Enterprise Housing Goals, 82965-82970 [2020-28084]

Download as PDF Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules will be viewable to DOE Building Technologies Office staff only. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment. However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. 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DOE considers public participation to be a very important part of the process for developing energy conservation standards. DOE actively encourages the participation and interaction of the public during the comment period in each stage of the rulemaking process. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 82965 in the rulemaking process. Anyone who wishes to be added to the DOE mailing list to receive future notices and information about this process or would like to request a public meeting should contact Appliance and Equipment Standards Program staff at (202) 287– 1445 or via email at ApplianceStandardsQuestions@ ee.doe.gov. Signing Authority This document of the Department of Energy was signed on December 8, 2020, by Daniel R Simmons, Assistant Secretary for the Office of Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register. Signed in Washington, DC, on December 9, 2020. Treena V. Garrett, Federal Register Liaison Officer, U.S. Department of Energy. [FR Doc. 2020–27456 Filed 12–18–20; 8:45 am] BILLING CODE 6450–01–P FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1282 RIN 2590–AB12 Enterprise Housing Goals Federal Housing Finance Agency. ACTION: Advance notice of proposed rulemaking. AGENCY: The Federal Housing Finance Agency (FHFA) is publishing an Advance Notice of Proposed Rulemaking (ANPR) requesting public comment on a variety of questions related to potential changes to the regulation establishing housing goals for Fannie Mae and Freddie Mac (Enterprises). FHFA will consider public comments received on these questions in order to inform rulemaking that is planned for 2021 to establish single-family and multifamily housing goals benchmark levels for 2022 and SUMMARY: E:\FR\FM\21DEP1.SGM 21DEP1 82966 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules beyond, and to make other changes to the Enterprise housing goals regulation, as appropriate. DATES: Comments must be received on or before February 28, 2021. ADDRESSES: You may submit your comments on the ANPR, identified by regulatory information number (RIN) 2590–AB12, by any one of the following methods: • Agency website: https:// www.fhfa.gov/open-for-comment-orinput. • Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. If you submit your comment to the Federal eRulemaking Portal, please also send it by email to FHFA at RegComments@fhfa.gov to ensure timely receipt by FHFA. Include the following information in the subject line of your submission: Comments/RIN 2590–AB12. • Hand Delivered/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/ RIN 2590–AB12, Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW, Washington, DC 20219. Deliver the package at the Seventh Street entrance Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m. • U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590–AB12, Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW, Washington, DC 20219. Please note that all mail sent to FHFA via U.S. Mail is routed through a national irradiation facility, a process that may delay delivery by approximately two weeks. FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director, Office of Housing & Community Investment, Division of Housing Mission and Goals, at (202) 649–3157, Ted.Wartell@ fhfa.gov; Padmasini Raman, Supervisory Policy Analyst, Office of Housing & Community Investment, Division of Housing Mission and Goals, at (202) 649–3633, Padmasini.Raman@fhfa.gov; or Kevin Sheehan, Associate General Counsel, Office of General Counsel, (202) 649–3086, Kevin.Sheehan@ fhfa.gov. These are not toll-free numbers. The mailing address is: Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC 20219. The telephone number for the Telecommunications Device for the Deaf is (800) 877–8339. SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 21:22 Dec 18, 2020 Jkt 253001 I. Comments FHFA invites comments on all aspects of this ANPR. Copies of all comments will be posted without change, including any personal information you provide such as your name, address, email address, and telephone number, on the FHFA website at https:// www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public through the electronic rulemaking docket for this ANPR, also located on the FHFA website. II. Advance Notice of Proposed Rulemaking This ANPR seeks public comments on a variety of questions related to potential changes to the Enterprise housing goals regulation.1 FHFA plans to issue a proposed rule in 2021 that would establish new benchmark levels for the Enterprise housing goals for 2022 and beyond, as well as make other changes to the regulation as appropriate. Based on the comments received in response to this ANPR, FHFA may propose revisions to the Enterprise housing goals regulation for comment in the proposed rule planned for 2021 or in a later rulemaking. FHFA invites comments on the specific questions set forth in this ANPR, and on any other issues that commenters think should be addressed as part of the rulemaking that will establish the housing goals benchmark levels for 2022 and beyond. Question 1: Are there categories of loans that should be excluded from receiving housing goals credit under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act) provisions on ‘‘unacceptable business and lending practices?’’ The Safety and Soundness Act requires FHFA to exclude ‘‘segments of the market determined to be unacceptable or contrary to good lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises’’ from consideration in setting the singlefamily housing goals.2 FHFA may not give credit toward achievement of the housing goals for mortgages that are ‘‘determined to be unacceptable or contrary to good lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises.’’ 3 The current exclusions under the Enterprise housing goals regulation generally focus on types of loans or 1 12 CFR part 1282. 12 U.S.C. 4562(e)(1). 3 See 12 U.S.C. 4562(i). 2 See PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 other product characteristics, rather than loans that are unacceptable or contrary to good lending practices. However, FHFA may also make exclusions based on factors considered in underwriting loans. For single-family loan purchases, the Enterprises use their own automated underwriting systems to evaluate whether a loan is eligible for purchase based on factors including, but not limited to, a borrower’s creditworthiness. These automated underwriting systems assess a borrower’s ability to make his or her mortgage payments over a two- or threeyear time period following origination. The Enterprises establish a cut-off threshold based on their credit risk appetite, and only those loans for which the borrowers’ predicted risk is deemed below that threshold are eligible to be sold to the Enterprises. The Enterprises also price loans according to their pricing grids to partially account for the risk profile of a loan. FHFA generally considers all conventional conforming first lien mortgages that are owner-occupied as potentially eligible for single-family housing goals credit, subject to certain exclusions. For instance, under the Safety and Soundness Act, investor loans are excluded, and under the Enterprise housing goals regulation, investor loans and second loans (i.e., any subordinate lien mortgages) are excluded, from consideration for the single-family housing goals.4 As another example, mortgages for secondary residences are excluded from consideration for the single-family housing goals.5 FHFA requests comment on whether there are other categories of loans that should be excluded from receiving housing goals credit under the statute’s ‘‘unacceptable business and lending practices’’ provisions. For example, should FHFA consider factors to promote borrower sustainability? How would FHFA determine and measure sustainability? Should risk-layering be considered in a manner that is distinct from the eligibility requirements of the Enterprises? 6 What criteria should be used to identify such loans? What public policies should FHFA consider when assessing certain categories of loans? Are there other loan characteristics that could be, in some instances, not in the long-term interest 4 See 12 U.S.C. 4562(a) and 12 CFR 1282.16(b)(10). 5 See 12 CFR 1282.16(b)(8). 6 Some examples of factors associated with higher risk include high debt-to-income ratio, high loan-tovalue ratio, or low credit score, among others. ‘‘Risk-layering’’ refers to loans with more than one such factor. E:\FR\FM\21DEP1.SGM 21DEP1 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules 7 See housing goals regulation does not restrict the income of borrowers whose mortgages qualify for the low-income areas home purchase subgoal if the mortgages are on properties located in a low-income census tract. Under the regulation, the Enterprises can meet the low-income areas home purchase subgoal by acquiring home purchase mortgages that are either: (1) Originated for borrowers located in low-income census tracts (defined as census tracts with median income less than or equal to 80 percent of area median income (AMI)); or (2) originated for borrowers with incomes less than or equal to AMI who reside in minority census tracts (defined as census tracts with a minority population of at least 30 percent and a tract median income of less than 100 percent of AMI).7 There are no borrower income requirements for criterion (1). While Enterprise mortgage acquisitions could qualify under either or both criteria, the share of the Enterprises’ mortgage acquisitions satisfying criterion (1) has been consistently higher than the share of Enterprise mortgage acquisitions satisfying criterion (2) in recent years. For example, among the Enterprises’ mortgage acquisitions in 2019, 15.0 percent of mortgages met only criterion (1), 10.2 percent met only criterion (2), and 6.4 percent met both criteria, as can be seen in Table 1 below. All of these shares have been increasing steadily since 2010. 12 CFR 1281.1 and 1282.12(f). VerDate Sep<11>2014 21:22 Dec 18, 2020 Jkt 253001 PO 00000 Frm 00018 Fmt 4702 Sfmt 4725 E:\FR\FM\21DEP1.SGM 21DEP1 EP21DE20.051</GPH> of the borrower, even if they are not treated as abusive or unfair under existing consumer protection statutes? Question 2: Are there ways to determine whether the low-income areas home purchase subgoal has resulted in the displacement of residents from certain communities, or to measure the extent of any such displacement? Should FHFA consider modifying the low-income areas home purchase subgoal to address such concerns? If so, how? Concerns have been raised about gentrification in low-income areas and high-minority census tracts, and the potential displacement of long-time low-income residents from such areas and tracts. The current Enterprise 82967 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules FHFA’s analysis of Home Mortgage Disclosure Act (HMDA) data in Table 2 shows that both low-income areas and high-minority areas have increasing shares of borrowers with incomes at or above 100 percent of AMI, although loans to borrowers with incomes over 100 percent of AMI do not qualify for the minority areas component of the goal. For instance, the share of loans made to borrowers with incomes greater than 100 percent of AMI and residing in these low-income census tracts increased from 38.8 percent in 2010 to 44.2 percent in 2016, after dropping to 36.5 percent in 2012. This share has been relatively stable since then, with a 43.3 percent share in 2019. Nonetheless, borrowers with higher incomes have made up an increasing share of the mortgage market in low-income areas. A similar trend exists among borrowers residing in high minority census tracts, with the share of higher income borrowers increasing from 42.5 percent in 2010 to 50 percent in 2016. That share declined to 47.8 percent in 2019 after hovering around 49 percent in 2018 and 2019. Table 3 shows that the share of loans made to borrowers with incomes greater than 100 percent of AMI and residing in low-income census tracts increased from 40.7 percent in 2010 to 42.8 percent in 2016. However, that share has declined since then, dropping to a low of 37 percent in 2019. This trend is similar among borrowers residing in high minority census tracts, with the share of higher income borrowers increasing from 45.4 percent in 2010 to 48.5 percent in 2016, after dropping to a low of 42.8 percent in 2012. This share has since declined to 42.8 percent in 2019. VerDate Sep<11>2014 21:22 Dec 18, 2020 Jkt 253001 PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 E:\FR\FM\21DEP1.SGM 21DEP1 EP21DE20.052</GPH> 82968 The presence of higher-income borrowers in these areas may be a sign of improved economic indicators for the community, but there is some concern that such a trend as seen particularly in the HMDA data analysis could also be accompanied by the displacement of lower income households. Change in the mix of renters to owner-occupied households often precedes and accompanies these trends. FHFA is aware that this particular subgoal may encourage the Enterprises to focus on purchasing loans for higher-income households in low-income and highminority areas, and FHFA is also aware of concerns about the impact of rising housing costs on current residents in low-income or higher-minority areas. However, it is possible that higherincome households would have moved into these areas even in the absence of the subgoal. In recognition of these issues, FHFA has been very conservative in setting the benchmark levels for this subgoal. Recently, in response to the issuance of FHFA’s proposed rule for the 2021 Enterprise housing goals, FHFA received two comment letters from policy advocacy organizations that referenced concerns about displacement and gentrification related to this subgoal. The comment letters supported and encouraged FHFA’s efforts to VerDate Sep<11>2014 21:22 Dec 18, 2020 Jkt 253001 monitor and analyze trends regarding this subgoal. The comment letters also requested release of additional data on borrower incomes associated with goalsqualifying loans. FHFA requests comment on how best to achieve the policy objectives of this subgoal. Should FHFA shift the focus of this subgoal to lower-income households? Should FHFA impose an AMI limit on borrowers for mortgages that qualify for the subgoal? Should FHFA set a limit on the number or share of mortgages for borrowers with incomes over 100 percent of AMI that count towards the subgoal? Question 3: Should FHFA revise the low-income areas home purchase subgoal to consider loans on properties located in Opportunity Zones, and if so, how should such loans be treated? Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act, and are designed to spur economic development and job creation in distressed communities by providing tax benefits to investors who invest in these communities.8 Investors may defer tax on eligible capital gains by making a 8 Public Law 115–97, section 13823, 131 Stat. 2054, 2183, codified at 26 U.S.C. 1400Z–1 and 1400Z–2 (Dec. 22, 2017). Note: Public Law 115–97 is commonly referred to as the ‘‘Tax Cuts and Jobs Act,’’ but that short title was omitted from the law as enacted. PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 82969 qualifying investment (including real estate) in a Qualified Opportunity Fund (QOF). A QOF is an investment vehicle with at least 90 percent of its holdings in a Qualified Opportunity Zone (QOZ) property. QOZs are census tracts that meet certain poverty rate and median family income requirements and that have been designated as such by the U.S. Department of the Treasury, based on nominations from the Chief Executive Officers of each State. There are around 8,700 QOZ tracts, the majority of which are low-income tracts. Because the Opportunity Zones program is new, its impact is still largely unknown. FHFA has noted that in 2019, over 17 percent of low-income area home purchase goal loans are in QOZs. Additionally, 12 percent of multifamily low-income goal units and 20 percent of small multifamily lowincome goal units are in QOZs. To help track how QOF projects are achieving the program’s intended goal of community revitalization, the U.S. Impact the U.S. Impact [MB1] Investing Alliance, the Beeck Center for Social Impact + Innovation at Georgetown University, and the Federal Reserve Bank of New York partnered to create the Opportunity Zones Reporting Framework, a tool that may be used to E:\FR\FM\21DEP1.SGM 21DEP1 EP21DE20.053</GPH> Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules 82970 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Proposed Rules assess the intended goal of community revitalization.9 FHFA requests comment on whether and how the objectives of the Opportunity Zones program would align with the purpose of the Enterprise lowincome areas home purchase subgoal. Should FHFA consider giving credit under this subgoal for loans on properties located in Opportunity Zones? What criteria should FHFA use to focus on Opportunity Zones that would have the largest benefit to a community? If included in the subgoal, how can FHFA ensure that the loans on properties in Opportunity Zones benefit these communities? How can FHFA use this subgoal to target slow-growing communities that need these loans? Should FHFA require the use of the Opportunity Zone Reporting Framework for impact tracking? Are there other public policy considerations related to Opportunity Zones that FHFA should consider? Question 4: Is there evidence that the Enterprise housing goals have helped expand low-income homeownership in the marketplace? The Safety and Soundness Act directs FHFA to evaluate Enterprise support for low-income homeownership by measuring the low-income share of the mortgages that the Enterprises have acquired.10 FHFA requests comment on the factors it should consider in assessing the effectiveness of the Enterprises’ activities in expanding low-income homeownership. In order to improve the housing goals, how should impacts be evaluated? What are the appropriate counterfactuals to consider? Is it possible to determine whether acquired mortgages that count toward achievement of the goals would have been originated in the absence of the housing goals? FHFA specifically requests comment on whether—and under the statute, how—other support activities undertaken by the Enterprises should be considered when FHFA reviews the Enterprises’ performance on the single-family housing goals. Mark A. Calabria, Director, Federal Housing Finance Agency. [FR Doc. 2020–28084 Filed 12–18–20; 8:45 am] BILLING CODE 8070–01–P 9 See https://ozframework.org/about-index. 12 U.S.C. 4562(a)(1). 10 See VerDate Sep<11>2014 21:22 Dec 18, 2020 Jkt 253001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2020–1138; Project Identifier MCAI–2020–01258–E] RIN 2120–AA64 Airworthiness Directives; Rolls-Royce Deutschland Ltd & Co KG (Type Certificate Previously Held by RollsRoyce plc) Turbofan Engines Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). AGENCY: The FAA proposes to adopt a new airworthiness directive (AD) for certain Rolls-Royce Deutschland Ltd & Co KG (RRD) Trent 1000–A2, 1000–AE2, 1000–C2, 1000–CE2, 1000–D2, 1000–E2, 1000–G2, 1000–H2, 1000–J2, 1000–K2 and 1000–L2 model turbofan engines. This proposed AD was prompted by the manufacturer’s analysis which determined that cracks may initiate in the front seal fins and cause cracks in the low-pressure turbine (LPT) disk. This proposed AD would require repetitive inspection of the seal fins and, depending on the results of the inspection, replacement of the LPT disk before further flight. The FAA is proposing this AD to address the unsafe condition on these products. DATES: The FAA must receive comments on this proposed AD by February 4, 2021. SUMMARY: You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments. • Fax: (202) 493–2251. • Mail: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12 140, 1200 New Jersey Avenue SE, Washington, DC 20590. • Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this NPRM, contact Rolls-Royce plc, P.O. Box 31, Derby, DE24 8BJ, United Kingdom, phone: +44 (0)1332 242424; website: https://www.rolls-royce.com/ contact-us.aspx. You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 1200 District Avenue, Burlington, MA 01803. For ADDRESSES: PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 information on the availability of this material at the FAA, call (781) 238– 7759. Examining the AD Docket You may examine the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA–2020–1138; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this NPRM, the mandatory continuing airworthiness information (MCAI), any comments received, and other information. The street address for Docket Operations is listed above. FOR FURTHER INFORMATION CONTACT: Kevin M. Clark, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone: (781) 238–7088; fax: (781) 238– 7199; email: kevin.m.clark@faa.gov. SUPPLEMENTARY INFORMATION: Comments Invited The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES. Include ‘‘Docket No. FAA–2020–1138; Project Identifier MCAI–2020–01258–E’’ at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments. Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to https:// www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact received about this NPRM. Confidential Business Information CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI E:\FR\FM\21DEP1.SGM 21DEP1

Agencies

[Federal Register Volume 85, Number 245 (Monday, December 21, 2020)]
[Proposed Rules]
[Pages 82965-82970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28084]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB12


Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is publishing an 
Advance Notice of Proposed Rulemaking (ANPR) requesting public comment 
on a variety of questions related to potential changes to the 
regulation establishing housing goals for Fannie Mae and Freddie Mac 
(Enterprises). FHFA will consider public comments received on these 
questions in order to inform rulemaking that is planned for 2021 to 
establish single-family and multifamily housing goals benchmark levels 
for 2022 and

[[Page 82966]]

beyond, and to make other changes to the Enterprise housing goals 
regulation, as appropriate.

DATES: Comments must be received on or before February 28, 2021.

ADDRESSES: You may submit your comments on the ANPR, identified by 
regulatory information number (RIN) 2590-AB12, by any one of the 
following methods:
     Agency website: https://www.fhfa.gov/open-for-comment-or-input.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by email 
to FHFA at [email protected] to ensure timely receipt by FHFA. 
Include the following information in the subject line of your 
submission: Comments/RIN 2590-AB12.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AB12, 
Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW, 
Washington, DC 20219. Deliver the package at the Seventh Street 
entrance Guard Desk, First Floor, on business days between 9 a.m. and 5 
p.m.
     U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel, Attention: Comments/RIN 2590-AB12, Federal 
Housing Finance Agency, Eighth Floor, 400 Seventh Street SW, 
Washington, DC 20219. Please note that all mail sent to FHFA via U.S. 
Mail is routed through a national irradiation facility, a process that 
may delay delivery by approximately two weeks.

FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director, 
Office of Housing & Community Investment, Division of Housing Mission 
and Goals, at (202) 649-3157, [email protected]; Padmasini Raman, 
Supervisory Policy Analyst, Office of Housing & Community Investment, 
Division of Housing Mission and Goals, at (202) 649-3633, 
[email protected]; or Kevin Sheehan, Associate General Counsel, 
Office of General Counsel, (202) 649-3086, [email protected]. 
These are not toll-free numbers. The mailing address is: Federal 
Housing Finance Agency, 400 Seventh Street SW, Washington, DC 20219. 
The telephone number for the Telecommunications Device for the Deaf is 
(800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Comments

    FHFA invites comments on all aspects of this ANPR. Copies of all 
comments will be posted without change, including any personal 
information you provide such as your name, address, email address, and 
telephone number, on the FHFA website at https://www.fhfa.gov. In 
addition, copies of all comments received will be available for 
examination by the public through the electronic rulemaking docket for 
this ANPR, also located on the FHFA website.

II. Advance Notice of Proposed Rulemaking

    This ANPR seeks public comments on a variety of questions related 
to potential changes to the Enterprise housing goals regulation.\1\ 
FHFA plans to issue a proposed rule in 2021 that would establish new 
benchmark levels for the Enterprise housing goals for 2022 and beyond, 
as well as make other changes to the regulation as appropriate. Based 
on the comments received in response to this ANPR, FHFA may propose 
revisions to the Enterprise housing goals regulation for comment in the 
proposed rule planned for 2021 or in a later rulemaking. FHFA invites 
comments on the specific questions set forth in this ANPR, and on any 
other issues that commenters think should be addressed as part of the 
rulemaking that will establish the housing goals benchmark levels for 
2022 and beyond.
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    \1\ 12 CFR part 1282.
---------------------------------------------------------------------------

    Question 1: Are there categories of loans that should be excluded 
from receiving housing goals credit under the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (Safety and 
Soundness Act) provisions on ``unacceptable business and lending 
practices?''
    The Safety and Soundness Act requires FHFA to exclude ``segments of 
the market determined to be unacceptable or contrary to good lending 
practices, inconsistent with safety and soundness, or unauthorized for 
purchase by the enterprises'' from consideration in setting the single-
family housing goals.\2\ FHFA may not give credit toward achievement of 
the housing goals for mortgages that are ``determined to be 
unacceptable or contrary to good lending practices, inconsistent with 
safety and soundness, or unauthorized for purchase by the 
enterprises.'' \3\
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    \2\ See 12 U.S.C. 4562(e)(1).
    \3\ See 12 U.S.C. 4562(i).
---------------------------------------------------------------------------

    The current exclusions under the Enterprise housing goals 
regulation generally focus on types of loans or other product 
characteristics, rather than loans that are unacceptable or contrary to 
good lending practices. However, FHFA may also make exclusions based on 
factors considered in underwriting loans. For single-family loan 
purchases, the Enterprises use their own automated underwriting systems 
to evaluate whether a loan is eligible for purchase based on factors 
including, but not limited to, a borrower's creditworthiness. These 
automated underwriting systems assess a borrower's ability to make his 
or her mortgage payments over a two- or three-year time period 
following origination. The Enterprises establish a cut-off threshold 
based on their credit risk appetite, and only those loans for which the 
borrowers' predicted risk is deemed below that threshold are eligible 
to be sold to the Enterprises. The Enterprises also price loans 
according to their pricing grids to partially account for the risk 
profile of a loan.
    FHFA generally considers all conventional conforming first lien 
mortgages that are owner-occupied as potentially eligible for single-
family housing goals credit, subject to certain exclusions. For 
instance, under the Safety and Soundness Act, investor loans are 
excluded, and under the Enterprise housing goals regulation, investor 
loans and second loans (i.e., any subordinate lien mortgages) are 
excluded, from consideration for the single-family housing goals.\4\ As 
another example, mortgages for secondary residences are excluded from 
consideration for the single-family housing goals.\5\
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    \4\ See 12 U.S.C. 4562(a) and 12 CFR 1282.16(b)(10).
    \5\ See 12 CFR 1282.16(b)(8).
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    FHFA requests comment on whether there are other categories of 
loans that should be excluded from receiving housing goals credit under 
the statute's ``unacceptable business and lending practices'' 
provisions. For example, should FHFA consider factors to promote 
borrower sustainability? How would FHFA determine and measure 
sustainability? Should risk-layering be considered in a manner that is 
distinct from the eligibility requirements of the Enterprises? \6\ What 
criteria should be used to identify such loans? What public policies 
should FHFA consider when assessing certain categories of loans? Are 
there other loan characteristics that could be, in some instances, not 
in the long-term interest

[[Page 82967]]

of the borrower, even if they are not treated as abusive or unfair 
under existing consumer protection statutes?
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    \6\ Some examples of factors associated with higher risk include 
high debt-to-income ratio, high loan-to-value ratio, or low credit 
score, among others. ``Risk-layering'' refers to loans with more 
than one such factor.
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    Question 2: Are there ways to determine whether the low-income 
areas home purchase subgoal has resulted in the displacement of 
residents from certain communities, or to measure the extent of any 
such displacement? Should FHFA consider modifying the low-income areas 
home purchase subgoal to address such concerns? If so, how?
    Concerns have been raised about gentrification in low-income areas 
and high-minority census tracts, and the potential displacement of 
long-time low-income residents from such areas and tracts. The current 
Enterprise housing goals regulation does not restrict the income of 
borrowers whose mortgages qualify for the low-income areas home 
purchase subgoal if the mortgages are on properties located in a low-
income census tract. Under the regulation, the Enterprises can meet the 
low-income areas home purchase subgoal by acquiring home purchase 
mortgages that are either: (1) Originated for borrowers located in low-
income census tracts (defined as census tracts with median income less 
than or equal to 80 percent of area median income (AMI)); or (2) 
originated for borrowers with incomes less than or equal to AMI who 
reside in minority census tracts (defined as census tracts with a 
minority population of at least 30 percent and a tract median income of 
less than 100 percent of AMI).\7\ There are no borrower income 
requirements for criterion (1). While Enterprise mortgage acquisitions 
could qualify under either or both criteria, the share of the 
Enterprises' mortgage acquisitions satisfying criterion (1) has been 
consistently higher than the share of Enterprise mortgage acquisitions 
satisfying criterion (2) in recent years. For example, among the 
Enterprises' mortgage acquisitions in 2019, 15.0 percent of mortgages 
met only criterion (1), 10.2 percent met only criterion (2), and 6.4 
percent met both criteria, as can be seen in Table 1 below. All of 
these shares have been increasing steadily since 2010.
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    \7\ See 12 CFR 1281.1 and 1282.12(f).
    [GRAPHIC] [TIFF OMITTED] TP21DE20.051
    

[[Page 82968]]


    FHFA's analysis of Home Mortgage Disclosure Act (HMDA) data in 
Table 2 shows that both low-income areas and high-minority areas have 
increasing shares of borrowers with incomes at or above 100 percent of 
AMI, although loans to borrowers with incomes over 100 percent of AMI 
do not qualify for the minority areas component of the goal. For 
instance, the share of loans made to borrowers with incomes greater 
than 100 percent of AMI and residing in these low-income census tracts 
increased from 38.8 percent in 2010 to 44.2 percent in 2016, after 
dropping to 36.5 percent in 2012. This share has been relatively stable 
since then, with a 43.3 percent share in 2019. Nonetheless, borrowers 
with higher incomes have made up an increasing share of the mortgage 
market in low-income areas.
    A similar trend exists among borrowers residing in high minority 
census tracts, with the share of higher income borrowers increasing 
from 42.5 percent in 2010 to 50 percent in 2016. That share declined to 
47.8 percent in 2019 after hovering around 49 percent in 2018 and 2019.
[GRAPHIC] [TIFF OMITTED] TP21DE20.052

    Table 3 shows that the share of loans made to borrowers with 
incomes greater than 100 percent of AMI and residing in low-income 
census tracts increased from 40.7 percent in 2010 to 42.8 percent in 
2016. However, that share has declined since then, dropping to a low of 
37 percent in 2019. This trend is similar among borrowers residing in 
high minority census tracts, with the share of higher income borrowers 
increasing from 45.4 percent in 2010 to 48.5 percent in 2016, after 
dropping to a low of 42.8 percent in 2012. This share has since 
declined to 42.8 percent in 2019.

[[Page 82969]]

[GRAPHIC] [TIFF OMITTED] TP21DE20.053

    The presence of higher-income borrowers in these areas may be a 
sign of improved economic indicators for the community, but there is 
some concern that such a trend as seen particularly in the HMDA data 
analysis could also be accompanied by the displacement of lower income 
households. Change in the mix of renters to owner-occupied households 
often precedes and accompanies these trends. FHFA is aware that this 
particular subgoal may encourage the Enterprises to focus on purchasing 
loans for higher-income households in low-income and high-minority 
areas, and FHFA is also aware of concerns about the impact of rising 
housing costs on current residents in low-income or higher-minority 
areas. However, it is possible that higher-income households would have 
moved into these areas even in the absence of the subgoal. In 
recognition of these issues, FHFA has been very conservative in setting 
the benchmark levels for this subgoal.
    Recently, in response to the issuance of FHFA's proposed rule for 
the 2021 Enterprise housing goals, FHFA received two comment letters 
from policy advocacy organizations that referenced concerns about 
displacement and gentrification related to this subgoal. The comment 
letters supported and encouraged FHFA's efforts to monitor and analyze 
trends regarding this subgoal. The comment letters also requested 
release of additional data on borrower incomes associated with goals-
qualifying loans.
    FHFA requests comment on how best to achieve the policy objectives 
of this subgoal. Should FHFA shift the focus of this subgoal to lower-
income households? Should FHFA impose an AMI limit on borrowers for 
mortgages that qualify for the subgoal? Should FHFA set a limit on the 
number or share of mortgages for borrowers with incomes over 100 
percent of AMI that count towards the subgoal?
    Question 3: Should FHFA revise the low-income areas home purchase 
subgoal to consider loans on properties located in Opportunity Zones, 
and if so, how should such loans be treated?
    Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act, 
and are designed to spur economic development and job creation in 
distressed communities by providing tax benefits to investors who 
invest in these communities.\8\ Investors may defer tax on eligible 
capital gains by making a qualifying investment (including real estate) 
in a Qualified Opportunity Fund (QOF). A QOF is an investment vehicle 
with at least 90 percent of its holdings in a Qualified Opportunity 
Zone (QOZ) property. QOZs are census tracts that meet certain poverty 
rate and median family income requirements and that have been 
designated as such by the U.S. Department of the Treasury, based on 
nominations from the Chief Executive Officers of each State. There are 
around 8,700 QOZ tracts, the majority of which are low-income tracts.
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    \8\ Public Law 115-97, section 13823, 131 Stat. 2054, 2183, 
codified at 26 U.S.C. 1400Z-1 and 1400Z-2 (Dec. 22, 2017). Note: 
Public Law 115-97 is commonly referred to as the ``Tax Cuts and Jobs 
Act,'' but that short title was omitted from the law as enacted.
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    Because the Opportunity Zones program is new, its impact is still 
largely unknown. FHFA has noted that in 2019, over 17 percent of low-
income area home purchase goal loans are in QOZs. Additionally, 12 
percent of multifamily low-income goal units and 20 percent of small 
multifamily low-income goal units are in QOZs. To help track how QOF 
projects are achieving the program's intended goal of community 
revitalization, the U.S. Impact the U.S. Impact [MB1] Investing 
Alliance, the Beeck Center for Social Impact + Innovation at Georgetown 
University, and the Federal Reserve Bank of New York partnered to 
create the Opportunity Zones Reporting Framework, a tool that may be 
used to

[[Page 82970]]

assess the intended goal of community revitalization.\9\
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    \9\ See https://ozframework.org/about-index.
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    FHFA requests comment on whether and how the objectives of the 
Opportunity Zones program would align with the purpose of the 
Enterprise low-income areas home purchase subgoal. Should FHFA consider 
giving credit under this subgoal for loans on properties located in 
Opportunity Zones? What criteria should FHFA use to focus on 
Opportunity Zones that would have the largest benefit to a community? 
If included in the subgoal, how can FHFA ensure that the loans on 
properties in Opportunity Zones benefit these communities? How can FHFA 
use this subgoal to target slow-growing communities that need these 
loans? Should FHFA require the use of the Opportunity Zone Reporting 
Framework for impact tracking? Are there other public policy 
considerations related to Opportunity Zones that FHFA should consider?
    Question 4: Is there evidence that the Enterprise housing goals 
have helped expand low-income homeownership in the marketplace?
    The Safety and Soundness Act directs FHFA to evaluate Enterprise 
support for low-income homeownership by measuring the low-income share 
of the mortgages that the Enterprises have acquired.\10\
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    \10\ See 12 U.S.C. 4562(a)(1).
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    FHFA requests comment on the factors it should consider in 
assessing the effectiveness of the Enterprises' activities in expanding 
low-income homeownership. In order to improve the housing goals, how 
should impacts be evaluated? What are the appropriate counterfactuals 
to consider? Is it possible to determine whether acquired mortgages 
that count toward achievement of the goals would have been originated 
in the absence of the housing goals? FHFA specifically requests comment 
on whether--and under the statute, how--other support activities 
undertaken by the Enterprises should be considered when FHFA reviews 
the Enterprises' performance on the single-family housing goals.

Mark A. Calabria,
Director, Federal Housing Finance Agency.
[FR Doc. 2020-28084 Filed 12-18-20; 8:45 am]
BILLING CODE 8070-01-P
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