterprise 
data collection and reporting related to fair housing and fair lending. 
It would require the Enterprises to collect, maintain, and report data 
on language preference, homeownership education, and housing counseling 
for applicants and borrowers. The proposed rule would be substantially 
the same as the policy announced by FHFA in May 2022.\85\ The 
Enterprises currently collect this data through the automated 
underwriting systems and loan delivery

[[Page 25305]]

and have established data standards for collection of the information. 
The Enterprises have also issued a standard form for collection of the 
data--the Supplemental Consumer Information Form.
---------------------------------------------------------------------------

    \85\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
---------------------------------------------------------------------------

    FHFA issued a request for input in 2017 that addressed improving 
language access in mortgage lending and mortgage servicing.\86\ As part 
of that request for input as well as through ongoing engagement, 
stakeholders have noted the value of collecting the information and 
certain issues related to its collection. Certain applicants or 
borrowers may not wish to disclose the information; consistent with 
current practice by the Enterprises, the proposed rule would not 
require a response from applicants and borrowers and they could be 
provided with the option to not respond to a question about language 
preference as part of the information collection to satisfy the 
proposed rule. Providing the applicant or borrower the option to not 
respond is consistent with the collection of data on race and ethnicity 
in the mortgage market.\87\ Certain stakeholders have also raised 
concerns about collecting the information in compliance with the Equal 
Credit Opportunity Act and Regulation B. The Consumer Financial 
Protection Bureau has specified that collection of language preference 
information does not violate Regulation B.\88\
---------------------------------------------------------------------------

    \86\ See FHFA, ``Improving Language Access in Mortgage Lending 
and Servicing Request for Input,'' (May 25, 2017), available at 
https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Language_Access_RFI.pdf.
    \87\ 12 CFR part 1003, appendix B.
    \88\ ``On May 3, 2022, the Federal Housing Finance Agency 
announced that lenders will be required to use the Supplemental 
Consumer Information Form, which asks about consumers' language 
preference, as part of the application process for loans that will 
be sold to the Enterprises. Consistent with the Consumer Financial 
Protection Bureau's Nov. 2017 approval, creditors do not violate the 
ECOA or Regulation B when they collect the language preference of an 
applicant or borrower.'' Consumer Financial Protection Bureau, 
``Resources to help industry understand, implement, and comply with 
the fair lending requirements of the Equal Credit Opportunity Act 
(ECOA) and Regulation B,'' available at https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/equal-credit-opportunity-act/.
---------------------------------------------------------------------------

    Information about homeownership education and housing counseling 
provides valuable insight into these programs. In July 2022, the 
Mortgage Industry Standards Maintenance Organization formed a new 
working group related to housing counseling data.\89\ FHFA's National 
Survey of Mortgage Originations (NSMO) includes questions related to 
homeownership education and housing counseling.\90\ Researchers have 
used the NSMO data to explore homeownership education and housing 
counseling's effects on borrowers.\91\ Prior research has also explored 
the effects of homeownership education and housing counseling on 
borrowers.\92\ Consistent collection of homeownership education and 
housing counseling data can facilitate research and market changes to 
further make use of homeownership education and housing counseling to 
assist borrowers.
---------------------------------------------------------------------------

    \89\ See https://www.mismo.org/about-MISMO/news/2022/07/25/mismo-issues-call-for-participants-for-new-housing-counseling-workgroup.
    \90\ See FHFA, National Survey of Mortgage Originations 
Technical Documentation (Dec. 13, 2022), available at https://www.fhfa.gov/DataTools/Downloads/Documents/NSMO-Public-Use-Files/NSMO-Technical-Documentation-20221213.pdf.
    \91\ See Robert Argento et al., ``First-Time Homebuyer 
Counseling and the Mortgage Selection Experience in the United 
States: Evidence from the National Survey of Mortgage 
Originations,'' CityScape, Vol. 21, Number 2, (Nov. 2019), available 
at https://www.huduser.gov/portal/periodicals/cityscpe/vol21num2/ch3.pdf.
    \92\ See Wei Li et al., ``NeighborWorks America's Homeownership 
Education and Counseling: Who Receives It and Is it Effective?'' 
Urban Institute (Sept. 29, 2016), available at https://www.urban.org/research/publication/neighborworks-americas-homeownership-education-and-counseling-who-receives-it-and-it-effective; Jennifer Turnham ``Pre-Purchase Counseling Outcome 
Study,'' (May 2012), available at https://www.huduser.gov/publications/pdf/pre_purchase_counseling.pdf; J. Michael Collins et 
al., ``Homeownership Education and Counseling: Do We Know What 
Works?'' available at http://massinc.org/wp-content/uploads/2011/06/76378_10554_Research_RIHA_Collins_Report.pdf.
---------------------------------------------------------------------------

    FHFA believes that the information collected on language 
preference, homeownership education, and housing counseling for 
applicants and borrowers can support efforts to promote sustainable 
housing opportunities for underserved communities and could underlie 
elements of future Equitable Housing Finance Plans.

N. Proposed Rule Timing Elements

    Considering the timing aspects of the proposed rule together, in 
the year prior to new plans, FHFA would conduct public engagement on or 
before June 15 (e.g., FHFA would conduct public engagement on or before 
June 15, 2024, to inform planning and oversight related to the 2025-
2027 plans). An Enterprise would submit the plan to FHFA for review by 
September 30 in the year prior to the three-year period covered by the 
plan; the Enterprise would then publish the plan on its website on 
January 15 of the first year covered by the plan (e.g., a Freddie Mac 
plan covering 2025-2027 would be submitted to FHFA on September 30, 
2024, and published by Freddie Mac on January 15, 2025). FHFA would 
conduct public engagement on or before June 15 in the first year of the 
plan cycle (e.g., FHFA would conduct public engagement on or before 
June 16, 2025, because it is the first business day after June 15). 
Updates and reports would be submitted to FHFA by February 15 of the 
second year of the plan cycle and published by an Enterprise on April 
15 (e.g., a 2026 Freddie Mac update to a 2025-2027 plan would be 
submitted to FHFA on February 16, 2026, because it is the first 
business day after February 15, and published by Freddie Mac on April 
15, 2026). FHFA would conduct public engagement on or before June 15 of 
the second year of the plan cycle (e.g., FHFA would conduct public 
engagement on or before June 15, 2026). Updates and reports would be 
submitted to FHFA by February 15 of the third year of the plan cycle 
and published by an Enterprise on April 15 (e.g., a 2027 Freddie Mac 
update to a 2025-2027 plan would be submitted to FHFA on February 16, 
2027, because it is the first business day after February 15, and 
published by Freddie Mac on April 15, 2027). FHFA would conduct public 
engagement on or before June 15 in the third year of the plan (e.g., 
FHFA would conduct public engagement on or before June 15, 2027).
    Establishing expected dates by rule for submission, public 
engagement, and publication provides certainty and transparency to the 
public and the Enterprises, while permitting the Director to change the 
dates by public order if necessary in exigent circumstances.

V. Considerations of Differences Between the Banks and the Enterprises

    Under the proposed rule, both the Enterprises and the Banks would 
be subject to proposed subpart A (Sec. Sec.  1293.1 through 1293.3) and 
subpart B (Sec. Sec.  1293.11 through 1293.12), including general 
provisions related to fair housing and fair lending laws, compliance, 
examinations, oversight, and enforcement. Additionally, both the Banks 
and Enterprises would be covered by FHFA's ability to require regular 
and special reports and the requirement to certify compliance in 
regular reports. However, FHFA has not currently issued any reporting 
orders requiring regular or special fair housing and fair lending 
reports from the Banks. The Equitable Housing Finance Plan and broader 
equitable housing finance planning requirements described specifically 
in subpart C (Sec. Sec.  1293.21 through 1293.26) would apply only to 
the Enterprises and would codify in regulation and expand on the 
existing equitable housing framework for the Enterprises that FHFA 
established. As

[[Page 25306]]

discussed above, as part of FHFA's comprehensive review of the Banks, 
commenters have suggested incorporating equitable housing 
considerations for the Banks and this idea is currently under 
consideration. FHFA requests public comment on whether FHFA should 
codify a similar framework to subpart C for the Banks in regulation and 
what elements of the framework should be included, modified, or 
excluded if FHFA were to apply such a framework to the Banks through 
regulation. FHFA also requests comment on other ways to incorporate 
principles of equitable housing for the Banks that would meet the same 
objective. Proposed subpart D (Sec.  1293.31) could include data 
collection and reporting requirements that would apply to both the 
Enterprises and the Banks, but currently as proposed the requirements 
would apply only to the Enterprises.
    When promulgating regulations or taking other actions that relate 
to the Banks, section 1313(f) of the Safety and Soundness Act, as 
amended by section 1201 of HERA, requires the Director 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; and joint and several liability.\93\ In preparing 
the proposed rule, the Director has considered the differences between 
the Banks and the Enterprises as they relate to the above factors and 
has determined that none of the statutory factors would be adversely 
affected by the proposed rule. The Director is requesting comments from 
the public about whether differences related to these factors should 
result in a revision of the proposed rule as it relates to the Banks.
---------------------------------------------------------------------------

    \93\ 12 U.S.C. 4513(f).
---------------------------------------------------------------------------

VI. Comments Specifically Requested

    As stated above, FHFA invites comments on all aspects of the 
proposed rule and will take all comments into consideration before 
issuing a final rule. In addition to comments specifically requested 
within the description of the proposed rule above, FHFA also requests 
comment on the questions set forth below. The most helpful comments 
reference the specific questions listed, explain the reason for any 
changes, and include supporting data.
General
    1. The rule currently does not define equity. FHFA seeks comments 
on whether the rule should define equity. If the rule should define 
equity, what would be an appropriate definition?
Compliance and Enforcement
    2. How can FHFA improve fair lending compliance oversight of the 
regulated entities?
    3. Are there other applicable consumer compliance and/or consumer 
protection statutes and regulations that FHFA should include in this 
section?
    4. Are there any benefits or other issues FHFA should be aware of 
in considering adding unfair or deceptive acts or practices to its 
compliance and enforcement for regulated entities?
    5. How should FHFA approach assessing compliance with non-fair 
lending consumer protection authorities such as unfair or deceptive 
acts or practices? Would additional guidance be helpful to regulated 
entities as they assess their overall compliance management?
    6. Are there alternatives FHFA should consider to the language and 
approach for fair lending compliance certifications?
Equitable Housing Finance Plans and Updates
    7. Is the three-year timeline for the plans adopted by the 
Enterprises appropriate?
    8. Should FHFA issue an evaluation of the Enterprises? Should the 
rule include required evaluation metrics for the progress reports?
    9. Should the rule include required or optional priority goals? If 
so, who should determine which priority goals are applicable?
    10. From year to year, what should be the scope of updates to the 
Equitable Housing Finance Plans?
    11. Should the focus of an Equitable Housing Finance Plan be 
limited to one underserved community at a time?
    12. Does the rule provide for sufficient public engagement?
    13. Developing or supporting special purpose credit programs is one 
type of meaningful action that an Enterprise could take under an 
Equitable Housing Finance Plan, but the rule would not establish any 
special purpose credit programs under 12 CFR 1002.8(a)(1) in the 
regulation itself. Should FHFA adopt any special purpose credit 
programs under 12 CFR 1002.8(a)(1) and, if so, what type of program(s) 
should be adopted?
    14. Are the minimum requirements for performance reports sufficient 
or should performance reports contain any additional information not 
included in the rule?
Federal Home Loan Banks
    15. Should the Banks be required to comply with a framework similar 
to that of the Equitable Housing Finance Plans by regulation?
    16. What elements of the framework should be included, modified, or 
excluded if FHFA were to apply such a framework to the Banks by 
regulation?
    17. Are there other ways to incorporate principles of equitable 
housing for the Banks that would meet the same objective?

VII. Paperwork Reduction Act

    The proposed rule would not contain any information collection 
requirement that would require the approval of the Office of Management 
and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.). Therefore, FHFA has not submitted any information to OMB for 
review.

VIII. 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. FHFA has considered the impact of this proposed rule under 
the Regulatory Flexibility Act. FHFA certifies that this proposed rule, 
if adopted as a final rule, will not have a significant economic impact 
on a substantial number of small entities because the regulation would 
apply only to the regulated entities, which are not small entities for 
purposes of the Regulatory Flexibility Act.

List of Subjects for 12 CFR Part 1293

    Government-sponsored enterprises, Fair housing, Federal home loan 
banks, Mortgages, Reporting and recordkeeping requirements.

Authority and Issuance

0
Accordingly, for the reasons stated in the preamble, under the 
authority of 12 U.S.C. 4511, 4513, 4526, FHFA proposes to add part 1293 
to chapter XII in title 12 of the Code of Federal Regulations, to read 
as follows:

[[Page 25307]]

PART 1293--FAIR LENDING OVERSIGHT AND EQUITABLE HOUSING FINANCE

Subpart A--General
Sec.  1293.1 General.
Sec.  1293.2 Definitions.
Sec.  1293.3 Compliance and enforcement.
Sec.  1293.4 Preservation of authority.
Sec. Sec.  1293.5-1293.10 [Reserved]
Subpart B--Fair Housing and Fair Lending Compliance
Sec.  1293.11 Regulated entity compliance.
Sec.  1293.12 Reports, data, and certifications.
Sec. Sec.  1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
Sec.  1293.21 General; Identification of subpart as prudential 
standard.
Sec.  1293.22 Equitable housing finance plans and updates.
Sec.  1293.23 Performance reports.
Sec.  1293.24 Public engagement.
Sec.  1293.25 Program requirements.


Sec.  1293.26  Enterprise board equitable housing and mission 
responsibilities.

Sec.  1293.27-1293.30 [Reserved]
Subpart D--Data Collection
Sec.  1293.31 Required Enterprise data collection and reporting.

    Authority: 12 U.S.C. 1456(c)(1); 12 U.S.C. 1723a(m)(1); 12 
U.S.C. 4511; 12 U.S.C. 4513; 12 U.S.C. 4513b; 12 U.S.C. 4514; 12 
U.S.C. 4517; 12 U.S.C. 4526; 42 U.S.C. 3608(d).

Subpart A--General


Sec.  1293.1  General.

    (a) This part sets forth requirements related to fair lending 
oversight of regulated entities, equitable housing finance planning by 
the Enterprises, and certain data collection and reporting by the 
regulated entities.
    (b) Nothing in this part permits or requires a regulated entity to 
engage in any activity that would otherwise be inconsistent with the 
Safety and Soundness Act, the authorizing statutes, or other applicable 
law.
    (c) Nothing in this part creates a private right of action.


Sec.  1293.2  Definitions.

    For purposes of this part:
    Annual plan update (update) means a public update to an Equitable 
Housing Finance Plan for the second or third year of a planning cycle.
    Barrier means an element of an Enterprise's actions, products, or 
policies, or an aspect of the housing market that can reasonably be 
influenced by the Enterprise's actions, products, or policies, that 
contributes to an underserved community's limited share of sustainable 
housing opportunities, difficulties in accessing those sustainable 
housing opportunities, or the continuing adverse effects of 
discrimination affecting their participation in the housing market.
    Equitable Housing Finance Plan (plan) means a three-year public 
plan developed with public engagement and adopted by each Enterprise 
describing how each Enterprise will overcome barriers to sustainable 
housing opportunities faced by one or more underserved communities 
through objectives, meaningful actions, and measurable goals.
    Fair housing and fair lending laws means the Fair Housing Act, the 
Equal Credit Opportunity Act, and implementing regulations. 
Additionally, with respect to an Enterprise, it means 12 U.S.C. 4545 
and implementing regulations.
    Performance report (report) means an annual public report by an 
Enterprise on its performance under its Equitable Housing Finance Plan 
and other information on equitable housing and fair lending that meets 
the requirements of Sec.  1293.23 and any other FHFA requirements.
    Sustainable housing opportunity means a rental or homeownership 
opportunity that includes one or more characteristics important to the 
needs of a tenant or homeowner. These include but are not limited to: 
being affordable to obtain and sustain; relating to a dwelling that 
meets basic habitability requirements and is reasonably able to 
withstand natural disasters or other climate-related impact events; 
relating to a dwelling that is improving the quality of housing stock 
in an area; being located in an area with access to educational, 
transportation, economic, and other important opportunities, including 
community assets; being accessible for persons with disabilities and 
available in the most integrated setting appropriate to the needs of an 
individual with a disability; not placing the tenant or homeowner in a 
position where they are unlikely to succeed in sustaining the housing 
opportunity over the long term; and providing reasonable opportunities 
to accommodate hardships by the renter or homeowner to allow 
continuation of the housing opportunity.
    Underserved community is a group of people with shared 
characteristics or an area that is subject to current discrimination or 
has been subjected to past discrimination that has or has had 
continuing adverse effects on the group or area's participation in the 
housing market, historically has received or currently receives a lower 
share of the benefits of Enterprise programs and activities providing 
sustainable housing opportunities, or that otherwise has had difficulty 
accessing these benefits compared with groups of people without the 
shared characteristic or other areas. Shared characteristics include 
but are not limited to characteristics protected by fair lending laws 
applicable to the Enterprises including race, color, religion, sex 
(including actual or perceived sexual orientation or gender identity), 
familial status, national origin, disability, marital status, age, 
receipt of public assistance income, exercise of rights protected by 
the Consumer Credit Protection Act, exercise of rights protected by the 
Fair Housing Act, dwelling age, dwelling location, and neighborhood 
age. Examples of underserved communities, if supported by adequate 
information in a plan pursuant to Sec.  1239.25 of this chapter, 
include: the Commonwealth of Puerto Rico, single parents, persons with 
disabilities, women of color, seniors with fixed income, self-employed 
individuals, individuals with limited mainstream credit and banking 
history, counties which have historically received a lower share of the 
benefits of Enterprise programs and activities, individuals with income 
variance such as skilled tradespeople or those that receive income 
through commission, persons with limited English proficiency, and 
multigenerational households.


Sec.  1293.3  Compliance and enforcement.

    FHFA may enforce compliance with this part in any manner and 
through any means within its authority, including but not limited to 
adverse examination findings or through supervision or enforcement 
under 12 U.S.C. 4511(b), 4513b, 4631, or 4636. The agency may conduct 
examinations of a regulated entity's activities related to this part 
pursuant to 12 U.S.C. 4517.


Sec.  1293.4  Preservation of authority.

    Nothing in this part in any way limits the authority of the Federal 
Housing Finance Agency under other provisions of applicable law and 
regulations.


Sec.  Sec.  1293.5-1293.10  [Reserved]

Subpart B--Fair Housing and Fair Lending Compliance


Sec.  1293.11  Regulated entity compliance.

    (a) Compliance with fair housing and fair lending laws. Regulated 
entities must comply with fair housing and fair lending laws.
    (b) Compliance with prohibition on unfair or deceptive acts or 
practices. Regulated entities must comply with the

[[Page 25308]]

prohibition on unfair or deceptive acts or practices under 15 U.S.C. 
45.
    (c) Responsibilities of boards of directors. In accordance with 
Sec.  1239.4(b)(4) of this chapter, directors of a regulated entity 
shall direct the operations of the regulated entity in conformity with 
fair housing and fair lending laws and the prohibition on unfair or 
deceptive acts or practices under 15 U.S.C. 45, including by 
appropriately considering compliance with fair housing and fair lending 
laws and the prohibition on unfair or deceptive acts or practices under 
15 U.S.C. 45 in the oversight of the regulated entity and its business 
activities.


Sec.  1293.12  Reports, data, and certifications.

    (a) Reports. FHFA may require the regulated entities to submit to 
FHFA regular and special reports concerning fair housing and fair 
lending, including the provision of data pursuant to FHFA instructions.
    (b) Certifications. Each regular report concerning fair housing and 
fair lending shall include a certification of the regulated entity's 
compliance with fair housing and fair lending laws and with Sec.  
1293.11(b) in addition to any other required certification or 
declaration (such as a declaration under 12 U.S.C. 4514(a)(4)).


Sec. Sec.  1293.13-1293.20  [Reserved]

Subpart C--Enterprise Equitable Housing Finance Planning


Sec.  1293.21  General; Identification of subpart as a prudential 
standard.

    (a) This subpart sets forth the Enterprise duty to engage in 
equitable housing finance planning and to take meaningful actions to 
support underserved communities, and establishes standards and 
procedures related to public engagement and FHFA's oversight of the 
Enterprises' planning and actions.
    (b) If a date provided in this subpart falls on a day that is not a 
business day, the date required shall be the next business day.
    (c) Submission and publication dates provided in this subpart may 
be changed by the Director, as determined appropriate, by public order 
for a particular required submission or publication.
    (d) This subpart, except for Sec.  1293.26, is a prudential 
standard pursuant to section 1313B of the Safety and Soundness Act, 12 
U.S.C. 4513b, and is subject to 12 CFR part 1236.


Sec.  1293.22  Equitable housing finance plans and updates.

    (a) General. Every three years each Enterprise shall adopt an 
Equitable Housing Finance Plan covering a three-year period. Each 
Enterprise may adopt a public annual plan update to that plan for the 
second and third years of the plan.
    (b) Contents of plan. The plan shall include:
    (1) Identification of barriers to sustainable housing opportunities 
faced by one or more underserved communities;
    (2) Objectives that establish the overall direction and focus for 
the plan by defining the outcomes the plan seeks to accomplish, and 
that are logically tied to one or more identified barriers;
    (3) Meaningful actions (actions) describing the high-impact 
activities the Enterprise intends to undertake to further the 
identified objectives that span one or more years (including extending 
beyond the period covered by the plan);
    (4) Specific, measurable, and time-bound goals (goals) for each 
action; and
    (5) Summaries of the Enterprise's public engagement in developing 
the plan.
    (c) Plan submission. Each Enterprise shall submit its Plan to FHFA 
for review on or before September 30 of the year prior to the first 
year covered by the Plan.
    (d) Contents of annual plan update. If an Enterprise chooses to 
submit an update, it shall include all changes the Enterprise is making 
to its plan, including any changes in identified barriers, objectives, 
meaningful actions, specific, measurable, and time-bound goals, and a 
summary of any additional public engagement. The update shall clearly 
describe the specific reason(s) for each significant change to the 
plan.
    (e) Annual update submission. If an Enterprise chooses to submit an 
update, it shall submit its update for FHFA review on or before 
February 15 of the year covered by the update.
    (f) FHFA review. FHFA shall review each plan and update and, prior 
to publication, may:
    (1) Require removal of any confidential or proprietary information;
    (2) Require removal of any content that is not consistent with this 
part, the Safety and Soundness Act, the authorizing statutes, or other 
applicable law; and
    (3) Provide any feedback for consideration.
    (g) No prior approval of activities. FHFA's review does not 
constitute a prior approval of a plan or update or any action described 
therein. All actions included in a plan are subject to all applicable 
FHFA and other requirements and authorities.
    (h) Disclaimer included in plan and annual update. The plan and the 
annual update must include disclaimer language indicating the 
implementation of actions may be subject to change based on certain 
factors.
    (i) Plan and update publication. Each Enterprise shall publish its 
plan on its website on January 15 of the first year covered by the plan 
and maintain it thereafter. Each Enterprise shall publish any update on 
its website on April 15 of the second and third year covered by the 
plan and maintain it thereafter. Each Enterprise shall ensure that 
plans and updates are accessible to persons with disabilities.
    (j) Additional guidance. From time to time, FHFA may issue public 
guidance on plans and updates.


Sec.  1293.23  Performance reports.

    (a) General. Annually, each Enterprise shall publicly report on its 
plan progress and provide other information related to equitable 
housing and fair housing and fair lending for the prior year in a 
performance report.
    (b) Contents of the report. The report shall contain, at a minimum:
    (1) A narrative assessment consisting of a review of major 
successes and key accomplishments as well as lessons learned and 
challenges experienced;
    (2) Plan performance details for each objective, measurable goal, 
and meaningful action, including outcome-based metrics;
    (3) A summary of outcomes for the year categorized by type of 
activity and by race and ethnicity group and underserved community 
group (if available);
    (4) A summary of the value of resources dedicated by the Enterprise 
in supporting the outcomes categorized by type of activity and a 
summary of additional value of resources contributed from third parties 
as a result of the Enterprise's support of the outcomes.
    (5) An assessment of the Enterprise's underwriting that includes:
    (i) For the applicable year and the preceding three years, the 
accept rates for the Enterprise's automated underwriting system 
categorized by home purchase, rate-term refinancing, and cash-out 
refinancing and by race and ethnicity group and underserved community 
group (if available);
    (ii) For the applicable year and the preceding three years, the 
Enterprise's loan acquisitions categorized by home purchase, rate-term 
refinancing, and cash-out refinancing and by race and

[[Page 25309]]

ethnicity group and underserved community group (if available); and
    (iii) A narrative assessment of any innovations in automated 
underwriting or other policy taken during the applicable year and any 
future planned work intended to address identified disparities.
    (c) Report submission. Each Enterprise shall submit its report to 
FHFA for review on or before February 15 annually.
    (d) FHFA review. FHFA shall review each report and, prior to 
publication, may:
    (1) Require removal of any confidential or proprietary information;
    (2) Require removal of any content that is not consistent with this 
part, the Safety and Soundness Act, the authorizing statutes, or other 
applicable law; and
    (3) Provide any feedback for consideration.
    (e) Report publication. Each Enterprise shall publish its report on 
its website on April 15 annually and maintain it thereafter. Each 
Enterprise shall ensure that reports are accessible to persons with 
disabilities.
    (f) Additional requirements and guidance. FHFA may require 
additional information to be included in reports through other FHFA 
authorities, such as 12 U.S.C. 4514. From time to time, FHFA may issue 
public guidance on reports.


Sec.  1293.24  Public engagement.

    (a) FHFA public engagement. On or before June 15 annually, FHFA 
will conduct public engagement to allow the public to provide input for 
the Enterprises to consider in developing and implementing their plans 
and for FHFA to consider in its oversight.
    (b) Enterprise consultation. The Enterprises shall consult with 
stakeholders, including members of underserved communities and housing 
market participants, in the development and implementation of their 
plans and updates.


Sec.  1293.25  Program requirements.

    (a) Requirements for underserved communities. An Enterprise shall 
ensure that a plan relies on adequate information in identifying the 
underserved community or communities addressed by that plan and shall 
document that information as part of the plan. In selecting one or more 
underserved communities to be the focus of a plan, an Enterprise shall 
consider, among other factors:
    (1) Input from public engagement;
    (2) Whether the underserved community has previously been the focus 
of a plan;
    (3) The extent of the needs identified for the underserved 
community, including such needs that may remain despite prior efforts 
under a plan; and
    (4) Whether the underserved community is covered by a different 
initiative or program of the Enterprise.
    (b) Requirements for objectives. Objectives identified in a plan 
shall be logically tied to one or more identified barriers and 
facilitate establishing meaningful actions and measurable goals.
    (c) Requirements for meaningful actions--(1) Relation to objectives 
and goals. Meaningful actions shall be logically tied to one or more 
measurable goals and one or more objectives and support sustainable 
housing opportunities for an identified underserved community.
    (2) Other Enterprise goals and incremental action. Meaningful 
actions may also serve other Enterprise objectives and goals; however, 
a plan shall reflect significant additional action above and beyond 
actions that are also serving other Enterprise objectives and goals and 
shall reflect more than de minimis action.
    (3) Significant dedication of resources. Meaningful actions shall 
reflect a commitment commensurate with an Enterprise's prominence in 
the housing market, its available resources, its dedication of 
resources to other important efforts, the needs of underserved 
communities, market conditions, and safety and soundness.
    (4) Compliance with law. Actions that are not compliant with the 
Safety and Soundness Act, the authorizing statutes, or other applicable 
law do not qualify as meaningful actions.
    (5) Required remedial actions. Actions that are required to 
remediate supervisory findings or required as a result of enforcement 
actions do not qualify as meaningful actions.
    (d) Requirements for measurable goals. Measurable goals shall be:
    (1) Logically tied to one or more meaningful actions identified in 
a plan;
    (2) Specific;
    (3) Time-bound;
    (4) Focused on outcomes; and
    (5) Facilitative of measuring Enterprise progress, comparing 
Enterprise performance, and ensuring public accountability.


Sec.  1293.26  Enterprise board equitable housing and mission 
responsibilities.

    An Enterprise's board of directors shall appropriately consider the 
objectives, actions, and goals of the Enterprise's Equitable Housing 
Finance Plan, while also appropriately considering its affordable 
housing goals, Duty to Serve plans and targets, and other mission-
related obligations, in the board's oversight of the Enterprise and the 
Enterprise's business activities.


Sec. Sec.  1293.27-1293.30  [Reserved]

Subpart D--Data Collection


Sec.  1293.31  Required Enterprise data collection and reporting.

    Each Enterprise shall collect, maintain, and provide to FHFA the 
following data relating to single-family mortgages:
    (a) The language preference of applicants and borrowers; and
    (b) Whether applicants and borrowers have completed homeownership 
education or housing counseling and information about the homeownership 
education or housing counseling.

Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2023-08602 Filed 4-25-23; 8:45 am]
BILLING CODE 8070-01-P