[Federal Register Volume 88, Number 185 (Tuesday, September 26, 2023)]
[Proposed Rules]
[Pages 65827-65831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20818]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 88, No. 185 / Tuesday, September 26, 2023 /
Proposed Rules
[[Page 65827]]
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1228
RIN 2590-AB30
Exception to Restrictions on Private Transfer Fee Covenants for
Loans Meeting Certain Duty To Serve Shared Equity Loan Program
Requirements
AGENCY: Federal Housing Finance Agency.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing to
amend its regulation that restricts its regulated entities--the Federal
National Mortgage Association (Fannie Mae), the Federal Home Loan
Mortgage Corporation (Freddie Mac) (collectively, the Enterprises), and
the Federal Home Loan Banks (Banks)--from purchasing, investing in,
accepting as collateral, or otherwise dealing in mortgages on
properties encumbered by certain types of private transfer fee
covenants (PTFCs), and in related securities, subject to certain
exceptions (PTFC Regulation). The proposed rule would establish an
additional exception to the restrictions for loans on properties with
PTFCs, and related securities, if the loans meet certain shared equity
loan program requirements for Resale Restriction Programs in FHFA's
Duty to Serve Underserved Markets Regulation (Duty to Serve
Regulation).
DATES: Written comments on the proposed rule must be received on or
before November 27, 2023.
ADDRESSES: You may submit your comments on the proposed rule,
identified by regulatory information number (RIN) 2590-AB30, 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-AB30.
Hand Delivered/Courier: The hand delivery address is:
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB30,
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC
20219. Deliver the package at the Seventh Street SW 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-AB30, 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 time sensitive correspondence, please plan
accordingly.
FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director,
Office of Housing and Community Investment (OHCI), 202-649-3157,
[email protected]; or Sara L. Todd, Assistant General Counsel,
Office of General Counsel (OGC), 202-649-3527, [email protected];
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC
20219. These are not toll-free numbers. The mailing address for each
contact is: Federal Housing Finance Agency, Fourth Floor, 400 Seventh
Street SW, Washington, DC 20219. For TTY/TRS users with disabilities,
dial 711 and ask to be connected to any of the contact numbers above.
SUPPLEMENTARY INFORMATION:
I. Public Comments and Access
FHFA invites comments on all aspects of the proposed rule, and will
take all comments into consideration before issuing a final rule.
Commenters do not need to answer each of the specific questions asked
below. Copies of all comments received will be posted on the FHFA
website at http://www.fhfa.gov, and will include any personal
information you provide, such as your name, address, email address, and
telephone number. 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.
II. Background
A. Statutory and Regulatory Background: Enterprises
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992, as amended (Safety and Soundness Act), provides that the
Director of FHFA has a duty to ensure that the operations and
activities of the Enterprises foster liquid, efficient, competitive,
and resilient national housing finance markets.\1\ To achieve these
goals, the Enterprises purchase residential mortgages that fall within
the conforming loan limits established pursuant to 12 U.S.C. 1717 and
12 U.S.C. 1454, and issue guaranteed mortgage-backed securities backed
by those loans.
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\1\ 12 U.S.C. 4513(a)(1)(B)(ii).
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In addition, the Safety and Soundness Act provides generally that
the Enterprises ``have an affirmative obligation to facilitate the
financing of affordable housing for low- and moderate-income
families.'' \2\ Section 1129 of the Housing and Economic Recovery Act
of 2008 (HERA) amended section 1335 of the Safety and Soundness Act to
establish a duty for the Enterprises to serve three specified
underserved markets (Duty to Serve) in order to increase the liquidity
of mortgage investments and improve the distribution of investment
capital available for mortgage financing for certain categories of
borrowers in those markets.\3\ Specifically, the Enterprises are
required to provide leadership in developing loan products and flexible
underwriting guidelines to facilitate a secondary market for mortgages
on housing for very low-, low-, and moderate-income families for the
manufactured housing, affordable housing preservation, and rural
housing markets.\4\ FHFA's Duty to Serve Regulation,\5\ which
implements these
[[Page 65828]]
Duty to Serve statutory requirements, is discussed further below.
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\2\ 12 U.S.C. 4501(7).
\3\ 12 U.S.C. 4565.
\4\ 12 U.S.C. 4565(a). The terms ``very low-income,'' ``low-
income,'' and ``moderate-income'' are defined in 12 U.S.C. 4502.
\5\ 12 CFR part 1282, subpart C.
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B. Statutory and Regulatory Background: Federal Home Loan Banks
The eleven Banks are wholesale financial institutions organized
under the Federal Home Loan Bank Act to support housing finance and
further affordable housing and community development.\6\ The Banks are
cooperatives and carry out their mission primarily by providing
products and services to their member institutions. Bank members and
eligible housing associates (nonmember mortgagee borrowers such as
state housing finance agencies) may obtain access to secured loans,
known as advances.\7\ These must be fully secured by eligible
collateral at the time of issuance or renewal, which may include, among
other forms of collateral, residential mortgages and mortgage-backed
securities.\8\ In addition, the Banks issue standby letters of credit
on behalf of members and housing associates, which may be secured by
residential mortgages and mortgage-backed securities.
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\6\ See 12 U.S.C. 1421 et seq.
\7\ See 12 U.S.C. 1426(a)(4), 1430(a), 1430b.
\8\ See 12 U.S.C. 1430(a)(3), 1430(b); 12 CFR 1266.7, 1266.17,
part 1269.
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Most Banks also offer Acquired Member Assets (AMA) programs, under
which they acquire eligible mortgages from participating members and
housing associates, subject to parameters set forth in FHFA's AMA
regulation.\9\ The Banks are also authorized to invest in mortgage-
backed securities and other mortgage-related investments meeting
applicable requirements.\10\ Finally, the Banks may serve as pass-
through entities for mortgage loans acquired by another purchaser.
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\9\ See 12 CFR part 1268.
\10\ See 12 CFR 1267.3(a)(4)(iv), (v).
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III. PTFC Regulation
The current PTFC Regulation prohibits the Enterprises and Banks
from purchasing, investing in, or otherwise dealing in any mortgages
encumbered by PTFCs or related securities, and prohibits the Banks from
accepting such mortgages or securities as collateral for advances,
unless such PTFCs are ``excepted transfer fee covenants.'' \11\ Under
the PTFC Regulation, ``PTFCs'' mean obligations that purport to ``run
with the land'' in the records of title to real property or to bind
current owners of, and successors in title to, such real property, and
that obligate a transferee or transferor to pay a private transfer fee
upon transfer of the property.\12\ A ``private transfer fee'' is
defined in the PTFC Regulation as a transfer fee, including a charge or
payment, imposed by a covenant, and required to be paid in connection
with or as a result of a transfer of title to real estate, and payable
on a continuing basis each time a property is transferred (except for
transfers specifically excepted) for a period of time or
indefinitely.\13\
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\11\ 12 CFR 1228.2.
\12\ 12 CFR 1228.1.
\13\ 12 CFR 1228.1. The definition excludes fees imposed by or
payable to the Federal, State, or local government, and fees that
defray actual costs of the transfer of the property, neither of
which would be modified by the proposed rule.
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In adopting the PTFC Regulation, FHFA was concerned that private
transfer fees would: (1) be used to fund purely private continuous
streams of income for select market participants, either directly or
through securitized investment vehicles; (2) not benefit homeowners or
the properties involved; and (3) interfere with accurate determination
of property values. Therefore, FHFA concluded that mortgages on
properties with PTFCs might impair the safety and soundness of the
Enterprises and the Banks that purchase, invest in, or otherwise deal
in, or in the case of the Banks, that accept as collateral, such
mortgages.\14\
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\14\ See 77 FR 15566, 15567 (Mar. 16, 2012).
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The prohibition in the PTFC Regulation does not apply where the
PTFC is an ``excepted transfer fee covenant,'' which is defined as a
covenant that requires payment to a ``covered association'' and that
limits the use of such payment to purposes that provide a ``direct
benefit'' to the real property.\15\ A ``covered association'' is
defined as ``a nonprofit mandatory membership organization comprising
owners of homes, condominiums, cooperatives, manufactured homes, or any
interest in real property, created pursuant to a declaration, covenant
or other applicable law; or an organization described in section
501(c)(3) or section 501(c)(4) of the Internal Revenue Code.'' \16\ The
PTFC Regulation defines a ``direct benefit'' as meaning that the
proceeds of a PTFC ``are used exclusively to support maintenance and
improvements to encumbered properties, and acquisition, improvement,
administration, and maintenance of property owned by the covered
association of which the owners of the burdened property are members
and used primarily for their benefit.'' \17\ This may include
``cultural, educational, charitable, recreational, environmental,
conservation, or other similar activities that (1) are conducted in or
protect the burdened community or adjacent or contiguous property, or
(2) are conducted on other property that is used primarily by residents
of the burdened community.'' \18\
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\15\ 12 CFR 1228.1.
\16\ Id.
\17\ Id.
\18\ Id.
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IV. Interaction Between the PTFC Regulation and the Enterprise Duty To
Serve Regulation and Activities
Approximately four years after the adoption of the PTFC Regulation,
FHFA adopted the Duty to Serve Regulation, which applies only to the
Enterprises.\19\ Under the Duty to Serve Regulation, each Enterprise is
required to prepare an Underserved Markets Plan (Plan), which is
subject to Non-Objection by FHFA, and which describes the specific
activities and objectives the Enterprise will undertake over a three-
year period to fulfill its Duty to Serve in each underserved
market.\20\ The regulation identifies specific types of activities that
are eligible to receive Duty to Serve credit and that an Enterprise may
include in its Plan under each underserved market.\21\ An Enterprise
may also include additional activities in its Plan, subject to FHFA
determination of whether they are eligible to receive Duty to Serve
credit.\22\
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\19\ 12 CFR part 1282, subpart C; 81 FR 96242 (Dec. 29, 2016).
\20\ 12 CFR 1282.32(a), (b).
\21\ See 12 CFR 1282.33(c) for eligible activities in the
manufactured housing market; 12 CFR 1282.34(c), (d) for eligible
activities in the affordable housing preservation market; and 12 CFR
1282.35(c) for eligible activities in the rural housing market.
\22\ 12 CFR 1282.32(d)(2).
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Under the Duty to Serve Regulation, one of the activities eligible
for Duty to Serve credit under the affordable housing preservation
market is Enterprise support for shared equity programs for affordable
homeownership preservation in the form of resale restriction programs
administered by community land trusts, other nonprofit organizations,
or state or local governments or instrumentalities (collectively,
Resale Restriction Programs).\23\ The Duty to Serve Regulation further
specifies the following criteria for an eligible Resale Restriction
Program:
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\23\ 12 CFR 1282.34(d)(4)(i)(A).
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(a) Provides homeownership opportunities to very low-, low-, or
moderate-income households (100 percent or less of area median income
(AMI));
(b) Utilizes a ground lease, deed restriction, subordinate loan, or
similar legal mechanism that includes provisions stating that the
program will
[[Page 65829]]
keep the home affordable for subsequent very low-, low-, or moderate-
income families, the affordability term is at least 30 years after
recordation, a resale formula applies that limits the homeowner's
proceeds upon resale, and the program administrator or its assignee has
a preemptive option to purchase the homeownership unit from the
homeowner at resale; and
(c) Supports homebuyers and homeowners to promote sustainable
homeownership, including reviewing and pre-approving refinances and
home equity lines of credit.\24\
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\24\ 12 CFR 1282.34(d)(4)(ii).
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The preamble to the 2015 proposed Duty to Serve rule noted that
many shared equity loan programs allow the sponsors to charge modest
fees that cover the cost of operating the program.\25\ However, the
preamble to the final Duty to Serve rule did not reiterate this
discussion of fees and did not include a reference to fees in the
regulatory text. The final Duty to Serve rule also did not refer to or
amend the PTFC Regulation specifically to provide an exception to the
restriction on PTFCs for loans that meet Resale Restriction Program
requirements in the Duty to Serve Regulation.
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\25\ 80 FR 79181, 79203 (Dec. 18, 2015).
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Between 2018 (the first year of Duty to Serve program
implementation) and 2022, the Enterprises, collectively, purchased 595
shared equity loans for Duty to Serve credit. Both Enterprises' 2022-
2024 Duty to Serve Plans include plans to purchase shared equity loans
under Resale Restriction Programs in 2023 and 2024.
The loans purchased by the Enterprises under many of the Resale
Restriction Programs are on properties encumbered by PTFCs that fall
within the PTFC Regulation's prohibition because they bind current
owners and successors to pay a fee to the program administrator (often
a community land trust) on a continuing basis each time the property is
transferred. The loans do not meet the definition of an ``excepted
transfer fee covenant'' in the PTFC Regulation because they are used by
the program administrator to pay for its operating costs, including
costs of enforcing the long-term affordability requirements, but they
are not limited to costs and activities that are specific to the
``burdened community'' in which the subject property is located, nor
are they otherwise required to be used for the purpose of providing a
``direct benefit'' to the property (as these quoted terms are defined
in the PTFC Regulation).\26\
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\26\ See 12 CFR 1228.1.
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During the Enterprises' efforts to implement the shared equity loan
objectives in their Duty to Serve Plans, the Enterprises reviewed model
organizational documents that were proposed to be used as templates by
Resale Restriction Programs. In preparing to establish approved
templates, the Enterprises determined that, while Resale Restriction
Programs using the templates would meet the criteria for Resale
Restriction Programs in the Duty to Serve Regulation (except for the
100 percent of AMI limit), the programs' possible inclusion of private
transfer fee payment requirements could cause any loans issued under
the terms of the model organizational documents to be ineligible for
purchase by the Enterprises pursuant to the PTFC Regulation.
V. Regulatory Waiver for the Enterprises; Proposed Sec. 1228.1
In response to the Enterprises' identification of PTFCs in shared
equity loans under Resale Restriction Programs that otherwise could be
purchased and qualify for Duty to Serve credit, FHFA reviewed these
types of loans and determined that the private transfer fees in these
programs are not the types of fees that prompted the concern underlying
the PTFC Regulation. Unlike fees paid to the select market participants
that concerned FHFA when the PTFC Regulation was adopted, the fees in
Resale Restriction Programs reimburse the program administrators, which
are typically community land trusts, nonprofits, or local governments,
for their ongoing operating expenses related to the purchase and sale
of affordable homes under the program. They are not used as a method to
provide a continuous income stream to the program administrators with
no continuing affordable housing-related services provided. For
example, fees in Resale Restriction Programs may be used to pay for:
maintaining a list of, and qualifying, prospective program-eligible
homebuyers; providing seller representation and outreach to prospective
buyers; ensuring that repairs are incorporated into the sale
transaction; providing potential homebuyers with homeownership
counseling or similar education; exercising the program administrator's
option to purchase the home if the homeowner defaults on the first lien
or the affordability restriction; enforcing the long-term affordability
requirements (such as calculating the maximum resale price according to
the resale formula); and executing legal documents with subsequent
homebuyers.
Accordingly, FHFA issued a temporary prospective waiver of the
private transfer fee restrictions in Sec. 1228.2 of the PTFC
Regulation for Enterprise purchases or securitizations of shared equity
loans on properties with PTFCs that meet the Duty to Serve shared
equity loan program criteria for Resale Restriction Programs in the
Duty to Serve Regulation other than the Duty to Serve 100 percent of
AMI limit,\27\ through the remaining term of the Enterprises' 2022-2024
Duty to Serve Plans, i.e., through December 31, 2024. The waiver did
not include an income limit, based on input from the Enterprises and
other practitioners familiar with shared equity programs who indicated
that these programs typically set income limits up to 140 percent of
AMI (which is above the Duty to Serve 100 percent of AMI limit),
especially in communities where housing costs are high relative to
incomes. Limiting eligibility for the waiver to loans that meet the
Duty to Serve 100 percent of AMI limit would require lenders and shared
equity program administrators to use a differentiated approach with
borrowers above and below this income threshold. Further, it would
require lenders to review each loan to ensure eligibility for purchase
by the Enterprises and the Banks. This would undermine the objective of
standardizing the shared equity homeownership market and increasing the
number of Enterprise shared equity loan purchases under the Duty to
Serve program.
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\27\ 12 CFR 1282.34(d)(4)(i)(A), (d)(4)(ii).
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The waiver also included a retrospective component that waived the
restrictions in the PTFC Regulation for shared equity loans on
properties with private transfer fees purchased or securitized by the
Enterprises with note dates prior to July 1, 2023, regardless of
whether the loans met the Duty to Serve shared equity loan program
criteria for Resale Restriction Program loans.
Finally, the waiver provided notice of FHFA's intention to promptly
engage in notice-and-comment rulemaking to propose amending the PTFC
Regulation to codify the waiver provisions. This proposed rule
implements that intent. Specifically, the proposed rule would amend the
definition of ``excepted transfer fee covenant'' in Sec. 1228.1 of the
PTFC Regulation to add as an exception a PTFC that encumbers a property
for which a shared equity loan meets the requirements of a Duty to
Serve Resale Restriction Program (Sec. 1282.34(d)(4)(i)(A) and
(d)(4)(ii) of this chapter) other than the 100 percent of AMI limit.
[[Page 65830]]
VI. Interaction Between the PTFC Regulation and the Banks' Activities;
Proposed Sec. 1228.1
The current PTFC Regulation also prohibits the Banks from
purchasing, investing in, or otherwise dealing in mortgages on
properties encumbered by PTFCs, and related securities, and prohibits
the Banks from accepting such mortgages or securities as collateral for
advances, subject to the exceptions in the regulation.\28\ The Banks
have indicated that, to their knowledge, they have not purchased, or
accepted as collateral, shared equity loans. The same considerations
discussed above for the Enterprises (regarding differences in the uses
of fees payable at resale to administrators of Resale Restriction
Programs and the fees that FHFA was concerned about when the PTFC
Regulation was adopted) also apply to the Banks. However, because the
waiver for the Enterprises derived from their activities under the Duty
to Serve regulation (which does not apply to the Banks), the waiver did
not address activities of the Banks with respect to shared equity
loans. Because the Banks might decide in the future to purchase, invest
in, or otherwise deal in shared equity loans or related securities
under Resale Restriction Programs, or accept them as collateral, to
facilitate increased liquidity for affordable homeownership, FHFA
believes the exception provided in the proposed rule for the
Enterprises should also apply for the Banks.
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\28\ 12 CFR 1228.2.
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Accordingly, the definition of ``excepted transfer fee covenant''
in Sec. 1228.1 of the PTFC Regulation would continue to apply to both
the Enterprises and the Banks, as amended by the proposed rule to add
as an exception a PTFC that encumbers a property for which a shared
equity loan meets the requirements of a Duty to Serve Resale
Restriction Program (Sec. 1282.34(d)(4)(i)(A) and (d)(4)(ii) of that
chapter) other than the 100 percent of AMI limit.
VII. Limitation on Applicability; Proposed Sec. 1228.3
The proposed rule would remove the prospective application and
effective date in current Sec. 1228.3 of the PTFC Regulation. Current
Sec. 1228.3 includes a grandfather provision for mortgages on certain
properties encumbered by PTFCs if those PTFCs were created pursuant to
an agreement entered into before the effective date of the PTFC
regulation. The regulated entities have been operating under the terms
of the current regulation since July 16, 2012, and the Enterprises
subsequently have been operating under the terms of the regulatory
waiver since July 1, 2023. If this proposed PTFC rule is adopted as a
final rule, the prospective application date (i.e., the effective date)
of the final rule would be 60 days after the date of its publication in
the Federal Register. This date will precede December 31, 2024, which
is the conclusion of the 2022-2024 Duty to Serve Plan cycle and the
date on which the temporary prospective component of the waiver will
expire.
Proposed Sec. 1228.3 would include the retrospective component of
the waiver by allowing the Enterprises to retain in their portfolios
any of the 595 shared equity loans on properties with private transfer
fees that were purchased or securitized by the Enterprises with note
dates prior to the effective date of the waiver (July 1, 2023),
regardless of whether the loans met the Duty to Serve shared equity
loan program criteria for resale restriction programs in Sec.
1282.34(d)(4)(i)(A) and (d)(4)(ii) of this chapter.
VIII. Requests for Comments
FHFA specifically requests comments on the following questions
(please identify the question answered by the number assigned below):
1. Should the proposed rule apply to the Banks in addition to the
Enterprises? Do differences between the Banks and the Enterprises
warrant additional or other revisions to the proposed rule as it
relates to the Banks?
2. Should all of the Duty to Serve Resale Restriction Program
criteria, including the 100 percent of AMI limit, apply to the
determination of whether a mortgage loan that is subject to PTFCs, or a
related security, is eligible for purchase, investment, otherwise
dealing in, or acceptance as collateral by the Banks and Enterprises?
If not, which of those specific criteria should apply?
3. Should criteria other than the Duty to Serve Resale Restriction
Program criteria, such as an income limit different from 100 percent of
AMI, apply to the determination of eligibility?
4. Should criteria in addition to the Duty to Serve Resale
Restriction Program criteria apply to the determination of eligibility?
IX. Paperwork Reduction Act
The proposed rule does not contain any information collection
requirement. Thus, it would not require 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.
X. 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. FHFA need not undertake such an
analysis if the agency has certified that the regulation will not have
a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the
proposed rule under the Regulatory Flexibility Act and FHFA certifies
that the proposed rule, if adopted as a final rule, will not have a
significant economic impact on a substantial number of small entities
because the proposed rule is applicable only to the regulated entities,
which are not small entities for purposes of the Regulatory Flexibility
Act.
XI. Consideration of Differences Between the Banks and the Enterprises
When promulgating regulations relating to the Banks, section
1313(f) of the Safety and Soundness Act requires the Director of FHFA
to consider the differences between the Banks and the Enterprises with
respect to the Banks' cooperative ownership structure; mission of
providing liquidity to members and housing associates; affordable
housing and community development mission; capital structure; and joint
and several liability. In preparing this proposed rule, FHFA considered
the differences between the Banks and the Enterprises as they relate to
the above factors, and determined that the proposed rule is appropriate
as it would have no impact on four of the five factors and could have a
modest, positive impact on the fifth factor--the mission of providing
liquidity to members and housing associates. FHFA requests comments
regarding whether differences related to those factors should result in
any additional or other revisions to the proposed rule.
List of Subjects in 12 CFR Part 1228
Banks, Banking, Condominiums, Cooperatives, Federal Home Loan
Banks, Government-sponsored enterprises, Investments, Loan programs--
housing and community development, Low and moderate income housing,
Mortgages, Nonprofit organizations, Real property acquisition,
Securities.
For the reasons stated in the Preamble, and under the authority of
12 U.S.C. 4526, FHFA proposes to amend
[[Page 65831]]
part 1228 of chapter XII of title 12 of the Code of Federal Regulations
as follows:
PART 1228--RESTRICTIONS ON THE ACQUISITION OF, OR TAKING SECURITY
INTERESTS IN, MORTGAGES ON PROPERTIES ENCUMBERED BY CERTAIN PRIVATE
TRANSFER FEE COVENANTS AND RELATED SECURITIES
0
1. The authority citation for part 1228 is revised to read as follows:
Authority: 12 U.S.C. 4511, 4513, 4526, 4565, 4616, 4617, 4631.
0
2. Amend Sec. 1228.1 by revising the definition of ``Excepted transfer
fee covenant'' to read as follows:
Sec. 1228.1 Definitions.
* * * * *
Excepted transfer fee covenant means a private transfer fee
covenant that:
(1) Requires payment of a private transfer fee to a covered
association and limits the use of such transfer fees exclusively to
purposes which provide a direct benefit to the real property encumbered
by the private transfer fee covenants; or
(2) Requires payment of a private transfer fee under a program
meeting the Duty to Serve shared equity loan program criteria for
resale restriction programs in Sec. 1282.34(d)(4)(i)(A) and (d)(4)(ii)
of this chapter other than the Duty to Serve 100 percent of area median
income limit.
* * * * *
0
3. Revise Sec. 1228.3 to read as follows:
Sec. 1228.3 Limitation on applicability.
This part is not applicable to shared equity loans, or related
securities, that were purchased or securitized by the Enterprises with
note dates prior to July 1, 2023, regardless of whether the loans met
the Duty to Serve shared equity loan program criteria for resale
restriction programs in Sec. 1282.34(d)(4)(i)(A) and (d)(4)(ii) of
this chapter.
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2023-20818 Filed 9-25-23; 8:45 am]
BILLING CODE 8070-01-P