[Federal Register Volume 89, Number 96 (Thursday, May 16, 2024)]
[Rules and Regulations]
[Pages 42768-42788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-09559]


=======================================================================
-----------------------------------------------------------------------

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: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is 
issuing this final rule that addresses 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, unfair or deceptive acts or practices, and 
Equitable Housing Finance Plans. The final rule furthers 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, the regulated entities), and 
their fulfillment of their statutory purposes.

DATES: This rule is effective on July 15, 2024, except for subpart D to 
part 1293 (amendatory instruction 2), which will become effective on 
February 15, 2026.

FOR FURTHER INFORMATION CONTACT: Renita Roberts, Policy Analyst, Office 
of Fair Lending Oversight, (202) 809-2610, [email protected], 
Federal Housing Finance Agency, Constitution Center, 400 7th Street SW, 
Washington, DC 20219; or Lindsey Cope, Attorney Advisor, Office of Fair 
Lending Oversight, (202) 875-4047, [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: 

Table of Contents

I. Introduction
    A. Background
    B. Overview of the Proposed Rule
II. Discussion of Comments and Agency Response
    A. Overview of Comments Received
    B. Unfair or Deceptive Acts or Practices
    C. Board Standards and Responsibilities
    D. Certification of Compliance
    E. Mission-Specific Board Standards and Responsibilities
    F. Determination Not To Designate Enterprise Equitable Housing 
Finance Planning as a Prudential Management and Operations Standard
    G. Determination Not To Define ``Equity''
    H. Resource Disclosures
    I. Public Engagement
    J. Program Evaluation
    K. Reporting on Bank Voluntary Actions To Address Barriers to 
Sustainable Housing Opportunities
    L. Data Collection
    M. Authority and Consistency With Law
III. Summary of Changes in the Final Rule
    A. Section 1293.1(d), Severability Clause
    B. Section 1293.12(a), Reports, Data, and Certification
    C. Section 1293.12(b), Certification of Compliance
    D. Section 1293.21, General
    E. Section 1293.23, Resource Disclosures, Additions, and 
Clarifying Edits
    F. Section 1293.27, Program Evaluation
    G. Section 1293.31, Federal Home Loan Bank Equitable Housing 
Finance Planning
IV. Consideration of Differences Between the Banks and the 
Enterprises
V. Regulatory Analyses
    A. Paperwork Reduction Act
    B. Regulatory Flexibility Act
    C. Congressional Review Act

I. Introduction

    Federal agency oversight of fair housing, fair lending, and other 
relevant 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 final 
rule addresses barriers to sustainable housing opportunities for 
underserved communities by codifying existing FHFA practices in 
regulation and adding new requirements. Collectively, the actions in 
the final rule will improve FHFA's fulfillment of its statutory 
purposes and its oversight of the regulated entities and their 
fulfillment of their statutory purposes.
---------------------------------------------------------------------------

    \1\ Sustainable housing opportunity is defined more completely 
later in the final 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 final 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's 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 final rule codifies 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 final rule makes changes to the 
Equitable Housing Finance Plan program to promote greater 
accountability for the Enterprises and public transparency, adds 
oversight of unfair or deceptive acts or practices to FHFA's fair 
housing and fair lending oversight programs, requires additional 
certification of compliance by the regulated entities, and establishes 
more precise standards related to fair housing, fair lending, and 
principles of equitable housing for regulated entity boards of 
directors (boards). The final rule also establishes a requirement for 
the Banks

[[Page 42769]]

to report annually on any actions they voluntarily take to address 
barriers to sustainable housing opportunity for underserved communities 
in order to provide public transparency but does not require the Banks 
to undertake such actions or engage in the planning process required of 
the Enterprises.

A. Background

    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 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\
---------------------------------------------------------------------------

    \3\ See 12 U.S.C. 1451 (note) and 1716.
---------------------------------------------------------------------------

    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 (Bank Act),\4\ and today consists of 11 regional Banks and the 
System's fiscal agent, the Office of Finance. Each Bank is a separate, 
government-chartered, member-owned corporation.
---------------------------------------------------------------------------

    \4\ See 12 U.S.C. 1421 et seq.
---------------------------------------------------------------------------

    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 must be managed safely and soundly so that they 
continue to accomplish their public missions.\6\
---------------------------------------------------------------------------

    \5\ See 12 U.S.C. 4511(b).
    \6\ See 12 U.S.C. 4501(1) (the Enterprises and 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) (the 
Enterprises have an 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).
---------------------------------------------------------------------------

    With respect to the statutory mission of the Enterprises, a number 
of statutory and regulatory authorities that apply to FHFA and the 
Enterprises speak to the need to promote sustainable housing 
opportunities for all 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 duties 
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 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\
---------------------------------------------------------------------------

    \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 the Enterprises' 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\ See 12 U.S.C. 4513(a)(1)(B)(i), (v).
    \9\ See 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4) 
(Freddie Mac charter).
    \10\ See 12 U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
---------------------------------------------------------------------------

    The Housing Goals and Duty to Serve requirements \11\ are important 
components for ensuring that the Enterprises fulfill their statutory 
mission and charters and serve low- and moderate-income families and 
underserved markets.\12\ 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.\13\ 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.\14\ 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 2023 year, the Enterprises transferred 
$301 million into the funds.\15\
---------------------------------------------------------------------------

    \11\ See 12 U.S.C. 4565; 12 CFR part 1282, subpart C.
    \12\ See 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).
    \13\ See 12 U.S.C. 4565(b)(3)(A).
    \14\ See 12 U.S.C. 4567.
    \15\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-301-Million-for-Affordable-Housing-Programs.aspx.
---------------------------------------------------------------------------

    Several provisions of the Bank Act denote the statutory missions 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 community investment programs 
and affordable housing programs, compliance with housing goals, and the 
requirement that certain board directors have experience in public 
interest areas.\16\ FHFA launched a comprehensive review of the System 
in August 2022.\17\ Among the areas FHFA explored as part of the review 
were 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. FHFA issued a Report based on 
its comprehensive review in November 2023, ``The Federal Home Loan Bank 
System at 100: Focusing on

[[Page 42770]]

the Future.'' \18\ The Report noted the passage of the Fair Housing Act 
as a significant milestone in the development of the mortgage finance 
system and noted that compliance with fair housing and fair lending 
laws and equity initiatives is not currently assessed in supervisory 
ratings for the Banks. The Report also noted that participants in 
FHFA's comprehensive review of the System suggested that FHFA consider 
requiring the Banks to prepare an affordable housing strategy or 
equitable housing finance plan that would describe their planned 
activities and summarize actions taken in the prior year.
---------------------------------------------------------------------------

    \16\ See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii) states that 
Directors must have experience ``representing consumer or community 
interests on banking services, credit needs, housing, or financial 
consumer protections[;]'' 12 U.S.C. 1430(g), (i), (j); 12 U.S.C. 
1430c.
    \17\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx.
    \18\ See https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHLBank-System-at-100-Report.pdf.
---------------------------------------------------------------------------

    Under the Fair Housing Act, all Federal agencies which have 
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.\19\ 
FHFA has included considerations of fair housing and fair lending in 
rulemaking since its establishment.\20\ FHFA 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.\21\ FHFA issued orders to Fannie Mae and 
Freddie Mac for regular and special reports related to fair housing and 
fair lending.\22\ FHFA issued guidance for the Enterprises on fair 
housing and fair lending supervisory expectations.\23\ FHFA coordinates 
with HUD on fair lending and fair housing oversight,\24\ and 
established a fair lending oversight data system in part to facilitate 
cooperation in interagency fair housing and fair lending oversight.\25\ 
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).\26\ FHFA also established the 
Equitable Housing Finance Plan program for the Enterprises to develop a 
framework for addressing barriers to sustainable housing opportunities 
for underserved communities through strategic planning and public 
participation.\27\ 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.\28\ In 2023, 
FHFA established a supervisory rating system for the Enterprises that 
evaluates compliance with fair housing and fair lending laws and equity 
initiatives.\29\
---------------------------------------------------------------------------

    \19\ 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
    \20\ See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR 31602, 31603, 
31606 (July 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).
    \21\ 86 FR 36199 (July 9, 2021).
    \22\ 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.
    \23\ Advisory Bulletin AB 2021-04, Enterprise Fair Lending and 
Fair Housing Compliance (December 20, 2021), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf.
    \24\ 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.
    \25\ 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.
    \26\ Public Law 110-289, 122 Stat. 2696, 2697 (2008) (codified 
at 12 U.S.C. 4561(d)).
    \27\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-
Announces-Equitable-Housing-Finance-Plans_for-Fannie-Mae-and-
Freddie-Mac.aspx.
    \28\ 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.
    \29\ See Advisory Bulletin AB 2023-05: Enterprise Fair Lending 
and Fair Housing Rating System (September 27, 2023), available at: 
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB_2023-05_Enterprise-Fair-Lending-and-Fair-Housing-Rating-System.aspx.
---------------------------------------------------------------------------

    Barriers to Sustainable Housing Opportunities. Ongoing disparities 
and challenges in the housing market persist, which limit sustainable 
housing opportunities for underserved communities. The rest of Part A 
discusses some of these disparities and challenges by way of example. 
Both Enterprises' 2022-2024 Equitable Housing Finance Plans identify 
Black and Latino communities as underserved and include extensive 
discussions of barriers to sustainable housing opportunities.\30\ The 
inclusion or discussion of a particular disparity, challenge, or 
underserved community is not an indication of FHFA's views on the needs 
of a community or what actions FHFA's regulated entities should take.
---------------------------------------------------------------------------

    \30\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan 
(June 2022), available at https://www.freddiemac.com/about/pdf/2022-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.
---------------------------------------------------------------------------

    Challenges Accessing Sustainable Housing Opportunities. There are 
many underserved communities experiencing significant challenges in 
accessing sustainable housing opportunities. This includes, for 
example, 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.\31\ More than 10 million households headed by someone over 
age 65 are cost-burdened, with the median older renter having net worth 
under $6,000 in 2019.\32\ By 2035, the population age 80 and over is 
expected to double from its level in 2016. The population in rural 
areas is older and more likely to have lower income levels, with the 
median income for renters in high needs rural areas being $26,422 
compared to $40,505 nationally.\33\ Lower incomes can lead to greater 
cost burdens in rural areas, particularly for renters. For example, in 
Middle Appalachia, 49 percent of renters are cost-burdened.\34\ 
Individuals with disabilities also face housing challenges. 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. Two percent of total housing inventory is 
accessible for people with mobility disabilities, while 14 percent of 
Americans have mobility disabilities.\35\
---------------------------------------------------------------------------

    \31\ When disaggregated by race, 57 percent of Black renter 
households were cost-burdened, and 31 percent of Black homeowner 
households were cost-burdened. See Joint Center for Housing Studies 
of Harvard University, The State of the Nation's Housing 2023, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \32\ 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.
    \33\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (Apr. 7, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf.
    \34\ Id.
    \35\ 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.

---------------------------------------------------------------------------

[[Page 42771]]

    Other populations, including persons identifying as lesbian, gay, 
bisexual, transgender, or queer (LGBTQ+), Native Americans, single 
parents, individuals with limited mainstream credit and banking 
history, and households with limited English proficiency (LEP), 
continue to report facing challenges in accessing the housing finance 
system. A study found that same-sex applicants are 73.12 percent more 
likely than different-sex applicants to be denied for a mortgage.\36\ 
Mortgage financing opportunities for people living on Native American 
trust lands remain limited.\37\ Research has found that the median 
single mothers of minor children possess only about $7,000 in family 
wealth, by far the lowest median wealth among all singles.\38\ And 
relatedly, one study of census data found that only 31 percent of 
single mothers are also homeowners, compared to 64 percent of 
households overall.\39\ Borrowers with limited credit histories, who 
are disproportionately likely to be Black or Hispanic or live in low-
income neighborhoods, have difficulty accessing affordable credit.\40\ 
Additionally, LEP households, or those 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.\41\ As a 
result, this can leave the borrower without a full understanding of 
mortgage terms and conditions.
---------------------------------------------------------------------------

    \36\ 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.
    \37\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (April 7, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf.
    \38\ Federal Reserve Bank of St. Louis, ``Single Mothers Face 
Difficulties with Slim Financial Cushions'' (May 9, 2022) (defining 
singles as ``those who have never married, are divorced, widowed or 
separated''), https://www.stlouisfed.org/on-the-economy/2022/may/single-mothers-slim-financial-cushions.
    \39\ Dana Anderson, ``McAllen, Texas, Salt Lake City and Grand 
Rapids Have the Highest Homeownership Rates for Single Mothers,'' 
Redfin News (June 24, 2019), https://www.redfin.com/news/single-
mother-homeownership-rate-us/
#:~:text=McAllen%2C%20Texas%2C%20where%20the%20typical,%25%20and%20Mi
nneapolis%20(40.3%25).
    \40\ CFPB, Data Point: Credit Invisibles at 6 (May 2015), 
https://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf.
    \41\ 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.
---------------------------------------------------------------------------

    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.\42\ However, there have been 
persistent gaps in the homeownership rate by race and ethnicity. In the 
fourth quarter of 2023, the White homeownership rate was 73.8 percent, 
the Black homeownership rate was 45.9 percent, the Latino homeownership 
rate was 49.8 percent, and the Asian, Native Hawaiian and Pacific 
Islander homeownership rate was 63.0 percent.\43\ The Black and White 
homeownership gap, at 27.9 percentage points as of the fourth quarter 
of 2023, 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 between 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.\44\
---------------------------------------------------------------------------

    \42\ 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.
    \43\ Federal Reserve Economic Data, Federal Reserve Bank of St. 
Louis; Housing and Homeownership: Homeownership Rate (retrieved 
February 13, 2024) available at https://fred.stlouisfed.org/release/tables?rid=296&eid=784188#snid=784199; https://www.federalreserve.gov/econres/notes/feds-notes/greater-wealth-greater-uncertainty-changes-in-racial-inequality-in-the-survey-of-consumer-finances-accessible-20231018.htm#fig1.
    \44\ See Fannie Mae 2022-2024 Equitable Housing Finance Plan 
(June 2022), p. 7, available at https://www.fanniemae.com/media/43636/display.
---------------------------------------------------------------------------

    A household's home is often its largest financial asset and key to 
wealth building and intergenerational wealth transfers, which in turn 
enable future generations to achieve homeownership. The Federal 
Reserve, in a 2022 survey, found that White families have the highest 
level of both median and mean family wealth: $285,000 and $1,367,170, 
respectively.\45\ In contrast, Black families' median and mean wealth 
was $44,890 and $211,450, respectively. In other words, the typical 
Black family has about $16 in wealth for every $100 held by the typical 
White family. These wealth disparities grew between 2003 and 2018, 
though have narrowed slightly since 2018.\46\ One study estimated that 
the total racial wealth gap is $10.14 trillion.\47\ Black families are 
less likely to receive or expect to receive an inheritance, and, if 
they do, it is, on average, less than that of White households.\48\ 
Black families are also less likely to obtain financial assistance from 
their personal networks, with 41 percent of Black families reporting 
they could receive $3,000 from family or friends compared to 72 percent 
of White families.\49\ Black households are less likely to receive 
familial assistance with down payments and the other forms of financial 
support that can make homeownership achievable and sustainable.\50\ 
Moreover, many Black, Latino, and Asian households provide financial 
assistance to older generations, which slows their ability to save for 
a down payment.\51\
---------------------------------------------------------------------------

    \45\ See Aditya Aladangady et al., Board of Governors of the 
Federal Reserve System, ``Greater Wealth, Greater Uncertainty: 
Changes in Racial Inequality in the Survey of Consumer Finances,'' 
(Oct. 18, 2023), available at https://www.federalreserve.gov/econres/notes/feds-notes/greater-wealth-greater-uncertainty-changes-in-racial-inequality-in-the-survey-of-consumer-finances-20231018.html.
    \46\ 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.
    \47\ See Fred Dews, ``Charts of the Week: The racial wealth gap; 
the middle-class income slump,'' The 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/.
    \48\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan 
(June 2022), available at Freddie Mac Equitable Housing Finance 
Plan.
    \49\ Neil Bhutta et al., Disparities in Wealth by Race and 
Ethnicity in the 2019 Survey of Consumer Finances, Bd. of Governors 
of the Fed. Res. Sys.: FEDS Notes (Sept. 28, 2020), https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.html.
    \50\ Michael Stegman and Mike Loftin. 2021. ``An Essential Role 
for Down Payment Assistance in Closing America's Racial 
Homeownership and Wealth Gaps.'' Washington, DC: Urban Institute.
    \51\ 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.
---------------------------------------------------------------------------

    Disparities Based on Disaggregated Data. For many underserved 
communities, it is critical to examine disaggregated data and data at 
the community level.\52\ Failing to disaggregate may result in failure 
to identify significant disparities facing unique 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

[[Page 42772]]

Nepalese Americans' homeownership rate is 33 percent.\53\ There can be 
geographic differences, as well: while the overall homeownership gap 
between Black and White homeowners is 29.6 percentage points, in 
Minneapolis, the gap rises to 50 percentage points.\54\
---------------------------------------------------------------------------

    \52\ 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.
    \53\ See Asian Real Estate Association, 2023-2024 State of Asia 
America Report, available at https://areaa.org/resource-asia-america-report.
    \54\ 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.
---------------------------------------------------------------------------

    There are also disparities in mortgage underwriting that may be 
obscured by looking at aggregated data.\55\ 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.
---------------------------------------------------------------------------

    \55\ See Leda Bloomfield et al., FHFA Insights Blog, ``Asian 
Americans, Native Hawaiians, and Pacific Islanders: Visible 
Together,'' (May 30, 2023), available at https://www.fhfa.gov/Media/Blog/Pages/Asian-Americans-Native-Hawaiians-and-Pacific-Islanders-Visible-Together.aspx.
---------------------------------------------------------------------------

    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 comprised about 68 percent of Fannie Mae and Freddie 
Mac acquisitions.\56\
---------------------------------------------------------------------------

    \56\ 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's 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 the fourth 
quarter of 2023, White applicants' automated underwriting system 
applications had approval rates of about 83 percent and 89 percent for 
the automated underwriting systems of Fannie Mae and Freddie Mac, 
respectively; Black applicants had approval rates of about 65 percent 
and 73 percent; Latino applicants had approval rates of about 75 
percent and 80 percent; Asian applicants had approval rates of about 86 
percent and 90 percent; American Indian and Alaska Native applicants 
had approval rates of about 76 percent and 78 percent; and Native 
Hawaiian and Pacific Islander applicants had approval rates of about 77 
percent and 82 percent.\57\
---------------------------------------------------------------------------

    \57\ 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.\58\ The 
trend in higher denial rates has persisted in HMDA data for many 
years.\59\ A 2019 study of mortgage pricing found that Latino and Black 
borrowers pay 7.9 and 3.6 basis points more in interest for mortgages, 
respectively, even when controlling for several factors.\60\ Pursuant 
to the Safety and Soundness Act, FHFA conducts an annual screening, 
preliminary findings, and referral process for lenders that demonstrate 
patterns of interest rate disparities for minority borrowers when 
compared with borrowers who are not minorities and describes the 
results in its Annual Report to Congress.\61\ Based on the results of 
FHFA's 2019 and 2020 analyses, 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.\62\
---------------------------------------------------------------------------

    \58\ 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.
    \59\ 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.
    \60\ See Robert Bartlett et al., Haas School of Business UC 
Berkeley, ``Consumer-Lending Discrimination in the FinTech Era,'' 
(Nov. 2019), available at https://faculty.haas.berkeley.edu/morse/research/papers/discrim.pdf.
    \61\ 12 U.S.C. 4561(d).
    \62\ 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.\63\ 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.\64\
---------------------------------------------------------------------------

    \63\ See https://fhlbsf.com/about/newsroom/urban-institute-and-fhlbank-san-francisco-announce-new-efforts-close-racial?f%5B0%5D=authored_on%3A2021.
    \64\ 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. For example, rural areas suffer from a lack of affordable 
multifamily and single-family capital, and borrowers typically have 
lower credit scores and higher mortgage denial rates than the overall 
population of borrowers.\65\ Manufactured housing represents 13 percent 
of housing stock in rural areas, compared to 6.1 percent of the housing 
stock nationally.\66\ Residents of owner-

[[Page 42773]]

occupied manufactured housing have lower incomes and lower net worth 
than residents of site-built homes, and lack adequate mortgage 
financing options.\67\ FHFA's Duty to Serve program works to address 
many of these disparities.\68\
---------------------------------------------------------------------------

    \65\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved 
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
    \66\ Fannie Mae 2022-2024 Duty to Serve Underserved Markets Plan 
(April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved 
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
    \67\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved 
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
    \68\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved 
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
---------------------------------------------------------------------------

    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.\69\ This is compared 
to 13.4 percent of homes in White tracts (0-50 percent) and 19.2 
percent of homes in minority tracts (50.1-80 percent).\70\ 
Additionally, FHFA identified examples of appraisal reports with direct 
references to the racial and ethnic composition of the 
neighborhood.\71\ FHFA also identified time adjustments as a factor in 
appraisals that contributes to appraised values less than contract 
price, and racial disparities in appraisal outcomes.\72\ Freddie Mac's 
research showed that properties in minority tracts are more likely than 
properties in White tracts to receive an appraisal lower than the 
contract price.\73\ 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.\74\ Additional research has also highlighted and 
analyzed disparities in property valuation.\75\ Consumer groups have 
begun to conduct fair housing paired testing of appraisers, resulting 
in the filing of complaints.\76\ Rural markets also experience 
challenges related to appraiser availability and appraisal cost.\77\ 
Similarly, the availability of appraisals for manufactured housing is 
limited due in part to the lack of comparable property data and the 
lack of familiarity with appraising techniques surrounding manufactured 
housing.\78\
---------------------------------------------------------------------------

    \69\ See Jonathan Liles, ``Exploring Appraisal Bias Using UAD 
Aggregate Statistics,'' FHFA Insights Blog (Nov. 2, 2022), available 
at https://www.fhfa.gov/Media/Blog/Pages/Exploring-Appraisal-Bias-Using-UAD-Aggregate-Statistics.aspx.
    \70\ 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 percent in White tracts. Uniform 
Appraisal Dataset Aggregate Statistics, available at https://www.fhfa.gov/DataTools/Pages/UAD-Dashboards.aspx.
    \71\ 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.
    \72\ See Scott Susin, ``Underutilization of Appraisal Time 
Adjustments,'' (Jan. 2024), available at https://www.fhfa.gov/Media/Blog/Pages/Underutilization-of-Appraisal-Time-Adjustments.aspx; 
Scott Susin, ``Underappraisal Disparities and Time Adjustments,'' 
(Jan. 2024), available at https://www.fhfa.gov/Media/Blog/Pages/Underappraisal-Disparities-and-Time-Adjustments.aspx.
    \73\ 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-A Modeling Approach,'' (Sept. 20, 2021), 
available at https://www.freddiemac.com/research/insight/20210920-home-appraisals.
    \74\ See Jake Williamson et al., ``Appraising the Appraisal,'' 
(Feb. 2022) available at https://www.fanniemae.com/media/42541/display.
    \75\ 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.
    \76\ 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/.
    \77\ 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; Freddie Mac 2022-2024 Duty to 
Serve Underserved Markets Plan (April, 2022), p. 49, available at 
https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
    \78\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets 
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved 
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
---------------------------------------------------------------------------

    Enterprise Contributions Pursuant to the Equitable Housing Finance 
Planning Framework and FHFA Oversight. In accordance with the 
authorizing statutes, each Enterprise's mission includes promoting 
access to mortgage credit throughout the Nation,\79\ and, as discussed 
above, a number of statutory authorities speak to the Enterprises' 
statutory purposes and FHFA's statutory duties to ensure the 
Enterprises meet those purposes. FHFA's experience in overseeing the 
Equitable Housing Finance Plan program since it was originally 
established in 2021 has informed the rule. In addition, FHFA finds that 
the programs undertaken by the Enterprises under their 2022-2024 
Equitable Housing Finance Plans have helped the Enterprises comply with 
the authorizing statutes, and that the program and oversight framework 
has helped FHFA fulfill its statutory duties.
---------------------------------------------------------------------------

    \79\ 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4) 
(Freddie Mac charter).
---------------------------------------------------------------------------

    For the first Equitable Housing Finance Plan cycle, the Enterprises 
focused on addressing inequities and removing barriers to housing 
opportunities in a manner consistent with safety and soundness, and 
borrower sustainability for Black and Latino borrowers, as these 
borrower populations have been historically denied consistent and 
systemic fair, just, and impartial treatment and face persistent 
disparities in accessing housing. Although the Enterprises focused 
their 2022-2024 Equitable Housing Finance Plans on addressing barriers 
faced by Black and Latino borrowers, all implemented actions were 
beneficial to numerous underserved communities.
    Freddie Mac pursued a variety of activities under its 2022-2024 
Equitable Housing Finance Plan to achieve its objectives. To help 
eliminate disparities for Black and Latino communities in the 
Multifamily sector, Freddie Mac expanded financing for affordable 
housing developers and improved access to education and financing 
opportunities for diverse and emerging multifamily developers through 
its Develop the Developer program. Freddie Mac also established a fair 
servicing process to help identify gaps in loss mitigation outcomes, 
promoted Borrower Help Centers, and expanded use of its own renovation 
products to preserve affordable single-family homes. It financed 
rehabilitation loans to

[[Page 42774]]

maintain and improve the quality of existing affordable housing stock 
and used its preservation loan agreements to preserve affordable rents 
at affordable housing properties that do not receive government 
subsidies. To promote renter empowerment at multifamily properties, 
Freddie Mac established a Renter Resource Organization program and 
expanded CreditSmart, a free financial and homeownership education 
curriculum for renters and borrowers.
    Freddie Mac employed affirmative outreach methods to ensure housing 
professionals were equipped with equity-related information, education, 
and resources to ensure its servicing and oversight policies promote 
positive borrower-home retention outcomes. Freddie Mac followed up with 
its Mission Servicing Oversight Framework that allows the Enterprise to 
work with servicers that provide high-touch engagement with at-risk 
borrowers to offer early delinquency counseling and help mitigate 
mortgage defaults. To combat appraisal bias, a text detection method 
was added to Freddie Mac's Loan Collateral Advisor tool to flag 
subjective words and phrases that could indicate bias to better educate 
appraisers and correct the use of potentially biased language in 
appraisal reports with real-time feedback. Finally, both Freddie Mac 
and Fannie Mae continued the Appraiser Diversity Initiative to provide 
scholarships and promote the diversity of new entrants to the 
residential appraisal profession by reducing the barriers to entry, 
including education, training, and experience requirements.
    Fannie Mae also pursued a variety of activities under its 2022-2024 
Equitable Housing Finance Plan to achieve its objectives. Fannie Mae 
introduced HomeView, a free online homeownership education course 
designed to address misconceptions and knowledge gaps about the home 
purchase and mortgage qualification process. Fannie Mae also made the 
HomeView course available in Spanish. Fannie Mae used its Here2Help 
program to provide counseling services for renters and homeowners 
facing financial hardships and offered its Future Housing Leaders 
program to connect college students from diverse institutions to career 
opportunities in the housing industry. In its efforts to assist Black 
and Latino renters and support affordable housing in the Multifamily 
sector, Fannie Mae offered pricing and underwriting incentives for 
multifamily borrowers that set aside at minimum 20 percent of a 
property's units as affordable units for renters earning up to 120 
percent of the area median income (AMI) in very low-income markets 
through their Sponsor-Dedicated Workforce and Sponsor-Initiated 
Affordability programs. Fannie Mae also introduced the Multifamily 
Positive Rental Payment History program to help renters establish and 
improve credit scores using bank transaction data and is currently 
exploring ways to decrease renters' upfront security deposits, which 
can then be saved as cash reserves and later used towards down payment 
and/or closing costs. Fannie Mae also agreed to partner with local 
housing organizations to support the revitalization and expansion of 
housing opportunities in historically Black neighborhoods.
    In their efforts to advance equity as part of their Equitable 
Housing Finance Plans, both Enterprises provided liquidity for eligible 
lender-developed Special Purpose Credit Programs (SPCPs) and developed 
their own SPCPs to expand access to mortgage funding for historically 
underserved communities.\80\
---------------------------------------------------------------------------

    \80\ 15 U.S.C. 1691(c)(3); 12 CFR 1002.8(a); Federal Housing 
Finance Agency et. al., Interagency Statement on Special Purpose 
Credit Programs Under the Equal Credit Opportunity Act and 
Regulation B (Feb. 22, 2022), https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/SPCP_Interagency_Statement_2022_02_22.pdf; see also Susan M. Bernard 
and Patrice Alexander Ficklin, CFPB, ``Expanding access to credit to 
underserved communities'' (July 31, 2020), https://www.consumerfinance.gov/about-us/blog/expanding-access-credit-underserved-communities/ communities/. See OCC, ``OCC Announces Project REACh to 
Promote Greater Access to Capital and Credit for Underserved 
Populations'' (July 10, 2020), https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-89.html..
---------------------------------------------------------------------------

    Fannie Mae initiated several appraisal modernization efforts, 
including appraisal text scanning reviews and introduction of the Value 
Acceptance/Property Data option that permits lenders to bypass an 
appraisal if interior and exterior property data collection is provided 
to verify the property's eligibility prior to the note date. In order 
to extend credit access to underserved communities that have a low 
credit score or no credit score established, Freddie Mac improved its 
automated underwriting system, Loan Product Advisor (LPA), to increase 
accuracy and fairness by removing reliance on third-party credit scores 
and using a proprietary, enhanced credit view that focuses specifically 
on mortgage credit risk. LPA was also improved to consider bank 
transaction data, allowing positive cash flow and on-time rent payments 
to be factored into loan purchase decisions. Fannie Mae also improved 
its automated underwriting system, Desktop Underwriter (DU), to 
consider a borrower's positive rent payment history as part of the 
credit risk assessment and allow for cash-flow assessments using a 
borrower's bank transaction data in cases when the borrower has no 
established credit score.
    The Enterprises' respective performance reports demonstrate their 
efforts to ensure all communities have greater access to sustainable 
rental and homeownership opportunities and better preparedness for 
obtaining a mortgage loan, all while fulfilling their statutory 
missions to promote affordable housing, serve the public interest, and 
ensure safety and soundness. Ultimately, FHFA expects that Enterprise 
changes implemented as part of the inaugural Equitable Housing Finance 
Plans will have long-standing impacts, even as the Enterprises proceed 
to devise new objectives to advance sustainable housing opportunities 
and address a new set of barriers impacting the spectrum of underserved 
communities for the 2025-2027 Equitable Housing Finance Plans.
    Based on FHFA's experience in overseeing the activities undertaken 
by the Enterprises pursuant to their 2022-2024 Equitable Housing 
Finance Plans and the public reporting provided by the Enterprises, 
FHFA finds that the Enterprises' activities and the EHFP program have 
helped the Enterprises meet their statutory purposes under the 
authorizing statutes and helped FHFA fulfill its statutory duties. FHFA 
finds these activities have assisted the Enterprises in fulfilling 
their mission to provide stability to the secondary market for 
residential mortgages; provide 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 promote access to mortgage credit throughout the United 
States.\81\ FHFA finds that establishing the Equitable Housing Finance 
Plan program and overseeing the Enterprises' performance has assisted 
FHFA in fulfilling its duties to ensure the purposes of the Safety and 
Soundness Act, the authorizing statutes, and other applicable laws 
(including the Fair Housing Act, the Equal Credit Opportunity Act, and 
Section 5 of the Federal Trade Commission Act (FTC Act)) are carried 
out.\82\
---------------------------------------------------------------------------

    \81\ 12 U.S.C. 1451 (note) and 1716.
    \82\ 12 U.S.C. 4511(b) and 4513(a)(1)(B)(v).

---------------------------------------------------------------------------

[[Page 42775]]

B. Overview of the Proposed Rule

    FHFA Fair Lending Oversight of the Regulated Entities. The proposed 
rule included regulatory codification of many of 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 ,\83\ and 
taking enforcement actions. The proposed rule also included 
codification of FHFA's oversight of potential unfair or deceptive acts 
or practices (UDAP) by the regulated entities and requirements for the 
regulated entities to file certifications of compliance with fair 
lending, fair housing, and UDAP laws with regular reports. The proposed 
rule also articulated more precise standards related to fair housing, 
fair lending, and UDAP and principles of equitable housing for 
regulated entity boards of directors.
---------------------------------------------------------------------------

    \83\ See https://www.fhfa.gov/SupervisionRegulation/LegalDocuments/Pages/Orders.aspx.
---------------------------------------------------------------------------

    Enterprise Equitable Housing Finance Plans. The proposed rule 
included regulatory codification of FHFA's current requirements for the 
Enterprises' Equitable Housing Finance Plans along with establishment 
of additional public disclosure and reporting requirements and expanded 
program requirements. The proposed rule did not propose to codify these 
standards for the Banks but asked commenters how equitable housing 
finance should be addressed for the Banks.
    Enterprise Data Collection and Reporting to FHFA. The proposed rule 
included regulatory codification for the Enterprises to collect, 
maintain, and report data on language preference, homeownership 
education, and housing counseling for applicants and borrowers. This 
regulatory codification is consistent with FHFA policy announced in May 
2022 for mandatory use of the Supplemental Consumer Information 
Form.\84\
---------------------------------------------------------------------------

    \84\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
---------------------------------------------------------------------------

II. Discussion of Comments and Agency Response

A. Overview of Comments Received

    A total of 121 public comments were posted to the public docket for 
the proposed rule. The comments submitted include comments from members 
of the public, trade associations, industry participants, FHFA 
regulated entities, consumer advocacy organizations, research 
organizations, think tanks, and others. Several comment letters were 
signed by coalitions of organizations. Several comments primarily 
pertained to matters outside the scope of the rulemaking, such as 
complaints about conditions at particular multifamily properties, 
comments regarding Enterprise guarantee fees, or proposals for future 
language access policies. Four of the posted comments are meeting 
summaries from FHFA meetings with Fannie Mae, Freddie Mac, Ceres, and 
the National Fair Housing Alliance that were documented and posted in 
accordance with FHFA's Policy on Communications with Outside Parties in 
Connection with FHFA Rulemakings.\85\ Members of Congress submitted a 
letter to FHFA that FHFA posted to the public docket and treated as a 
comment letter on the rule in accordance with the Members' wishes. 
Comments received and FHFA's responses are summarized by topic below.
---------------------------------------------------------------------------

    \85\ Policy on Communications with Outside Parties in Connection 
with FHFA Rulemakings (March 5, 2019), available at https://www.fhfa.gov/AboutUs/Policies/Documents/Ex-Parte-Communications-Public-Policy_3-5-19.pdf.
---------------------------------------------------------------------------

B. Unfair or Deceptive Acts or Practices

    FHFA proposed to codify in regulation the regulated entities' 
existing obligations to comply with the FTC Act's prohibition on 
UDAP.\86\ FHFA received ten comments on this proposed section from the 
regulated entities, consumer and civil rights advocates, and industry 
participants.
---------------------------------------------------------------------------

    \86\ 15 U.S.C. 45(a)(1).
---------------------------------------------------------------------------

    Comments from regulated entities requested additional guidance from 
FHFA on UDAP compliance. FHFA expects to address these requests by 
issuing additional advisory guidance that will provide further clarity 
on FHFA's supervisory expectations, as other agencies have done for the 
entities they regulate.\87\ Consumer advocate commenters supported the 
proposed requirement to codify UDAP compliance and asserted it was 
consistent with FHFA's authority and the oversight of financial 
institutions by other Federal financial regulators.
---------------------------------------------------------------------------

    \87\ See Federal Reserve et. al., Interagency Guidance Regarding 
Unfair or Deceptive Credit Practices (Aug. 22, 2014), available at 
https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices/interagency-guidance-regarding-unfair-deceptive-credit-practices; Consumer Financial 
Protection Bureau, Unfair, Deceptive, or Abusive Acts or Practices 
(UDAAPs) examination procedures (Oct. 1, 2012), available at https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Board of Governors of the Federal Reserve System & 
Federal Deposit Insurance Corporation, Unfair or Deceptive Acts or 
Practices by State-Chartered Banks (March 11, 2004), available at 
https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf; see also Federal Deposit Insurance Corporation, 
Inactive Financial Institution Letters: Guidance on Unfair or 
Deceptive Acts or Practices (May 30, 2002), available at https://www.fdic.gov/news/inactive-financial-institution-letters/2002/fil0257.html.
---------------------------------------------------------------------------

    Industry commenters challenged codification of FHFA's oversight of 
the regulated entities' compliance with UDAP, arguing that UDAP is 
distinct from fair lending and fair housing, and exceeds congressional 
intent for FHFA's authority. Commenters also raised concerns that 
codification of UDAP compliance oversight may result in unintentional 
consequences for primary mortgage market lenders and asserted that 
codifying UDAP compliance in regulation was legally unnecessary. One 
commenter similarly contended that because the regulated entities do 
not interact with consumers in the same way as other lenders subject to 
UDAP, UDAP compliance requirements for the regulated entities were 
inappropriate.
    FHFA considered these comments and determined that the proposed 
provisions are necessary to carry out its statutory duties and purposes 
and the benefits of codifying FHFA's oversight of regulated entity UDAP 
compliance in regulation otherwise outweigh commenters' concerns. The 
broad language of Section 5 of the FTC Act prohibits ``unfair or 
deceptive acts or practices in or affecting commerce,'' which would 
encompass activities of FHFA's regulated entities.\88\ The Safety and 
Soundness Act charges FHFA with overseeing its regulated entities' 
compliance not only with the purposes of the Safety and Soundness Act 
and the authorizing statutes, but also with ``any other applicable 
law,'' \89\ and to engage in enforcement for noncompliance with 
law.\90\
---------------------------------------------------------------------------

    \88\ 15 U.S.C. 45(a)(1).
    \89\ 12 U.S.C. 4511(b)(2).
    \90\ 12 U.S.C. 4511(b)(2), 4526(a), 4513(a)(1)(B)(v), and 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 or deceptive acts or practices. See also Faiella v. 
Green Tree Servicing, LLC, No. 16-cv-088-JD, 2017 WL 589096, *7 
(D.N.H. Sept. 14, 2017) (``These statutory grants of power can 
reasonably be construed to grant FHFA regulatory authority over 
Fannie Mae's mortgage and foreclosure practices and any unfair or 
deceptive practices arising from them.'').
---------------------------------------------------------------------------

    FHFA acknowledges that UDAP is distinct from fair lending and fair 
housing. In the proposed rule, FHFA distinguished between the two by 
separating UDAP specific language from fair lending specific language 
to clarify that FHFA does not view UDAP compliance and fair lending 
compliance as identical.\91\ Furthermore, FHFA

[[Page 42776]]

believes that both frameworks have related goals of consumer protection 
and fair dealing in the mortgage market, and notes that other financial 
regulators treat both as related consumer protection standards. Thus, 
FHFA believes this final rule is an appropriate vehicle for affirming 
UDAP compliance obligations \92\ for the regulated entities.\93\
---------------------------------------------------------------------------

    \91\ See 88 FR 25293, 25307-08 (Apr. 26, 2023).
    \92\ FHFA is codifying its authority as a primary regulator to 
oversee the regulated entities compliance with existing obligations, 
including UDAP. See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601 (FHA); 15 
U.S.C. 1691 (ECOA); 12 U.S.C. 4517 (stating that ``[FHFA] examiners 
shall have the same authority . . . applicable to examiners employed 
by the Federal Reserve banks'').
    \93\ See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601 (FHA); 15 U.S.C. 
1691 (ECOA); 12 U.S.C. 4513(a)(1)(B)(v) (stating that a principal 
duty of the FHFA Director is to ensure that ``the activities of each 
regulated entity and the manner in which such regulated entity is 
operated are consistent with the public interest.'').
---------------------------------------------------------------------------

    FHFA does not expect the final rule will impact primary market 
lenders, as they are already subject to UDAP compliance requirements 
from the other Federal financial regulators, including the Consumer 
Financial Protection Bureau, and the Federal Trade Commission.\94\ This 
final rule does not apply to primary market lenders and FHFA's 
enforcement and supervision would be limited to its own regulated 
entities.
---------------------------------------------------------------------------

    \94\ See, e.g., Consumer Financial Protection Bureau, Unfair, 
Deceptive, or Abusive Acts or Practices (UDAAPs) examination 
procedures (Oct. 1, 2012), available at https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Federal Trade Commission, Policy Statement on 
Unfairness (Dec. 17, 1980), available at: https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness; Federal Trade 
Commission, Policy Statement on Deception (Oct. 14, 1983), available 
at https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf; Office of the Comptroller of the 
Currency, Unfair or Deceptive Acts or Practices and Unfair, 
Deceptive, or Abusive Acts or Practices (June 2020), available at 
https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/unfair-deceptive-act/pub-ch-udap-udaap.pdf; National Credit Union Administration, Unfair or Deceptive 
Credit Practices (August 2014), available at https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices; Board of Governors of the Federal 
Reserve System & Federal Deposit Insurance Corporation, Unfair or 
Deceptive Acts or Practices by State-Chartered Banks (March 11, 
2004), available at https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf.
---------------------------------------------------------------------------

    Codification of the Enterprises' and the Banks' existing UDAP 
compliance obligations would be consistent with the broad nature of 
Section 5 of the FTC Act, the actions of the prudential regulators for 
their regulated entities, and FHFA's supervisory responsibilities.\95\ 
For example, such compliance would support FHFA's principal duty to 
ensure that the regulated entities manage risks and foster fair, 
efficient, and competitive housing finance markets. Indeed, one of the 
core purposes served by UDAP prohibitions is to correct actions that 
impede efficient and competitive marketplaces, such as those that 
``unreasonably create[ ] or take[ ] advantage of an obstacle to the 
free exercise of consumer decision-making.'' \96\ Given the strong 
statutory support for fair lending oversight, FHFA's concurrent 
oversight of UDAPs in connection with fair lending oversight would 
further the efficient supervision and examination of the regulated 
entities. Ensuring UDAP compliance can also reasonably be understood to 
be part of FHFA's duty to ensure that the regulated entities' 
activities and operations are consistent with the ``public interest.''
---------------------------------------------------------------------------

    \95\ See, e.g., Consumer Financial Protection Bureau, Unfair, 
Deceptive, or Abusive Acts or Practices (UDAAPs) examination 
procedures (Oct. 1, 2012), available at: https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Federal Trade Commission, Policy Statement on 
Unfairness (Dec. 17, 1980), available at https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness; Federal Trade 
Commission, Policy Statement on Deception (Oct. 14, 1983), available 
at: https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf; Office of the Comptroller of the 
Currency, Unfair or Deceptive Acts or Practices and Unfair, 
Deceptive, or Abusive Acts or Practices (June 2020), available at 
https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/unfair-deceptive-act/pub-ch-udap-udaap.pdf; National Credit Union Administration, Unfair or Deceptive 
Credit Practices (August 2014), available at https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices; Board of Governors of the Federal 
Reserve System & Federal Deposit Insurance Corporation, Unfair or 
Deceptive Acts or Practices by State-Chartered Banks (March 11, 
2004), available at https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf.
    \96\ Federal Trade Commission, ``Policy Statement on 
Unfairness'' (Dec. 17, 1980), available at https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness.
---------------------------------------------------------------------------

    Furthermore, FHFA's regulated entities have significant impacts on 
consumers. The Enterprises maintain underwriting models and other 
automated systems and lending and servicing standards that have 
substantial potential to affect consumers and the housing market. There 
are certain circumstances involving mortgage servicing and disposition 
of Real Estate Owned (REO) properties where FHFA's regulated entities 
or their agents interact with consumers. The regulated entities also 
provide consumer education and outreach activities to borrowers and 
applicants. Additionally, UDAP is not limited to consumers \97\ and the 
Enterprises and Banks have a duty to ensure that their dealings with 
other parties protected by UDAP standards are compliant and that their 
standards that affect primary market lenders are consistent with UDAP. 
FHFA plans to give due consideration to any effects on primary market 
participants in the supervision and regulation of regulated entity UDAP 
compliance, just as it does in all aspects of its work, and to 
coordinate with other regulators as appropriate. FHFA agrees that it is 
not necessary for FHFA to issue a rule to supervise the regulated 
entities for UDAP compliance.\98\ However, given that FHFA had not 
previously supervised and enforced UDAP standards, FHFA believes that 
it was valuable to provide notice and opportunity for comment to both 
the regulated entities and the public. Accordingly, FHFA is adopting 
Sec.  1293.11(b) of the final rule on regulated entity UDAP compliance 
with no changes from the proposed rule.
---------------------------------------------------------------------------

    \97\ See Federal Trade Commission v. IFC Credit Corp., 543 F. 
Supp. 2d 925, 941 (N.D. Ill. 2008).
    \98\ See Faiella v. Green Tree Servicing, LLC, No. 16-cv-088-JD, 
2017 WL 589096, *7 (D.N.H. Sept. 14, 2017) (``These statutory grants 
of power can reasonably be construed to grant FHFA regulatory 
authority over Fannie Mae's mortgage and foreclosure practices and 
any unfair or deceptive practices arising from them.'').
---------------------------------------------------------------------------

C. Board Standards and Responsibilities

    FHFA proposed to require the board of directors of a regulated 
entity to direct the entity's operations in conformity with fair 
lending, fair housing, and UDAP laws. FHFA received two comments from 
the Enterprises regarding the responsibilities of boards of directors. 
One comment raised concerns that requiring boards of directors to 
direct the operations of a regulated entity consistent with fair 
housing, fair lending, and UDAP authorities is duplicative of existing 
compliance duties and places fair lending above other compliance 
obligations.
    FHFA believes that the proposed language clarifies rather than 
duplicates existing compliance duties. The regulated entities are 
currently required to comply with fair housing, fair lending, and UDAP 
laws,\99\ and the regulated entities' boards of directors are required 
to oversee compliance

[[Page 42777]]

risks.\100\ The proposed language clarified that the board of directors 
must consider fair lending, fair housing, and UDAP compliance in its 
oversight of the regulated entity. The proposed section referenced 12 
CFR 1239.4(b)(4), which sets out the duties of the regulated entities' 
boards of directors. Section 1239.4(b)(4) states that each director on 
the board of a regulated entity has a duty to ``[d]irect the operations 
of the regulated entity in conformity with the requirements set forth 
in the authorizing statutes, the Safety and Soundness Act, and this 
chapter[.]'' The proposed language referenced the general board 
responsibilities laid out in Sec.  1239.4(b)(4) and makes clear that 
that responsibility includes directing the regulated entity's behavior 
in compliance with fair lending, fair housing, and UDAP laws in 
addition to compliance with the Safety and Soundness Act and other 
authorizing statutes such as the Enterprises' charter acts, not in lieu 
of compliance with other authorities.\101\
---------------------------------------------------------------------------

    \99\ See FHFA Advisory Bulletin AB 2021-04: Enterprise Fair 
Lending and Fair Housing Compliance (Dec. 20, 2021), available at 
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/Enterprise-Fair-Lending-and-Fair-Housing-Compliance.aspx.
    \100\ See 12 CFR part 1236, Appendix: Prudential Management 
Standards & Operations Standards 8, Overall Risk Management 
Processes; see also 12 CFR 1239.4, Duties and responsibilities of 
directors; and 12 CFR 1239.12, Compliance Program.
    \101\ See 12 CFR 1239.4.(b)(4).
---------------------------------------------------------------------------

    Furthermore, supervisory rating systems routinely consider board 
engagement in entities' compliance management programs and dedication 
to compliance management in rating an entity. For example, the Federal 
Financial Institutions Examination Council (FFIEC) Uniform Interagency 
Consumer Compliance Rating System measures entities based on their 
board oversight of and commitment to the compliance management 
system.\102\
---------------------------------------------------------------------------

    \102\ FFIEC Uniform Interagency Consumer Compliance Rating 
System, at 21, available at https://www.ffiec.gov/press/PDF/FFIEC_CCR_SystemFR_Notice.pdf.
---------------------------------------------------------------------------

    One commenter objected to the use of ``directs'' as the board of 
directors' responsibility, arguing that a board of directors actually 
``oversees'' the operations of an entity. Section 1239.4(b)(4) uses the 
term ``direct'' in regard to the board of directors' oversight 
responsibility.\103\ In the preamble of the final rule promulgating 
Sec.  1239.4(b)(4), FHFA responded to a comment asking whether 
``directs'' was the appropriate language for a board's 
responsibilities.\104\ FHFA explained that the language had originated 
in regulations promulgated by FHFA's predecessor agencies, the Federal 
Housing Finance Board and the Office of Federal Housing Enterprise 
Oversight.\105\ After analysis of state laws governing the Enterprises' 
corporate responsibility duties, FHFA revised the proposed language to 
read that management of the entity should be ``by or under the 
direction of'' of the board.\106\ FHFA expects boards of directors to 
direct management consideration of whether and how much potential 
decisions heighten or mitigate fair lending, fair housing, and UDAP 
risk, as appropriate, prior to making decisions. After consideration, 
FHFA believes that the use of ``direct'' in the proposed rule is 
consistent with the language in Sec.  1239.4(b)(4) of this chapter as 
it appropriately reflects a board's responsibilities and has retained 
it in this final rule.
---------------------------------------------------------------------------

    \103\ See 12 CFR 1239.4(b)(4).
    \104\ 80 FR 72327, 723330 (Nov. 19, 2015).
    \105\ Id.
    \106\ Id. at 723331.
---------------------------------------------------------------------------

    Finally, while not raised by any commenters, FHFA is aware of the 
holding in Meyer v. Holley that directors of a board are generally not 
vicariously liable for the conduct of their employees or agents under 
the Fair Housing Act, even if the corporation itself is held 
vicariously liable.\107\ FHFA believes that this final rule is 
consistent with that holding.
---------------------------------------------------------------------------

    \107\ Meyer v. Holley, 537 U.S. 280, 290-91 (2003).
---------------------------------------------------------------------------

    Accordingly, FHFA is adopting Sec.  1293.11 of the final rule with 
no changes from the proposed rule.

D. Certification of Compliance

    FHFA proposed to require the regulated entities to certify 
compliance with fair lending, fair housing, and UDAP laws with each 
regular report concerning fair housing and fair lending submitted. FHFA 
received five comments regarding the proposal to require certifications 
of compliance.
    Comments from the regulated entities uniformly opposed the proposed 
requirement for certifications of compliance with fair housing, fair 
lending, and UDAP laws, stating it would be too burdensome and could 
create liability. One commenter suggested that such a certification 
would place fair lending and fair housing above other compliance 
concerns. A second commenter suggested that such a certification would 
require ``absolute compliance'' and suggested instead that FHFA require 
a certification of accuracy or certification of a ``system reasonably 
assured to ensure compliance.'' A third commenter opposed the proposed 
requirement on the basis that it was too broad and recommended altering 
the language to certify compliance ``to the best of one's knowledge and 
belief following reasonable or due inquiry of the certifying 
official.''
    One civil rights advocate commenter observed that FHFA has 
authority for requiring certifications and proposed expanding the 
language to apply to special reports and regular reports, and to cite 
Section 5 of the FTC Act directly. One industry commenter opposed 
requiring certification of compliance with UDAP, stating that inclusion 
of UDAP was inappropriate and could have unintended consequences for 
primary market participants. FHFA understood this comment to be more 
directly related to proposed Sec.  1293.11(b) and responded to it in 
Section II.B. above.
    FHFA does not intend to create liability with this certification, 
but instead to incentivize consideration of fair lending compliance 
throughout decision-making processes. FHFA's stated intention not to 
create liability is consistent with proposed Sec.  1293.1(c), which 
further states that ``[n]othing in this part creates a private right of 
action.'' FHFA also believes that a requirement to certify compliance 
would be consistent with the Enterprises' own practices in 
certifications required of seller/servicers \108\ and HUD's practices 
in certifications required for grantees.\109\ After consideration of 
the various alternatives proposed by the commenters, FHFA believes that 
qualifying the certification ``to the best of the certifier's knowledge 
and belief following reasonable or due inquiry of the certifying 
official'' adequately incentivizes compliance management efforts 
without creating an undue burden of certifying absolute compliance.
---------------------------------------------------------------------------

    \108\ See Fannie Mae, Mortgage Selling and Servicer Contract: 
Instructions to the Lender, at 6 (July 2005), available at https://singlefamily.fanniemae.com/media/35796/display; Freddie Mac, Seller/
Service Guide Section 1301.2: Compliance with applicable law, 
available at https://guide.freddiemac.com/app/guide/section/1301.2.
    \109\ See U.S. Department of Housing and Urban Development, Form 
424-B: Applicant and Recipient Assurances and Certifications (Jan. 
27, 2023), available at https://www.hud.gov/sites/dfiles/OCHCO/documents/424-B.pdf.
---------------------------------------------------------------------------

    Accordingly, FHFA has revised Sec.  1293.12(b) of the final rule by 
adding ``to the best of the certifier's knowledge and belief following 
reasonable or due inquiry of the certifying official'' to the 
certification of compliance. FHFA intends this revision to make clear 
that identification of a fair lending compliance risk following the 
completion of the certification does not on its own create liability 
for the regulated entity.

[[Page 42778]]

E. Mission-Specific Board Standards and Responsibilities

    FHFA proposed to require an Enterprise's board of directors to 
consider mission goals, including the Equitable Housing Finance Plans, 
Duty to Serve Plans, and affordable housing goals, alongside other 
mission-related obligations in the board's oversight of the Enterprise 
and its business activities. FHFA received no comments on this proposal 
except for a comment requesting that an effective date for this section 
be ``in accordance with the APA.'' The effective date of this rule is 
60 days from the date of its publication in the Federal Register, which 
is in accordance with the Administrative Procedure Act (APA). 
Accordingly, FHFA is adopting Sec.  1293.26 of the final rule with no 
changes from the proposed rule.

F. Determination Not To Designate Enterprise Equitable Housing Finance 
Planning as a Prudential Management and Operations Standard

    FHFA proposed the designation of the Equitable Housing Finance 
Planning subpart (proposed subpart C) as a Prudential Management and 
Operations Standard (``PMOS'' or ``prudential standard''). While some 
commenters supported a PMOS designation, most commenters did not 
support it, and suggesting it was an inappropriate use of PMOS 
authority. As discussed in the proposed rule preamble, FHFA proposed 
the PMOS designation because the Enterprise equitable housing finance 
planning framework is consistent with the Enterprises' authorizing 
statute obligations and FHFA's statutory charges related to ensuring 
the regulated entities operate consistent with the public interest and 
that FHFA furthers fair housing in its oversight of the regulated 
entities.\110\ FHFA noted that the PMOS designation would provide FHFA 
access to section 4513b corrective measures, if necessary, to address 
deficiencies in equitable housing finance planning or implementation by 
an Enterprise.\111\ FHFA has previously designated discretionary rules 
undertaken as part of its general rulemaking authority that are 
consistent with its authority and the mission of the Enterprises as 
PMOS.\112\
---------------------------------------------------------------------------

    \110\ 88 FR 25293, 25299 (Apr. 26, 2023).
    \111\ Id.
    \112\ See, e.g., 12 CFR 1242.1(b).
---------------------------------------------------------------------------

    In response to comments and after reviewing existing PMOS 
guidelines and other FHFA supervisory and enforcement authorities, FHFA 
has determined not to designate this final rule as a Prudential 
Management and Operations Standard at this time. FHFA believes that 
this decision is responsive to concerns expressed by commenters, and 
that other existing supervisory and enforcement authorities should 
provide appropriate means to address any deficiencies by the 
Enterprises.
    FHFA does disagree with the limited view of PMOS authority 
expressed by certain commenters, and notes that the Safety and 
Soundness Act is not limited to prudential safety and soundness 
standards.\113\ The existing Prudential Management and Operations 
Standards established for the Enterprises cover a broad range of 
situations and acknowledge the Enterprises' mission to promote access 
to mortgage credit throughout the Nation.\114\
---------------------------------------------------------------------------

    \113\ See 12 U.S.C. 4513b(a).
    \114\ See, e.g., 12 CFR part 1236, Appendix--Prudential 
Management and Operations Standards, Responsibilities of the Board 
of Directors and Senior Management, paragraph 10; Standard 4, 
paragraph 4; Standard 6, paragraph 4; Standard 7 (references to 
mission in paragraphs 2, 3, 4); Standard 8, paragraph 2.
---------------------------------------------------------------------------

    Moreover, the existing Prudential Management and Operations 
Standards contain several elements that could be relevant to components 
of equitable housing finance planning. For example, the prudential 
standards regarding adopting and implementing business strategies, 
policies, and procedures for boards and senior management may be 
relevant if FHFA determines the Enterprise failed to provide adequate 
resources or to establish appropriate controls to effectively execute 
business strategies, policies, or procedures related to the equitable 
housing finance planning requirements.\115\ The prudential standards 
regarding internal controls and information systems may be relevant if 
FHFA determines an Enterprise failed to monitor the overall 
effectiveness of its internal controls and key risks on an ongoing 
basis and ensure that business units and internal and external audit 
teams conduct periodic evaluations related to the equitable housing 
finance planning requirements.\116\ The prudential standards for 
independence and adequacy of internal audit systems may also be 
relevant if FHFA determines an Enterprise failed to conduct risk-based 
audits related to equitable housing finance planning, or an 
Enterprise's internal audit department failed to determine whether 
violations, findings, weaknesses, and other issues reported by FHFA 
with regard to the equitable housing finance planning have been 
promptly addressed.\117\ Lastly, the prudential standard for the board 
and senior management to ensure an Enterprise's risk profile is aligned 
with its mission objectives and the prudential standard related to 
overall risk management and compliance with laws, regulations and 
supervisory guidance may be relevant if FHFA determined an Enterprise's 
equitable housing finance planning efforts did not reflect adherence to 
the authorizing statutes, the Fair Housing Act, the Equal Credit 
Opportunity Act, the requirements of the final rule, and other relevant 
guidance and regulations, and posed reputational or other material 
risks to the Enterprise.\118\ Although FHFA is not designating any part 
of the final rule as a new PMOS, an Enterprise's failure to properly 
engage in equitable housing finance planning could result in a 
determination that it has failed to meet one or more of the existing 
PMOS, and must take corrective action.
---------------------------------------------------------------------------

    \115\ See, e.g., 12 CFR part 1236, Appendix--Prudential 
Management and Operations Standards, Responsibilities of the Board 
of Directors and Senior Management, paragraphs 1, 5, and 6.
    \116\ See, e.g., 12 U.S.C. 4513b(a)(1), 12 CFR part 1236, 
Appendix--Prudential Management and Operations Standards, Standard 
1--Internal Controls and Information Systems, paragraph 14.
    \117\ See 12 U.S.C. 4513b(a)(2), 12 CFR part 1236, Appendix--
Prudential Management and Operations Standards, Standard 2--
Independence and Adequacy of Internal Audit Systems.
    \118\ See 12 U.S.C. 4513b(a)(8), 12 CFR part 1236, Appendix--
Prudential Management and Operations Standards, Responsibilities of 
the Board of Directors and Senior Management, paragraph 10, and 
Standard 8--Overall Risk Management Processes, paragraph 12.
---------------------------------------------------------------------------

    FHFA continues to recognize the Enterprises' duty to overcome 
barriers to sustainable housing opportunities faced by one or more 
underserved communities through objectives, meaningful actions, and 
measurable goals, as outlined in the final rule, as an important 
component of their public interest mission and Charter Act obligation 
to promote access to mortgage credit throughout the Nation. In addition 
to the existing PMOS discussed above which may be relevant to ensure 
compliance by the Enterprises, the final rule provides that FHFA may 
enforce compliance 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. Designation of the equitable housing finance planning 
requirements as a PMOS remains an option for future rulemaking based on 
experience FHFA gains in supervising and enforcing compliance with the 
final rule.

G. Determination Not To Define ``Equity''

    FHFA asked commenters on the proposed rule whether ``equity'' 
should

[[Page 42779]]

be defined in the rule. Most commenters supported FHFA defining 
``equity'' in the regulatory text to prevent confusion and ensure the 
Enterprises take actions that promote the Agency's definition of 
``equity.'' Two commenters argued that imposing an ``equity'' 
definition and requirements on the regulated entities is outside FHFA's 
statutory mission.
    FHFA recognizes that a definition of ``equity'' has been explicitly 
provided in HUD's most recent proposed Affirmatively Furthering Fair 
Housing (AFFH) rule,\119\ which would require equity plans from HUD 
program participants and which FHFA reviewed in developing the proposed 
and final rules given that both equity plans are grounded in the 
statutory requirement to affirmatively further fair housing.\120\ 
According to a 2021 Presidential Memorandum, the AFFH mandate ``. . . 
is not only a mandate to refrain from discrimination but a mandate to 
take actions that undo historic patterns of segregation and other types 
of discrimination and that afford access to long-denied 
opportunities.'' \121\ Executive Order 13985 defined ``equity'' for 
purposes of that order as ``the consistent and systematic fair, just, 
and impartial treatment of all individuals, including individuals who 
belong to underserved communities that have been denied such 
treatment.'' \122\ The definition provided in HUD's proposed rule 
shares many similarities with the Executive Order 13985, but is not 
identical.
---------------------------------------------------------------------------

    \119\ 88 FR 8516, 8558 (Feb. 9, 2023).
    \120\ See 42 U.S.C. 3608(d), 3608(e)(5). See also Executive 
Order 12892, Leadership and Coordination of Fair Housing in Federal 
Programs: Affirmatively Furthering Fair Housing, 59 FR 2939 (Jan. 
20, 1994).
    \121\ See Memorandum on Redressing Our Nation's and the Federal 
Government's History of Discriminatory Housing Practices and 
Policies (Jan. 26, 2021), available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/26/memorandum-on-redressing-our-nations-and-the-federal-governments-history-of-discriminatory-housing-practices-and-policies/. As acknowledged by 
the memorandum: ``[t]hroughout much of the 20th century, the Federal 
Government systematically supported discrimination and exclusion in 
housing and mortgage lending. While many of the Federal Government's 
housing policies and programs expanded homeownership across the 
country, many knowingly excluded Black people and other persons of 
color, and promoted and reinforced housing segregation. Federal 
policies contributed to mortgage redlining and lending 
discrimination against persons of color.''
    \122\ See Executive Order 13985, Advancing Racial Equity and 
Support for Underserved Communities Through the Federal Government, 
86 FR 7009 (Jan. 25, 2021).
---------------------------------------------------------------------------

    The proposed rule did not specifically define ``equity,'' but did 
include defined terms that would form the basis of the rule's 
requirements, informed by the concept of equity as it has been 
interpreted under the Fair Housing Act's affirmatively furthering 
statutory provision, the proposed AFFH rule, Presidential Memoranda, 
and Executive Orders noted above, as well as incorporating concepts to 
ensure consistency with FHFA's public interest duty and the 
Enterprises' Charter Act obligation to promote access to mortgage 
credit throughout the Nation. The proposed rule provides a concrete 
framework through which the Enterprises may work to promote sustainable 
housing opportunities for all homebuyers, homeowners, and tenants by 
taking meaningful actions under an ``equitable housing finance plan'' 
to overcome ``barriers'' faced by ``underserved communities'' 
throughout the country.\123\ For example, the proposed rule's 
``underserved community'' definition includes groups with a shared 
characteristic or geographic area that previously had or currently have 
difficulty accessing housing opportunities compared with groups of 
people without the shared characteristic or other areas.\124\ The 
proposed rule defined ``barrier'' to refer to Enterprise actions, 
products, or policies, or aspects of the housing market that can 
reasonably be influenced by the Enterprise's actions, products, or 
policies, that contribute to inequitable housing opportunities and 
outcomes for underserved communities.\125\ The ``equitable housing 
finance plan'' requires an Enterprise to identify barriers to 
sustainable housing opportunities faced by one or more underserved 
communities, and subsequently, establish objectives that demonstrate a 
focus to combat those identified barriers through the EHFP plan and the 
outcomes sought.\126\
---------------------------------------------------------------------------

    \123\ See 12 CFR 1293.2.
    \124\ Id.
    \125\ Id.
    \126\ See 12 CFR 1293.2, 1293.22.
---------------------------------------------------------------------------

    FHFA believes the Equitable Housing Finance Planning program 
standards and provided definitions of ``underserved community,'' 
``barrier,'' and ``equitable housing finance plan'' provide a clear 
framework for the Enterprises' work to advance the availability of 
mortgage credit and housing for all individuals. FHFA believes it is 
important to recognize there are many underserved communities 
throughout the nation, and it is important to understand each 
community's unique barriers, starting points, and access to 
opportunities that have been shaped by history and the present day. 
FHFA believes the proposed rule's approach provides a flexible and 
adaptable framework for addressing the needs of underserved communities 
that exist today, or that may arise in the future. Accordingly, 
consistent with the proposed rule, the final rule does not include a 
definition of ``equity.'' FHFA may consider issuing additional guidance 
or engaging in future rulemaking on this topic based on additional 
experience with the program and engagement with stakeholders.

H. Resource Disclosures

    FHFA proposed a requirement in Sec.  1293.23(b)(4) for the 
Enterprises to submit disclosures of resources dedicated to the 
Equitable Housing Finance Plans as part of their performance reports. 
Commenters who specifically addressed this issue opposed the proposed 
requirement. Some commenters expressed concerns about reputational 
risks, due to the high potential for subjectivity when different 
parties examine the same value. For example, consumer advocates may 
posit that the Enterprises' financial expenditures for meaningful 
actions are inadequate, while industry commenters may view the same 
value as an excessive and unnecessary expenditure. Other commenters 
suggested a financial disclosure requirement would be burdensome for 
the Enterprises and difficult to calculate accurately, as ``resources'' 
could be interpreted to include anything from closing cost credits to 
administrative costs.
    Based on the comments, FHFA considered the requirement in the 
proposed rule as well as an alternative limited resource disclosure 
requirement and removing the requirement. The limited disclosure 
requirement would mandate the Enterprises to publish a summary of cost 
savings and benefits delivered to consumers for homeownership programs 
or products created pursuant to an Equitable Housing Finance Plan to 
support Enterprise accountability and transparency. However, concerns 
of subjectivity when interpreting any financial disclosures and whether 
financial disclosures are sufficient or excessive would still remain. 
Further, it could be difficult for the Enterprises to determine what 
monetary threshold constitutes sufficient resource dedication, and what 
constitutes a resource for Plan purposes, as some resources are not 
easily quantifiable or may be issued by a third party because of 
Enterprise efforts. Accordingly, for these reasons, FHFA has not 
included this alternative more limited financial disclosure requirement 
in the final rule.
    FHFA finds the comments on the proposed financial disclosures 
requirement persuasive and has

[[Page 42780]]

determined not to include that requirement in the final rule at this 
time. FHFA agrees with commenters that it can be difficult to fully and 
uniformly account for resource expenditures. In contrast to federal 
grant-making, the Enterprises provide support to underserved 
communities through the Equitable Housing Finance Plans through a 
variety of mechanisms. These mechanisms include both direct spending 
and indirect support, including but not limited to closing cost 
credits, special pricing, and policy enhancements. The Enterprises' 
indirect support can be difficult to quantify and compare across 
projects. Further, ``typical'' or customary costs may differ 
significantly across markets, resulting in aggregated data that does 
not provide meaningful insights and transparency. For these reasons, 
FHFA does not believe at this time that the potential burdens of the 
proposed rule provision or the alternative more limited disclosure 
requirement discussed above would be outweighed by the usefulness of 
information provided.
    FHFA recognizes that although financial disclosures are one way to 
monitor program effectiveness and prioritization of housing equity, 
other performance metrics may better illustrate the impact of the 
Plans, including accept rate gaps, home loan acquisitions, and other 
performance metrics that are included in the Enterprises' performance 
reports.\127\ Enterprise accountability can also be achieved through 
FHFA's Enterprise Fair Lending and Fair Housing Rating System (Rating 
System).\128\ This Rating System will directly evaluate Enterprise 
impact, performance, public engagement, and overall commitment to 
addressing barriers to sustainable housing opportunities for 
underserved communities as part of FHFA's confidential supervisory 
ratings. Additionally, as discussed below, FHFA is also adopting a 
requirement in Sec.  1293.27 of the final rule for a public narrative 
assessment of the Plans that will also contribute to Enterprise 
accountability and public transparency. FHFA may consider implementing 
a financial disclosure requirement in the future based on additional 
experience with the program and engagement with stakeholders.
---------------------------------------------------------------------------

    \127\ See 12 CFR 1293.23.
    \128\ See Advisory Bulletin AB 2023-05: Enterprise Fair Lending 
and Fair Housing Rating System (September 27, 2023), available at 
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB_2023-05_Enterprise-Fair-Lending-and-Fair-Housing-Rating-System.aspx.
---------------------------------------------------------------------------

I. Public Engagement

    Proposed Sec.  1293.24 included an annual public engagement 
requirement for FHFA, and a requirement for the Enterprises to consult 
with the public, including members of underserved communities and 
housing market participants, in the development and implementation of 
their Equitable Housing Finance Plans and updates, and describe such 
consultation in their Plans. The Enterprises' comments on the proposal 
requested additional instructions and flexibility for public engagement 
and input. Some other commenters were concerned that the absence of 
detailed public engagement requirements in the proposed rule could lead 
to inadequate public outreach and requested more rigorous requirements. 
One commenter recommended mandating the Enterprises provide several 
opportunities for input during the year via public meetings in each of 
the nine census divisions.
    Although FHFA agrees that the Enterprises should provide ongoing 
opportunities for public engagement, FHFA does not believe the rule 
should state specific requirements for the Enterprises' public 
engagement because it may cause the Enterprises to limit public 
engagement efforts only to those specified in the rule and may 
otherwise inhibit flexibility in how public engagement is achieved. 
FHFA also believes mandating Enterprise engagement by census division 
is inappropriate at this time, as the census divisions are not 
prominently known to the public and may be unduly burdensome for the 
Enterprises, due to the additional resources necessary to employ 
multiple meetings in the various census divisions across the country, 
and subsequently, incorporate the public input in their EHFP reports 
each year before the September 30 due date.
    Making this provision too prescriptive could have the unintended 
consequence of hindering an Enterprise's innovative and flexible ways 
of engaging with the public. Due to the specifics of the final rule, 
the underserved communities and barriers addressed with meaningful 
actions will continuously change, and the program standards must be 
flexible enough to allow for that. FHFA expects that the Enterprises 
would seek feedback from stakeholder groups about how best to design 
their Plans. Affording flexibility regarding public engagement will 
allow for more focused and targeted Plans based on specific Enterprise 
public outreach efforts, which must be described in the Plan as part of 
the public engagement requirement. Accordingly, FHFA has not 
implemented any changes to the public engagement requirements in this 
final rule. FHFA may provide further guidance on the adequacy of public 
engagement in the future based on additional experience with the 
program and engagement with stakeholders.

J. Program Evaluation

    FHFA asked commenters on the proposed rule whether an evaluation of 
the Enterprises' equitable housing performance should be publicly 
issued, or whether evaluation metrics should be included in the 
Enterprises' public performance reports. Commenters generally supported 
FHFA publishing an evaluative narrative to facilitate constructive 
public input and increase Enterprise transparency and accountability. 
Two commenters suggested the Enterprises should granularly disclose the 
success or failure of reports, and provide full reporting on all 
Enterprise pilot programs at the local level.
    FHFA's Rating System assesses the Enterprises' compliance with fair 
lending and fair housing standards and their planning and execution 
with respect to Equitable Housing Finance Plans.\129\ One of the four 
rating components is equitable housing finance, which measures the 
performance of each Enterprise under its Equitable Housing Finance Plan 
activities. The Rating System complements other existing FHFA 
supervisory rating systems used by FHFA's Division of Bank Regulation, 
Division of Enterprise Regulation, and Office of Minority and Women 
Inclusion.\130\ FHFA generally prohibits disclosure of non-public 
Agency information.\131\ Supervisory ratings are generally confidential 
supervisory information and have not historically been publicly 
disclosed in order to encourage greater candor, cooperation, and 
compliance by the regulated entity. One exception to this general 
policy in financial regulation is the disclosure of Community 
Reinvestment Act (CRA) ratings.\132\
---------------------------------------------------------------------------

    \129\ Id.
    \130\ See Advisory Bulletin AB 2012-03: FHFA Examination Rating 
System (December 19, 2012), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB-2012-03-FHFA-EXAMINATION-RATING-SYSTEM.aspx.
    \131\ See 12 CFR part 1214, from 78 FR 39957, 39958 (July 3, 
2013).
    \132\ See https://www.ffiec.gov/craratings/.
---------------------------------------------------------------------------

    As part of evaluating comments on this issue, FHFA considered 
disclosing the supervisory ratings, disclosing a narrative assessment 
of the equitable housing finance component, and

[[Page 42781]]

developing separate public evaluation metrics. FHFA believes that 
maintaining the confidential supervisory nature of the ratings under 
the Rating System, including the equitable housing finance component, 
is most consistent with agency policy of maintaining confidentiality of 
supervisory information. While FHFA considered public evaluation 
metrics similar to those provided under the Duty to Serve program,\133\ 
FHFA believes that implementation of two separate evaluation systems--
one internal to FHFA and one public-facing--to assess the equitable 
housing finance program metrics would likely create implementation 
challenges for FHFA and the Enterprises. However, FHFA does agree with 
the commenters that favored some form of public evaluation and has 
added a provision in Sec.  1293.27 of the final rule requiring FHFA to 
publish a narrative evaluative assessment of each Enterprise's program 
performance. FHFA believes this change will foster greater public 
transparency and Enterprise accountability, while reducing the burden 
associated with developing separate public evaluation metrics. This 
provision requires FHFA, by May 15 of each year, to publish on its 
website a narrative assessment evaluating each Enterprise's performance 
under its respective Equitable Housing Finance Plans. This requirement 
will also provide greater alignment of the Equitable Housing Finance 
Program with the CRA, though FHFA acknowledges the CRA examinations 
ratings disclosures are more extensive.
---------------------------------------------------------------------------

    \133\ See 12 CFR part 1282, subpart C (Duty to Serve).
---------------------------------------------------------------------------

K. Reporting on Bank Voluntary Actions To Address Barriers to 
Sustainable Housing Opportunities

    FHFA asked commenters on the proposed rule whether the Banks should 
be required to comply with the same Equitable Housing Finance Planning 
requirements as the Enterprises, including submission of Equitable 
Housing Finance Plans. Some commenters suggested that imposing such 
requirements on the Banks would be too burdensome and unnecessary, 
stating that the Banks' Affordable Housing Programs and Community 
Investment Programs already address the needs of underserved 
communities.\134\ Several other commenters requested that FHFA ensure 
the Banks do more to promote fair and affordable housing by determining 
appropriate mechanisms and structures to assess the Banks' equity 
efforts. The regulated entities' comments emphasized the differences 
between the Enterprises and the Banks, including contrasts in 
acquisition volume, market share, and the Banks' issuance of advances 
to their members.
---------------------------------------------------------------------------

    \134\ See 12 CFR parts 1291, 1292.
---------------------------------------------------------------------------

    FHFA believes addressing barriers to sustainable housing 
opportunities for underserved communities should be a priority for all 
its regulated entities and, after considering comments requesting 
appropriate mechanisms for the Banks, FHFA is adopting a requirement in 
the final rule for the Banks to report any voluntary meaningful actions 
taken to further equity in the past year. FHFA expects to engage in 
future guidance and rulemaking specific to the Banks, in response to 
and consistent with ``The Federal Home Loan Bank System at 100: 
Focusing on the Future'' Report. Although FHFA recognizes the Banks' 
activities have less influence on aspects of the housing market in 
comparison to the Enterprises' activities, FHFA believes addressing 
barriers to sustainable housing opportunities should be a priority for 
all regulated entities and is consistent with the public interest and 
acknowledges commenters' requests for FHFA to develop appropriate 
mechanisms for the Banks. FHFA recognizes that equitable housing 
finance planning requires time, effort, and financial and 
administrative resources from the Enterprises, which may not be 
feasible for the Banks to provide at the same level, considering the 
difference in their resources. Therefore, consistent with the proposed 
rule, the final rule does not adopt the equitable housing finance 
planning requirements for the Banks, but requires instead the reporting 
of voluntary meaningful Bank efforts for addressing barriers to 
sustainable housing opportunities in new subpart D.
    This addition recognizes the importance of equitable housing 
finance planning for all regulated entities, while also recognizing the 
differences between the Banks and the Enterprises and providing FHFA 
and stakeholders additional time and information to further refine any 
potential future requirements for the Banks. FHFA has determined that a 
delayed effective date for this subpart is appropriate, considering the 
differences between the Banks and the Enterprises and that the 
Enterprises are conforming to similar requirements already. Subpart D 
will be effective on February 15, 2026.

L. Data Collection

    The proposed rule included codification, in substantially similar 
form, of the existing FHFA policy under which the Enterprises collect 
data on (a) housing counseling and homeownership education, and (b) the 
language preference of mortgage applicants and borrowers. An Enterprise 
requested clarification of the proposed housing counseling data 
collection requirement. Commenters on the proposed rule generally 
supported codifying the data collection requirements for collecting 
language preference and data regarding completion of housing counseling 
and homeownership courses, though some commenters did not support the 
requirement. Some commenters provided suggestions for future policies 
that would support limited English proficient (LEP) communities. 
Additionally, the proposed requirement is substantially the same as the 
policy announced by FHFA in May 2022 mandating lender use of the 
Supplemental Consumer Information Form (SCIF) as part of the 
application process for loans that will be sold to the 
Enterprises.\135\
---------------------------------------------------------------------------

    \135\ See FHFA Announces Mandatory Use of the Supplemental 
Consumer Information Form (May 3, 2022), available at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
---------------------------------------------------------------------------

    FHFA believes that the data collected on language preference, 
homeownership education, and housing counseling for applicants and 
borrowers will support efforts to promote sustainable housing 
opportunities for underserved communities and could underlie elements 
of future Equitable Housing Finance Plans. FHFA is adopting the 
proposed rule text without change in the final rule and believes that 
it should not require any additional resources from the regulated 
entities or market participants given the existing policy.
    As noted above, an Enterprise requested clarification of the 
proposed housing counseling data collection requirement. At this time, 
the Enterprises' SCIF instructions require lenders to provide an 
opportunity for the borrower to indicate a language preference or that 
they would prefer not to respond.\136\ The instructions require 
completion of the housing counseling and homeownership education 
section if housing counseling or homeownership education is required by 
an Enterprise's loan program.\137\ The housing counseling and 
homeownership section may also be voluntarily completed by the borrower 
even if housing counseling or homeownership

[[Page 42782]]

education was not required by a loan program, and analysis of current 
data indicates that voluntary data is being provided in some 
circumstances.\138\ FHFA did not intend to change the existing policy 
or instructions as part of the proposed rule, which was intended to 
codify the existing policy and practice. FHFA believes that the 
instructions and current practice comply with the proposed and final 
rule text. FHFA appreciates the comments provided on future LEP policy, 
but based on the scope of the final rule, is not addressing them in the 
final rule.
---------------------------------------------------------------------------

    \136\ See Fannie Mae and Freddie Mac, Instructions for 
Completing the Supplemental Consumer Information Form (SCIF), 
available at https://sf.freddiemac.com/docs/pdf/press-release/july-6-2022-gse-scif-announcement.pdf.
    \137\ Id.
    \138\ Id.
---------------------------------------------------------------------------

M. Authority and Consistency With Law

    Some commenters on the proposed rule questioned FHFA's authority to 
codify the equitable housing finance plan program in regulation and the 
consistency of the proposed rule with the U.S. Constitution and law. 
FHFA's rulemaking authority is discussed and set forth throughout both 
the proposed rule preamble and the final rule preamble but is 
summarized below in response to the concerns raised by these 
commenters.
    FHFA's Rulemaking Authority. FHFA's authority under the Safety and 
Soundness Act includes exercising general regulatory authority to 
ensure the purposes of the Safety and Soundness Act, the authorizing 
statutes, and other applicable laws are carried out.\139\ FHFA's 
authority also includes the authority to exercise incidental powers 
that may be necessary or appropriate to fulfill the duties and 
responsibilities of the Agency.\140\ In addition, FHFA's authority 
includes issuing regulations necessary to carry out the duties of the 
Agency and ensure the purposes of the Safety and Soundness Act and the 
authorizing statutes are accomplished.\141\
---------------------------------------------------------------------------

    \139\ 12 U.S.C. 4511(b).
    \140\ 12 U.S.C. 4513(a)(2)(B).
    \141\ 12 U.S.C. 4526. FHFA also has explicit authority to 
require the regulated entities to submit regular and special reports 
on a range of topics, 12 U.S.C. 4514.
---------------------------------------------------------------------------

    This final rule's subject matter is well supported by the core 
purposes and duties of the Agency found in the Safety and Soundness 
Act, including Congress's finding that the regulated entities have 
important public missions,\142\ the duty of the Agency to ensure the 
regulated entities operate in the public interest,\143\ and the duty to 
ensure the purposes of applicable law (including the Fair Housing Act, 
the Equal Credit Opportunity Act, and the FTC Act's prohibition on 
unfair or deceptive acts or practices) are carried out,\144\ as well as 
the Enterprises' chartered purposes (including promoting access to 
mortgage credit throughout the Nation).\145\ FHFA also has an 
overarching obligation to affirmatively further fair housing in 
exercising these authorities and understanding the public missions set 
forth in relevant statutes.\146\ Other parts of the relevant statutes 
also make clear the connection that equitable housing finance, fair 
housing, and fair lending have to FHFA's statutory authority and duties 
and responsibilities. These include the requirement for the Enterprises 
to assess and report on aspects of their operations that cause 
disparities and actions taken to promote fair lending,\147\ the 
requirement for FHFA to obtain data on pricing disparities from the 
Enterprises and refer lenders for fair lending purposes,\148\ and the 
requirement for the Enterprises to take affirmative steps to assist the 
primary market in making housing credit available in areas with 
concentrations of low-income and minority families.\149\ Finally, data 
collection and reporting requirements \150\ and other mission-related 
obligations of FHFA and the Enterprises speak more generally about the 
need to promote sustainable housing opportunities.\151\
---------------------------------------------------------------------------

    \142\ 12 U.S.C. 4501.
    \143\ 12 U.S.C. 4513.
    \144\ 12 U.S.C. 4511(b).
    \145\ 12 U.S.C. 1716(4) and 12 U.S.C. 1451 note (b)(4); see also 
12 U.S.C. 1716(3) and 12 U.S.C. 1451 note (b)(3).
    \146\ 42 U.S.C. 3608(d); see also 12 U.S.C. 4513(a).
    \147\ 12 U.S.C. 1723a(n)(2)(G) and 12 U.S.C. 1456(f)(2)(G).
    \148\ 12 U.S.C. 4561(d)(1).
    \149\ 12 U.S.C. 4565(b)(3)(A). Some commenters asserted this 
language should be interpreted only to authorize actions that target 
areas that are both low-income concentrated and minority 
concentrated. FHFA does not believe this is a reasonable 
interpretation of the statute. Applying the commenters' reading to 
the section 4565 as a whole makes clear that it is not a reasonable 
reading, as there are numerous categories which are joined by 
``and'' which are mutually exclusive or clear from the context that 
they are not intended to be joined requirements which must all be 
satisfied simultaneously by individual actions. Regardless, the 
final rule does not rest solely on this provision.
    \150\ 12 U.S.C. 1723a(m)(1) and 12 U.S.C. 1456(e)(1); 12 U.S.C. 
4544(b).
    \151\ See 12 U.S.C. 4561(a), 4562, and 4563 (Enterprise 
affordable housing goals); 12 CFR part 1282, subpart B (housing 
goals); 12 U.S.C. 4565 (Enterprise Duty to Serve affordable housing 
needs of certain underserved markets); 12 CFR part 1282, subpart C 
(Duty to Serve).
---------------------------------------------------------------------------

    HUD and FHFA's Fair Housing Responsibility. Some commenters 
asserted that fair housing and fair lending with respect to the 
Enterprises are solely HUD's responsibility, because 12 U.S.C. 4545 
directs the Secretary of HUD to take certain actions related to fair 
housing and the Enterprises.\152\ This provision does not mean that 
FHFA is not responsible for overseeing fair housing and fair lending 
compliance at the Enterprises. In addition to HUD's authority and 
FHFA's supervisory authority, FHFA is empowered to initiate enforcement 
actions for Enterprise violations of 12 U.S.C. 4545 and HUD's 
implementing regulations under the Safety and Soundness Act.\153\ FHFA 
has a responsibility to use its authority to further fair housing, and 
FHFA's oversight of its regulated entities for fair lending and fair 
housing is consistent with that of other Federal financial 
regulators.\154\
---------------------------------------------------------------------------

    \152\ See 12 U.S.C. 4545.
    \153\ See 59 FR 18266 (Apr. 15, 1994); 86 FR 36199 (July 9, 
2021); HUD-FHFA Memorandum of Understanding Regarding Fair Housing 
and Fair Lending Coordination (Aug. 12, 2021), available at https://www.hud.gov/sites/dfiles/PA/documents/FHFA-HUD-MOU_8122021.pdf.
    \154\ See 42 U.S.C. 3608(d).
---------------------------------------------------------------------------

    Equal Protection and Strict Scrutiny. Some commenters asserted that 
the rule would be illegal under the Equal Protection Clause. FHFA 
disagrees. The final rule sets forth a strategic planning, public 
input, and public reporting process for addressing the needs of 
underserved communities, which will necessarily vary over time. The 
term ``underserved community'' is defined broadly to encompass many 
different types of communities, including communities that do not share 
any particular race or ethnicity, and the rule does not impose any 
requirement to take actions that are racially restricted. Further, the 
Plans merely provide public transparency into the Enterprise's 
analyses, the barriers experienced by that underserved community, and 
actions the Enterprises intends to take to attempt to overcome those 
barriers. Any such actions are subject to fair lending and fair housing 
laws, including the Equal Credit Opportunity Act and the Fair Housing 
Act, which generally prohibit discrimination based on prohibited 
characteristics with limited exceptions (which include special purpose 
credit programs). This final rule specifies that unlawful actions are 
not permitted in several provisions, including Sec. Sec.  1293.1(b), 
1293.11(a), (b), 1293.12(b), 1293.22(f)(2), (g), 1293.23(d)(2), and 
1293.32(d)(2). Current Equitable Housing Finance Plan reports 
demonstrate that actions taken under the current Plans, which identify 
Black and Latino communities as underserved communities, benefit 
applicants, borrowers, and renters of all races.\155\ To

[[Page 42783]]

the extent that any specific activity undertaken or proposed to be 
undertaken by the Enterprises raised concerns of Constitutional or 
other legal compliance, FHFA's supervisory and enforcement authority 
described in the final rule, combined with the public input and public 
reporting processes in the final rule, provide means to address 
concerns with specific activities.
---------------------------------------------------------------------------

    \155\ See Freddie Mac, 2022 Equitable Housing Finance Plan 
Performance Report, available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan-2022-Performance-Report.pdf; Fannie Mae, 2022 Equitable Housing Finance Plan 
Performance Report, available at https://www.fanniemae.com/media/46616/display.
---------------------------------------------------------------------------

    The Major Questions Doctrine. Some commenters asserted that the 
rule would not be consistent with the U.S. Supreme Court's ``major 
questions'' doctrine.\156\ FHFA disagrees. The final rule is not a 
sweeping change either with respect to oversight of the regulated 
entities or with respect to the equitable housing finance plan program. 
Much of the content of the final rule codifies existing policy. 
Further, the final rule is consistent with FHFA's core statutory 
purposes as discussed above. With respect to equitable housing finance 
as well as other aspects, the final rule does not impose changes of 
vast economic or political significance. It requires a strategic 
planning process supported by broad stakeholder input and program 
standards to more effectively achieve FHFA's and the Enterprises' 
public mission, in concert with other FHFA programs and requirements. 
It also includes guardrails and processes for self-correction to ensure 
activities remain consistent with the law and the Enterprises' 
Congressionally chartered purposes and that FHFA's oversight remains 
within the bounds of the law and the Constitution.
---------------------------------------------------------------------------

    \156\ See, e.g., West Virginia v. EPA, 142 S. Ct. 2587 (June 30, 
2022).
---------------------------------------------------------------------------

III. Summary of Changes in the Final Rule

A. Section 1293.1(d), Severability Clause

    FHFA has added a severability clause in Sec.  1293.1(d) of the 
final rule. FHFA believes that it is appropriate to make clear its 
intention in the final rule that all provisions of the final rule be 
severable given that the final rule contains many thematically related 
but ultimately independent regulatory requirements, each of which FHFA 
believes is independently important to pursue through rulemaking and 
can function independently.

B. Section 1293.12(a), Reports, Data, and Certification

    FHFA has added a reference to Sec.  1293.11(b) in Sec.  1293.12(a) 
of the final rule to make clear that reports to FHFA may be required to 
include matters related to UDAP compliance, consistent with the 
certification attached to the report required in Sec.  1293.12(b). FHFA 
has also changed the title of subpart B to include UDAP.

C. Section 1293.12, Certification of Compliance

    FHFA has revised Sec.  1293.12(b) in the final rule by qualifying 
the required certification of compliance with fair lending, fair 
housing, and UDAP laws ``to the best of the certifier's knowledge and 
belief following reasonable or due inquiry of the certifying 
official.'' FHFA determined that certifying compliance to the best of 
the certifier's knowledge and belief will adequately incentivize 
identification of risk without imposing additional liability for 
certifying to absolute compliance.

D. Section 1293.21, General

    FHFA has not included in the final rule the proposed rule provision 
that would have identified Enterprise Equitable Housing Finance 
Planning as a prudential standard by regulation pursuant to section 
4513(b) of the Safety and Soundness Act. Accordingly, the title of 
Sec.  1293.21 has changed to remove ``Identification of subpart as a 
prudential standard,'' and now states ``General'' only. Based on 
comments received, FHFA determined it is not necessary to designate 
this rule as a prudential standard at this time. FHFA acknowledges that 
Enterprise failure to adhere to EHFP program standards can be addressed 
by other enforcement and supervision methods, and certain deficiencies 
may also be failures to meet existing PMOS standards that may trigger 
corrective action pursuant to section 4513(b) of the Safety and 
Soundness Act and 12 CFR part 1236.

E. Section 1293.23, Resource Disclosures, Additions, and Clarifying 
Edits

    In response to comments, FHFA has not included in the final rule 
proposed Sec.  1293.23(b)(4), which would have required the Enterprises 
to submit a summary of the value of resources dedicated to supporting 
the outcomes categorized by type of activity and a summary of 
additional value of resources contributed from third parties because of 
the Enterprise's support of the outcomes. Instead, Enterprise 
accountability will be evaluated by FHFA's Rating System and 
performance metrics, including but not limited to accept rate gaps and 
home loan acquisitions. The Rating System will assess Enterprise 
reports, performance, and overall commitment to equity. FHFA also may 
consider implementing a financial disclosure requirement in a future 
rule and will examine the Enterprises' equitable housing finance 
planning under the rule.
    FHFA has made additions and clarifying edits to Sec.  1293.23 in 
the final rule, including distinguishing between multifamily and 
single-family acquisition reporting, adding neighborhood race and 
ethnicity reporting where appropriate, adding narrative description 
requirements for the underwriting sections of the performance reports, 
adding a separate reporting requirement for all homeownership programs 
to facilitate better comparison between the Enterprises, and clarifying 
that FHFA may use its order authority under 12 U.S.C. 4514 to establish 
requirements for reporting.

F. Section 1293.27, Program Evaluation

    In response to comments, FHFA has added Sec.  1293.27 ``Program 
Evaluation'' in the final rule, which provides that FHFA will publish 
on its website a narrative assessment evaluating each Enterprise's 
performance under its respective Equitable Housing Finance Planning 
program standards by May 15 of each year. FHFA believes this change 
will foster greater public transparency and Enterprise accountability, 
while reducing burden and complexity associated with developing 
separate evaluation metrics for public consumption. It will also 
further align the Equitable Housing Finance Program with the Community 
Reinvestment Act, in that both programs require review and public 
disclosure by their respective agencies of the performance of the 
entities they regulate.

G. Section 1293.31, Federal Home Loan Bank Equitable Housing Finance 
Planning

    In response to comments, FHFA has added a new Subpart D--Federal 
Home Loan Bank Equitable Housing Finance Planning in the final rule, 
requiring the Banks to report on any meaningful actions voluntarily 
taken to support underserved communities and such actions currently 
planned for the coming year, or to provide a public notice that it has 
not taken any voluntary actions and does not currently have any such 
voluntary meaningful actions planned for the coming year. This 
requirement recognizes the importance of addressing barriers to

[[Page 42784]]

sustainable housing for all regulated entities, while also recognizing 
and considering the differences between the Banks and Enterprises. FHFA 
may engage in future rulemaking and guidance specific to the Banks 
regarding equitable housing finance planning.

IV. Consideration of Differences Between the Banks and the Enterprises

    Under the final rule, both the Enterprises and the Banks would be 
subject to 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 the Enterprises would be covered by FHFA's authority 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 previously established. In response to comments, FHFA has 
added subpart D in the final rule which requires the Banks to report on 
any voluntary equitable housing finance actions taken or planned but 
does not require any actions by the Banks other than the reports or 
notices that there are no actions to report. Subpart E (Sec.  1293.41) 
could include data collection and reporting requirements that would 
apply to both the Enterprises and the Banks, but currently the 
requirements would apply only to the Enterprises.
    When promulgating any regulation that may have future effect 
relating to the Banks, the Director is required by section 1313(f) of 
the Safety and Soundness Act 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.\157\ FHFA requested 
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. FHFA's adoption of new subpart D in the final rule 
reflects its consideration of the comments and appropriate 
consideration of the differences between the Banks and the Enterprises. 
The Director considered the differences between the Banks and the 
Enterprises, as they relate to the above factors, and determined that 
this final rule is appropriate.
---------------------------------------------------------------------------

    \157\ 12 U.S.C. 4513(f).
---------------------------------------------------------------------------

V. Regulatory Analyses

A. Paperwork Reduction Act

    The final rule does 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.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities must include an analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the regulation will not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the final 
rule under the Regulatory Flexibility Act. FHFA certifies that the 
final rule will not have a significant economic impact on a substantial 
number of small entities because the regulation applies only to the 
Enterprises and the Banks, which are not small entities for purposes of 
the Regulatory Flexibility Act.

C. Congressional Review Act

    In accordance with the Congressional Review Act (5 U.S.C. 801 et 
seq.), FHFA has determined that this final rule is a major rule and has 
verified this determination with the Office of Information and 
Regulatory Affairs of OMB.

List of Subjects for 12 CFR Part 1293

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

    For the reasons stated in the preamble, the Federal Housing Finance 
Agency amends chapter XII in title 12 of the Code of Federal 
Regulations, as follows:

0
1. Add part 1293 to read as follows:

PART 1293--FAIR LENDING OVERSIGHT AND EQUITABLE HOUSING FINANCE

Subpart A--General
Sec.
1293.1 General.
1293.2 Definitions.
1293.3 Compliance and enforcement.
1293.4 Preservation of authority.
1293.5-1293.10 [Reserved]
Subpart B--Fair Housing, Fair Lending, and Unfair or Deceptive Acts or 
Practices Compliance
1293.11 Regulated entity compliance.
1293.12 Reports, data, and certifications.
1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
1293.21 General.
1293.22 Equitable housing finance plans and updates.
1293.23 Performance reports.
1293.24 Public engagement.
1293.25 Program requirements.
1293.26 Enterprise board equitable housing and mission 
responsibilities.
1293.27 Program evaluation.
1293.28-1293.30 [Reserved]
Subpart D--[Reserved]
Subpart E--Data Collection
1293.41 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. 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.
    (d) If any provision of this part, or any application of a 
provision, is stayed or determined to be invalid, the remaining 
provisions or applications are severable and shall continue in effect.


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

[[Page 42785]]

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 characteristics 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 housing and 
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.  1293.25, 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, Fair Lending, and Unfair or Deceptive Acts 
or Practices 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 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, fair lending, 
and compliance with Sec.  1293.11(b) 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) to the best of the certifier's knowledge and belief 
following reasonable or due inquiry of the certifying official 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.

    (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.

[[Page 42786]]

    (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) Plans and reports under this subpart are reports required under 
12 U.S.C. 4514(a) and therefore must include a notice and declaration 
in compliance with 12 U.S.C. 4514(a)(4).


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, meaningful action, 
measurable goal, 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 outcomes for the year for homeownership programs 
or products created pursuant to the Plan by race and ethnicity group 
and underserved community group (if available);
    (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, cash-out 
refinancing and by race and ethnicity group and by underserved 
community group (if available);
    (ii) For the applicable year and the preceding three years, the 
Enterprise's single-family loan acquisitions categorized by home 
purchase, rate-term refinancing, cash-out refinancing, and by race and 
ethnicity group, neighborhood race and ethnicity, and underserved 
community group (if available);
    (iii) For the applicable year and the preceding three years, the 
Enterprise's multifamily loan acquisitions categorized by neighborhood 
race and ethnicity;
    (iv) A narrative description of paragraphs (b)(5)(i)through (iii) 
of this section; and
    (v) 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 an order under 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.

[[Page 42787]]

    (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.  1293.27  Program evaluation.

    FHFA shall publish on its website a narrative assessment evaluating 
each Enterprise's performance under their respective Equitable Housing 
Finance Plans by May 15 of each year.


Sec. Sec.  1293.28-1293.30  [Reserved]

Subpart D--[Reserved]

Subpart E--Data Collection


Sec.  1293.41  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.

0
2. Effective February 15, 2026, add subpart D to part 1293 to read as 
follows:
Subpart D--Federal Home Loan Bank Equitable Housing Finance Planning
Sec.
1293.31 General.
1293.32 Equitable housing reports.
1293.33-1293.40 [Reserved]

Subpart D--Federal Home Loan Bank Equitable Housing Finance 
Planning


Sec.  1293.31  General.

    (a) This subpart sets forth the Federal Home Loan Banks' (Banks) 
duty to report on actions voluntarily taken to support underserved 
communities.
    (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) Reports under this subpart are reports required under 12 U.S.C. 
4514(a) and therefore must include a notice and declaration in 
compliance with 12 U.S.C. 4514(a)(4).


Sec.  1293.32  Equitable housing reports.

    (a) General. Annually, each Bank shall publicly provide information 
related to actions voluntarily to taken to overcome barriers to 
sustainable housing opportunities faced by one or more underserved 
communities for the prior year and such actions currently planned for 
the coming year or shall provide a notice that it has not taken any 
voluntary actions and does not currently have any such voluntary 
meaningful actions planned for the coming year.
    (b) Contents of the report. The report shall contain, at a minimum, 
a narrative assessment consisting of:
    (1) A review of voluntary actions taken, including, as applicable 
major successes, key accomplishments, lessons learned, and challenges 
experienced; and
    (2) A description of any future planned voluntary actions.
    (c) Report or notice submission. Each Bank shall submit its report 
to FHFA for review on or before February 15 annually or shall submit a 
notice to FHFA that it has not taken any voluntary actions and does not 
currently have such voluntary meaningful actions planned for the coming 
year.
    (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 or notice publication. Each Bank shall publish its 
report or notice

[[Page 42788]]

that it has not taken voluntary actions and does not currently have 
such voluntary actions planned for the future on its website on April 
15 annually and maintain it thereafter. Each Bank 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 an order under 12 U.S.C. 4514. From time to time, 
FHFA may issue public guidance on reports.


Sec. Sec.  1293.33-1293.40  [Reserved]

Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2024-09559 Filed 5-15-24; 8:45 am]
BILLING CODE 8070-01-P