Policy Statement on Fair Lending, 36199-36202 [2021-14438]

Download as PDF Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Rules and Regulations Subpart B—Uniform System of Accounts 31. Amend § 1767.41 by revising entry 119 to read as follows: ■ § 1767.41 Accounting methods and procedures required of all RUS borrowers. * * * * * 119 Special Equipment Special Equipment items are classified separately from work order items. The USoA provides accounting that differs from that used for other types of materials. The cost of new, special equipment items shall be capitalized at the time of purchase; it shall not be charged to Account 154 as is the case with other materials. The first installation cost, as well as all incidental costs necessary to prepare the equipment for use, shall be capitalized with the material upon purchase. All subsequent costs of removing, resetting, changing, renewing oil, and repairing constitute operations and maintenance expenses. The capitalized cost of special equipment items, including the first installation, shall be removed from the electric plant accounts only when the items are abandoned or retired from the system. Borrowers may request a waiver from the special equipment accounting requirements as described later in this section. Special Equipment Items include the following: 1. Reclosers and Sectionalizers recorded in Account 365, Conductor and Devices 2. Transformers, Capacitors and Voltage Regulators recorded in Account 368, Line Transformers 3. Meters, Meter Sockets, current and potential transformers, and other metering equipment recorded in Account 379, Meters 4. Load Control Devices recorded in Account 371, Installations on Customers’ Premises (See Interpretation No. 118) jbell on DSKJLSW7X2PROD with RULES Note: Equipment installed in a substation is not considered special equipment. Special equipment items which are classified as nonusable shall be segregated in the warehouse and retired from service. The Summary of Special Equipment Costs shall be retitled Summary of Special Equipment Costs Retired and used for this purpose. A journal entry reflecting this information shall be prepared and posted to the books. Since loan funds for special equipment, including first installation costs, are approved for advance by the Rural Development upon receipt of the borrower’s written estimate of funds required, and not on the basis of an VerDate Sep<11>2014 15:58 Jul 08, 2021 Jkt 253001 Inventory of Work Orders, it is improper to take a credit for any salvage involved in the retirement of special equipment on the Inventory of Work Orders. Electric borrowers that wish to receive a waiver from the special equipment accounting requirements should submit a letter request to Rural Development. In order to expedite these requests the letter to Rural Development should state that the borrower will adhere to the following requirements to account for special equipment using the work order procedure rather than the special equipment accounting procedures prescribed by Rural Development: 1. New purchases of special equipment items are to be charged to Account 154, Materials and Supplies, upon purchase. 2. Labor, material and overhead costs associated with the initial installation and all subsequent installations of special equipment are recorded on construction work orders and charged to the appropriate plant accounts upon closeout of the construction work order. 3. Labor and overhead costs associated with the removal of special equipment items, whether the items removed are placed in inventory or permanently retired and disposed of, are recorded on retirement work orders and charged or credited to the depreciation reserve account upon closeout of the retirement work order. 4. The special equipment items retired and salvaged for reuse are returned to the materials and supplies account at the average material cost in the materials and supplies account and credited to the depreciation reserve upon closeout of the retirement work order. In addition to recognition of the requirements noted above, the borrower should indicate how it plans to account for the items of special equipment that have been charged to the plant accounts but not installed (in inventory). Two acceptable methods to account for this equipment are: (1) Leave the equipment in the plant accounts until the inventory is depleted and charge only new purchases to materials and supplies, or (2) credit the plant accounts for the installed cost of the equipment in inventory, charge the equipment cost to materials and supplies, and charge the installation cost to the appropriate operations expense account. Also, under the second method, the borrower must submit a ‘‘negative’’ special equipment summary to Rural Development to return to the balance in reserve for the current loan the installed cost of special PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 36199 equipment in inventory on the date of transition. * * * * * Christopher A. McLean, Acting Administrator, Rural Utilities Service. [FR Doc. 2021–14358 Filed 7–8–21; 8:45 am] BILLING CODE 3410–15–P FEDERAL HOUSING FINANCE AGENCY 12 CFR Part Chapter XII [No. 2021–N–7] Policy Statement on Fair Lending Federal Housing Finance Agency. ACTION: Notification of approval and adoption of policy statement; request for comment. AGENCY: The Federal Housing Finance Agency (FHFA or agency) is issuing a policy statement on Fair Lending (Policy Statement) to communicate the agency’s general position on monitoring and information gathering, supervisory examinations, and administrative enforcement related to the Equal Credit Opportunity Act, the Fair Housing Act, and the Federal Housing Enterprises Financial Safety and Soundness Act, and is soliciting comments on its application. SUMMARY: The Policy Statement becomes effective on July 9, 2021. Comments must be received on or before September 7, 2021. FOR FURTHER INFORMATION CONTACT: Annalyce Shufelt, Senior Attorney Advisor (Fair Lending), Office of Fair Lending Oversight, (202) 649–3416, Annalyce.Shufelt@fhfa.gov, Federal Housing Finance Agency, Constitution Center, 400 7th Street SW, Washington, DC 20219; or Ming-Yuen Meyer-Fong, Associate General Counsel, Office of General Counsel, (202) 649–3078 (not toll-free numbers), Ming-Yuen.MeyerFong@fhfa.gov. The Telecommunications Device for the Deaf is (800) 877–8339. ADDRESSES: FHFA welcomes comments about application of the principles set out in the policy statement to specific policies and practices. You may submit your comments to FHFA, identified by ‘‘Policy Statement; Comment Request: (2021–N–7)’’, by any one of the following methods: • Agency website: www.fhfa.gov/ open-for-comment-or-input. • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. If DATES: E:\FR\FM\09JYR1.SGM 09JYR1 36200 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES 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: ‘‘Policy Statement; Comment Request: (2021–N–7).’’ • Hand Delivered/Courier: The hand delivery address is: Clinton Jones, General Counsel, Attention: ‘‘Policy Statement; Comment Request: (2021–N– 7)’’, 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: Clinton Jones, General Counsel, Attention: ‘‘Policy Statement; Comment Request: (2021–N–7)’’, 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 any timesensitive correspondence, please plan accordingly. We will post all public comments we receive without change, including any personal information you provide, such as your name and 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 comment docket also located on the FHFA website. SUPPLEMENTARY INFORMATION: I. Purpose FHFA is the primary regulator for Fannie Mae and Freddie Mac (the Enterprises) and the Federal Home Loan Banks (the Banks) (collectively, the regulated entities). FHFA is issuing this Policy Statement to communicate FHFA’s general position on monitoring and information gathering, supervisory examinations, and administrative enforcement related to the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., the Fair Housing Act, 42 U.S.C. 3601 et seq., and section 4545 of the Federal Housing Enterprises Financial Safety and Soundness Act (Safety and Soundness Act), 12 U.S.C. 4501 et seq. (collectively, with implementing regulations and other sources, ‘‘fair lending laws’’). This Policy Statement is intended to be consistent with those statutes and their implementing regulations and to VerDate Sep<11>2014 15:58 Jul 08, 2021 Jkt 253001 provide guidance to FHFA’s regulated entities seeking to comply with them. It describes sources of statutory authority for actions that may be taken by FHFA and it articulates FHFA’s policies for supervisory oversight and enforcement of fair lending matters. FHFA is also issuing this Policy Statement to provide a foundation for possible future interpretations and rulemakings by the agency for its regulated entities.1 II. Policy Statement Fair Lending Policy Statement FHFA is committed to ensuring that its regulated entities operate consistently with the public interest and with sufficient overall risk management by providing fair, equitable, and nondiscriminatory access to credit and housing. Fair lending is central to the principles under which the U.S. housing finance system operates and is a requirement of law. FHFA will never tolerate illegal discrimination by the regulated entities. FHFA will engage in comprehensive fair lending oversight of its regulated entities and adopts the following high-level policies to guide its fair lending monitoring, supervision, and enforcement. FHFA is committed to interagency engagement, coordination, and collaboration in fair lending. Legal Overview While many Federal statutes seek to promote fair lending, FHFA’s policy statement focuses on ECOA, the Fair Housing Act, and the fair lending provisions of the Safety and Soundness Act as they apply to the regulated entities’ activities. This policy statement does not create or confer any substantive or procedural rights which could be enforceable in any administrative or civil proceeding. 1 As a historical note, in 1994, a number of Federal agencies published a Policy Statement on Discrimination in Lending (1994 Statement) which, in part, described how Federal agencies use their authorities to oversee fair lending compliance. See 59 FR 18266 (April 15, 1994). FHFA did not exist at the time and was not a signatory. In 2008, Congress abolished the former Office of Federal Housing Enterprise Oversight and the Federal Housing Finance Board, which had been parties to the 1994 Statement. In their place, Congress established FHFA with authorities that, in contrast to its predecessor agencies, include overseeing Enterprise and Bank compliance with applicable law. 12 U.S.C. 4511(b) (FHFA ‘‘shall have general regulatory authority over each regulated entity . . . and shall exercise such general regulatory authority . . . to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out’’). Given the importance of fair lending compliance, FHFA is publishing this FHFA Policy Statement on Fair Lending to implement its authorities and articulate agency activities in relevant areas including monitoring, examination, enforcement, and coordination to oversee regulated entity fair lending compliance. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 The Consumer Financial Protection Bureau’s (CFPB) Regulation B, 12 CFR part 1002, along with Official Interpretations in Supplement I to 12 CFR part 1002, implements ECOA.2 The U.S. Department of Housing and Urban Development’s (HUD) regulations at 24 CFR part 100 implement the Fair Housing Act. Together, these statutes and regulations prohibit discrimination on the basis of race or color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), receipt of income derived from any public assistance program, exercise, in good faith, of any right under the Consumer Credit Protection Act, familial status (defined by 42 U.S.C. 3602(k) of the Fair Housing Act as children under the age of 18 living with a parent or legal custodian, pregnant women, and people securing custody of children under 18), and disability.3 The Enterprises are also subject to section 4545 of the Safety and Soundness Act, which requires HUD, by regulation, to prohibit the Enterprises from discriminating in the purchase of mortgages on the bases of race, color, religion, sex, disability, familial status, age, or national origin, including any consideration of the age or location of the dwelling or the age of the neighborhood or census tract where the dwelling is located in a manner that has a discriminatory effect.4 FHFA also recognizes that there are a number of applicable and relevant sources of fair lending law and guidance, including judicial decisions, administrative interpretations and guidance, and administrative actions. Fair Lending Oversight Considerations FHFA has broad statutory authority to supervise the regulated entities, including authority to monitor and gather information, conduct supervisory examinations, and enforce compliance with law where appropriate. FHFA monitors regulated entities for fair lending risk, conducts supervisory examinations, and, when necessary, 2 The Federal Reserve Board of Governors also implements ECOA through a regulation covering auto dealers. 3 The Fair Housing Act uses the term ‘‘handicap’’ instead of ‘‘disability.’’ This document uses the term ‘‘disability,’’ which is more generally accepted. See Joint Statement of the Department of Housing and Urban Development and the Department of Justice on Accessibility (Design and Construction) Requirements for Covered Multifamily Dwellings under the Fair Housing Act, April 30, 2013, available at https://www.hud.gov/ sites/documents/JOINTSTATEMENT.PDF (citing Bragdon v. Abbott, 524 U.S. 624, 631 (1998), to say that both terms have the same legal meaning). 4 12 U.S.C. 4545. E:\FR\FM\09JYR1.SGM 09JYR1 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Rules and Regulations takes enforcement action to ensure compliance with fair lending laws. Monitoring and Information Gathering FHFA regularly monitors the fair lending risk presented by Enterprise and Bank activities and may request data and information in its role as supervisor and regulator to ensure effective, ongoing oversight. FHFA reviews the regulated entities’ internal fair lending data monitoring, risk assessments, policies and procedures, internal control systems, and other information to appropriately scope monitoring and examinations commensurate with fair lending risk. Fair lending monitoring information may be collected pursuant to FHFA’s supervisory and regulatory authority, including 12 U.S.C. 4514(a) which authorizes FHFA to order regulated entities to submit both regular and special reports. FHFA may require regulated entities to submit ‘‘regular reports . . . on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate.’’ 5 Fair lending monitoring information includes, but is not limited to: Data and other information necessary to monitor and evaluate the policies, programs, and activities of the regulated entities; information about changes in policies, programs, and activities; information about the regulated entities’ fair lending testing and other compliance activities; and the regulated entities’ self-evaluations of fair lending risk and the compliance of their policies, programs, and activities with respect to fair lending laws. Supervisory Examinations FHFA has broad authority to supervise the Enterprises and the Banks for compliance with fair lending standards. The regulated entities are subject to FHFA’s overarching ‘‘supervision and regulation.’’ 6 FHFA may conduct examinations of the regulated entities whenever FHFA determines that an examination is necessary or appropriate.7 FHFA examiners have examination authority equivalent to other Federal prudential 5 12 U.S.C. 4514(a). U.S.C. 4511(b)(1) (‘‘Each regulated entity shall, to the extent provided in this chapter, be subject to the supervision and regulation of the Agency’’); 12 U.S.C. 4511(b)(2) (‘‘The Director shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 4513 of this title, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out.’’). 7 12 U.S.C. 4517(b). jbell on DSKJLSW7X2PROD with RULES 6 12 VerDate Sep<11>2014 15:58 Jul 08, 2021 Jkt 253001 regulators.8 FHFA also has a duty to ensure that the regulated entities are operating consistently with the public interest.9 FHFA conducts risk-based fair lending examinations of the regulated entities. FHFA’s fair lending oversight program is committed to effective, appropriately tailored supervisory measures to ensure that the regulated entities adhere to applicable fair lending compliance standards. The Enterprises and the Banks each engage in activities that present differing levels and kinds of fair lending risk. FHFA carefully weighs the totality of available information, including monitoring information, market intelligence, and relevant data, when considering how best to employ supervisory resources. Enforcement FHFA may use its administrative enforcement authority to address violations of ECOA and the Fair Housing Act by the regulated entities. That a regulated entity is in conservatorship does not preclude other enforcement actions; however, the conservator’s broad statutory powers may provide FHFA with more efficient means to address problems than traditional enforcement tools. FHFA as conservator may take immediate action, consistent with applicable law, to direct or restrict the activities at the regulated entity, including the activities of the board of directors and executive management. FHFA has broader enforcement authority than its predecessor agencies FHFB and OFHEO, including for fair lending violations. The Housing and Economic Recovery Act (HERA) 10 granted FHFA the authority to use cease and desist orders to enforce violations of all applicable laws, including ECOA and the Fair Housing Act.11 FHFA may also use civil money penalties as a tool to ensure fair lending compliance, where the statutory bases for such penalties are present.12 8 12 U.S.C. 4517(e). The statute particularly references the authority of examiners employed by the Federal Reserve banks. 9 12 U.S.C. 4513(a)(1)(B)(v). 10 The Housing and Economic Recovery Act of 2008 (HERA), Public Law 110–289 (July 30, 2008), available at https://www.govinfo.gov/content/pkg/ PLAW-110publ289/pdf/PLAW-110publ289.pdf. 11 Public Law 110–289, sec. 1101 (amended the former OFHEO authorities to provide the new FHFA general supervisory and regulatory authority requiring regulated entity compliance with the Safety and Soundness Act, the regulated entities statutory charters, and ‘‘any other applicable law’’); sec. 1151 (amended cease and desist authorities to include violations of law generally); codified at 12 U.S.C. 4511 and 4631. 12 12 U.S.C. 4636. PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 36201 Prior to HERA, OFHEO’s fair lending enforcement authority over the Enterprises was limited to the Safety and Soundness Act fair housing provision and HUD’s implementing regulation.13 HUD’s implementing regulation anticipates HUD referring violations and potential violations of that provision by an Enterprise to FHFA for enforcement.14 FHFA will support enforcement of HUD’s regulation implementing the Safety and Soundness Act’s fair housing provision. FHFA will conduct a full review of HUD’s referral of a violation or potential violation and all evidence submitted as part of the referral and resolve the matter appropriately and in accordance with FHFA’s enforcement policy and in consultation with HUD. In addition, FHFA will continue to facilitate HUD’s periodic fair lending reviews of the Enterprises. FHFA may also independently pursue administrative enforcement actions for any violations of section 4545 of the Safety and Soundness Act. FHFA’s enforcement policy applies when taking any enforcement action against regulated entities for violations of law, including violations of fair lending law.15 Pursuant to FHFA’s enforcement policy, FHFA may engage in consent order negotiations with regulated entities to resolve violations of fair lending laws.16 FHFA is not required by statute to refer potential fair lending violations to the Attorney General when the agency has a reason to believe that a regulated entity has engaged in a pattern or practice of discouraging or denying applications for 13 See 24 CFR 81.47(a). CFR 81.47(a). Under the Safety and Soundness Act, FHFA is empowered to initiate enforcement actions for Enterprise violations of 12 U.S.C. 4545 and HUD’s implementing regulations. The process for referring ‘‘violations or potential violations’’ to FHFA under 24 CFR 81.47(a) is distinct from the process under 24 CFR 81.47(b), in which HUD shall conduct an investigation of the Fair Housing Act complaint, make a determination as to whether or not reasonable cause exists to believe discrimination occurred, and, if it does, proceed to enforcement under the Fair Housing Act. 15 Federal Housing Finance Agency, Advisory Bulletin: FHFA Enforcement Policy, AB 2013–03 (issued May 31, 2013), available at https:// www.fhfa.gov/SupervisionRegulation/ AdvisoryBulletins/AdvisoryBulletinDocuments/ 20130531_AB_2013-03_FHFA-Enforcement-Policy_ 508%20(2).pdf. 16 Federal Housing Finance Agency, Advisory Bulletin: FHFA Enforcement Policy, AB 2013–03 (issued May 31, 2013), available at https:// www.fhfa.gov/SupervisionRegulation/ AdvisoryBulletins/AdvisoryBulletinDocuments/ 20130531_AB_2013-03_FHFA-Enforcement-Policy_ 508%20(2).pdf. The Enforcement Policy further describes a number of informal and formal actions that FHFA may take, many of which may be used for enforcing compliance with fair lending laws. 14 24 E:\FR\FM\09JYR1.SGM 09JYR1 36202 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Rules and Regulations credit.17 Nevertheless, FHFA will consult with and refer matters to the Attorney General and coordinate with the Department of Justice on enforcement of fair lending matters as appropriate. FHFA will consider whether the regulated entity has conducted any selfevaluations or undertaken any corrective actions when making supervisory and enforcement decisions. FHFA will view responsible business practices such as self-testing, implementation of management controls, and voluntary remedial action favorably when making fair lending supervisory and enforcement determinations. In particular, FHFA commits to taking into consideration an entity’s cooperation and candor during examinations and monitoring. Regulated entities are not required to self-report potential violations of fair lending laws. However, self-reporting of violations of fair lending laws will be viewed favorably by FHFA as it exercises its discretion. FHFA also considers the number and duration of violations identified, the nature of the evidence of discrimination (i.e., overt discrimination, disparate treatment, or disparate impact), the pervasiveness of the discrimination, the presence and effectiveness of any anti-discrimination policies, any history of discriminatory conduct, any corrective measures implemented or proposed by the regulated entity, and any other factors for determining the appropriateness of any potential action. Consideration of Differences Between the Banks and the Enterprises jbell on DSKJLSW7X2PROD with RULES FHFA recognizes the important distinctions between the two types of regulated entities, the Enterprises and the Banks. In drafting this Policy Statement, FHFA has considered the differences between 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, and joint and several liability, as well as other applicable differences.18 Sandra L. Thompson, Acting Director, Federal Housing Finance Agency. [FR Doc. 2021–14438 Filed 7–8–21; 8:45 am] BILLING CODE 8070–01–P 17 15 18 12 U.S.C. 1691e(g). U.S.C. 4513(f). VerDate Sep<11>2014 15:58 Jul 08, 2021 Jkt 253001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2021–0542; Project Identifier MCAI–2021–00117–R; Amendment 39–21641; AD 2021–14–14] RIN 2120–AA64 Airworthiness Directives; Leonardo S.p.a. Helicopters Federal Aviation Administration (FAA), DOT. ACTION: Final rule; request for comments. AGENCY: The FAA is adopting a new airworthiness directive (AD) for certain Leonardo S.p.a. Model AW119 MKII helicopters. This AD was prompted by reports of detected smoke and burning smell during flight, caused by chafing of electrical wiring. This AD requires an inspection of the instrument panel electrical wiring, corrective actions if necessary, a modification of the wiring installation, and, for certain helicopters, an additional modification of the wiring installation, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD becomes effective July 26, 2021. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of July 26, 2021. The FAA must receive comments on this AD by August 23, 2021. ADDRESSES: 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 material incorporated by reference (IBR) in this AD, contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; phone: +49 221 8999 000; email: ADs@easa.europa.eu; internet: www.easa.europa.eu. You may find this material on the EASA website at https://ad.easa.europa.eu. You may SUMMARY: PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N–321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call 817–222–5110. It is also available in the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2021– 0542. Examining the AD Docket You may examine the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA–2021–0542; 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 AD, any comments received, and other information. The street address for Docket Operations is listed above. FOR FURTHER INFORMATION CONTACT: Hal Jensen, Aerospace Engineer, Operational Safety Branch, Compliance & Airworthiness Division, FAA, 950 L’Enfant Plaza N SW, Washington, DC 20024; telephone (202) 267–9167; email hal.jensen@faa.gov. SUPPLEMENTARY INFORMATION: Background The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021–0040, dated January 27, 2021 (EASA AD 2021–0040) (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for certain Leonardo S.p.a. Model AW119 MKII helicopters. This AD was prompted by reports of detected smoke and burning smell during flight, caused by chafing of electrical wiring. The FAA is issuing this AD to address detected smoke, burning smell during flight, and chafing of electrical wiring, which could lead to further occurrences of smoke in the cabin, or loss of function of avionics equipment, and possibly result in reduced control of the helicopter. See the MCAI for additional background information. Related Service Information Under 1 CFR Part 51 EASA AD 2021–0040 specifies procedures for an inspection of the instrument panel electrical wiring for defects (including wire chafing; pinched, broken, or severely bent wires; deteriorated, cracked or missing wire shielding or insulation; and loose, corroded, or broken wire connectors), corrective actions (repair or replacement of the wiring and a pin to pin continuity E:\FR\FM\09JYR1.SGM 09JYR1

Agencies

[Federal Register Volume 86, Number 129 (Friday, July 9, 2021)]
[Rules and Regulations]
[Pages 36199-36202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14438]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part Chapter XII

[No. 2021-N-7]


Policy Statement on Fair Lending

AGENCY: Federal Housing Finance Agency.

ACTION: Notification of approval and adoption of policy statement; 
request for comment.

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

SUMMARY: The Federal Housing Finance Agency (FHFA or agency) is issuing 
a policy statement on Fair Lending (Policy Statement) to communicate 
the agency's general position on monitoring and information gathering, 
supervisory examinations, and administrative enforcement related to the 
Equal Credit Opportunity Act, the Fair Housing Act, and the Federal 
Housing Enterprises Financial Safety and Soundness Act, and is 
soliciting comments on its application.

DATES: The Policy Statement becomes effective on July 9, 2021. Comments 
must be received on or before September 7, 2021.

FOR FURTHER INFORMATION CONTACT: Annalyce Shufelt, Senior Attorney 
Advisor (Fair Lending), Office of Fair Lending Oversight, (202) 649-
3416, [email protected], Federal Housing Finance Agency, 
Constitution Center, 400 7th Street SW, Washington, DC 20219; or Ming-
Yuen Meyer-Fong, Associate General Counsel, Office of General Counsel, 
(202) 649-3078 (not toll-free numbers), [email protected]. 
The Telecommunications Device for the Deaf is (800) 877-8339.

ADDRESSES: FHFA welcomes comments about application of the principles 
set out in the policy statement to specific policies and practices. You 
may submit your comments to FHFA, identified by ``Policy Statement; 
Comment Request: (2021-N-7)'', by any one of the following methods:
     Agency website: www.fhfa.gov/open-for-comment-or-input.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. If

[[Page 36200]]

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: ``Policy Statement; Comment Request: (2021-N-7).''
     Hand Delivered/Courier: The hand delivery address is: 
Clinton Jones, General Counsel, Attention: ``Policy Statement; Comment 
Request: (2021-N-7)'', 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: Clinton Jones, 
General Counsel, Attention: ``Policy Statement; Comment Request: (2021-
N-7)'', 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 any 
time-sensitive correspondence, please plan accordingly.
    We will post all public comments we receive without change, 
including any personal information you provide, such as your name and 
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 
comment docket also located on the FHFA website.

SUPPLEMENTARY INFORMATION:

I. Purpose

    FHFA is the primary regulator for Fannie Mae and Freddie Mac (the 
Enterprises) and the Federal Home Loan Banks (the Banks) (collectively, 
the regulated entities). FHFA is issuing this Policy Statement to 
communicate FHFA's general position on monitoring and information 
gathering, supervisory examinations, and administrative enforcement 
related to the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et 
seq., the Fair Housing Act, 42 U.S.C. 3601 et seq., and section 4545 of 
the Federal Housing Enterprises Financial Safety and Soundness Act 
(Safety and Soundness Act), 12 U.S.C. 4501 et seq. (collectively, with 
implementing regulations and other sources, ``fair lending laws''). 
This Policy Statement is intended to be consistent with those statutes 
and their implementing regulations and to provide guidance to FHFA's 
regulated entities seeking to comply with them. It describes sources of 
statutory authority for actions that may be taken by FHFA and it 
articulates FHFA's policies for supervisory oversight and enforcement 
of fair lending matters. FHFA is also issuing this Policy Statement to 
provide a foundation for possible future interpretations and 
rulemakings by the agency for its regulated entities.\1\
---------------------------------------------------------------------------

    \1\ As a historical note, in 1994, a number of Federal agencies 
published a Policy Statement on Discrimination in Lending (1994 
Statement) which, in part, described how Federal agencies use their 
authorities to oversee fair lending compliance. See 59 FR 18266 
(April 15, 1994). FHFA did not exist at the time and was not a 
signatory. In 2008, Congress abolished the former Office of Federal 
Housing Enterprise Oversight and the Federal Housing Finance Board, 
which had been parties to the 1994 Statement. In their place, 
Congress established FHFA with authorities that, in contrast to its 
predecessor agencies, include overseeing Enterprise and Bank 
compliance with applicable law. 12 U.S.C. 4511(b) (FHFA ``shall have 
general regulatory authority over each regulated entity . . . and 
shall exercise such general regulatory authority . . . to ensure 
that the purposes of this Act, the authorizing statutes, and any 
other applicable law are carried out''). Given the importance of 
fair lending compliance, FHFA is publishing this FHFA Policy 
Statement on Fair Lending to implement its authorities and 
articulate agency activities in relevant areas including monitoring, 
examination, enforcement, and coordination to oversee regulated 
entity fair lending compliance.
---------------------------------------------------------------------------

II. Policy Statement

Fair Lending Policy Statement

    FHFA is committed to ensuring that its regulated entities operate 
consistently with the public interest and with sufficient overall risk 
management by providing fair, equitable, and nondiscriminatory access 
to credit and housing. Fair lending is central to the principles under 
which the U.S. housing finance system operates and is a requirement of 
law. FHFA will never tolerate illegal discrimination by the regulated 
entities. FHFA will engage in comprehensive fair lending oversight of 
its regulated entities and adopts the following high-level policies to 
guide its fair lending monitoring, supervision, and enforcement. FHFA 
is committed to interagency engagement, coordination, and collaboration 
in fair lending.

Legal Overview

    While many Federal statutes seek to promote fair lending, FHFA's 
policy statement focuses on ECOA, the Fair Housing Act, and the fair 
lending provisions of the Safety and Soundness Act as they apply to the 
regulated entities' activities. This policy statement does not create 
or confer any substantive or procedural rights which could be 
enforceable in any administrative or civil proceeding.
    The Consumer Financial Protection Bureau's (CFPB) Regulation B, 12 
CFR part 1002, along with Official Interpretations in Supplement I to 
12 CFR part 1002, implements ECOA.\2\ The U.S. Department of Housing 
and Urban Development's (HUD) regulations at 24 CFR part 100 implement 
the Fair Housing Act. Together, these statutes and regulations prohibit 
discrimination on the basis of race or color, religion, national 
origin, sex, marital status, age (provided the applicant has the 
capacity to contract), receipt of income derived from any public 
assistance program, exercise, in good faith, of any right under the 
Consumer Credit Protection Act, familial status (defined by 42 U.S.C. 
3602(k) of the Fair Housing Act as children under the age of 18 living 
with a parent or legal custodian, pregnant women, and people securing 
custody of children under 18), and disability.\3\
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    \2\ The Federal Reserve Board of Governors also implements ECOA 
through a regulation covering auto dealers.
    \3\ The Fair Housing Act uses the term ``handicap'' instead of 
``disability.'' This document uses the term ``disability,'' which is 
more generally accepted. See Joint Statement of the Department of 
Housing and Urban Development and the Department of Justice on 
Accessibility (Design and Construction) Requirements for Covered 
Multifamily Dwellings under the Fair Housing Act, April 30, 2013, 
available at https://www.hud.gov/sites/documents/JOINTSTATEMENT.PDF 
(citing Bragdon v. Abbott, 524 U.S. 624, 631 (1998), to say that 
both terms have the same legal meaning).
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    The Enterprises are also subject to section 4545 of the Safety and 
Soundness Act, which requires HUD, by regulation, to prohibit the 
Enterprises from discriminating in the purchase of mortgages on the 
bases of race, color, religion, sex, disability, familial status, age, 
or national origin, including any consideration of the age or location 
of the dwelling or the age of the neighborhood or census tract where 
the dwelling is located in a manner that has a discriminatory 
effect.\4\
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    \4\ 12 U.S.C. 4545.
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    FHFA also recognizes that there are a number of applicable and 
relevant sources of fair lending law and guidance, including judicial 
decisions, administrative interpretations and guidance, and 
administrative actions.

Fair Lending Oversight Considerations

    FHFA has broad statutory authority to supervise the regulated 
entities, including authority to monitor and gather information, 
conduct supervisory examinations, and enforce compliance with law where 
appropriate. FHFA monitors regulated entities for fair lending risk, 
conducts supervisory examinations, and, when necessary,

[[Page 36201]]

takes enforcement action to ensure compliance with fair lending laws.
Monitoring and Information Gathering
    FHFA regularly monitors the fair lending risk presented by 
Enterprise and Bank activities and may request data and information in 
its role as supervisor and regulator to ensure effective, ongoing 
oversight. FHFA reviews the regulated entities' internal fair lending 
data monitoring, risk assessments, policies and procedures, internal 
control systems, and other information to appropriately scope 
monitoring and examinations commensurate with fair lending risk. Fair 
lending monitoring information may be collected pursuant to FHFA's 
supervisory and regulatory authority, including 12 U.S.C. 4514(a) which 
authorizes FHFA to order regulated entities to submit both regular and 
special reports. FHFA may require regulated entities to submit 
``regular reports . . . on the condition (including financial 
condition), management, activities, or operations of the regulated 
entity, as the Director considers appropriate.'' \5\ Fair lending 
monitoring information includes, but is not limited to: Data and other 
information necessary to monitor and evaluate the policies, programs, 
and activities of the regulated entities; information about changes in 
policies, programs, and activities; information about the regulated 
entities' fair lending testing and other compliance activities; and the 
regulated entities' self-evaluations of fair lending risk and the 
compliance of their policies, programs, and activities with respect to 
fair lending laws.
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    \5\ 12 U.S.C. 4514(a).
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Supervisory Examinations
    FHFA has broad authority to supervise the Enterprises and the Banks 
for compliance with fair lending standards. The regulated entities are 
subject to FHFA's overarching ``supervision and regulation.'' \6\ FHFA 
may conduct examinations of the regulated entities whenever FHFA 
determines that an examination is necessary or appropriate.\7\ FHFA 
examiners have examination authority equivalent to other Federal 
prudential regulators.\8\ FHFA also has a duty to ensure that the 
regulated entities are operating consistently with the public 
interest.\9\
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    \6\ 12 U.S.C. 4511(b)(1) (``Each regulated entity shall, to the 
extent provided in this chapter, be subject to the supervision and 
regulation of the Agency''); 12 U.S.C. 4511(b)(2) (``The Director 
shall have general regulatory authority over each regulated entity 
and the Office of Finance, and shall exercise such general 
regulatory authority, including such duties and authorities set 
forth under section 4513 of this title, to ensure that the purposes 
of this Act, the authorizing statutes, and any other applicable law 
are carried out.'').
    \7\ 12 U.S.C. 4517(b).
    \8\ 12 U.S.C. 4517(e). The statute particularly references the 
authority of examiners employed by the Federal Reserve banks.
    \9\ 12 U.S.C. 4513(a)(1)(B)(v).
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    FHFA conducts risk-based fair lending examinations of the regulated 
entities. FHFA's fair lending oversight program is committed to 
effective, appropriately tailored supervisory measures to ensure that 
the regulated entities adhere to applicable fair lending compliance 
standards. The Enterprises and the Banks each engage in activities that 
present differing levels and kinds of fair lending risk. FHFA carefully 
weighs the totality of available information, including monitoring 
information, market intelligence, and relevant data, when considering 
how best to employ supervisory resources.
Enforcement
    FHFA may use its administrative enforcement authority to address 
violations of ECOA and the Fair Housing Act by the regulated entities. 
That a regulated entity is in conservatorship does not preclude other 
enforcement actions; however, the conservator's broad statutory powers 
may provide FHFA with more efficient means to address problems than 
traditional enforcement tools. FHFA as conservator may take immediate 
action, consistent with applicable law, to direct or restrict the 
activities at the regulated entity, including the activities of the 
board of directors and executive management.
    FHFA has broader enforcement authority than its predecessor 
agencies FHFB and OFHEO, including for fair lending violations. The 
Housing and Economic Recovery Act (HERA) \10\ granted FHFA the 
authority to use cease and desist orders to enforce violations of all 
applicable laws, including ECOA and the Fair Housing Act.\11\ FHFA may 
also use civil money penalties as a tool to ensure fair lending 
compliance, where the statutory bases for such penalties are 
present.\12\
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    \10\ The Housing and Economic Recovery Act of 2008 (HERA), 
Public Law 110-289 (July 30, 2008), available at https://www.govinfo.gov/content/pkg/PLAW-110publ289/pdf/PLAW-110publ289.pdf.
    \11\ Public Law 110-289, sec. 1101 (amended the former OFHEO 
authorities to provide the new FHFA general supervisory and 
regulatory authority requiring regulated entity compliance with the 
Safety and Soundness Act, the regulated entities statutory charters, 
and ``any other applicable law''); sec. 1151 (amended cease and 
desist authorities to include violations of law generally); codified 
at 12 U.S.C. 4511 and 4631.
    \12\ 12 U.S.C. 4636.
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    Prior to HERA, OFHEO's fair lending enforcement authority over the 
Enterprises was limited to the Safety and Soundness Act fair housing 
provision and HUD's implementing regulation.\13\ HUD's implementing 
regulation anticipates HUD referring violations and potential 
violations of that provision by an Enterprise to FHFA for 
enforcement.\14\ FHFA will support enforcement of HUD's regulation 
implementing the Safety and Soundness Act's fair housing provision. 
FHFA will conduct a full review of HUD's referral of a violation or 
potential violation and all evidence submitted as part of the referral 
and resolve the matter appropriately and in accordance with FHFA's 
enforcement policy and in consultation with HUD. In addition, FHFA will 
continue to facilitate HUD's periodic fair lending reviews of the 
Enterprises. FHFA may also independently pursue administrative 
enforcement actions for any violations of section 4545 of the Safety 
and Soundness Act.
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    \13\ See 24 CFR 81.47(a).
    \14\ 24 CFR 81.47(a). Under the Safety and Soundness Act, FHFA 
is empowered to initiate enforcement actions for Enterprise 
violations of 12 U.S.C. 4545 and HUD's implementing regulations. The 
process for referring ``violations or potential violations'' to FHFA 
under 24 CFR 81.47(a) is distinct from the process under 24 CFR 
81.47(b), in which HUD shall conduct an investigation of the Fair 
Housing Act complaint, make a determination as to whether or not 
reasonable cause exists to believe discrimination occurred, and, if 
it does, proceed to enforcement under the Fair Housing Act.
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    FHFA's enforcement policy applies when taking any enforcement 
action against regulated entities for violations of law, including 
violations of fair lending law.\15\ Pursuant to FHFA's enforcement 
policy, FHFA may engage in consent order negotiations with regulated 
entities to resolve violations of fair lending laws.\16\ FHFA is not 
required by statute to refer potential fair lending violations to the 
Attorney General when the agency has a reason to believe that a 
regulated entity has engaged in a pattern or practice of discouraging 
or denying applications for

[[Page 36202]]

credit.\17\ Nevertheless, FHFA will consult with and refer matters to 
the Attorney General and coordinate with the Department of Justice on 
enforcement of fair lending matters as appropriate.
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    \15\ Federal Housing Finance Agency, Advisory Bulletin: FHFA 
Enforcement Policy, AB 2013-03 (issued May 31, 2013), available at 
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/20130531_AB_2013-03_FHFA-Enforcement-Policy_508%20(2).pdf.
    \16\ Federal Housing Finance Agency, Advisory Bulletin: FHFA 
Enforcement Policy, AB 2013-03 (issued May 31, 2013), available at 
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/20130531_AB_2013-03_FHFA-Enforcement-Policy_508%20(2).pdf. The Enforcement Policy further describes a 
number of informal and formal actions that FHFA may take, many of 
which may be used for enforcing compliance with fair lending laws.
    \17\ 15 U.S.C. 1691e(g).
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    FHFA will consider whether the regulated entity has conducted any 
self-evaluations or undertaken any corrective actions when making 
supervisory and enforcement decisions. FHFA will view responsible 
business practices such as self-testing, implementation of management 
controls, and voluntary remedial action favorably when making fair 
lending supervisory and enforcement determinations. In particular, FHFA 
commits to taking into consideration an entity's cooperation and candor 
during examinations and monitoring. Regulated entities are not required 
to self-report potential violations of fair lending laws. However, 
self-reporting of violations of fair lending laws will be viewed 
favorably by FHFA as it exercises its discretion. FHFA also considers 
the number and duration of violations identified, the nature of the 
evidence of discrimination (i.e., overt discrimination, disparate 
treatment, or disparate impact), the pervasiveness of the 
discrimination, the presence and effectiveness of any anti-
discrimination policies, any history of discriminatory conduct, any 
corrective measures implemented or proposed by the regulated entity, 
and any other factors for determining the appropriateness of any 
potential action.
Consideration of Differences Between the Banks and the Enterprises
    FHFA recognizes the important distinctions between the two types of 
regulated entities, the Enterprises and the Banks. In drafting this 
Policy Statement, FHFA has considered the differences between 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, and joint and several liability, as well as other applicable 
differences.\18\
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    \18\ 12 U.S.C. 4513(f).

Sandra L. Thompson,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2021-14438 Filed 7-8-21; 8:45 am]
BILLING CODE 8070-01-P
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