Suspended Counterparty Program, 79675-79680 [2015-32183]

Agencies

• FEDERAL HOUSING FINANCE AGENCY

[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)]
[Rules and Regulations]
[Pages 79675-79680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32183]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1227

RIN 2590-AA60


Suspended Counterparty Program

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: This final rule establishes requirements and procedures for 
the Federal Housing Finance Agency's (FHFA) Suspended Counterparty 
Program. Under the Suspended Counterparty Program, FHFA may issue 
suspension orders directing the regulated entities (Fannie Mae, Freddie 
Mac, and the eleven Federal Home Loan Banks (Banks)) to cease doing 
business with an individual or institution, and any affiliate thereof, 
for a specified period of time where such party has committed fraud or 
other financial misconduct involving a mortgage transaction.
    The final rule revises the interim final rule published on October 
23, 2013. The final rule excludes from the types of covered 
transactions that would be subject to a final suspension order any 
transaction involving a residential mortgage loan if the loan is 
secured by the respondent's own personal or

[[Page 79676]]

household residence. The final rule provides more time than the interim 
final regulation provided for the regulated entities to submit reports 
to FHFA when they become aware that any individual or institution, and 
any affiliate thereof, with which they do business, has committed fraud 
or other financial misconduct involving a mortgage transaction. The 
final rule also simplifies the standard for issuing suspension orders 
by eliminating the requirement that FHFA demonstrate that the regulated 
entity has done business with the individual or institution within the 
past three years. Finally, the final rule clarifies the method of 
issuing notices of proposed suspension orders with respect to 
affiliates.

DATES: The final rule is effective January 22, 2016.

FOR FURTHER INFORMATION CONTACT: Kevin Sheehan, Associate General 
Counsel, at (202) 649-3086 (not a toll-free number), Federal Housing 
Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 
20219. The telephone number for the Hearing Impaired is (800) 877-8339 
(TDD only).

SUPPLEMENTARY INFORMATION: 

I. Background

    The Suspended Counterparty Program requires a regulated entity to 
submit a report to FHFA if it becomes aware that an individual or 
institution with which it does business has been found within the past 
three years to have committed fraud or other financial misconduct 
involving a mortgage transaction. FHFA may issue proposed and final 
suspension orders based on the reports it has received from the 
regulated entities or based on other information. FHFA offers the 
affected individual or institution and the regulated entities an 
opportunity to respond to any proposed suspension order. FHFA may issue 
a final suspension order if FHFA determines that the underlying 
misconduct is of a type that would be likely to cause significant 
financial or reputational harm to a regulated entity or otherwise 
threaten the safe and sound operation of a regulated entity. Final 
suspension orders direct the regulated entities to cease or refrain 
from doing business with the suspended individuals or institutions for 
a specified period of time, which may be permanent in appropriate 
cases.
    FHFA established the Suspended Counterparty Program in June 2012 by 
letter to the regulated entities. The requirements and procedures for 
the Suspended Counterparty Program were generally codified by the 
interim final rule published on October 23, 2013. 78 FR 63007. FHFA 
received two comment letters on the interim final rule: one from Fannie 
Mae; and one from eleven of the then twelve Banks \1\ (the Pittsburgh 
Bank did not join in the comment letter). The current regulation, the 
comments received, and the final rule are discussed below.
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    \1\ The Federal Home Loan Bank of Seattle merged into the 
Federal Home Loan Bank of Des Moines as of the close of business on 
May 31, 2015.
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II. Analysis of Final Rule

A. Requirement to Submit Reports--Sec.  1227.4

1. Scope of Reporting Requirements
    Current regulation. The current regulation requires a regulated 
entity to submit a report to FHFA when the regulated entity becomes 
aware that a person or affiliate thereof with which the regulated 
entity is engaging or has engaged in a covered transaction within the 
past three years has engaged in covered misconduct. A regulated entity 
is aware of covered misconduct when the regulated entity has reliable 
information that such misconduct has occurred. 12 CFR 1227.4(a). 
``Covered misconduct'' is defined to include convictions or 
administrative sanctions based on fraud or similar misconduct in 
connection with the mortgage business. 12 CFR 1227.2. The Federal 
Register notice accompanying the interim final rule states that the 
regulated entities are not required to conduct any independent 
investigation of the underlying conduct. See 78 FR at 63009.
    Comments received. The Banks supported the requirement in the 
current regulation for reporting to FHFA when they ``become aware'' of 
covered misconduct based on ``reliable information.'' However, the 
Banks asked that FHFA provide additional guidance on the scope of their 
reporting obligations with respect to ``reliable information.'' The 
Banks recommended that the rule language indicate that the regulated 
entities are not required to conduct any independent investigation of 
the conduct underlying covered misconduct. The Banks also asked that 
the rule language indicate that the regulated entities are not required 
to research possible affiliate relationships, stating that it would be 
difficult, if not impossible, to know the full extent of the affiliates 
of any given entity.
    The Banks asked FHFA to state that the regulated entities would not 
be required to conduct any docket searches for convictions or to 
monitor federal agency notices of debarment. The Banks also recommended 
that the reporting requirements not apply where a regulated entity 
becomes aware of covered misconduct through national news reporting or 
by an announcement or action taken by a federal agency, stating that 
such information would be accessible to FHFA as well as the regulated 
entities and all regulated entities should not have to report on the 
same, widely known conduct. The Banks further recommended that the 
reporting requirements not apply to any information about covered 
misconduct that a regulated entity discovers in reviewing a member's 
examination report. The Banks stated that their review of such reports 
is subject to confidentiality agreements with federal financial 
regulators that limit their ability to disclose any information in the 
reports without the express written consent of the regulator.
    Final rule. The final rule does not change the scope of the 
reporting requirements under the Suspended Counterparty Program. A 
regulated entity is required to submit a report to FHFA regarding only 
covered misconduct of which the regulated entity is aware. The extent 
of any regulated entity's efforts in evaluating counterparties or 
addressing potential mortgage fraud is a prudential matter for the 
regulated entity, subject to regular supervision by FHFA. The Suspended 
Counterparty Program is not intended to require additional review or 
investigation by a regulated entity, nor is it intended to take the 
place of any review or investigation that a regulated entity would 
otherwise engage in.
    With respect to the comment regarding confidential examination 
information, the Suspended Counterparty Program is limited to 
convictions or administrative sanctions for fraud or other financial 
misconduct related to mortgage transactions. Records regarding any such 
actions would be publicly available, so it is not necessary to revise 
this rule to address confidential examination information.
2. Scope of Screening
    Current regulation. The Federal Register notice accompanying the 
interim final rule states that the rule does not specify the internal 
procedures that each regulated entity must establish to ensure 
compliance with the reporting requirements under the rule. See 78 FR at 
63009.
    Comments received. The Banks indicated that they have existing 
procedures for screening against the U.S. Treasury Department's Office 
of Foreign Assets Control's list. The Banks requested that FHFA state 
that such

[[Page 79677]]

procedures are sufficient for purposes of the Suspended Counterparty 
Program.
    Fannie Mae commented that screening individual purchasers of Fannie 
Mae-owned real estate (REO) against the FHFA suspended counterparty 
list would present operational challenges. Fannie Mae requested FHFA to 
state that such screening is not required.
    Final rule. The Suspended Counterparty Program is not intended to 
define the scope of a regulated entity's internal procedures to address 
risks presented by fraud or other financial misconduct. Each regulated 
entity must establish appropriate procedures to address such risks. The 
Suspended Counterparty Program supplements the efforts of the regulated 
entities; it does not replace those efforts. For example, the Suspended 
Counterparty Program does not by itself require a regulated entity to 
screen individual REO purchasers against the FHFA suspended 
counterparty list, but a regulated entity may still do so if the 
regulated entity determines that such screening would be a prudent 
business practice.
3. Timing of Reports
    Current regulation. The current regulation provides that the 
regulated entities must submit reports to FHFA on covered misconduct no 
later than ten business days after the regulated entity becomes aware 
of such misconduct. 12 CFR 1227.4(c).
    Comments received. Fannie Mae commented that ten business days is 
not sufficient to complete its usual due diligence and reasonable 
investigation to confirm whether there is in fact covered misconduct 
and whether or not Fannie Mae is engaged in a covered transaction with 
the reported party. Fannie Mae noted that such investigations typically 
rely on public information that may not be available within such 
timeframe. Fannie Mae asked FHFA to extend the time for submitting 
reports to 30 calendar days.
    Final rule. FHFA recognizes that in some instances ten business 
days may not be sufficient to complete necessary investigation or other 
due diligence. Accordingly, the final rule revises the time for 
submitting reports to 30 calendar days.

B. Timing Requirements for Covered Transactions--Sec. Sec.  1227.4, 
1227.5 and 1227.6

    Current regulation. The Suspended Counterparty Program covers 
situations where an individual or institution has engaged in a covered 
transaction with a regulated entity within the past three years. The 
current regulation requires a regulated entity to report to FHFA when 
it becomes aware that a person or affiliate thereof with which the 
regulated entity is engaging or has engaged in a covered transaction 
within the past three years has engaged in covered misconduct. 12 CFR 
1227.4(a). The current regulation also provides that a proposed or 
final order of suspension may be issued if the suspending official 
determines that there is evidence that the regulated entity has engaged 
in a covered transaction with the person or affiliate thereof within 
the past three years and has engaged in covered misconduct. 12 CFR 
1227.5(b)(1) and 1227.6(a)(1).
    Comments received. Both Fannie Mae and the Banks asked that the 
rule be limited to current counterparties, not counterparties with 
which they have done business within the past three years. The Banks 
indicated that their current procedures for identifying covered 
misconduct under the Suspended Counterparty Program do not address 
persons that have ceased doing business with the Banks and stated that 
requiring reports on such persons would be unduly burdensome. Fannie 
Mae commented that requiring reports on covered misconduct involving 
persons or institutions with whom Fannie Mae no longer does business 
would be an inefficient use of resources. Fannie Mae noted that 
requiring a regulated entity to research whether a contract or 
agreement terminated two or three or four years ago would yield very 
little benefit and would not fulfill the purposes of the Suspended 
Counterparty Program.
    Final rule. The final rule revises the standard for issuing a 
proposed or final suspension order to eliminate the requirement that 
FHFA demonstrate that the regulated entity has done business with the 
individual or institution within the past three years. However, the 
final rule maintains the requirement that a regulated entity submit 
reports regarding any parties with which it has done business within 
the past three years.
    FHFA recognizes that it may be difficult for a regulated entity to 
determine the exact date it ceased doing business with a particular 
individual or institution. In addition, documenting the exact timing of 
the most recent covered transaction is not necessary to accomplish the 
purposes of the Suspended Counterparty Program. Suspension orders 
reflect a determination by FHFA that doing business with an individual 
or institution presents a safety and soundness risk to the regulated 
entities. This determination is forward-looking and does not depend on 
whether a regulated entity has recently engaged in a covered 
transaction. For those reasons, the final rule eliminates the 
requirements in Sec. Sec.  1227.5(b)(1) and 1227.6(a)(1) that FHFA 
demonstrate that a regulated entity has done business with the 
individual or institution within the past three years.
    Although the final rule revises the standard for whether FHFA may 
issue a proposed or final suspension order, the final rule maintains 
the requirement in Sec.  1227.4(a) that the regulated entities submit 
reports in appropriate cases, even if they have already ceased doing 
business with the individual or institution. In many cases, a regulated 
entity may take action to terminate its relationship with a party 
before there has been any conviction or administrative sanction that 
would trigger the reporting requirement under the Suspended 
Counterparty Program. In some cases, a regulated entity may have 
stopped doing business with a counterparty that is currently doing 
business with another regulated entity that is not yet aware of the 
covered misconduct. Therefore, excluding those cases from the coverage 
of the rule would undermine the effectiveness of the program.
    To the extent records are available, the regulated entities are 
encouraged to submit reports on any individual or institution that has 
engaged in covered misconduct regardless of when the most recent 
covered transaction took place. However, recognizing the practical and 
operational difficulty of determining when the most recent transaction 
may have occurred, the final rule only requires a regulated entity to 
submit reports regarding any parties with which it has done business 
within the past three years.

C. Definitions--Sec.  1227.2

1. Covered Transaction
    Current regulation. The current regulation defines ``covered 
transaction'' as ``a contract, agreement, or financial or business 
relationship between a regulated entity and a person and any affiliates 
thereof.'' 12 CFR 1227.2. The Federal Register notice accompanying the 
interim final rule invited comments on whether this definition should 
be revised to include more explicit standards. As an example, the 
notice asked whether the rule should cover ``lower tier covered 
transactions'' to address persons who may indirectly do business with a 
regulated entity, such as a subcontractor or other person providing 
services to a party that does

[[Page 79678]]

business directly with a regulated entity. See 78 FR at 63009.
    Comments received. The Banks commented that the regulation should 
not cover lower tier covered transactions. The Banks indicated that it 
would not be possible in all cases to require their counterparties to 
ensure that the counterparties did not do business with any suspended 
party in connection with a covered transaction and that the Banks would 
be unable to effectively monitor such a requirement in cases where a 
counterparty did agree to the requirement. The Banks commented that it 
would be possible for the Banks to encourage their counterparties not 
to do business with entities that have been suspended by FHFA.
    Fannie Mae commented that the regulated entities should not be 
required to directly ensure that a suspended party does not do business 
indirectly with a regulated entity. Fannie Mae indicated that it would 
be operationally difficult for Fannie Mae to attempt to monitor such 
relationships between third parties. Fannie Mae commented that it could 
notify its counterparties of any limitations imposed by FHFA on such 
transactions, but it would not be able to directly ensure compliance.
    Fannie Mae also recommended that the definition of ``covered 
transaction'' be limited to ``contract or agreement'' and not include 
other ``financial or business relationships.'' Fannie Mae stated that 
``financial or business relationships'' is redundant with ``contract or 
agreement,'' and that if it was intended to capture something beyond a 
contract or agreement, it is too broad and ambiguous. Fannie Mae 
expressed concern that ``financial or business relationships'' could be 
interpreted to include relationships with service providers such as 
delivery services for which Fannie Mae may have an account but not 
necessarily a contract or agreement, which it stated would not advance 
the purposes of the Suspended Counterparty Program.
    Final rule. The final rule does not revise the definition of 
``covered transaction.'' In many cases involving mortgage fraud, a 
regulated entity that has purchased a mortgage loan may be directly 
affected by the fraud despite the fact that none of the parties that 
engaged in fraudulent conduct has a direct relationship with the 
regulated entity. However, FHFA recognizes that it would be 
operationally difficult at this time for the regulated entities to 
effectively monitor relationships between their counterparties and such 
lower tier service providers. For that reason, FHFA is not at this time 
requiring that the regulated entities report on transactions between 
their direct counterparties and lower tier parties, or that the 
regulated entities ensure that their direct counterparties cease doing 
business with any lower tier parties that have been suspended by FHFA.
    FHFA expects the regulated entities to take all appropriate 
measures to address the risks presented by mortgage fraud. The scope of 
those measures may depend in part on the nature of the financial or 
business relationship between the party and the regulated entity. 
Limiting the definition of ``covered transaction'' to only a ``contract 
or agreement,'' as recommended by Fannie Mae, would be too restrictive 
and, thus, contrary to the intent of the Suspended Counterparty 
Program. FHFA intends the definition to be flexible enough to encompass 
any parties who present a particular risk to the regulated entities, 
while still excluding generic third party service providers that are 
only incidentally involved in mortgage-related transactions, such as 
mail and package delivery vendors.
    While the final rule does not limit the general definition of 
``covered transaction'' in response to the comments received, the final 
rule limits the scope of a final suspension order to exclude one 
category of what otherwise might be considered lower tier covered 
transactions. FHFA does not intend final suspension orders to prevent 
respondents or their households from obtaining mortgage financing for 
the respondent's own personal or household residence. The final rule 
adds a new paragraph (d) to Sec.  1227.3 making clear that final 
suspension orders do not have any effect on any transaction involving a 
residential mortgage loan if the loan is secured by the respondent's 
own personal or household residence.
2. Affiliate
    Current regulation. The current regulation defines ``affiliate'' as 
a party that controls or is controlled by another person, whether 
directly or indirectly, including situations where one or more persons 
are controlled by the same third person. 12 CFR 1227.2.
    Comments received. The Banks requested clarification of the 
definition of ``affiliate,'' particularly on what constitutes 
``control'' for purposes of the definition. The Banks indicated that 
parent and subsidiary companies would appear to be covered, but 
expressed uncertainty over whether the definition would include 
executive officers of a company. The Banks also suggested that the 
definition of ``covered misconduct'' should be revised to refer to 
imputed conduct ``among persons'' rather than ``among affiliates.''
    Final rule. The final rule does not change the definition of 
``affiliate,'' and it does not replace the reference to ``affiliates'' 
in the definition of ``covered misconduct.'' FHFA intends the term 
``affiliate'' to be interpreted broadly in light of the specific 
provisions regarding imputing conduct among affiliates in the 
definition of ``covered misconduct.'' 12 CFR 1227.2. The definition of 
``covered misconduct'' makes clear that FHFA may impute conduct from an 
individual to an organization in appropriate circumstances. In those 
circumstances, FHFA would consider the individual and organization to 
be affiliates for purposes of the Suspended Counterparty Program.
3. Covered Misconduct
    Current regulation. The current regulation defines ``covered 
misconduct'' to include convictions or administrative sanctions within 
the past three years based on fraud or similar misconduct in connection 
with the mortgage business. The definition provides that FHFA may 
impute conduct among individuals and organizations in appropriate 
circumstances as provided in the rule. 12 CFR 1227.2.
    Comments received. The Banks supported defining ``covered 
misconduct'' as limited to offenses in connection with the mortgage 
business. The Banks suggested restating the definition of ``covered 
misconduct'' as certain types of conduct resulting in conviction or 
administrative sanction rather than a conviction or administrative 
sanction based on certain types of conduct. The Banks suggested that 
this would make clear that the conduct being imputed is the conduct 
that gave rise to the conviction or administrative sanction and not the 
conviction or administrative sanction itself.
    Final rule. The final rule does not change the definition of 
``covered misconduct.'' FHFA does not engage in independent fact-
finding regarding the conduct underlying a conviction or administrative 
sanction covered by the rule. The current regulation reflects this 
approach by defining ``covered misconduct'' explicitly in terms of 
convictions and administrative sanctions. Where FHFA proceeds with a 
proposed or final suspension with respect to an affiliate, FHFA is 
imputing not just the underlying conduct, but the ``covered 
misconduct'' as defined in the rule.

[[Page 79679]]

4. Administrative Sanctions
    Current regulation. The current regulation defines ``administrative 
sanction'' as a debarment, suspension, or any similar administrative 
sanction imposed by a Federal agency that has the effect of limiting 
the ability of a person to do business with a Federal agency. 12 CFR 
1227.2. The definition includes any settlements of a proposed 
administrative sanction if the settlement has the same effect. The 
Federal Register notice accompanying the interim final rule requested 
comment on whether the definition should include other types of 
administrative sanctions, such as enforcement actions by other 
financial institution regulators. See 78 FR at 63009.
    Comments received. Fannie Mae commented that the definition in the 
current regulation is appropriate and sufficiently broad and, 
therefore, should not be expanded to include enforcement actions by 
other financial institution regulators.
    Final rule. The final rule does not change the definition of 
``administrative sanction'' to include other types of administrative 
sanctions, such as enforcement actions by other financial regulators. 
The Suspended Counterparty Program is a limited measure intended to 
reduce the risks to the regulated entities from fraud and other 
financial misconduct. Other kinds of administrative actions may or may 
not be related to the goals of the Suspended Counterparty Program. FHFA 
may consider expanding the definition of ``administrative sanction'' in 
the future, but only in appropriate circumstances related to the goals 
of the Suspended Counterparty Program.
5. Conviction
    Current regulation. The current regulation defines ``conviction'' 
as any judgment or other determination of guilt of a criminal offense 
by a court of competent jurisdiction, or any other functionally 
equivalent resolution. 12 CFR 1227.2. The definition includes judgments 
entered by verdict or based on a guilty plea. Other dispositions, such 
as probation before judgment or deferred prosecution, are also included 
if they include an admission of guilt.
    Comments received. The Banks asked that FHFA state that ``a court 
of competent jurisdiction'' is limited to courts of the United States 
of America and does not include courts in foreign jurisdictions.
    Final rule. The final rule does not change the definition of 
``conviction.'' FHFA intends the definition of conviction to encompass 
both state and federal courts. FHFA has not received any reports to 
date based on a conviction from a court outside the United States. If 
FHFA receives any such report in the future, FHFA will further evaluate 
the report to determine whether any additional action is necessary or 
appropriate.

D. Written Notice of Proposed Suspension

    Current regulation. The current regulation provides that if the 
suspending official determines that there are grounds for a proposed 
suspension order, the suspending official ``may'' issue a written 
notice of proposed suspension. 12 CFR 1227.5(c).
    Comments received. The Banks commented that a written notice of 
proposed suspension is necessary to enable affected parties to respond. 
The Banks, therefore, recommended that issuance of a written suspension 
notice should be mandatory where a suspending official finds grounds 
for such issuance.
    Final rule. The final rule does not change this provision of the 
regulation. The use of the permissive ``may'' rather than the mandatory 
``shall'' in this sentence is appropriate because the decision to 
propose suspension is a discretionary decision by FHFA. For example, 
the suspending official may determine that there are grounds for a 
proposed suspension order but that for other reasons a proposed 
suspension is not appropriate. The existing provision correctly 
expresses the discretionary nature of the decision to propose 
suspension. If the suspending official decides that a written notice of 
proposed suspension should be issued to the affected person, the 
suspending official must provide notice of the proposed suspension to 
each of the regulated entities as well.
    While the final rule does not change the substance of this 
provision, the final rule clarifies the method of sending a notice of 
proposed suspension. Under the final rule, a notice of proposed 
suspension will be sent to an affiliate of a respondent only if the 
affiliate would be subject to the proposed suspension. The final rule 
also makes technical drafting changes to the language on the method of 
sending notices for greater clarity.

E. Scope of Final Suspension Orders

    Current regulation. The current regulation provides that a final 
suspension order may be issued directing the regulated entities to 
cease or refrain from engaging in covered transactions ``with a 
particular person and any affiliates thereof.'' 12 CFR 1227.3(a).
    Comments received. The Banks commented that this language should be 
revised to clarify that each suspended affiliate will be identified in 
the suspension order. The Banks noted that it is difficult, if not 
impossible, for the regulated entities to know the full extent of the 
affiliates of any given entity.
    Final rule. The final rule does not change this provision of the 
regulation. Section 1227.6(f)(2)(ii) states that each final suspension 
order must identify ``each person and any affiliates thereof to which 
the suspension applies.'' It is not necessary to restate this 
requirement in Sec.  1227.3(a).

F. Status of Previous FHFA Guidance

    Comments received. The Banks requested that, in order to eliminate 
potential conflicts of interpretation, FHFA state that any FHFA 
guidance issued prior to the interim final rule has been superseded by 
the interim final rule. The Banks also asked whether existing FHFA 
reporting forms should continue to be used for submitting reports.
    Final rule. The Suspended Counterparty Program was established in 
June 2012 by letter to the regulated entities. Prior to publication of 
the interim final rule on October 23, 2013, FHFA adopted procedures for 
the regulated entities to submit reports and provided informal guidance 
on the scope of the reporting obligations. While the interim final rule 
generally codified the existing procedures for the Suspended 
Counterparty Program, to avoid unnecessary confusion, FHFA views any 
guidance issued prior to the effective date of the interim final rule 
as superseded. FHFA may respond to questions from the regulated 
entities about implementation and interpretation of the final rule, and 
FHFA may provide written guidance on specific issues as appropriate.

III. Consideration of Differences Between the Banks and the Enterprises

    Section 1313(f) of the Federal Housing Enterprises Financial Safety 
and Soundness Act requires FHFA, when promulgating regulations relating 
to the Banks, to consider the differences between Fannie Mae and 
Freddie Mac (collectively, the Enterprises) and the Banks with respect 
to the Banks': cooperative ownership structure; mission of providing 
liquidity to members; affordable housing and community development 
mission; capital structure; joint and several liability; and any other 
differences FHFA considers appropriate. See 12

[[Page 79680]]

U.S.C. 4513(f). In preparing this final rule, FHFA considered the 
differences between the Banks and the Enterprises as they relate to the 
above factors and determined that the Banks should not be treated 
differently from the Enterprises for purposes of the final rule.

IV. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirement that requires 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.

V. Regulatory Flexibility Act

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

List of Subjects in 12 CFR Part 1227

    Administrative practice and procedure, Federal home loan banks, 
Government-sponsored enterprises, Reporting and recordkeeping 
requirements.

Authority and Issuance

    Accordingly, for the reasons stated in the SUPPLEMENTARY 
INFORMATION, under the authority of 12 U.S.C. 4513, 4513b, 4514, and 
4526, FHFA is adopting as final the interim final rule published at 78 
FR 63007 (October 23, 2013) with the following changes:

PART 1227--SUSPENDED COUNTERPARTY PROGRAM

0
1. The authority citation for part 1227 continues to read as follows:

    Authority: 12 U.S.C. 4513, 4513b, 4514, 4526.


0
2. Amend Sec.  1227.3 by adding paragraph (d) to read as follows:


Sec.  1227.3  Scope of suspension orders.

* * * * *
    (d) No effect on residential mortgage loans secured by respondent's 
own personal or household residence. A final suspension order issued 
pursuant to this part shall have no effect on any transaction involving 
a residential mortgage loan if the loan is secured by the respondent's 
own personal or household residence.


Sec.  1227.4  [Amended]

0
3. Amend Sec.  1227.4(c)(1) by removing the phrase ``ten (10) business 
days'' and adding in its place the phrase ``thirty (30) calendar 
days''.


Sec.  1227.5  [Amended]

0
4. Amend Sec.  1227.5 by
0
a. Removing the phrase ``regulated entity is engaging or engaged in a 
covered transaction with the person or any affiliates thereof within 
the past three (3) years and the'' from paragraph (b)(1).
0
b. Revising paragraph (e) to read as follows:


Sec.  1227.5  Proposed suspension order.

* * * * *
    (e) Method of sending notice. The suspending official shall send 
the notice of proposed suspension to the last known street address, 
facsimile number, or email address of:
    (1) The person, the person's counsel, or an agent for service of 
process; and
    (2) Any affiliates of the person, the counsel for those affiliates, 
or an agent for service of process, if suspension is also being 
proposed for such affiliates.
* * * * *


Sec.  1227.6  [Amended]

0
5. Amend Sec.  1227.6(a)(1) by removing the phrase ``regulated entity 
is engaging or has engaged in a covered transaction within the past 
three (3) years with the respondent, and the''.

    Dated: December 15, 2015.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2015-32183 Filed 12-22-15; 8:45 am]
 BILLING CODE 8070-01-P