Fair Lending, Fair Housing, and Equitable Housing Finance Plans, 25293-25309 [2023-08602]
Download as PDF
Federal Register / Vol. 88, No. 80 / Wednesday, April 26, 2023 / Proposed Rules
34.63% in benefits,22) with a total cost
of $98 annually.
The total recordkeeping burden of the
57 certifying agents accredited to certify
organic livestock operations, including
dairies, 14.25 hours (.25 hours or 15
minutes per response), calculated at
$603. Of these 57 certifying agents, 59%
or 34 are based in the U.S. with a
recordkeeping burden of 8.5 hours at an
estimated wage rate of $47.75 per hour
($36.45,23 plus 31% in benefits,24) with
a total cost of $406 annually. The
remaining 41% or 23 certifying agents
are in foreign countries with a
recordkeeping burden of 5.75 hours at
an estimated wage rate of $34.34
($25.73,25 plus 34.63% 26 in benefits),
with a total cost of $197 annually.
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Conclusion
AMS invites public comment on the
following topics: (1) whether the
proposed collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information will have
practical utility; (2) the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used; (3)
ways to enhance the quality, utility, and
clarity of the information to be
collected; and (4) ways to minimize the
burden of the collection of information
on those who are to respond, including
the use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology.
AMS will summarize all responses to
this notification and include its
summary in the request for OMB
22 Benefit compensation rates at 34.63% of wage
rates is based on an average of Organization for
Economic Co-Operation and Development (OECD)
benefits compensation rates for countries with
USDA-accredited certifying agents. https://
stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
23 National Compensation Survey: Occupational
Employment and Wages, March 2022, published by
the Bureau of Labor Statistics. Bureau of Labor
Statistics, Occupational Employment and Wages,
13–041 Compliance Officers https://www.bls.gov/
oes/current/oes_nat.htm.
24 Bureau of Labor Statistics News Release on
Employer Costs for Employee Compensation,
Benefits account for 31% of total average employer
compensation costs, March 2022: https://
www.bls.gov/news.release/ecec.nr0.htm.
25 Wages in foreign countries are benchmarked as
69.97% of U.S wages derived from World Bank
estimates of Organization for Economic CoOperation and Development (OECD) member
countries in 2021 https://data.worldbank.org/
indicator/NY.GDP.PCAP.PP.CD?locations=OE.
26 Benefit compensation rates at 34.63% of wage
rates is based on an average of Organization for
Economic Co-Operation and Development (OECD)
benefits compensation rates for countries with
USDA-accredited certifying agents. https://
stats.oecd.org/Index.aspx?DataSetCode=AWCOMP.
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18:51 Apr 25, 2023
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approval. All comments will become a
matter of public record.
Authority: 7 U.S.C. 6501–6524.
Erin Morris,
Associate Administrator, Agricultural
Marketing Service.
[FR Doc. 2023–06885 Filed 4–25–23; 8:45 am]
BILLING CODE P
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1293
RIN 2590–AB29
Fair Lending, Fair Housing, and
Equitable Housing Finance Plans
Federal Housing Finance
Agency.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Federal Housing Finance
Agency (FHFA or the Agency) is seeking
comments on a proposed rule that
would address barriers to sustainable
housing opportunities for underserved
communities by codifying existing
FHFA practices in regulation and
adding new requirements related to fair
lending, fair housing, and Equitable
Housing Finance Plans. The proposed
rule would improve FHFA’s fulfillment
of its statutory purposes and its
oversight of the Federal National
Mortgage Association (Fannie Mae), the
Federal Home Loan Mortgage
Corporation (Freddie Mac), and the
Federal Home Loan Banks (Banks)
(Fannie Mae and Freddie Mac
collectively, the Enterprises; the
Enterprises and the Banks collectively,
regulated entities), and their fulfillment
of their statutory purposes.
DATES: Comments must be received on
or before June 26, 2023.
ADDRESSES: You may submit your
comments on the proposed rule,
identified by regulatory information
number (RIN) 2590–AB29, by any one of
the following methods:
• Agency Website: www.fhfa.gov/
open-for-comment-or-input.
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments. If
you submit your comment to the
Federal eRulemaking Portal, please also
send it by email to FHFA at
RegComments@fhfa.gov to ensure
timely receipt by FHFA. Include the
following information in the subject line
of your submission: Comments/RIN
2590–AB29.
• Hand Delivered/Courier: The hand
delivery address is: Clinton Jones,
SUMMARY:
PO 00000
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25293
General Counsel, Attention: Comments/
RIN 2590–AB29, Federal Housing
Finance Agency, 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: Comments/RIN 2590–AB29,
Federal Housing Finance Agency, 400
Seventh Street SW, Washington, DC
20219. Please note that all mail sent to
FHFA via U.S. Mail is routed through a
national irradiation facility, a process
that may delay delivery by
approximately two weeks. For any timesensitive correspondence, please plan
accordingly.
FOR FURTHER INFORMATION CONTACT:
James Wylie, Associate Director, Office
of Fair Lending Oversight, (202) 649–
3209, James.Wylie@fhfa.gov; Leda
Bloomfield, Branch Chief for Policy and
Equity, Office of Fair Lending Oversight,
(202) 649–3415, Leda.Bloomfield@
fhfa.gov; Annalyce Shufelt, Branch
Chief for Fair Lending Law,
Supervision, and Enforcement, (202)
717–1164, Annalyce.Shufelt@FHFA.gov;
or Sarah Friedman, Examination
Specialist (Fair Lending), Office of Fair
Lending Oversight, (202) 807–9324,
Sarah.Friedman@FHFA.gov. These are
not toll-free numbers. For TTY/TRS
users with hearing and speech
disabilities, dial 711 and ask to be
connected to any of the contact numbers
above.
SUPPLEMENTARY INFORMATION:
Comments
FHFA invites comments on all aspects
of the proposed rule and will take all
comments into consideration before
issuing a final rule. Copies of all
comments will be posted without
change, and will include 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 proposed rule also
located on the FHFA website.
Table of Contents
I. Introduction
II. Background
A. FHFA, the Regulated Entities, and Their
Public Purposes
B. Barriers to Sustainable Housing
Opportunities
1. Disparities in Homeownership Rates and
Wealth
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2. Disparities Based on Disaggregated Data
3. Challenges Accessing Sustainable
Housing Opportunities
4. Mortgage Market Disparities
5. Appraisal and Valuation Disparities
III. The Proposed Rule
A. FHFA Fair Lending Oversight of the
Regulated Entities
B. Enterprise Equitable Housing Finance
Plans
C. Enterprise Data Collection and
Reporting to FHFA
D. Application of FHFA’s Prudential
Standard Framework
E. Policy Purposes for and Benefits of the
Proposed Rule
IV. Section-by-Section Analysis
A. Section 1293.1 General
B. Section 1293.2 Definitions
C. Section 1293.3 Compliance and
Enforcement
D. Section 1293.4 Preservation of Authority
E. Section 1293.11 Regulated Entity
Compliance
F. Section 1293.12 Reports and Data
G. Section 1293.21 General
H. Section 1293.22 Plans and Updates
I. Section 1293.23 Performance Reports
J. Section 1293.24 Public Engagement
K. Section 1293.25 Program Standards
L. Section 1293.26 Enterprise Board
Equitable Housing and Mission
Responsibilities
M. Section 1293.31 Required Enterprise
Data Collection and Reporting
N. Proposed Rule Timing Elements
V. Considerations of Differences Between the
Banks and the Enterprises
VI. Comments Specifically Requested
VII. Paperwork Reduction Act
VIII. Regulatory Flexibility Act
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I. Introduction
Federal agency oversight of fair
housing and fair lending laws, as well
as strategic planning to address barriers
faced by renters and borrowers, are
important in promoting sustainable
housing opportunities 1 for underserved
communities.2 The proposed rule would
address barriers to sustainable housing
opportunities for underserved
communities by codifying existing
FHFA practices in regulation and
adding new requirements. Collectively,
the actions in the proposed rule would
1 Sustainable housing opportunity is defined
more completely later in the proposed rule, but
generally encompasses rental or homeownership
opportunities that include one or more
characteristics important to the needs of a tenant or
homeowner.
2 Underserved community is defined more
completely later in the proposed rule, but generally
encompasses a group of people with shared
characteristics or an area that is subject to current
discrimination or has been subjected to past
discrimination that has or has had continuing
adverse effects on the group or area’s participation
in the housing market, historically has received or
currently receives a lower share of the benefits of
Enterprise programs and activities providing
sustainable housing opportunities, or that otherwise
has had difficulty accessing these benefits
compared with groups of people without the shared
characteristic or other areas.
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improve FHFA’s fulfillment of its
statutory purposes and its oversight of
the regulated entities and their
fulfillment of their statutory purposes.
The proposed rule would codify in
regulation much of FHFA’s existing
practices and programs regarding fair
housing and fair lending oversight of its
regulated entities, the Equitable Housing
Finance Plan program for the
Enterprises, and requirements for the
Enterprises to collect and report
language preference, homeownership
education, and housing counseling
information. The proposed rule would
make changes to the Equitable Housing
Finance Plan program to promote
greater accountability for the Enterprises
and public transparency, add oversight
of unfair or deceptive acts or practices
to FHFA’s fair housing and fair lending
oversight programs, require additional
certification of compliance by the
Enterprises, and establish more precise
standards related to fair housing, fair
lending, and principles of equitable
housing for regulated entity boards of
directors (boards).
II. Background
A. FHFA, the Regulated Entities, and
Their Public Purposes
Fannie Mae and Freddie Mac are
federally chartered housing finance
enterprises whose purposes include
providing stability to the secondary
market for residential mortgages;
providing ongoing assistance to the
secondary market for residential
mortgages (including activities related
to mortgages on housing for low- and
moderate-income families) by increasing
the liquidity of mortgage investments
and improving distribution of
investment capital available for
residential mortgage financing; and,
promoting access to mortgage credit
throughout the United States, including
central cities, rural areas, and
underserved areas, by increasing the
liquidity of mortgage investments and
improving the distribution of
investment capital available for
residential mortgage financing.3
The Federal Home Loan Bank System
(the System) provides a stable and
reliable source of liquidity for its
members and provides support for
affordable housing and community
development for the communities they
serve. It was established in 1932 by the
Federal Home Loan Bank Act,4 and
today consists of 11 regional Federal
Home Loan Banks (the Banks) and the
System’s fiscal agent, the Office of
3 12
4 12
PO 00000
U.S.C. 1451 (note) and 1716.
U.S.C. 1421 et seq.
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Finance. Each Bank is a separate,
government-chartered, member-owned
corporation.
Congress established FHFA to oversee
the regulated entities to ensure that the
purposes of the Federal Housing
Enterprises Financial Safety and
Soundness Act of 1992 (Safety and
Soundness Act), as amended, the
authorizing statutes, and any other
applicable laws are carried out.5 In
doing so, Congress recognized that the
regulated entities have important public
purposes reflected in their authorizing
statutes, and that they need to be
managed safely and soundly so that they
continue to accomplish their public
missions.6
With respect to the public purposes of
the Enterprises, a number of statutory
and regulatory authorities that apply to
FHFA and the Enterprises speak to the
need to advance equity for homebuyers,
homeowners, and tenants in the housing
market.7 FHFA’s principal duties
include ensuring that the Enterprises
operate consistent with safety and
soundness and with the public interest.8
FHFA and the Enterprises also have
statutory and other commitments to
advance equitable solutions for
borrowers and tenants in the housing
market. The Enterprises’ authorizing
statutes, for example, provide that one
of their purposes is to promote access to
mortgage credit throughout the nation
(including central cities, rural areas, and
underserved areas).9 The authorizing
5 12
U.S.C. 4511(b).
U.S.C. 4501(1) (Enterprises and Federal
Home Loan Banks have important public missions),
(2) (their continued ability to accomplish their
public missions is important, and effective
regulation is needed to reduce risk of failure), and
(7) (Enterprises have affirmative obligation to
facilitate financing of affordable housing for lowand moderate-income families consistent with their
public purposes, while maintaining a strong
financial condition and a reasonable economic
return).
7 These include providing ongoing assistance to
the secondary market for residential mortgages,
including mortgages on housing for low- and
moderate-income families involving a reasonable
economic return that may be less than the return
earned on other activities. 12 U.S.C. 1716(3) and (4)
(Fannie Mae charter purposes); 12 U.S.C. 1451 note
(b)(3) and (4) (Freddie Mac charter purposes). They
also include Enterprise affordable housing Goals,
see 12 U.S.C. 4561(a), 4562, and 4563; 12 CFR part
1282, subpart B, and Enterprise Duty to Serve
affordable housing needs of certain underserved
markets, see 12 U.S.C. 4565; 12 CFR part 1282,
subpart C. In addition, the Enterprises are required
to report annually to Congress on, among other
things, assessments of their underwriting standards
and business practices that affect their purchases of
mortgages for low- and moderate-income families,
and revisions to their standards and practices that
promote affordable housing or fair lending. 12
U.S.C. 1723a(n)(2)(G) (Fannie Mae charter),
1456(f)(2)(G) (Freddie Mac charter).
8 12 U.S.C. 4513(a)(1)(B)(i), (v).
9 12 U.S.C. 1716(4) (Fannie Mae charter); 1451
note (b)(4) (Freddie Mac charter).
6 12
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statutes require the Enterprises, as part
of their annual housing reports, to
assess their underwriting standards,
policies, and business practices that
affect low- and moderate-income
families or cause racial disparities,
along with any revisions to these
standards, policies, or practices that
promote affordable housing or fair
lending.10
The Housing Goals and Duty to Serve
requirements are critical elements for
ensuring that the Enterprises fulfill their
mission and charters and serve low- and
moderate-income families and
underserved populations.11 The Safety
and Soundness Act provides that, in
meeting these requirements, the
Enterprises are required to take
affirmative steps to assist primary
lenders to make housing credit available
in areas with concentrations of lowincome and minority families.12 The
Safety and Soundness Act also requires
the Enterprises to transfer an amount
equal to 4.2 basis points for each dollar
of unpaid principal balance of new
purchases to the U.S. Department of
Housing and Urban Development’s
(HUD) administration of the Housing
Trust Fund and the U.S. Department of
the Treasury’s administration of the
Capital Magnet Fund.13 Both funds are
designed to support affordable housing
initiatives by providing capital for the
production or preservation of affordable
housing and related economic
development activities. For the 2022
year, the Enterprises transferred $545
million into the funds.14
Several provisions of the Federal
Home Loan Bank Act denote the public
purposes of the Banks, including their
role in making secured long-term
advances to members to support
residential housing finance, specific
community support requirements,
establishment of a community
investment program and an affordable
housing program, compliance with
housing goals, and the requirement that
certain directors have experience in
public interest areas.15 FHFA launched
a comprehensive review of the System
10 12
U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
U.S.C. 4561(a) (FHFA to establish annual
housing goals by regulation), 4562 (establishment of
required categories of single-family housing goals),
and 4563 (establishment of required multifamily
affordable housing goals); 12 U.S.C. 4565
(Enterprise duty to facilitate secondary mortgage
market for very low-, low-, and moderate-income
families in certain underserved markets).
12 12 U.S.C. 4565(b)(3)(A).
13 12 U.S.C. 4567.
14 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-545-Million-forAffordable-Housing-Programs.aspx.
15 See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii), 12 U.S.C.
1430(g), (i), (j); 12 U.S.C. 1430c.
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11 12
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in August 2022.16 Among the areas
FHFA has explored as part of the review
are the Banks’ role in promoting
affordable, sustainable, equitable, and
resilient housing and community
investment, including rental housing,
and in addressing the unique needs of
tribal communities, communities of
color, rural communities, and other
financially vulnerable and underserved
communities. Numerous commenters
during the public input phases of the
initiative suggested establishing or
expanding requirements for housing and
community development lending plans
for the Banks, and these and other
suggestions are currently under
consideration separately and apart from
this proposed rulemaking.
Under the Fair Housing Act, all
Federal agencies having regulatory or
supervisory authority over financial
institutions, including FHFA, are
required to administer their programs
and activities relating to housing and
urban development in a manner that
affirmatively furthers the purposes of
the Fair Housing Act, which includes
providing for fair housing throughout
the United States.17 FHFA has included
considerations of fair housing and fair
lending in rulemaking since its
establishment.18 FHFA has also issued a
policy statement on fair lending which
describes its regulatory and oversight
authorities to supervise and enforce fair
lending laws with respect to its
regulated entities.19 FHFA has issued
orders to Fannie Mae and Freddie Mac
for regular and special reports related to
fair housing and fair lending.20 FHFA
has issued guidance for the Enterprises
on fair housing and fair lending
supervisory expectations.21 FHFA
16 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Comprehensive-Review-ofthe-FHLBank-System.aspx.
17 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
18 See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR
31602, 31603, 31606 (Jul. 2, 2009), 12 CFR
1254.6(a)(2) and 1254.8(b)(2); 84 FR 41886, 41905,
41906, 41907 (Aug. 16, 2019), and 12 CFR
1291.23(e); 83 FR 61186, 61208, 61238 (Nov. 28,
2018).
19 86 FR 36199 (Jul. 9, 2021).
20 See FHFA Orders In Re: Enterprise Compliance
and Information Submission with Respect to Fair
Lending, Nos. 2021–OR–FNMA–2 and 2021–OR–
FHLMC–2 (FHFA’s Fair Lending Orders), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Pages/Fair-Lending-OversightProgram.aspx#:∼:text=Fair%20Lending
%20Reporting%20Orders&text=The%20orders%20
require%20the%20Enterprises,lending%20
supervision%20and%20monitoring
%20capabilities.
21 Advisory Bulletin AB–2021–04, Enterprise Fair
Lending and Fair Housing Compliance (Dec. 20,
2021), available at https://www.fhfa.gov/
SupervisionRegulation/AdvisoryBulletins/
AdvisoryBulletinDocuments/AB%20202104%20Enterprise%20Fair%20Lending%20
and%20Fair%20Housing%20Compliance.pdf.
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25295
coordinates with HUD on fair lending
and fair housing oversight,22 and has
established a fair lending oversight data
system in part to facilitate cooperation
in interagency fair housing and fair
lending oversight.23 FHFA has also
implemented the referral program for
potential mortgage pricing disparities
across mortgage lenders based on the
Enterprises’ data, as required by
Congress in section 1128 of the Housing
and Economic Recovery Act of 2008
(HERA).24 FHFA also established the
Equitable Housing Finance Plan
program for the Enterprises to develop
a framework for addressing barriers to
sustainable housing opportunity for
underserved communities through
strategic planning and public
participation.25 FHFA joined other
agencies in issuing the Interagency
Statement on Special Purpose Credit
Programs Under the Equal Credit
Opportunity Act and Regulation B in
2022.26
B. Barriers to Sustainable Housing
Opportunities
Ongoing disparities and challenges in
the housing market persist, limiting
sustainable housing opportunities for
underserved communities. The
following section discusses some of
these disparities and challenges by way
of example. Both Enterprises’ 2022–
2024 Equitable Housing Finance Plans
also include extensive discussions of
barriers to sustainable housing
opportunities.27 The inclusion or
discussion of a particular disparity,
challenge, or underserved community is
not an indication of FHFA’s views on
22 Memorandum of Understanding by and
between the U.S. Department of Housing and Urban
Development and the Federal Housing Finance
Agency regarding Fair Housing and Fair Lending
Coordination (Aug. 12, 2021), available at https://
www.fhfa.gov/Media/PublicAffairs/
PublicAffairsDocuments/FHFA-HUD-MOU_
8122021.pdf.
23 Fair Lending Oversight Data System of Records
Notice, 87 FR 30947 (May 20, 2022), available at
https://www.govinfo.gov/content/pkg/FR-2022-0520/pdf/2022-10798.pdf.
24 Public Law 110–289, 122 Stat. 2696, 2697
(2008) (codified at 12 U.S.C. 4561(d)).
25 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Equitable-HousingFinance-Plans--for-Fannie-Mae-and-FreddieMac.aspx.
26 See Interagency Statement on Special Purpose
Credit Programs Under the Equal Credit
Opportunity Act and Regulation B (Feb. 22, 2022),
available at https://www.federalreserve.gov/
supervisionreg/caletters/CA%20222%20Attachment%20SPCP_Interagency_
Statement_for_release.pdf.
27 See Freddie Mac 2022–2024 Equitable Housing
Finance Plan (Apr. 2023), available at https://
www.freddiemac.com/about/pdf/Freddie-MacEquitable-Housing-Finance-Plan.pdf; Fannie Mae
2022–2024 Equitable Housing Finance Plan (June
2022), available at https://www.fanniemae.com/
media/43636/display.
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the needs of a community or what
actions FHFA’s regulated entities
should take.
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1. Disparities in Homeownership Rates
and Wealth
The national homeownership rate has
ranged from around 45 percent in some
eras to around 65 percent in recent
years.28 However, there have been
persistent gaps in the homeownership
rate by race and ethnicity. In the fourth
quarter of 2022, the White
homeownership rate was 74.5 percent,
the Black homeownership rate was 44.9
percent, the Latino homeownership rate
was 48.5 percent, and the Asian, Native
Hawaiian and Pacific Islander
homeownership rate was 61.9 percent.29
The Black and White homeownership
gap, at 29.6 percentage points as of the
fourth quarter of 2022, has persisted
over time, though there have been some
modest reductions in the gap since
2019. Even when the racial
homeownership rate is stratified by
household income, there continue to be
significant disparities in
homeownership amongst racial groups,
even in the highest income brackets. For
example, for households with an
income over $150,000, there exists a 10
percentage point gap between Black and
White families.30
A household’s home is often its
largest financial asset and key to wealth
building and intergenerational wealth
transfers. The homeownership gap
therefore contributes significantly to
wealth gaps for underserved
communities. The Federal Reserve, in a
2019 survey, found that White families
have the highest level of both median
and mean family wealth: $188,200 and
$983,400, respectively.31 In contrast,
Black families’ median and mean wealth
is less than 15 percent that of White
families, at $24,100 and $142,500,
respectively. These wealth disparities
28 See Don Layton, ‘‘The Homeownership Rate
and Housing Finance Policy, Part 1: Learning from
the Rate’s History,’’ August 2021, available at
https://www.jchs.harvard.edu/sites/default/files/
research/files/harvard_jchs_homeownership_rate_
layton_2021.pdf.
29 Federal Reserve Economic Data, Federal
Reserve Bank of St. Louis; Housing and
Homeownership: Homeownership Rate (retrieved
February 11, 2023) available at https://fred.
stlouisfed.org/release/tables?rid=296&eid=784188#
snid=784199.
30 See Fannie Mae 2022–2024 Equitable Housing
Finance Plan (June 2022), p. 7, available at https://
www.fanniemae.com/media/43636/display.
31 See Neil Bhutta et al., Board of Governors of
the Federal Reserve System, ‘‘Disparities in Wealth
by Race and Ethnicity in the 2019 Survey of
Consumer Finances,’’ (Sept. 28, 2020), available at
https://www.federalreserve.gov/econres/notes/fedsnotes/disparities-in-wealth-by-race-and-ethnicityin-the-2019-survey-of-consumer-finances20200928.html.
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have grown between 2003 and 2018.32
One study estimated that the total racial
wealth gap is $10.14 trillion.33 This lack
of intergenerational wealth transfers
reduces the likelihood that older
generations can assist with down
payments, educational costs, and
unexpected financial events, including
natural disasters and medical
emergencies. Black families are also less
likely to receive or expect to receive an
inheritance, and, if they do, it is, on
average, less than that of White
households.34 Moreover, many Black,
Latino, and Asian households provide
financial assistance to older generations,
which slows their ability to save for a
down payment.35
looking at aggregated data.39 For Latino
communities, Mexican applicants have
slightly higher approval rates than
Latino applicants as a whole, but Puerto
Rican and ‘‘Other Hispanic’’ applicants
have lower approval rates. Among Asian
applicants, the Vietnamese, Filipino,
and ‘‘Other Asian’’ communities
experience lower approval rates than
White applicants, despite Asian
applicants, as a whole, having similar
approval rates to White applicants.
Similarly, when the Pacific Islander
group is disaggregated, it becomes clear
that Samoan and ‘‘Other Pacific
Islander’’ applicants have significantly
lower approval rates than Native
Hawaiian and Chamorro applicants.
2. Disparities Based on Disaggregated
Data
For many underserved communities,
it is critical to examine disaggregated
data and data at the community level.36
Failing to disaggregate may result in
failure to identify significant disparities
facing unique race/ethnicity subgroups
for the purpose of identifying barriers
and improving housing policy. For
example, although Asians and Pacific
Islanders as a whole have
homeownership rates above 60 percent,
Korean Americans’ homeownership rate
is 54 percent and Nepalese Americans’
homeownership rate is 33 percent.37
Geographically, while the overall
homeownership gap between Black and
White homeowners is 29.6 percentage
points, in Minneapolis the gap rises to
50 percentage points.38
There are also disparities in mortgage
underwriting that may be obscured by
3. Challenges Accessing Sustainable
Housing Opportunities
In addition to racial and ethnic gaps
across homeownership and wealth,
there are other underserved
communities experiencing significant
challenges in accessing sustainable
housing opportunities. This includes
families living on tribal land, in rural
areas, and in rental homes. Almost half
of renters are cost-burdened, paying
more than 30 percent of their income on
housing, compared to only 22 percent of
homeowners.40 As an increasing
proportion of households wish to age in
place, there is often a lack of housing
opportunities that provide for mobility
and other physical impairments. By
2035, the population 80 and over is
expected to double from its level in
2016. More than 10 million households
headed by someone over 65 are costburdened, with the median older renter
having net wealth under $6,000 in
2019.41 Two percent of total housing
inventory is accessible for people with
mobility disabilities, while 14 percent of
Americans have mobility disabilities.42
Other populations, including persons
identifying as lesbian, gay, bisexual,
transgender, or queer (LGBTQ+),
continue to report facing challenges in
32 See Earl Fitzhugh et al., McKinsey Institute for
Black Economic Mobility, ‘‘It’s time for a new
approach to racial equity,’’ (Dec. 2, 2020), available
at https://www.mckinsey.com/bem/our-insights/itstime-for-a-new-approach-to-racial-equity.
33 See Fred Dews, ‘‘Charts of the Week: The racial
wealth gap; the middle-class income slump,’’
Brookings Institution (Jan. 8, 2021), available at
https://www.brookings.edu/blog/brookings-now/
2021/01/08/charts-of-the-week-the-racial-wealthgap-the-middle-class-income-slump/.
34 See Freddie Mac 2022–2024 Equitable Housing
Finance Plan (Apr. 2023), available at https://
www.freddiemac.com/about/pdf/Freddie-MacEquitable-Housing-Finance-Plan.pdf.
35 See Mike Dang, ‘‘Their Children Are Their
Retirement Plans,’’ New York Times (Feb. 24, 2023),
available at https://www.nytimes.com/2023/01/21/
business/retirement-immigrant-families.html.
36 See Leda Bloomfield et al., FHFA Insights Blog,
‘‘Latino Diversity and Complexity: The Importance
of Data Disaggregation,’’ (Sept. 23, 2021), available
at https://www.fhfa.gov/Media/Blog/Pages/LatinoDiversity-and-Complexity-The-Importance-of-DataDisaggregation.aspx.
37 See Asian Real Estate Association, 2023–2024
State of Asia America Report, available at https://
areaa.org/resource-asia-america-report.
38 See Alanna McCargo et al., ‘‘Mapping the black
homeownership gap,’’ (Feb. 26, 2018), available at
https://www.urban.org/urban-wire/mapping-blackhomeownership-gap.
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39 See Leda Bloomfield et al., FHFA Insights Blog,
‘‘Latino Diversity and Complexity: The Importance
of Data Disaggregation,’’ (Sept. 23, 2021), available
at https://www.fhfa.gov/Media/Blog/Pages/LatinoDiversity-and-Complexity-The-Importance-of-DataDisaggregation.aspx.
40 See National Equity Atlas, ‘‘Housing Burden:
All residents should have access to quality,
affordable homes), (retrieved Mar. 5, 2023) available
at https://nationalequityatlas.org/indicators/
Housing_burden#/?rentown01=2.
41 See Jennifer Molinsky, ‘‘Housing for America’s
Older Adults: Four Problems We Must Address,’’
Joint Center for Housing Studies of Harvard
University (Aug. 18, 2022), available at https://
www.jchs.harvard.edu/blog/housing-americasolder-adults-four-problems-we-must-address.
42 See Freddie Mac 2022–2024 Equitable Housing
Finance Plan (Apr. 2023), available at https://
www.freddiemac.com/about/pdf/Freddie-MacEquitable-Housing-Finance-Plan.pdf.
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accessing the housing finance system. A
study found that same-sex applicants
are 73.12 percent more likely to be
denied for a mortgage.43 Households
with limited English proficiency (LEP),
or who are more comfortable transacting
in a language other than English, may
also experience barriers to housing
opportunities and housing
sustainability. Often, LEP borrowers
will rely on their English-proficient
child, who may not be familiar with
mortgage lending terms, as a
translator.44 As a result, this can leave
the borrower without a full
understanding of mortgage terms and
conditions.
4. Mortgage Market Disparities
Disparities are present in the mortgage
market for several underserved
communities. For example, in 2022
Black families comprised about 14
percent of the total U.S. population, but
only about 7 percent of the loans that
Fannie Mae and Freddie Mac
purchased. American Indian and Alaska
Native families comprised about 3
percent of the total U.S. population, but
only about 1 percent of the loans that
Fannie Mae and Freddie Mac
purchased. In contrast, White families
comprised about 62 percent of the U.S.
population, but they comprised about
68 percent of Fannie Mae and Freddie
Mac acquisitions.45
FHFA has released data on Fannie
Mae and Freddie Mac’s automated
underwriting systems, presenting gaps
in approval rates for applicants from
certain groups over time compared to
other groups. These underwriting tools
complete credit risk assessments on
loan applicants to determine whether a
loan is eligible for sale to the
Enterprises. Although the move to a
more automated, less subjective system
to assess creditworthiness in mortgage
market underwriting was an important
step in eliminating bias in subjective
ddrumheller on DSK120RN23PROD with PROPOSALS1
43 See
Hua Sun et al., ‘‘Lending practices to samesex borrowers,’’ (Apr. 16, 2019), available at https://
www.pnas.org/doi/10.1073/pnas.1903592116.
44 See Freddie Mac and Fannie Mae, ‘‘Language
Access for Limited English Proficiency Borrowers:
Final Report,’’ (Apr. 2017), available at https://
www.fhfa.gov/PolicyProgramsResearch/Policy/
Documents/Borrower-Language-Access-FinalReport-June-2017.pdf.
45 Loan purchase data sourced from Enterprise
data released by FHFA at https://www.fhfa.gov/
DataTools/Downloads/Pages/Fair-LendingData.aspx. Total population statistics are drawn
from 2020 Census data summarized at https://
www.census.gov/library/stories/2021/08/improvedrace-ethnicity-measures-reveal-united-statespopulation-much-more-multiracial.html. Total
population statistics for White are provided as
White alone. Total population statistics for Black
and American Indian and Alaska Native are
provided as alone or in combination with another
race or ethnicity category.
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underwriting decisions, further
improvements in automated
underwriting to reduce gaps would
promote better access to sustainable
housing opportunities. In 2022, White
applicants’ automated underwriting
system applications had approval rates
of about 84 and 85 percent for the
automated underwriting systems of
Fannie Mae and Freddie Mac,
respectively; Black applicants had
approval rates of about 70 and 69
percent; Latino applicants had approval
rates of about 78 percent and 73 percent;
Asian applicants had approval rates of
about 84 and 85 percent; American
Indian and Alaska Native applicants
had approval rates of about 78 and 75
percent; and Native Hawaiian and
Pacific Islander applicants had approval
rates of about 78 and 74 percent.46
Home Mortgage Disclosure Act
(HMDA) data also shows higher denial
rates by lenders for many underserved
communities. For example, an analysis
of the 2020 HMDA data found a denial
rate of 27.1 percent for Black applicants
compared to 13.6 percent for White
applicants.47 The trend in higher denial
rates has persisted in HMDA data for
many years.48 A 2019 study of mortgage
pricing found that Black and Latino
borrowers pay 7.9 and 3.6 basis points
more in interest for mortgages, even
when controlling for several factors.49
FHFA conducts an annual screening,
preliminary findings, and referral
process for lenders pursuant to the
Safety and Soundness Act and describes
the results in its Annual Report to
Congress. Based on the results of
FHFA’s 2019 and 2020 analysis, more
than 36 percent of FHFA’s preliminary
findings were based on an annual
percentage rate disparity of 10 basis
points or more, with the most common
preliminary findings and referrals for
Latino and Black borrowers.50
46 See https://www.fhfa.gov/DataTools/
Downloads/Pages/Fair-Lending-Data.aspx.
47 See Jung H. Choi et al., ‘‘What Different Denial
Rates Can Tell Us About Racial Disparities in the
Mortgage Market,’’ (Jan. 13, 2022), available at
https://www.urban.org/urban-wire/what-differentdenial-rates-can-tell-us-about-racial-disparitiesmortgage-market.
48 See Laurie Goodman et al., ‘‘Traditional
Mortgage Denial Metrics May Misrepresent Racial
and Ethnic Discrimination,’’ (Aug. 23, 2018), p. 5,
available at https://www.urban.org/urban-wire/
traditional-mortgage-denial-metrics-maymisrepresent-racial-and-ethnic-discrimination.
49 See Robert Bartlett et al., Haas School of
Business UC Berkely, ‘‘Consumer-Lending
Discrimination in the FinTech Era,’’ (Nov. 2019),
available at https://faculty.haas.berkeley.edu/
morse/research/papers/discrim.pdf.
50 See Federal Housing Finance Agency, 2021
Report to Congress, p. 67, available at https://
www.fhfa.gov/AboutUs/Reports/ReportDocuments/
FHFA-2021-Annual-Report-to-Congress.pdf.
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The Federal Home Loan Bank of San
Francisco entered into a research and
product development initiative with a
research institution to address issues
related to the racial homeownership
gap.51 A study resulting from this
partnership noted that the heavy
reliance on certain credit attributes in
the current mortgage underwriting
process to the exclusion of other
attributes limits opportunities for
people of color.52
Additional mortgage market
disparities and challenges remain with
respect to rural areas, manufactured
housing, and other market segments.
FHFA’s Duty to Serve program works to
address many of these disparities.53
5. Appraisal and Valuation Disparities
FHFA’s Uniform Appraisal Dataset
(UAD) Aggregate Statistics highlight that
properties located in minority tracts
have a higher proportion of appraised
values less than the contract price.
According to the 2021 appraisal
statistics, 23.3 percent of homes in high
minority tracts (80.1–100 percent)
experienced an appraised value less
than the contract price.54 This is
compared to 13.4 percent of homes in
White tracts (0–50 percent) and 19.2
percent in minority tracts (50.1–80
percent).55 Additionally, FHFA
identified examples with direct
references to the racial and ethnic
composition of the neighborhood in
appraisal reports.56 Freddie Mac’s
51 See https://fhlbsf.com/about/newsroom/urbaninstitute-and-fhlbank-san-francisco-announce-newefforts-close-racial?f%5B0%5D=authored_
on%3A2021.
52 See Jung H. Choi et al., Urban Institute and
Federal Home Loan Bank of San Francisco,
‘‘Reducing the Black-White Homeownership Gap
through Underwriting Innovations: The Potential
Impact of Alternative Data in Mortgage
Underwriting,’’ available at https://www.urban.org/
sites/default/files/2022-10/Reducing%20
the%20Black-White%20Homeownership
%20Gap%20through%20Underwriting
%20Innovations.pdf.
53 See https://www.fhfa.gov/PolicyPrograms
Research/Programs/Pages/Duty-to-Serve.aspx.
54 See Jonathan Liles, ‘‘Exploring Appraisal Bias
Using UAD Aggregate Statistics,’’ FHFA Insights
Blog (Nov. 11, 2022), available at https://
www.fhfa.gov/Media/Blog/Pages/ExploringAppraisal-Bias-Using-UAD-AggregateStatistics.aspx.
55 For 2022, 17.15 percent of home purchase
appraisals were below contract price in high
minority tracts, compared to 14.3 percent in
minority tracts and 11.2% in White tracts. Uniform
Appraisal Dataset Aggregate Statistics, available at
https://www.fhfa.gov/DataTools/Pages/UADDashboards.aspx.
56 See Chandra Broadnax, ‘‘Reducing Valuation
Bias by Addressing Appraiser and Property
Valuation Commentary,’’ FHFA Insights Blog (Dec.
14, 2021), available at https://www.fhfa.gov/Media/
Blog/Pages/Reducing-Valuation-Bias-byAddressing-Appraiser-and-Property-ValuationCommentary.aspx.
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research showed that properties in
minority tracts are more likely than
properties in White tracts to receive an
appraisal lower than the contract
price.57 A Fannie Mae publication
concluded that White borrowers’ homes
were overvalued at higher rates across
all neighborhoods, but stronger effects
were present for White borrowers in
Black neighborhoods.58 Additional
research has also highlighted and
analyzed disparities in property
valuation.59 Consumer groups have
begun to conduct fair housing paired
testing of appraisers, resulting in the
filing of complaints.60 Rural markets
also experience challenges related to
appraiser availability and appraisal
cost.61
III. The Proposed Rule
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A. FHFA Fair Lending Oversight of the
Regulated Entities
The proposed rule would codify in
regulation FHFA’s existing fair lending
oversight functions with respect to the
regulated entities, including conducting
supervisory examinations, issuing
examination findings, requiring regular
and special reporting and data, and
enforcement. The proposed oversight
would be substantially the same as
FHFA’s current fair lending oversight
functions, but would establish FHFA’s
57 See Melissa Narragon et al., ‘‘Racial & Ethnic
Valuation Gaps in Home Purchase Appraisals—A
Modeling Approach,’’ (May 2022), available at
https://www.freddiemac.com/research/insight/
20220510-racial-ethnic-valuation-gaps-homepurchase-appraisals-modeling-approach; Freddie
Mac, ‘‘Racial and Ethnic Valuation Gaps in Home
Purchase Appraisals,’’ (Sept. 20, 2021), available at
https://www.freddiemac.com/research/insight/
20210920-home-appraisals.
58 See Jake Williamson et al., ‘‘Appraising the
Appraisal,’’ (Feb. 2022) available at https://
www.fanniemae.com/media/42541/display.
59 See, e.g., Andre Perry et al., The Brookings
Institution, ‘‘The Devaluation of Assets in Black
Neighborhoods: The Case of Residential Property
(Nov. 27, 2018), available at https://
www.brookings.edu/research/devaluation-of-assetsin-black-neighborhoods/; Junia Howell et al.,
‘‘Appraised: The Persistent Evaluation of White
Neighborhoods as More Valuable Than
Communities of Color,’’ (Nov. 2022), available at
https://www.eruka.org/appraised; Edward Pinto et
al., American Enterprise Institute, ‘‘How Common
is Appraiser Racial Bias—An Update,’’ (May 2022),
available at https://www.aei.org/wp-content/
uploads/2022/06/How-Common-is-AppraiserRacial-Bias-An-Update-May-2022-FINAL-corrected1.pdf?x91208.
60 Jake Lilien, National Community Reinvestment
Coalition, ‘‘Faulty Foundations: Mystery-Shopper
Testing in Home Appraisals Exposes Racial Bias
Undermining Black Wealth,’’ (Oct. 2022), available
at https://ncrc.org/faulty-foundations-mysteryshopper-testing-in-home-appraisals-exposes-racialbias-undermining-black-wealth/.
61 See FHFA, Request for Information on
Appraisal-Related Policies, Practices, and Processes
(Dec. 28, 2020), p. 4, available at https://
www.fhfa.gov/Media/PublicAffairs/PublicAffairs
Documents/RFI-Appraisal-Related-Policies.pdf.
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oversight of potential unfair or
deceptive acts or practices by the
regulated entities and would require the
regulated entities to file certifications of
compliance with fair lending and fair
housing laws with regular and special
reports. It would additionally establish
more precise standards related to fair
housing and fair lending and principles
of equitable housing for regulated entity
boards of directors.
B. Enterprise Equitable Housing Finance
Plans
The proposed rule would codify
FHFA’s current requirements for the
Enterprises’ Equitable Housing Finance
Plans. The proposed plan requirements
would be substantially the same as
FHFA’s current requirements for the
Enterprises’ plans, but would establish
additional public disclosure and
reporting requirements and expanded
program requirements. Codifying the
Enterprises’ plan requirements with
additions in a regulation would make
the Enterprises’ obligations more
explicit and transparent to the public
and would also establish greater
accountability mechanisms through
FHFA’s statutory enforcement and
compliance authorities.
The proposed rule has some similar
elements to the HUD’s affirmatively
furthering fair housing rules and
requirements.62 HUD’s framework
provides helpful guidance and
information on an equity planning
process that affirmatively furthers fair
housing. HUD’s framework has
informed FHFA in its development of
the proposed rule, but FHFA has also
taken into account the unique features
of the Enterprises, its experience in
overseeing the program to date, and the
views of stakeholders as part of FHFA’s
requests for input and listening sessions
to develop the proposed rule.
C. Enterprise Data Collection and
Reporting to FHFA
The proposed rule would require the
Enterprises to collect, maintain, and
report data on language preference,
homeownership education, and housing
counseling for applicants and
borrowers. The Enterprises collect this
data through their automated
underwriting systems and loan delivery.
The Enterprises also provide a standard
form for collection of the data—the
Supplemental Consumer Information
Form. The proposed rule would codify
the FHFA policy announced in May
2022 for mandatory use of the
Supplemental Consumer Information
62 See,
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Form.63 Consistent with current policy,
the proposed rule would not require
applicants and borrowers to respond to
a language preference question, and
applicants and borrowers may be
provided with the option to not respond
to a question about language preference
as part of the information collection to
satisfy the proposed rule.
D. Application of FHFA’s Prudential
Standard Framework
Section 4513b of the Safety and
Soundness Act (12 U.S.C. 4513b(b))
requires FHFA to establish prudential
management and operations standards
for its regulated entities, authorizes
FHFA to establish such standards by
regulation or guideline, and establishes
a corrective action framework if a
regulated entity fails to meet a
prudential standard.64 To implement
section 4513b, FHFA has adopted a
Prudential Management and Operations
Standards (PMOS) regulation, at 12 CFR
part 1236, and an Appendix to that
regulation. The PMOS regulation is
primarily procedural; for example, it
addresses FHFA determinations that a
regulated entity has failed to meet a
standard; provides that FHFA may base
that determination on an examination,
inspection, or any other information;
and addresses the contents and filing
deadlines for corrective plans.65 The
PMOS regulation also codifies FHFA’s
authority to require a regulated entity to
submit a PMOS corrective plan in
conjunction with other required
submissions.66 If a regulated entity fails
to submit a corrective plan or fails to
implement an approved corrective plan,
the PMOS regulation addresses FHFA’s
statutory authority to order the
regulated entity to correct the deficiency
or to undertake additional corrective or
remedial measures as FHFA may
require.
The Appendix sets forth substantive
prudential management and operational
standards (Standards) that FHFA has
established as guidelines, including a
statement on General Responsibilities of
the Board and Management and ten
numbered Standards. These Standards
contain many elements that are relevant
to components of the proposed rule,
such as responsibilities for boards and
senior management with respect to
appropriate business strategies and
policies; standards for internal controls
and information systems; maintenance
of records; alignment of the overall risk
63 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Mandatory-Use-of-theSupplemental-Consumer-Information-Form.aspx.
64 12 U.S.C. 4513b(b)(2)(B).
65 12 CFR 1236.4(a).
66 12 CFR 1236.4(c)(2)(ii).
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profile with mission objectives; internal
audit; compliance with laws,
regulations, and supervisory guidance;
and others. Therefore, compliance with
the proposed rule, if finalized, would be
subject to applicable Standards and
could be addressed through the PMOS
corrective framework.
Separately, the proposed rule would
establish Subpart C, Enterprise
Equitable Housing Finance Planning,
except for § 1293.26, as a prudential
standard within the meaning of section
4513b. FHFA has determined that it is
legally appropriate and would be sound
policy to identify that subpart as a
prudential standard. The Enterprise
equitable housing finance planning
framework, as discussed above, is
consistent with the Enterprises’
authorizing statute obligations and
FHFA’s statutory charges related to
ensuring regulated entities operate
consistent with the public interest and
that FHFA furthers fair housing in its
oversight of the regulated entities. In
addition to the more general application
of the PMOS framework through the
Standards discussed above, this
designation of the equitable housing
finance planning framework as a
Standard by regulation would provide
FHFA access to section 4513b corrective
measures, if necessary, to address
deficiencies in equitable housing
finance planning or implementation by
an Enterprise. Section 1293.26 is
proposed to be excluded from the
designation because that section
articulates a broader concept related to
ensuring Enterprise boards
appropriately consider the equitable
housing finance plan alongside other
longstanding mission responsibilities in
their oversight of an Enterprise and not
the required elements and process for an
Equitable Housing Finance Plan.
Section 4513b makes clear that
corrective actions pursuant to the PMOS
framework are in addition to any
enforcement action FHFA would be
authorized to take, if FHFA determined
that an Enterprise has violated any
regulation.67 Thus the PMOS framework
does not limit FHFA’s authorities and
FHFA will determine the appropriate
supervisory response based on the facts
and circumstances of any failure or
violation.
E. Policy Purposes for and Benefits of
the Proposed Rule
All communities in the United States
deserve access to sustainable housing
opportunities and well-functioning
housing markets. As acknowledged
through the Duty to Serve requirements,
67 12
U.S.C. 4513b(c).
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housing goals framework, and the
Agency and the regulated entities’
public purposes, enumerated protected
classes under fair housing and fair
lending laws are not the only
underserved communities in the United
States. The proposed rule’s
incorporation of broad protections for
consumers under prohibitions against
unfair or deceptive acts or practices, and
defining underserved communities
broadly for the purposes of Equitable
Housing Finance Plans, will help ensure
the Agency and the regulated entities
focus on underserved communities
throughout the United States, consistent
with the Enterprises’ Charter Acts, the
Agency’s public interest duty, and the
purposes of the Fair Housing Act. The
proposed rule will add to the Agency’s
existing set of programs and tools to
accomplish these goals.
By codifying many of FHFA’s existing
requirements and policies regarding fair
lending oversight, Enterprise Equitable
Housing Finance Plans, and language
preference and homeownership
education and housing counseling data
collection, as well as expanding certain
requirements, the proposed rule serves
a number of policy purposes and would
provide a number of policy benefits.
Consistent oversight of fair housing
and fair lending, along with public
participation and accountability, have
been key issues that impact the fair
housing and fair lending compliance by
financial institutions and housing
market actors. Codifying the
requirements and policies through
rulemaking will provide greater public
transparency and input regarding the
existing programs, as well as greater
assurance of the Agency’s commitment.
Codifying existing fair housing and fair
lending requirements and enhancing
them will provide greater oversight and
accountability regarding the regulated
entities’ fair housing and fair lending
compliance and therefore benefit the
public who are ultimately protected by
fair housing and fair lending laws.
Strategic planning for improvements
in fair housing has been a key
component of fulfilling commitments to
affirmatively further fair housing and is
an important way in which progress
toward providing for fair housing
throughout the United States can be
made. Codifying Equitable Housing
Finance Plans in regulation and
providing additional standards through
rulemaking will ensure that fair housing
issues can be addressed proactively in
addition to reactively through
supervision and examinations.
Establishing enhanced standards and
transparency for fair housing and fair
lending generally, and for the Equitable
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25299
Housing Finance Plans, may also have
the benefit of providing greater market
assurance with respect to the regulated
entities’ compliance with applicable
laws, thereby supporting liquidity in the
secondary mortgage market and support
for underserved communities.
IV. Section-by-Section Analysis
A. Section 1293.1
General
Subpart A of the proposed rule would
provide general information, rules,
definitions, and compliance and
enforcement provisions that apply to all
of proposed part 1293. Proposed
§ 1293.1(a) would provide general
information and rules, including fair
lending oversight of the regulated
entities, equitable housing finance
planning by the Enterprises, and data
collection and reporting by the
regulated entities (currently only
including requirements for the
Enterprises). Proposed § 1293.1(b)
would provide that nothing in proposed
part 1293 permits or requires a regulated
entity to engage in any activity that
would otherwise be inconsistent with
the Safety and Soundness Act, the
authorizing statutes, or other applicable
law. FHFA believes it is important to
reiterate in the proposed rule that
activities must be in keeping with safety
and soundness. Without safety and
soundness underlying the regulated
entities’ activities, they cannot truly
promote fair housing, fair lending, and
principles of housing equity. As
discussed later, FHFA is also adding the
prohibition on unfair or deceptive acts
or practices to the laws it oversees with
respect to the regulated entities. FHFA
believes that underscoring the
importance of safety and soundness and
avoiding unfair or deceptive acts or
practices complements and enhances
the pursuit of solutions that further fair
housing, fair lending, and principles of
housing equity and makes clear that
predatory products or activities would
not be in furtherance of the proposed
rule. Proposed § 1293.1(c) would
provide that nothing in proposed part
1293 creates a private right of action.
B. Section 1293.2
Definitions
Proposed § 1293.2 would provide
definitions that apply to proposed part
1293.
The proposed definition of ‘‘Equitable
Housing Finance Plan’’ (plan) is a key
component of subpart C of the proposed
rule. It is a three-year public plan
developed with public engagement and
adopted by each Enterprise describing
how each Enterprise will overcome
barriers to sustainable housing
opportunities faced by one or more
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underserved communities through
objectives, meaningful actions, and
measurable goals. The plan is a key
element of the proposed rule, and its
requirements are more fully described
in proposed §§ 1293.22 and 1293.25.
The proposed definition of ‘‘annual plan
update’’ (update) is a public update to
a plan for the second or third year of a
planning cycle. The proposed definition
of ‘‘performance report’’ (report) is an
annual public report by an Enterprise on
its performance under a plan and other
information on equitable housing and
fair lending that meets the requirements
of proposed § 1293.23 and any other
FHFA requirements.
The proposed definition of ‘‘barrier’’
is an important element of a plan. As
part of a plan, an Enterprise would be
required to identify barriers faced by an
underserved community. The proposed
definition includes Enterprise actions,
products, or policies as well as aspects
of the housing market that can
reasonably be influenced by an
Enterprise’s actions, products, or
policies that contribute to an
underserved community’s limited share
of sustainable housing opportunities,
difficulties in accessing those
sustainable housing opportunities, or
the continuing adverse effects of
discrimination affecting their
participation in the housing market. The
proposed definition focuses on an
Enterprise’s own actions, products, or
policies because these are what an
Enterprise can most easily change.
Including aspects of the housing market
that can reasonably be influenced by an
Enterprise’s actions, in addition to an
Enterprise’s own actions, products, or
policies, encourages actions that serve
the public interest, promote access to
mortgage credit throughout the nation,
and further fair housing.
The proposed definition of ‘‘fair
housing and fair lending laws’’ provides
an enumeration of Federal fair housing
and fair lending laws to which the
regulated entities are subject and FHFA
oversees pursuant to the fair lending
oversight described in the proposed
rule. The ‘‘fair housing and fair lending
laws’’ are the Fair Housing Act, the
Equal Credit Opportunity Act, and
implementing regulations. Additionally,
with respect to an Enterprise, the ‘‘fair
housing and fair lending laws’’ include
12 U.S.C. 4545 and implementing
regulations.
The proposed definition of
‘‘sustainable housing opportunity’’
relates to the scope and type of the
benefits that the plans should seek to
achieve for underserved communities
through meaningful actions. The
proposed definition includes both rental
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and homeownership opportunities that
include one or more characteristics
important to the needs of a tenant or
homeowner within its scope and
includes several illustrative
characteristics of the concept, including
affordability, habitability, resilience to
climate impacts, quality, locational
benefits, accessibility, long-term
sustainability, and accommodations for
short-term hardships. These are
important features of housing
opportunities that should help focus the
Enterprises’ plans. Further standards
related to the proposed definition are
provided in proposed § 1293.25.
The proposed definition of
‘‘underserved community’’ is an
important element of a plan. An
Enterprise chooses one or more
underserved communities on which to
focus for a planning cycle.
‘‘Underserved community’’ would be
defined as a group of people with
shared characteristics or an area that is
subject to current discrimination or has
been subjected to past discrimination
that has or has had continuing adverse
effects on the group or area’s
participation in the housing market,
historically has received or currently
receives a lower share of the benefits of
Enterprise programs and activities
providing sustainable housing
opportunities, or that otherwise has had
difficulty accessing these benefits
compared with groups of people
without the shared characteristic or
other areas. The proposed definition
includes characteristics protected by fair
lending laws applicable to the
Enterprises, but the definition is not
limited to such characteristics. The
definition provides illustrative
examples, if supported by adequate
information under the requirements of
proposed § 1293.25. The proposed
definition makes clear that a variety of
groups or areas could be chosen by an
Enterprise. The inclusion or exclusion
of any particular group from the
illustrative examples is not an
indication of FHFA’s views about
whether or not that group constitutes an
underserved community or whether it
should be the focus of a plan.
C. Section 1293.3 Compliance and
Enforcement
Proposed § 1293.3 reiterates general
FHFA authority related to compliance
and enforcement for proposed part
1293, inclusive of all aspects of the
proposed rule. FHFA has broad
authority for compliance and
enforcement. This section notes FHFA’s
ability to conduct examinations related
to proposed part 1293, including fair
lending compliance, equitable housing
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finance, and other matters. It also notes
FHFA’s ability to issue adverse
examination findings and take various
forms of enforcement actions and issue
civil money penalties under 12 U.S.C.
4511(b), 4513b, 4631, and 4636. This
section is similar to other sections of
FHFA regulations related to oversight of
specific programmatic areas 68 and the
FHFA fair lending policy statement.69
Some examples of how FHFA’s
compliance and enforcement authority
could be used with respect to fair
lending oversight, equitable housing
finance, or data collection or reporting
include, but are not limited to:
• If FHFA found that a regulated
entity had insufficient compliance
management around fair lending laws or
the proposed rule, FHFA could issue
adverse examination findings and factor
the insufficient compliance
management into supervisory ratings;
• If FHFA found that a regulated
entity had violated the Fair Housing
Act, FHFA could issue adverse
examination findings, factor the noncompliance into supervisory ratings,
and enter into a consent order with the
regulated entity requiring corrective
action, additional remedies, and civil
money penalties;
• If an Equitable Housing Finance
Plan, annual update, performance
report, or an Enterprise’s actions taken
under the program did not meet the
requirements of this proposed rule,
FHFA could issue an adverse
examination finding, factor noncompliance into supervisory ratings,
and issue a prudential management
operating standard notice requiring the
entity to submit a corrective plan; and
• If FHFA found that a regulated
entity had not complied with required
data collection or reporting, FHFA
could issue an adverse examination
finding, factor non-compliance into
supervisory ratings, and enter into a
written agreement with the regulated
entity.
Neither this section of the proposed
rule or the examples given above are
intended to limit FHFA’s authority in
any way. This section merely restates
some of the most applicable FHFA
authority.
D. Section 1293.4 Preservation of
Authority
Proposed § 1293.4 would provide that
nothing in the proposed rule would in
any way limit the authority of the
agency under other provisions of
applicable law and regulations.
68 See,
e.g., 12 CFR 1223.24.
FHFA, ‘‘Policy Statement on Fair Lending,’’
(Jul. 9, 2021), available at https://www.govinfo.gov/
content/pkg/FR-2021-07-09/pdf/2021-14438.pdf.
69 See
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E. Section 1293.11 Regulated Entity
Compliance
Subpart B of the proposed rule
applies to all regulated entities and
provides standards related to
compliance, responsibilities of boards of
directors, reports, data, and
certification. Proposed § 1293.11
addresses regulated entity compliance
with fair housing and fair lending laws.
Proposed § 1293.11(a) states that
regulated entities must comply with the
Fair Housing Act, the Equal Credit
Opportunity Act, and 12 U.S.C. 4545 for
the Enterprises. Proposed § 1293.11(b)
would provide that the regulated
entities must comply with 15 U.S.C. 45
(Section 5 of the Federal Trade
Commission Act), which prohibits
unfair or deceptive acts or practices.
The prohibition against unfair or
deceptive acts or practices is an
important protection under Federal law
for consumers and other market actors
against predatory and deceptive
actions,70 and FHFA has determined it
would be appropriate to oversee the
regulated entities for compliance with
this statute. Violations of these laws by
the regulated entities would, in
addition, violate § 1293.11(a) and (b) as
proposed.71 The Safety and Soundness
Act empowers FHFA to oversee its
regulated entities’ compliance with
‘‘other applicable law,’’ 12 U.S.C.
4511(b)(2), and to engage in
enforcement for noncompliance with
law.72 Other Federal financial regulators
examine and oversee their regulated
entities on these or similar bases as part
of consumer protection under similar
authority.73 While FHFA is including
unfair or deceptive acts or practices in
the proposed rule because they are
similar to fair lending laws in the intent
70 Kathleen C. Engel et al., A Tale of Three
Markets: The Law and Economics of Predatory
Lending, 80 Tex. L. Rev. 1255, 1260 (2002) (noting
that lending fraud or deceptive practices ‘‘come[ ]
in endless varieties’’). Ngai Pindell, The Fair
Housing Act at Forty: Predatory Lending and the
City As Plaintiff, J. Affordable Housing &
Community Dev. L., Winter 2009, at 173–75
(describing contemporary unfair and predatory
lending practices).
71 See, e.g., 12 U.S.C. 4636.
72 12 U.S.C. 4631. FHFA’s cease-and-desist
authority is similar to Section 8 of the Federal
Deposit Insurance Act under which the FDIC (for
example) enforces unfair and deceptive acts or
practices.
73 See, e.g., Federal Deposit Insurance
Corporation (FDIC) Guidance on Unfair or
Deceptive Acts or Practices, FIL–57–2002 (May 30,
2002), available at https://www.fdic.gov/news/
inactive-financial-institution-letters/2002/
fil0257.html. See also HUD’s Mortgagee Letter
2014–10 (ML 2014–10), available at https://
www.hud.gov/sites/documents/14-10ML.PDF (HUD
letter ‘‘remind[ing] mortgagees of the Federal
Housing Administration’s (FHA) requirements
prohibiting misleading or deceptive advertising’’).
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to ensure fair treatment, FHFA
understands unfair or deceptive acts or
practices to encompass a broad scope of
activities harmful to individuals that go
beyond illegal discrimination.
Proposed § 1293.11(c) would establish
more precise standards related to fair
housing and fair lending and the
prohibition on unfair or deceptive acts
or practices for regulated entity boards
of directors in carrying out their existing
responsibility under FHFA’s Corporate
Governance regulation (12 CFR part
1239) to direct the operations of the
regulated entities in conformity with
FHFA regulations. FHFA’s Corporate
Governance regulation provides that the
ultimate responsibility for a regulated
entity’s oversight rests with the board of
directors, and that directors have a duty
to direct the operations of a regulated
entity in conformance with the
authorizing statutes, the Safety and
Soundness Act, and FHFA
regulations.74 Board and management
oversight of fair housing and fair
lending compliance has long been
recognized as a critical component of a
well-functioning compliance
management system. Federal financial
regulators regularly examine their
regulated entities for sufficient fair
lending compliance management, and
rate regulated entities based in part on
Board and Management Oversight.75
Consent orders for fair housing and fair
lending violations frequently include
specific requirements for enhanced
Board and Management Oversight.76
The standard articulated in the
proposed rule is intended to provide
more clarity and guidance to directors
in how to incorporate the proposed rule
into the pre-existing duty under the
Corporate Governance regulation to
direct operations in conformity with
FHFA regulations. The proposed rule’s
language on ‘‘appropriately
considering’’ compliance with fair
housing and fair lending laws and the
prohibition on unfair or deceptive acts
or practices are intended to be flexible
74 12
CFR 1239.4.
e.g., Federal Financial Institutions
Examination Council, Uniform Interagency
Consumer Compliance Rating System, 81 FR 79473
(Nov. 14, 2016) (outlining expectations for Board
and Management Oversight in consumer
compliance management, including fair lending);
Federal Financial Institutions Examination Council,
Interagency Fair Lending Examination Procedures,
available at https://www.fdic.gov/regulations/
examinations/fairlend.pdf (detailing examiners’
engagement with management and review of
management oversight).
76 See, e.g., United States v. Cadence Bank
Consent Order, available at https://www.justice.gov/
crt/case-document/file/1429051/download#:∼:
text=%C2%A7%C2%A7%201691%2D1691f.&text=
1.,%2C%20color%2C%20and%20national
%20origin.
75 See,
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25301
and tailored to the particular
consideration at hand, while reinforcing
the broad application of fair housing
and fair lending laws and the
prohibition on unfair or deceptive acts
or practices on a regulated entity’s
operations and the board’s ultimate
responsibility for the regulated entity’s
oversight.
F. Section 1293.12 Reports and Data
Proposed § 1293.12 would provide
that FHFA may require the regulated
entities to provide to FHFA regular and
special reports, including the provision
of data, concerning fair lending and fair
housing. FHFA has issued fair lending
reporting orders to Fannie Mae and
Freddie Mac requiring regular reports.77
FHFA has not issued fair lending
reporting orders to the Banks, and FHFA
is not proposing to require specific
reports of the Banks through this
proposed rule. FHFA would plan to
issue such reporting orders at an
appropriate time, if deemed necessary.
Proposed § 1293.12 also provides that
each regular report related to fair
housing and fair lending shall include a
certification of the regulated entity’s
compliance with fair housing and fair
lending laws and the prohibition on
unfair or deceptive acts or practices in
addition to any other required
certification or declaration (such as a
declaration under 12 U.S.C. 4514(a)(4)).
Under FHFA’s regular and special
report authority under 12 U.S.C.
4514(a)(4), each report must contain a
declaration from an officer that the
report is true and correct to the best of
such officer’s knowledge and belief.
This section would add an additional
requirement for a certification that the
regulated entity complies with fair
housing and fair lending laws and the
prohibition on unfair or deceptive acts
or practices for reports related to fair
housing and fair lending. This
certification requirement would provide
additional incentive to the boards and
management of the regulated entities to
ensure compliance with fair housing
and fair lending laws in their
operations. Both Enterprises require
their seller/servicers to attest to
compliance with fair housing and fair
lending laws.78 Certifications related to
77 See FHFA’s Fair Lending Orders, available at
https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Pages/Fair-Lending-OversightProgram.aspx#:∼:
text=Fair%20Lending%20Reporting%20Orders&
text=The%20orders%20require%20
the%20Enterprises,lending%20supervision%20
and%20monitoring%20capabilities.
78 See Fannie Mae Selling Guide, Compliance
with Laws available at https://sellingguide.fanniemae.com/Selling-Guide/Doing-
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compliance are commonly used by other
Federal agencies, including with respect
to Federal housing grants, such as
Community Development Block Grants,
and consent decrees and settlement
agreements by the Department of Justice
and HUD in housing and lending
discrimination cases.
FHFA is not proposing to include the
specific certification language in the
rule, instead merely the general
requirement. FHFA believes this would
allow flexibility for FHFA to make
changes to the specific certification
language when necessary. However,
FHFA seeks comment on the following
certification language: ‘‘[Regulated
entity] complies and has complied in all
material respects with, and maintains
policies, procedures, and internal
controls to assure compliance with fair
housing and fair lending laws and the
prohibition on unfair or deceptive acts
or practices.’’ If a regulated entity did
not believe it could certify to that or
similar language for a particular period,
such as because FHFA had identified
fair lending non-compliance in a
supervisory examination that the
regulated entity was still remediating,
and the regulated entity would not be
able to complete remediation by the
time of certification, it could notify
FHFA in advance to discuss additional
stipulations to the language.
G. Section 1293.21
General
Proposed § 1293.21 provides general
information that Subpart C of the
proposed rule, entitled Enterprise
Equitable Housing Finance Planning,
sets forth the Enterprises’ duty to engage
in equitable housing finance planning
and establishes standards and
procedures related to public engagement
and FHFA’s oversight of the Enterprises’
planning and actions. It provides for
general timing requirements when a
date falls on a non-business day. It also
provides that submission requirements
and publication dates provided in the
proposed rule may be altered or waived
by the Director by publication of a
public order. As discussed above, it also
designates Subpart C, except for
§ 1293.26, as a prudential standard.
ddrumheller on DSK120RN23PROD with PROPOSALS1
H. Section 1293.22
Plans and Updates
Proposed § 1293.22 provides rules
related to plans and updates.
Business-with-Fannie-Mae/Subpart-A3-GettingStarted-with-Fannie-Mae/Chapter-A3-2Compliance-with-Requirements-and-Laws/
1645975681/A3-2-01-Compliance-With-Laws-07-062022.htm and Freddie Mac Seller/Service Guide,
Compliance with Applicable Law available at
https://guide.freddiemac.com/app/guide/section/
1301.2/03-01-2023.
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Proposed § 1293.22(a) would establish
the general requirement for each
Enterprise to adopt a plan covering a
three-year period, with optional updates
in the second and third year of the plan
period.
Proposed § 1293.22(b) establishes
general content requirements for the
plan, including an identification of
barriers to sustainable housing
opportunities faced by one or more
underserved communities, objectives
that define the outcomes the plan seeks
to accomplish that address the
identified barriers, meaningful actions
that describe the high-impact activities
that the Enterprise will undertake to
accomplish or further the identified
objectives, which may span one or more
years (including extending beyond the
period covered by the plan); specific,
measurable, and time-bound goals for
those actions; and summaries of the
Enterprise’s public engagement in
developing the plan.
Proposed § 1293.22(c) would establish
a requirement for an Enterprise to
submit a plan to FHFA for review on or
before September 30 of the year prior to
the first year covered by the plan.
Proposed § 1293.22(d) would
establish general content requirements
for an update, including all changes the
Enterprise is making to its plan and a
summary of any additional public
engagement.
Proposed § 1293.22(e) would establish
a requirement for an Enterprise to
submit an update to FHFA for review on
or before February 15 of the year
covered by the update.
Proposed § 1293.22(f) would establish
standards for FHFA’s review of plans
and updates. It would provide that
FHFA may review each plan and update
prior to publication and may require
removal of any confidential or
proprietary information; require
removal of any content that is not
consistent with part 1293, the Safety
and Soundness Act, the authorizing
statutes, or other applicable law;
provide any feedback for consideration;
and exercise any other authority of
FHFA. Inclusion of confidential or
proprietary information in plans and
updates would be inappropriate and
reveal sensitive information that is not
required under the proposed rule.
Further, FHFA’s review may identify
proposals and plan content that are
contrary to the Enterprise’s authorizing
statutes, the Safety and Soundness Act,
or other applicable law. FHFA also
retains all other existing authority that
may be needed in particular
circumstances to address issues that
arise during the review of a plan or
update. Given that a plan may only
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contain limited information about a
proposed action, FHFA may identify
issues with the activity through other
processes, such as prior approval of new
products, or its supervision and
oversight of the Enterprises. FHFA’s
review of the plan would not preclude
using these processes and FHFA’s full
authorities if it were to later identify
issues with the action, and the public
engagement opportunities throughout
the plan cycle would give FHFA
additional information from the public
for this purpose.
Proposed § 1293.22(g) would provide
that FHFA’s review does not constitute
a prior approval of a plan or update or
any action described therein and that all
actions included in a plan are subject to
all applicable FHFA and other
requirements and authorities. For
example, a meaningful action that met
the criteria for a new activity or new
product would be subject to the process
described in FHFA’s prior approval for
Enterprise products regulation.79 FHFA
believes that the process established by
the proposed rule would help support
the prior approval for Enterprise
products regulation by providing both
FHFA and the public information about
activities being considered by the
Enterprises that may later trigger the
requirements of the regulation.
Proposed § 1293.22(h) would provide
that plans and updates must include
disclaimer language indicating the
implementation of actions may be
subject to change based on certain
factors. The disclaimer language in the
current plans is: ‘‘DISCLAIMER:
Implementation of the activities and
objectives in [Enterprise]’s Equitable
Housing Finance Plan may be subject to
change based on factors including,
without limitation, FHFA review for
compliance with [Enterprise]’s statutory
charter, specific FHFA approval
requirements and safety and soundness
standards, FHFA guidance and
directives, regulatory requirements,
Senior Preferred Stock Purchase
Agreement obligations, and adverse
market or economic conditions, as
applicable.’’ FHFA seeks comment on
this disclaimer language and any
changes that should be made.
Proposed § 1293.22(i) would provide
that each Enterprise shall publish its
plan on January 15 of the first year
covered by the plan, and each annual
update on April 15 of the second and
third year covered by the plan. It would
also provide that the Enterprise
maintain the plan on its website
thereafter and that it ensures that the
79 12
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plans or updates are accessible to
persons with disabilities.
Proposed § 1293.22(j) would provide
that from time to time, FHFA may issue
public guidance on plans and updates.
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I. Section 1293.23
Reports
Performance
Proposed § 1293.23 would provide
rules related to annual performance
reports (reports). Proposed § 1293.23(a)
would establish the general requirement
for each Enterprise to publicly report on
its plan progress and provide other
information related to equitable housing
and fair lending annually for the prior
year in a report.
Proposed § 1293.23(b) would establish
requirements for the contents of the
report, including: a narrative assessment
about the program; performance details
for each objective, measurable goal, and
meaningful action; general outcomes
categorized by group; summary of
resources dedicated to the plan; and an
assessment of the Enterprise’s
underwriting that includes several
elements. The report section on
underwriting is similar in nature to the
authorizing statutes’ requirements for
assessing underwriting standards that
may yield disparate results based on the
race of the borrower, including revisions
thereto that may promote fair lending,
and reporting on this assessment under
the Annual Housing Activities Report.80
FHFA believes that the proposed rule
provides an opportunity to incorporate
this concept into a fair lending-focused
report and provide details based on it
into reporting under the Equitable
Housing Finance Plans.
Proposed § 1293.23(c) would establish
a requirement for an Enterprise to
submit a report to FHFA for review on
or before February 15 annually.
Proposed § 1293.23(d) would
establish standards for FHFA’s review of
reports. The standards would align with
the review standards for plans and
updates.
Proposed § 1293.23(e) would establish
a requirement for an Enterprise to
publish its report on April 15 annually.
It would also require that the report be
maintained on the Enterprise’s website
and that the Enterprise ensures that
reports are accessible to persons with
disabilities.
Proposed § 1293.23(f) would establish
that FHFA may issue public guidance
80 See, e.g., 12 U.S.C. 1723a(n)(2)(G) (‘‘assess
underwriting standards, business practices,
repurchase requirements, pricing, fees, and
procedures, that affect the purchase of mortgages for
low- and moderate-income families, or that may
yield disparate results based on the race of the
borrower, including revisions thereto to promote
affordable housing or fair lending;’’).
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on reports and also notes that FHFA
may require additional information in
reports through other authorities, such
as its authority to require regular reports
under 12 U.S.C. 4514. FHFA believes
that this authority may be helpful in
establishing reporting requirements in
an expedited fashion for specific plans
given the differing nature of
underserved communities and activities
that may be included in plans and the
ongoing public engagement that is a part
of the process established by the
proposed rule.
J. Section 1293.24 Public Engagement
Proposed § 1293.24 establishes
requirements related to public
engagement. Proposed § 1293.24(a)
provides that on or before June 15
annually, FHFA will conduct public
engagement to gather public input for
the Enterprises and for FHFA to
consider. FHFA’s 2021 request for input
and listening session on the initial
Equitable Housing Finance Plan
program provided valuable input and
the proposed rule would therefore
codify these or similar types of public
engagement as a requirement for future
plans.81
Proposed § 1293.24(b) of the proposed
rule would provide that the Enterprises
are required to consult with
stakeholders, including members of
underserved communities and housing
market participants, in development of
a plan and update and describe such
consultation in the plan.
K. Section 1293.25 Program Standards
Proposed § 1293.25 would establish
program standards for various elements
of the Equitable Housing Finance Plan
process. These requirements are
intended to provide a foundational logic
model and theory of change for a
particular plan.82
Proposed § 1293.25(a) would establish
requirements for selecting one or more
underserved communities to be the
focus of a plan. It would establish a
requirement that an Enterprise’s choice
of an underserved community be
supported by information and
81 See FHFA, Enterprise Equitable Housing
Finance Plans Request for Input, (Sept. 2021),
available at https://www.fhfa.gov/Media/
PublicAffairs/PublicAffairsDocuments/EquitableHousing-Finance-Plans-RFI.pdf; FHFA Public
Listening Session: Enterprise Equitable Housing
Finance Plans RFI, (Sept. 28, 2021), available at
https://www.fhfa.gov/Videos/Pages/EnterpriseEquitable-Housing-Finance-Plans-RFI.aspx.
82 See, e.g., Leiha Edmonds, Urban Institute,
‘‘Center Racial Equity in Measurement and
Evaluation: Emerging Lessons and Guidance from
Human Service Nonprofits,’’ (July 2021), available
at https://www.urban.org/sites/default/files/
publication/104487/centering-racial-equity-inmeasurement-and-evaluation_0.pdf.
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25303
documented in the plan. It would also
provide several factors that an
Enterprise must consider in selecting an
underserved community, but would also
allow for the consideration of other
factors.
Proposed § 1293.25(b) would establish
requirements for objectives. It would
require objectives to be logically tied to
one or more identified barriers and
facilitate establishing meaningful
actions and measurable goals.
Objectives establish the overall
direction and focus for the plan by
defining the outcomes the plan seeks to
accomplish. Given that the definition of
an underserved community can include
both a group of people with a shared
characteristic or an area, in some cases
objectives could seek to provide placebased solutions to address the needs of
a specific area or may seek to provide
people the opportunity to obtain
sustainable housing opportunities more
broadly. The U.S. Supreme Court has
made clear that both strategies may be
appropriate and comply with the Fair
Housing Act depending on the
circumstances.83 FHFA expects that an
Enterprise would choose appropriate
strategies in developing its objectives
after considering the needs of an
underserved community and feedback
from public engagement.
Examples of objectives, if developed
to meet the requirements of the
proposed rule, could include:
• Developing and providing
secondary market support for special
purpose credit programs that promote
sustainable housing opportunities for an
underserved community;
• Increasing sustainable housing
opportunities for individuals in the
mortgage market, such as by expanding
the number of qualified borrowers of an
underserved community, or making
changes to underwriting standards,
business practices, repurchase
requirements, pricing, fees, and
procedures to promote fair lending or
provide greater access to sustainable
housing opportunities;
• Increasing sustainable housing
opportunities for renters of an
underserved community living in or
seeking to live in multifamily properties
financed by the Enterprise’s loan
purchases, such as by prohibiting source
of income discrimination (including
rental subsidies and vouchers),
providing other tenant protections, or
requiring reporting of on-time
payments;
83 See Tex. Dep’t of Hous. & Cmty. Affairs v.
Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507, 2512
(2015).
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• Reducing the homeownership gap
for an underserved community with a
significant homeownership rate
disparity;
• Reducing disparities in acceptance
rates for an underserved community
with a significant disparity in the
Enterprise’s automated underwriting
system;
• Reducing disparities in the share of
loans acquired by the Enterprise that
serve an underserved community with a
significant disparity in the share of
loans acquired by the Enterprise
compared to the share of loans
originated to members of that
underserved community in the overall
mortgage market;
• Reducing disparities in negative
outcomes for an underserved
community in servicing, loan
modifications, and loss mitigation;
• Reducing disparities in negative
outcomes for an underserved
community in tenant screening,
repayment options, and evictions;
• Increasing the supply of, and
equitable access to, high-quality
affordable rental housing for an
underserved community;
• Reducing underinvestment and
undervaluation in formerly redlined
areas or areas that are otherwise
underserved or undervalued;
• Increasing the supply of, and
equitable access to, high-quality
affordable and accessible housing for
persons with disabilities and that is
available in the most integrated setting
appropriate to the needs of an
individual with a disability;
• Increasing the supply of, and
equitable access to, high-quality
affordable housing for families with
children in areas with access to highquality educational, transportation,
economic, and other important
opportunities;
• Increasing sustainable housing
opportunities for veterans;
• Promoting or requiring
improvements in: fair lending standards
and compliance, marketing and
outreach to members of an underserved
community who are less likely to apply
for certain housing opportunities, the
estimation of race and ethnicity for
mortgage applicants or housing market
participants where race and ethnicity
data has not been self-reported, and fair
lending self-testing by primary lenders
or other market participants that do
business with the Enterprises;
• Conducting, and making available
publicly, research on advancing equity
and sustainable housing opportunities
for an underserved community;
• Conducting ethnographic or
consumer research on how to effectively
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serve an underserved community and
disseminating it to market participants
to improve quality of communications
and increase community trust;
• Releasing data publicly on how an
Enterprise or the market is performing
in serving an underserved community,
the effects of an Enterprise’s policies on
an underserved community, and how an
Enterprise’s actions may improve
performance or address such effects;
and
• Providing support to HUD program
participants in affirmatively furthering
fair housing.
The inclusion or exclusion of any
particular objective from the illustrative
list is not an indication of FHFA’s views
about whether or not that objective
should or should not be undertaken as
part of a plan. The list is intended to
illustrate the flexibility of the proposed
rule.
Proposed § 1293.25(c) would establish
requirements for meaningful actions. It
would require that meaningful actions
be logically tied to one or more
measurable goals and one or more
objectives for an identified underserved
community and that they support
sustainable housing opportunities. It
would also require that meaningful
actions reflect significant additional
action above and beyond actions that
also serve other Enterprise objectives
and goals and reflect more than de
minimis action. It would also require
that meaningful actions reflect a
commitment commensurate with an
Enterprise’s prominence in the housing
market, its available resources, its
dedication of resources to other
important efforts, the needs of
underserved communities, market
conditions, and safety and soundness. It
would also require that meaningful
actions comply with the Safety and
Soundness Act, the authorizing statutes,
and other applicable law. Finally, it
would require that meaningful actions
not be actions that are required to
remediate supervisory findings or
required as a result of enforcement
actions.
Proposed § 1293.25(d) would
establish requirements for measurable
goals. It would require measurable goals
to be logically tied to one or more
meaningful actions in a plan, be
specific, be time-bound, be focused on
outcomes, and facilitate measuring
Enterprise progress, comparing
Enterprise performance, and ensuring
public accountability.
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L. Section 1293.26 Enterprise Board
Equitable Housing and Mission
Responsibilities
Proposed § 1293.26 would provide
equitable housing and other missionrelated responsibilities for Enterprise
boards. As discussed above, board
oversight is an important element of
successful corporate governance, and
FHFA’s Corporate Governance
regulation establishes a requirement for
directors to direct the operations of
regulated entities in conformity with
FHFA regulations. The proposal would
provide that Enterprise boards
appropriately consider the objectives,
actions, and goals of the Enterprise’s
Equitable Housing Finance Plan, while
also appropriately considering its
affordable housing goals and Duty to
Serve plans and targets, and its other
mission-related obligations, in the
board’s oversight of the Enterprise and
the Enterprise’s business activities. The
proposed rule’s language on
‘‘appropriately considering’’ the
equitable housing and other mission
responsibilities is intended to be
flexible and tailored to the particular
consideration at hand, while reinforcing
that the plan should work in concert
with the Enterprise’s other mission
activities and operations as a whole.
This proposed section helps clearly
articulate the ultimate responsibility of
the board for oversight of the Equitable
Housing Finance Plan, the Enterprise’s
affordable housing goals and Duty to
Serve plans and targets, and its other
mission-related obligations, and that
they should work in concert with the
Enterprise’s operations as a whole.84
M. Section 1293.31 Required
Enterprise Data Collection and
Reporting
Proposed § 1293.31 provides for
certain required Enterprise data
collection and reporting related to fair
housing and fair lending. It would
require the Enterprises to collect,
maintain, and report data on language
preference, homeownership education,
and housing counseling for applicants
and borrowers. The proposed rule
would be substantially the same as the
policy announced by FHFA in May
2022.85 The Enterprises currently
collect this data through the automated
underwriting systems and loan delivery
84 See, e.g., Leiha Edmonds et al., Urban Institute,
‘‘Centering Racial Equity in Measurement and
evaluation,’’ (July 2021), available at https://
www.urban.org/sites/default/files/publication/
104487/centering-racial-equity-in-measurementand-evaluation_0.pdf.
85 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Mandatory-Use-of-theSupplemental-Consumer-Information-Form.aspx.
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and have established data standards for
collection of the information. The
Enterprises have also issued a standard
form for collection of the data—the
Supplemental Consumer Information
Form.
FHFA issued a request for input in
2017 that addressed improving language
access in mortgage lending and
mortgage servicing.86 As part of that
request for input as well as through
ongoing engagement, stakeholders have
noted the value of collecting the
information and certain issues related to
its collection. Certain applicants or
borrowers may not wish to disclose the
information; consistent with current
practice by the Enterprises, the
proposed rule would not require a
response from applicants and borrowers
and they could be provided with the
option to not respond to a question
about language preference as part of the
information collection to satisfy the
proposed rule. Providing the applicant
or borrower the option to not respond is
consistent with the collection of data on
race and ethnicity in the mortgage
market.87 Certain stakeholders have also
raised concerns about collecting the
information in compliance with the
Equal Credit Opportunity Act and
Regulation B. The Consumer Financial
Protection Bureau has specified that
collection of language preference
information does not violate Regulation
B.88
Information about homeownership
education and housing counseling
provides valuable insight into these
programs. In July 2022, the Mortgage
Industry Standards Maintenance
Organization formed a new working
group related to housing counseling
data.89 FHFA’s National Survey of
86 See FHFA, ‘‘Improving Language Access in
Mortgage Lending and Servicing Request for Input,’’
(May 25, 2017), available at https://www.fhfa.gov/
Media/PublicAffairs/PublicAffairsDocuments/
Language_Access_RFI.pdf.
87 12 CFR part 1003, appendix B.
88 ‘‘On May 3, 2022, the Federal Housing Finance
Agency announced that lenders will be required to
use the Supplemental Consumer Information Form,
which asks about consumers’ language preference,
as part of the application process for loans that will
be sold to the Enterprises. Consistent with the
Consumer Financial Protection Bureau’s Nov. 2017
approval, creditors do not violate the ECOA or
Regulation B when they collect the language
preference of an applicant or borrower.’’ Consumer
Financial Protection Bureau, ‘‘Resources to help
industry understand, implement, and comply with
the fair lending requirements of the Equal Credit
Opportunity Act (ECOA) and Regulation B,’’
available at https://www.consumerfinance.gov/
compliance/compliance-resources/otherapplicable-requirements/equal-credit-opportunityact/.
89 See https://www.mismo.org/about-MISMO/
news/2022/07/25/mismo-issues-call-forparticipants-for-new-housing-counselingworkgroup.
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Mortgage Originations (NSMO) includes
questions related to homeownership
education and housing counseling.90
Researchers have used the NSMO data
to explore homeownership education
and housing counseling’s effects on
borrowers.91 Prior research has also
explored the effects of homeownership
education and housing counseling on
borrowers.92 Consistent collection of
homeownership education and housing
counseling data can facilitate research
and market changes to further make use
of homeownership education and
housing counseling to assist borrowers.
FHFA believes that the information
collected on language preference,
homeownership education, and housing
counseling for applicants and borrowers
can support efforts to promote
sustainable housing opportunities for
underserved communities and could
underlie elements of future Equitable
Housing Finance Plans.
N. Proposed Rule Timing Elements
Considering the timing aspects of the
proposed rule together, in the year prior
to new plans, FHFA would conduct
public engagement on or before June 15
(e.g., FHFA would conduct public
engagement on or before June 15, 2024,
to inform planning and oversight related
to the 2025–2027 plans). An Enterprise
would submit the plan to FHFA for
review by September 30 in the year
prior to the three-year period covered by
the plan; the Enterprise would then
publish the plan on its website on
January 15 of the first year covered by
the plan (e.g., a Freddie Mac plan
covering 2025–2027 would be submitted
to FHFA on September 30, 2024, and
published by Freddie Mac on January
15, 2025). FHFA would conduct public
engagement on or before June 15 in the
90 See FHFA, National Survey of Mortgage
Originations Technical Documentation (Dec. 13,
2022), available at https://www.fhfa.gov/DataTools/
Downloads/Documents/NSMO-Public-Use-Files/
NSMO-Technical-Documentation-20221213.pdf.
91 See Robert Argento et al., ‘‘First-Time
Homebuyer Counseling and the Mortgage Selection
Experience in the United States: Evidence from the
National Survey of Mortgage Originations,’’
CityScape, Vol. 21, Number 2, (Nov. 2019),
available at https://www.huduser.gov/portal/
periodicals/cityscpe/vol21num2/ch3.pdf.
92 See Wei Li et al., ‘‘NeighborWorks America’s
Homeownership Education and Counseling: Who
Receives It and Is it Effective?’’ Urban Institute
(Sept. 29, 2016), available at https://
www.urban.org/research/publication/
neighborworks-americas-homeownershipeducation-and-counseling-who-receives-it-and-iteffective; Jennifer Turnham ‘‘Pre-Purchase
Counseling Outcome Study,’’ (May 2012), available
at https://www.huduser.gov/publications/pdf/pre_
purchase_counseling.pdf; J. Michael Collins et al.,
‘‘Homeownership Education and Counseling: Do
We Know What Works?’’ available at https://
massinc.org/wp-content/uploads/2011/06/76378_
10554_Research_RIHA_Collins_Report.pdf.
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first year of the plan cycle (e.g., FHFA
would conduct public engagement on or
before June 16, 2025, because it is the
first business day after June 15).
Updates and reports would be
submitted to FHFA by February 15 of
the second year of the plan cycle and
published by an Enterprise on April 15
(e.g., a 2026 Freddie Mac update to a
2025–2027 plan would be submitted to
FHFA on February 16, 2026, because it
is the first business day after February
15, and published by Freddie Mac on
April 15, 2026). FHFA would conduct
public engagement on or before June 15
of the second year of the plan cycle (e.g.,
FHFA would conduct public
engagement on or before June 15, 2026).
Updates and reports would be
submitted to FHFA by February 15 of
the third year of the plan cycle and
published by an Enterprise on April 15
(e.g., a 2027 Freddie Mac update to a
2025–2027 plan would be submitted to
FHFA on February 16, 2027, because it
is the first business day after February
15, and published by Freddie Mac on
April 15, 2027). FHFA would conduct
public engagement on or before June 15
in the third year of the plan (e.g., FHFA
would conduct public engagement on or
before June 15, 2027).
Establishing expected dates by rule
for submission, public engagement, and
publication provides certainty and
transparency to the public and the
Enterprises, while permitting the
Director to change the dates by public
order if necessary in exigent
circumstances.
V. Considerations of Differences
Between the Banks and the Enterprises
Under the proposed rule, both the
Enterprises and the Banks would be
subject to proposed subpart A (§§ 1293.1
through 1293.3) and subpart B
(§§ 1293.11 through 1293.12), including
general provisions related to fair
housing and fair lending laws,
compliance, examinations, oversight,
and enforcement. Additionally, both the
Banks and Enterprises would be covered
by FHFA’s ability to require regular and
special reports and the requirement to
certify compliance in regular reports.
However, FHFA has not currently
issued any reporting orders requiring
regular or special fair housing and fair
lending reports from the Banks. The
Equitable Housing Finance Plan and
broader equitable housing finance
planning requirements described
specifically in subpart C (§§ 1293.21
through 1293.26) would apply only to
the Enterprises and would codify in
regulation and expand on the existing
equitable housing framework for the
Enterprises that FHFA established. As
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discussed above, as part of FHFA’s
comprehensive review of the Banks,
commenters have suggested
incorporating equitable housing
considerations for the Banks and this
idea is currently under consideration.
FHFA requests public comment on
whether FHFA should codify a similar
framework to subpart C for the Banks in
regulation and what elements of the
framework should be included,
modified, or excluded if FHFA were to
apply such a framework to the Banks
through regulation. FHFA also requests
comment on other ways to incorporate
principles of equitable housing for the
Banks that would meet the same
objective. Proposed subpart D
(§ 1293.31) could include data
collection and reporting requirements
that would apply to both the Enterprises
and the Banks, but currently as
proposed the requirements would apply
only to the Enterprises.
When promulgating regulations or
taking other actions that relate to the
Banks, section 1313(f) of the Safety and
Soundness Act, as amended by section
1201 of HERA, requires the Director to
consider the differences between the
Banks and the Enterprises with respect
to the Banks’ cooperative ownership
structure; mission of providing liquidity
to members; affordable housing and
community development mission;
capital structure; and joint and several
liability.93 In preparing the proposed
rule, the Director has considered the
differences between the Banks and the
Enterprises as they relate to the above
factors and has determined that none of
the statutory factors would be adversely
affected by the proposed rule. The
Director is requesting comments from
the public about whether differences
related to these factors should result in
a revision of the proposed rule as it
relates to the Banks.
VI. Comments Specifically Requested
As stated above, FHFA invites
comments on all aspects of the proposed
rule and will take all comments into
consideration before issuing a final rule.
In addition to comments specifically
requested within the description of the
proposed rule above, FHFA also
requests comment on the questions set
forth below. The most helpful
comments reference the specific
questions listed, explain the reason for
any changes, and include supporting
data.
General
1. The rule currently does not define
equity. FHFA seeks comments on
93 12
U.S.C. 4513(f).
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whether the rule should define equity.
If the rule should define equity, what
would be an appropriate definition?
Compliance and Enforcement
2. How can FHFA improve fair
lending compliance oversight of the
regulated entities?
3. Are there other applicable
consumer compliance and/or consumer
protection statutes and regulations that
FHFA should include in this section?
4. Are there any benefits or other
issues FHFA should be aware of in
considering adding unfair or deceptive
acts or practices to its compliance and
enforcement for regulated entities?
5. How should FHFA approach
assessing compliance with non-fair
lending consumer protection authorities
such as unfair or deceptive acts or
practices? Would additional guidance
be helpful to regulated entities as they
assess their overall compliance
management?
6. Are there alternatives FHFA should
consider to the language and approach
for fair lending compliance
certifications?
Equitable Housing Finance Plans and
Updates
7. Is the three-year timeline for the
plans adopted by the Enterprises
appropriate?
8. Should FHFA issue an evaluation
of the Enterprises? Should the rule
include required evaluation metrics for
the progress reports?
9. Should the rule include required or
optional priority goals? If so, who
should determine which priority goals
are applicable?
10. From year to year, what should be
the scope of updates to the Equitable
Housing Finance Plans?
11. Should the focus of an Equitable
Housing Finance Plan be limited to one
underserved community at a time?
12. Does the rule provide for
sufficient public engagement?
13. Developing or supporting special
purpose credit programs is one type of
meaningful action that an Enterprise
could take under an Equitable Housing
Finance Plan, but the rule would not
establish any special purpose credit
programs under 12 CFR 1002.8(a)(1) in
the regulation itself. Should FHFA
adopt any special purpose credit
programs under 12 CFR 1002.8(a)(1)
and, if so, what type of program(s)
should be adopted?
14. Are the minimum requirements
for performance reports sufficient or
should performance reports contain any
additional information not included in
the rule?
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Federal Home Loan Banks
15. Should the Banks be required to
comply with a framework similar to that
of the Equitable Housing Finance Plans
by regulation?
16. What elements of the framework
should be included, modified, or
excluded if FHFA were to apply such a
framework to the Banks by regulation?
17. Are there other ways to
incorporate principles of equitable
housing for the Banks that would meet
the same objective?
VII. Paperwork Reduction Act
The proposed rule would not contain
any information collection requirement
that would require the approval of the
Office of Management and Budget
(OMB) under the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.). Therefore,
FHFA has not submitted any
information to OMB for review.
VIII. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities, small
businesses, or small organizations must
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
Agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities. FHFA has considered the
impact of this proposed rule under the
Regulatory Flexibility Act. FHFA
certifies that this proposed rule, if
adopted as a final rule, will not have a
significant economic impact on a
substantial number of small entities
because the regulation would apply
only to the regulated entities, which are
not small entities for purposes of the
Regulatory Flexibility Act.
List of Subjects for 12 CFR Part 1293
Government-sponsored enterprises,
Fair housing, Federal home loan banks,
Mortgages, Reporting and recordkeeping
requirements.
Authority and Issuance
Accordingly, for the reasons stated in
the preamble, under the authority of 12
U.S.C. 4511, 4513, 4526, FHFA proposes
to add part 1293 to chapter XII in title
12 of the Code of Federal Regulations,
to read as follows:
■
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PART 1293—FAIR LENDING
OVERSIGHT AND EQUITABLE
HOUSING FINANCE
Subpart A—General
§ 1293.1 General.
§ 1293.2 Definitions.
§ 1293.3 Compliance and enforcement.
§ 1293.4 Preservation of authority.
§§ 1293.5–1293.10 [Reserved]
Subpart B—Fair Housing and Fair Lending
Compliance
§ 1293.11 Regulated entity compliance.
§ 1293.12 Reports, data, and certifications.
§§ 1293.13–1293.20 [Reserved]
Subpart C—Enterprise Equitable Housing
Finance Planning
§ 1293.21 General; Identification of subpart
as prudential standard.
§ 1293.22 Equitable housing finance plans
and updates.
§ 1293.23 Performance reports.
§ 1293.24 Public engagement.
§ 1293.25 Program requirements.
§ 1293.26 Enterprise board equitable
housing and mission responsibilities.
§ 1293.27–1293.30 [Reserved]
Subpart D—Data Collection
§ 1293.31 Required Enterprise data
collection and reporting.
Authority: 12 U.S.C. 1456(c)(1); 12 U.S.C.
1723a(m)(1); 12 U.S.C. 4511; 12 U.S.C. 4513;
12 U.S.C. 4513b; 12 U.S.C. 4514; 12 U.S.C.
4517; 12 U.S.C. 4526; 42 U.S.C. 3608(d).
Subpart A—General
§ 1293.1
General.
(a) This part sets forth requirements
related to fair lending oversight of
regulated entities, equitable housing
finance planning by the Enterprises, and
certain data collection and reporting by
the regulated entities.
(b) Nothing in this part permits or
requires a regulated entity to engage in
any activity that would otherwise be
inconsistent with the Safety and
Soundness Act, the authorizing statutes,
or other applicable law.
(c) Nothing in this part creates a
private right of action.
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§ 1293.2
Definitions.
For purposes of this part:
Annual plan update (update) means a
public update to an Equitable Housing
Finance Plan for the second or third
year of a planning cycle.
Barrier means an element of an
Enterprise’s actions, products, or
policies, or an aspect of the housing
market that can reasonably be
influenced by the Enterprise’s actions,
products, or policies, that contributes to
an underserved community’s limited
share of sustainable housing
opportunities, difficulties in accessing
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those sustainable housing opportunities,
or the continuing adverse effects of
discrimination affecting their
participation in the housing market.
Equitable Housing Finance Plan
(plan) means a three-year public plan
developed with public engagement and
adopted by each Enterprise describing
how each Enterprise will overcome
barriers to sustainable housing
opportunities faced by one or more
underserved communities through
objectives, meaningful actions, and
measurable goals.
Fair housing and fair lending laws
means the Fair Housing Act, the Equal
Credit Opportunity Act, and
implementing regulations. Additionally,
with respect to an Enterprise, it means
12 U.S.C. 4545 and implementing
regulations.
Performance report (report) means an
annual public report by an Enterprise on
its performance under its Equitable
Housing Finance Plan and other
information on equitable housing and
fair lending that meets the requirements
of § 1293.23 and any other FHFA
requirements.
Sustainable housing opportunity
means a rental or homeownership
opportunity that includes one or more
characteristics important to the needs of
a tenant or homeowner. These include
but are not limited to: being affordable
to obtain and sustain; relating to a
dwelling that meets basic habitability
requirements and is reasonably able to
withstand natural disasters or other
climate-related impact events; relating
to a dwelling that is improving the
quality of housing stock in an area;
being located in an area with access to
educational, transportation, economic,
and other important opportunities,
including community assets; being
accessible for persons with disabilities
and available in the most integrated
setting appropriate to the needs of an
individual with a disability; not placing
the tenant or homeowner in a position
where they are unlikely to succeed in
sustaining the housing opportunity over
the long term; and providing reasonable
opportunities to accommodate
hardships by the renter or homeowner
to allow continuation of the housing
opportunity.
Underserved community is a group of
people with shared characteristics or an
area that is subject to current
discrimination or has been subjected to
past discrimination that has or has had
continuing adverse effects on the group
or area’s participation in the housing
market, historically has received or
currently receives a lower share of the
benefits of Enterprise programs and
activities providing sustainable housing
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opportunities, or that otherwise has had
difficulty accessing these benefits
compared with groups of people
without the shared characteristic or
other areas. Shared characteristics
include but are not limited to
characteristics protected by fair lending
laws applicable to the Enterprises
including race, color, religion, sex
(including actual or perceived sexual
orientation or gender identity), familial
status, national origin, disability,
marital status, age, receipt of public
assistance income, exercise of rights
protected by the Consumer Credit
Protection Act, exercise of rights
protected by the Fair Housing Act,
dwelling age, dwelling location, and
neighborhood age. Examples of
underserved communities, if supported
by adequate information in a plan
pursuant to § 1239.25 of this chapter,
include: the Commonwealth of Puerto
Rico, single parents, persons with
disabilities, women of color, seniors
with fixed income, self-employed
individuals, individuals with limited
mainstream credit and banking history,
counties which have historically
received a lower share of the benefits of
Enterprise programs and activities,
individuals with income variance such
as skilled tradespeople or those that
receive income through commission,
persons with limited English
proficiency, and multigenerational
households.
§ 1293.3
Compliance and enforcement.
FHFA may enforce compliance with
this part in any manner and through any
means within its authority, including
but not limited to adverse examination
findings or through supervision or
enforcement under 12 U.S.C. 4511(b),
4513b, 4631, or 4636. The agency may
conduct examinations of a regulated
entity’s activities related to this part
pursuant to 12 U.S.C. 4517.
§ 1293.4
Preservation of authority.
Nothing in this part in any way limits
the authority of the Federal Housing
Finance Agency under other provisions
of applicable law and regulations.
§ § 1293.5–1293.10
[Reserved]
Subpart B—Fair Housing and Fair
Lending Compliance
§ 1293.11
Regulated entity compliance.
(a) Compliance with fair housing and
fair lending laws. Regulated entities
must comply with fair housing and fair
lending laws.
(b) Compliance with prohibition on
unfair or deceptive acts or practices.
Regulated entities must comply with the
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prohibition on unfair or deceptive acts
or practices under 15 U.S.C. 45.
(c) Responsibilities of boards of
directors. In accordance with
§ 1239.4(b)(4) of this chapter, directors
of a regulated entity shall direct the
operations of the regulated entity in
conformity with fair housing and fair
lending laws and the prohibition on
unfair or deceptive acts or practices
under 15 U.S.C. 45, including by
appropriately considering compliance
with fair housing and fair lending laws
and the prohibition on unfair or
deceptive acts or practices under 15
U.S.C. 45 in the oversight of the
regulated entity and its business
activities.
§ 1293.12
Reports, data, and certifications.
(a) Reports. FHFA may require the
regulated entities to submit to FHFA
regular and special reports concerning
fair housing and fair lending, including
the provision of data pursuant to FHFA
instructions.
(b) Certifications. Each regular report
concerning fair housing and fair lending
shall include a certification of the
regulated entity’s compliance with fair
housing and fair lending laws and with
§ 1293.11(b) in addition to any other
required certification or declaration
(such as a declaration under 12 U.S.C.
4514(a)(4)).
§§ 1293.13–1293.20
[Reserved]
Subpart C—Enterprise Equitable
Housing Finance Planning
ddrumheller on DSK120RN23PROD with PROPOSALS1
§ 1293.21 General; Identification of
subpart as a prudential standard.
(a) This subpart sets forth the
Enterprise duty to engage in equitable
housing finance planning and to take
meaningful actions to support
underserved communities, and
establishes standards and procedures
related to public engagement and
FHFA’s oversight of the Enterprises’
planning and actions.
(b) If a date provided in this subpart
falls on a day that is not a business day,
the date required shall be the next
business day.
(c) Submission and publication dates
provided in this subpart may be
changed by the Director, as determined
appropriate, by public order for a
particular required submission or
publication.
(d) This subpart, except for § 1293.26,
is a prudential standard pursuant to
section 1313B of the Safety and
Soundness Act, 12 U.S.C. 4513b, and is
subject to 12 CFR part 1236.
VerDate Sep<11>2014
18:51 Apr 25, 2023
Jkt 259001
§ 1293.22 Equitable housing finance plans
and updates.
(a) General. Every three years each
Enterprise shall adopt an Equitable
Housing Finance Plan covering a threeyear period. Each Enterprise may adopt
a public annual plan update to that plan
for the second and third years of the
plan.
(b) Contents of plan. The plan shall
include:
(1) Identification of barriers to
sustainable housing opportunities faced
by one or more underserved
communities;
(2) Objectives that establish the
overall direction and focus for the plan
by defining the outcomes the plan seeks
to accomplish, and that are logically
tied to one or more identified barriers;
(3) Meaningful actions (actions)
describing the high-impact activities the
Enterprise intends to undertake to
further the identified objectives that
span one or more years (including
extending beyond the period covered by
the plan);
(4) Specific, measurable, and timebound goals (goals) for each action; and
(5) Summaries of the Enterprise’s
public engagement in developing the
plan.
(c) Plan submission. Each Enterprise
shall submit its Plan to FHFA for review
on or before September 30 of the year
prior to the first year covered by the
Plan.
(d) Contents of annual plan update. If
an Enterprise chooses to submit an
update, it shall include all changes the
Enterprise is making to its plan,
including any changes in identified
barriers, objectives, meaningful actions,
specific, measurable, and time-bound
goals, and a summary of any additional
public engagement. The update shall
clearly describe the specific reason(s)
for each significant change to the plan.
(e) Annual update submission. If an
Enterprise chooses to submit an update,
it shall submit its update for FHFA
review on or before February 15 of the
year covered by the update.
(f) FHFA review. FHFA shall review
each plan and update and, prior to
publication, may:
(1) Require removal of any
confidential or proprietary information;
(2) Require removal of any content
that is not consistent with this part, the
Safety and Soundness Act, the
authorizing statutes, or other applicable
law; and
(3) Provide any feedback for
consideration.
(g) No prior approval of activities.
FHFA’s review does not constitute a
prior approval of a plan or update or
any action described therein. All actions
PO 00000
Frm 00020
Fmt 4702
Sfmt 4702
included in a plan are subject to all
applicable FHFA and other
requirements and authorities.
(h) Disclaimer included in plan and
annual update. The plan and the annual
update must include disclaimer
language indicating the implementation
of actions may be subject to change
based on certain factors.
(i) Plan and update publication. Each
Enterprise shall publish its plan on its
website on January 15 of the first year
covered by the plan and maintain it
thereafter. Each Enterprise shall publish
any update on its website on April 15
of the second and third year covered by
the plan and maintain it thereafter. Each
Enterprise shall ensure that plans and
updates are accessible to persons with
disabilities.
(j) Additional guidance. From time to
time, FHFA may issue public guidance
on plans and updates.
§ 1293.23
Performance reports.
(a) General. Annually, each Enterprise
shall publicly report on its plan progress
and provide other information related to
equitable housing and fair housing and
fair lending for the prior year in a
performance report.
(b) Contents of the report. The report
shall contain, at a minimum:
(1) A narrative assessment consisting
of a review of major successes and key
accomplishments as well as lessons
learned and challenges experienced;
(2) Plan performance details for each
objective, measurable goal, and
meaningful action, including outcomebased metrics;
(3) A summary of outcomes for the
year categorized by type of activity and
by race and ethnicity group and
underserved community group (if
available);
(4) A summary of the value of
resources dedicated by the Enterprise in
supporting the outcomes categorized by
type of activity and a summary of
additional value of resources
contributed from third parties as a result
of the Enterprise’s support of the
outcomes.
(5) An assessment of the Enterprise’s
underwriting that includes:
(i) For the applicable year and the
preceding three years, the accept rates
for the Enterprise’s automated
underwriting system categorized by
home purchase, rate-term refinancing,
and cash-out refinancing and by race
and ethnicity group and underserved
community group (if available);
(ii) For the applicable year and the
preceding three years, the Enterprise’s
loan acquisitions categorized by home
purchase, rate-term refinancing, and
cash-out refinancing and by race and
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ethnicity group and underserved
community group (if available); and
(iii) A narrative assessment of any
innovations in automated underwriting
or other policy taken during the
applicable year and any future planned
work intended to address identified
disparities.
(c) Report submission. Each
Enterprise shall submit its report to
FHFA for review on or before February
15 annually.
(d) FHFA review. FHFA shall review
each report and, prior to publication,
may:
(1) Require removal of any
confidential or proprietary information;
(2) Require removal of any content
that is not consistent with this part, the
Safety and Soundness Act, the
authorizing statutes, or other applicable
law; and
(3) Provide any feedback for
consideration.
(e) Report publication. Each
Enterprise shall publish its report on its
website on April 15 annually and
maintain it thereafter. Each Enterprise
shall ensure that reports are accessible
to persons with disabilities.
(f) Additional requirements and
guidance. FHFA may require additional
information to be included in reports
through other FHFA authorities, such as
12 U.S.C. 4514. From time to time,
FHFA may issue public guidance on
reports.
§ 1293.24
Public engagement.
(a) FHFA public engagement. On or
before June 15 annually, FHFA will
conduct public engagement to allow the
public to provide input for the
Enterprises to consider in developing
and implementing their plans and for
FHFA to consider in its oversight.
(b) Enterprise consultation. The
Enterprises shall consult with
stakeholders, including members of
underserved communities and housing
market participants, in the development
and implementation of their plans and
updates.
ddrumheller on DSK120RN23PROD with PROPOSALS1
§ 1293.25
Program requirements.
(a) Requirements for underserved
communities. An Enterprise shall
ensure that a plan relies on adequate
information in identifying the
underserved community or
communities addressed by that plan and
shall document that information as part
of the plan. In selecting one or more
underserved communities to be the
focus of a plan, an Enterprise shall
consider, among other factors:
(1) Input from public engagement;
(2) Whether the underserved
community has previously been the
focus of a plan;
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18:51 Apr 25, 2023
Jkt 259001
(3) The extent of the needs identified
for the underserved community,
including such needs that may remain
despite prior efforts under a plan; and
(4) Whether the underserved
community is covered by a different
initiative or program of the Enterprise.
(b) Requirements for objectives.
Objectives identified in a plan shall be
logically tied to one or more identified
barriers and facilitate establishing
meaningful actions and measurable
goals.
(c) Requirements for meaningful
actions—(1) Relation to objectives and
goals. Meaningful actions shall be
logically tied to one or more measurable
goals and one or more objectives and
support sustainable housing
opportunities for an identified
underserved community.
(2) Other Enterprise goals and
incremental action. Meaningful actions
may also serve other Enterprise
objectives and goals; however, a plan
shall reflect significant additional action
above and beyond actions that are also
serving other Enterprise objectives and
goals and shall reflect more than de
minimis action.
(3) Significant dedication of
resources. Meaningful actions shall
reflect a commitment commensurate
with an Enterprise’s prominence in the
housing market, its available resources,
its dedication of resources to other
important efforts, the needs of
underserved communities, market
conditions, and safety and soundness.
(4) Compliance with law. Actions that
are not compliant with the Safety and
Soundness Act, the authorizing statutes,
or other applicable law do not qualify as
meaningful actions.
(5) Required remedial actions.
Actions that are required to remediate
supervisory findings or required as a
result of enforcement actions do not
qualify as meaningful actions.
(d) Requirements for measurable
goals. Measurable goals shall be:
(1) Logically tied to one or more
meaningful actions identified in a plan;
(2) Specific;
(3) Time-bound;
(4) Focused on outcomes; and
(5) Facilitative of measuring
Enterprise progress, comparing
Enterprise performance, and ensuring
public accountability.
§ 1293.26 Enterprise board equitable
housing and mission responsibilities.
An Enterprise’s board of directors
shall appropriately consider the
objectives, actions, and goals of the
Enterprise’s Equitable Housing Finance
Plan, while also appropriately
considering its affordable housing goals,
PO 00000
Frm 00021
Fmt 4702
Sfmt 4702
25309
Duty to Serve plans and targets, and
other mission-related obligations, in the
board’s oversight of the Enterprise and
the Enterprise’s business activities.
§§ 1293.27–1293.30
[Reserved]
Subpart D—Data Collection
§ 1293.31 Required Enterprise data
collection and reporting.
Each Enterprise shall collect,
maintain, and provide to FHFA the
following data relating to single-family
mortgages:
(a) The language preference of
applicants and borrowers; and
(b) Whether applicants and borrowers
have completed homeownership
education or housing counseling and
information about the homeownership
education or housing counseling.
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2023–08602 Filed 4–25–23; 8:45 am]
BILLING CODE 8070–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R07–OAR–2023–0201; FRL–10839–
01–R7]
Air Plan Partial Approval and Partial
Disapproval; Missouri; Revision to
Sulfur Dioxide Control Requirements
for Lake Road Generating Facility
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
The Environmental Protection
Agency (EPA) is proposing partial
approval and partial disapproval of
revisions to the Missouri State
Implementation Plan (SIP) submitted by
the State of Missouri on February 17,
2022. In its submission, the Missouri
Department of Natural Resources
(MoDNR) requested that revisions to a
2016 Administrative Order on Consent
(AOC) for controlling sulfur dioxide
(SO2) emissions at the Lake Road power
plant (hereinafter referred to as ‘‘2016
AOC’’) be approved in the SIP. The
revised AOC establishes more stringent
fuel oil sulfur content limits, removes
SO2 emission limits that are no longer
needed due to the strengthened fuel oil
sulfur requirements, and streamlines
reporting requirements. The changes
proposed for approval meet the
requirements of the Clean Air Act
(CAA). The EPA is proposing
disapproval of a new provision in the
AOC that would potentially allow Lake
SUMMARY:
E:\FR\FM\26APP1.SGM
26APP1
Agencies
[Federal Register Volume 88, Number 80 (Wednesday, April 26, 2023)]
[Proposed Rules]
[Pages 25293-25309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08602]
=======================================================================
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1293
RIN 2590-AB29
Fair Lending, Fair Housing, and Equitable Housing Finance Plans
AGENCY: Federal Housing Finance Agency.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is
seeking comments on a proposed rule that would address barriers to
sustainable housing opportunities for underserved communities by
codifying existing FHFA practices in regulation and adding new
requirements related to fair lending, fair housing, and Equitable
Housing Finance Plans. The proposed rule would improve FHFA's
fulfillment of its statutory purposes and its oversight of the Federal
National Mortgage Association (Fannie Mae), the Federal Home Loan
Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks
(Banks) (Fannie Mae and Freddie Mac collectively, the Enterprises; the
Enterprises and the Banks collectively, regulated entities), and their
fulfillment of their statutory purposes.
DATES: Comments must be received on or before June 26, 2023.
ADDRESSES: You may submit your comments on the proposed rule,
identified by regulatory information number (RIN) 2590-AB29, by any one
of the following methods:
Agency Website: www.fhfa.gov/open-for-comment-or-input.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. If you submit your
comment to the Federal eRulemaking Portal, please also send it by email
to FHFA at [email protected] to ensure timely receipt by FHFA.
Include the following information in the subject line of your
submission: Comments/RIN 2590-AB29.
Hand Delivered/Courier: The hand delivery address is:
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB29,
Federal Housing Finance Agency, 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: Comments/RIN 2590-AB29, Federal Housing
Finance Agency, 400 Seventh Street SW, Washington, DC 20219. Please
note that all mail sent to FHFA via U.S. Mail is routed through a
national irradiation facility, a process that may delay delivery by
approximately two weeks. For any time-sensitive correspondence, please
plan accordingly.
FOR FURTHER INFORMATION CONTACT: James Wylie, Associate Director,
Office of Fair Lending Oversight, (202) 649-3209, [email protected];
Leda Bloomfield, Branch Chief for Policy and Equity, Office of Fair
Lending Oversight, (202) 649-3415, [email protected]; Annalyce
Shufelt, Branch Chief for Fair Lending Law, Supervision, and
Enforcement, (202) 717-1164, [email protected]; or Sarah
Friedman, Examination Specialist (Fair Lending), Office of Fair Lending
Oversight, (202) 807-9324, [email protected]. These are not toll-
free numbers. For TTY/TRS users with hearing and speech disabilities,
dial 711 and ask to be connected to any of the contact numbers above.
SUPPLEMENTARY INFORMATION:
Comments
FHFA invites comments on all aspects of the proposed rule and will
take all comments into consideration before issuing a final rule.
Copies of all comments will be posted without change, and will include
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 proposed rule also located on the FHFA
website.
Table of Contents
I. Introduction
II. Background
A. FHFA, the Regulated Entities, and Their Public Purposes
B. Barriers to Sustainable Housing Opportunities
1. Disparities in Homeownership Rates and Wealth
[[Page 25294]]
2. Disparities Based on Disaggregated Data
3. Challenges Accessing Sustainable Housing Opportunities
4. Mortgage Market Disparities
5. Appraisal and Valuation Disparities
III. The Proposed Rule
A. FHFA Fair Lending Oversight of the Regulated Entities
B. Enterprise Equitable Housing Finance Plans
C. Enterprise Data Collection and Reporting to FHFA
D. Application of FHFA's Prudential Standard Framework
E. Policy Purposes for and Benefits of the Proposed Rule
IV. Section-by-Section Analysis
A. Section 1293.1 General
B. Section 1293.2 Definitions
C. Section 1293.3 Compliance and Enforcement
D. Section 1293.4 Preservation of Authority
E. Section 1293.11 Regulated Entity Compliance
F. Section 1293.12 Reports and Data
G. Section 1293.21 General
H. Section 1293.22 Plans and Updates
I. Section 1293.23 Performance Reports
J. Section 1293.24 Public Engagement
K. Section 1293.25 Program Standards
L. Section 1293.26 Enterprise Board Equitable Housing and
Mission Responsibilities
M. Section 1293.31 Required Enterprise Data Collection and
Reporting
N. Proposed Rule Timing Elements
V. Considerations of Differences Between the Banks and the
Enterprises
VI. Comments Specifically Requested
VII. Paperwork Reduction Act
VIII. Regulatory Flexibility Act
I. Introduction
Federal agency oversight of fair housing and fair lending laws, as
well as strategic planning to address barriers faced by renters and
borrowers, are important in promoting sustainable housing opportunities
\1\ for underserved communities.\2\ The proposed rule would address
barriers to sustainable housing opportunities for underserved
communities by codifying existing FHFA practices in regulation and
adding new requirements. Collectively, the actions in the proposed rule
would improve FHFA's fulfillment of its statutory purposes and its
oversight of the regulated entities and their fulfillment of their
statutory purposes.
---------------------------------------------------------------------------
\1\ Sustainable housing opportunity is defined more completely
later in the proposed rule, but generally encompasses rental or
homeownership opportunities that include one or more characteristics
important to the needs of a tenant or homeowner.
\2\ Underserved community is defined more completely later in
the proposed rule, but generally encompasses a group of people with
shared characteristics or an area that is subject to current
discrimination or has been subjected to past discrimination that has
or has had continuing adverse effects on the group or area's
participation in the housing market, historically has received or
currently receives a lower share of the benefits of Enterprise
programs and activities providing sustainable housing opportunities,
or that otherwise has had difficulty accessing these benefits
compared with groups of people without the shared characteristic or
other areas.
---------------------------------------------------------------------------
The proposed rule would codify in regulation much of FHFA's
existing practices and programs regarding fair housing and fair lending
oversight of its regulated entities, the Equitable Housing Finance Plan
program for the Enterprises, and requirements for the Enterprises to
collect and report language preference, homeownership education, and
housing counseling information. The proposed rule would make changes to
the Equitable Housing Finance Plan program to promote greater
accountability for the Enterprises and public transparency, add
oversight of unfair or deceptive acts or practices to FHFA's fair
housing and fair lending oversight programs, require additional
certification of compliance by the Enterprises, and establish more
precise standards related to fair housing, fair lending, and principles
of equitable housing for regulated entity boards of directors (boards).
II. Background
A. FHFA, the Regulated Entities, and Their Public Purposes
Fannie Mae and Freddie Mac are federally chartered housing finance
enterprises whose purposes include providing stability to the secondary
market for residential mortgages; providing ongoing assistance to the
secondary market for residential mortgages (including activities
related to mortgages on housing for low- and moderate-income families)
by increasing the liquidity of mortgage investments and improving
distribution of investment capital available for residential mortgage
financing; and, promoting access to mortgage credit throughout the
United States, including central cities, rural areas, and underserved
areas, by increasing the liquidity of mortgage investments and
improving the distribution of investment capital available for
residential mortgage financing.\3\
---------------------------------------------------------------------------
\3\ 12 U.S.C. 1451 (note) and 1716.
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The Federal Home Loan Bank System (the System) provides a stable
and reliable source of liquidity for its members and provides support
for affordable housing and community development for the communities
they serve. It was established in 1932 by the Federal Home Loan Bank
Act,\4\ and today consists of 11 regional Federal Home Loan Banks (the
Banks) and the System's fiscal agent, the Office of Finance. Each Bank
is a separate, government-chartered, member-owned corporation.
---------------------------------------------------------------------------
\4\ 12 U.S.C. 1421 et seq.
---------------------------------------------------------------------------
Congress established FHFA to oversee the regulated entities to
ensure that the purposes of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (Safety and Soundness Act), as
amended, the authorizing statutes, and any other applicable laws are
carried out.\5\ In doing so, Congress recognized that the regulated
entities have important public purposes reflected in their authorizing
statutes, and that they need to be managed safely and soundly so that
they continue to accomplish their public missions.\6\
---------------------------------------------------------------------------
\5\ 12 U.S.C. 4511(b).
\6\ 12 U.S.C. 4501(1) (Enterprises and Federal Home Loan Banks
have important public missions), (2) (their continued ability to
accomplish their public missions is important, and effective
regulation is needed to reduce risk of failure), and (7)
(Enterprises have affirmative obligation to facilitate financing of
affordable housing for low- and moderate-income families consistent
with their public purposes, while maintaining a strong financial
condition and a reasonable economic return).
---------------------------------------------------------------------------
With respect to the public purposes of the Enterprises, a number of
statutory and regulatory authorities that apply to FHFA and the
Enterprises speak to the need to advance equity for homebuyers,
homeowners, and tenants in the housing market.\7\ FHFA's principal
duties include ensuring that the Enterprises operate consistent with
safety and soundness and with the public interest.\8\ FHFA and the
Enterprises also have statutory and other commitments to advance
equitable solutions for borrowers and tenants in the housing market.
The Enterprises' authorizing statutes, for example, provide that one of
their purposes is to promote access to mortgage credit throughout the
nation (including central cities, rural areas, and underserved
areas).\9\ The authorizing
[[Page 25295]]
statutes require the Enterprises, as part of their annual housing
reports, to assess their underwriting standards, policies, and business
practices that affect low- and moderate-income families or cause racial
disparities, along with any revisions to these standards, policies, or
practices that promote affordable housing or fair lending.\10\
---------------------------------------------------------------------------
\7\ These include providing ongoing assistance to the secondary
market for residential mortgages, including mortgages on housing for
low- and moderate-income families involving a reasonable economic
return that may be less than the return earned on other activities.
12 U.S.C. 1716(3) and (4) (Fannie Mae charter purposes); 12 U.S.C.
1451 note (b)(3) and (4) (Freddie Mac charter purposes). They also
include Enterprise affordable housing Goals, see 12 U.S.C. 4561(a),
4562, and 4563; 12 CFR part 1282, subpart B, and Enterprise Duty to
Serve affordable housing needs of certain underserved markets, see
12 U.S.C. 4565; 12 CFR part 1282, subpart C. In addition, the
Enterprises are required to report annually to Congress on, among
other things, assessments of their underwriting standards and
business practices that affect their purchases of mortgages for low-
and moderate-income families, and revisions to their standards and
practices that promote affordable housing or fair lending. 12 U.S.C.
1723a(n)(2)(G) (Fannie Mae charter), 1456(f)(2)(G) (Freddie Mac
charter).
\8\ 12 U.S.C. 4513(a)(1)(B)(i), (v).
\9\ 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4)
(Freddie Mac charter).
\10\ 12 U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
---------------------------------------------------------------------------
The Housing Goals and Duty to Serve requirements are critical
elements for ensuring that the Enterprises fulfill their mission and
charters and serve low- and moderate-income families and underserved
populations.\11\ The Safety and Soundness Act provides that, in meeting
these requirements, the Enterprises are required to take affirmative
steps to assist primary lenders to make housing credit available in
areas with concentrations of low-income and minority families.\12\ The
Safety and Soundness Act also requires the Enterprises to transfer an
amount equal to 4.2 basis points for each dollar of unpaid principal
balance of new purchases to the U.S. Department of Housing and Urban
Development's (HUD) administration of the Housing Trust Fund and the
U.S. Department of the Treasury's administration of the Capital Magnet
Fund.\13\ Both funds are designed to support affordable housing
initiatives by providing capital for the production or preservation of
affordable housing and related economic development activities. For the
2022 year, the Enterprises transferred $545 million into the funds.\14\
---------------------------------------------------------------------------
\11\ 12 U.S.C. 4561(a) (FHFA to establish annual housing goals
by regulation), 4562 (establishment of required categories of
single-family housing goals), and 4563 (establishment of required
multifamily affordable housing goals); 12 U.S.C. 4565 (Enterprise
duty to facilitate secondary mortgage market for very low-, low-,
and moderate-income families in certain underserved markets).
\12\ 12 U.S.C. 4565(b)(3)(A).
\13\ 12 U.S.C. 4567.
\14\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-545-Million-for-Affordable-Housing-Programs.aspx.
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Several provisions of the Federal Home Loan Bank Act denote the
public purposes of the Banks, including their role in making secured
long-term advances to members to support residential housing finance,
specific community support requirements, establishment of a community
investment program and an affordable housing program, compliance with
housing goals, and the requirement that certain directors have
experience in public interest areas.\15\ FHFA launched a comprehensive
review of the System in August 2022.\16\ Among the areas FHFA has
explored as part of the review are the Banks' role in promoting
affordable, sustainable, equitable, and resilient housing and community
investment, including rental housing, and in addressing the unique
needs of tribal communities, communities of color, rural communities,
and other financially vulnerable and underserved communities. Numerous
commenters during the public input phases of the initiative suggested
establishing or expanding requirements for housing and community
development lending plans for the Banks, and these and other
suggestions are currently under consideration separately and apart from
this proposed rulemaking.
---------------------------------------------------------------------------
\15\ See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii), 12 U.S.C. 1430(g),
(i), (j); 12 U.S.C. 1430c.
\16\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx.
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Under the Fair Housing Act, all Federal agencies having regulatory
or supervisory authority over financial institutions, including FHFA,
are required to administer their programs and activities relating to
housing and urban development in a manner that affirmatively furthers
the purposes of the Fair Housing Act, which includes providing for fair
housing throughout the United States.\17\ FHFA has included
considerations of fair housing and fair lending in rulemaking since its
establishment.\18\ FHFA has also issued a policy statement on fair
lending which describes its regulatory and oversight authorities to
supervise and enforce fair lending laws with respect to its regulated
entities.\19\ FHFA has issued orders to Fannie Mae and Freddie Mac for
regular and special reports related to fair housing and fair
lending.\20\ FHFA has issued guidance for the Enterprises on fair
housing and fair lending supervisory expectations.\21\ FHFA coordinates
with HUD on fair lending and fair housing oversight,\22\ and has
established a fair lending oversight data system in part to facilitate
cooperation in interagency fair housing and fair lending oversight.\23\
FHFA has also implemented the referral program for potential mortgage
pricing disparities across mortgage lenders based on the Enterprises'
data, as required by Congress in section 1128 of the Housing and
Economic Recovery Act of 2008 (HERA).\24\ FHFA also established the
Equitable Housing Finance Plan program for the Enterprises to develop a
framework for addressing barriers to sustainable housing opportunity
for underserved communities through strategic planning and public
participation.\25\ FHFA joined other agencies in issuing the
Interagency Statement on Special Purpose Credit Programs Under the
Equal Credit Opportunity Act and Regulation B in 2022.\26\
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\17\ 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
\18\ See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR 31602, 31603,
31606 (Jul. 2, 2009), 12 CFR 1254.6(a)(2) and 1254.8(b)(2); 84 FR
41886, 41905, 41906, 41907 (Aug. 16, 2019), and 12 CFR 1291.23(e);
83 FR 61186, 61208, 61238 (Nov. 28, 2018).
\19\ 86 FR 36199 (Jul. 9, 2021).
\20\ See FHFA Orders In Re: Enterprise Compliance and
Information Submission with Respect to Fair Lending, Nos. 2021-OR-
FNMA-2 and 2021-OR-FHLMC-2 (FHFA's Fair Lending Orders), available
at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Fair-
Lending-Oversight-
Program.aspx#:~:text=Fair%20Lending%20Reporting%20Orders&text=The%20o
rders%20require%20the%20Enterprises,lending%20supervision%20and%20mon
itoring%20capabilities.
\21\ Advisory Bulletin AB-2021-04, Enterprise Fair Lending and
Fair Housing Compliance (Dec. 20, 2021), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf.
\22\ Memorandum of Understanding by and between the U.S.
Department of Housing and Urban Development and the Federal Housing
Finance Agency regarding Fair Housing and Fair Lending Coordination
(Aug. 12, 2021), available at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/FHFA-HUD-MOU_8122021.pdf.
\23\ Fair Lending Oversight Data System of Records Notice, 87 FR
30947 (May 20, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-05-20/pdf/2022-10798.pdf.
\24\ Public Law 110-289, 122 Stat. 2696, 2697 (2008) (codified
at 12 U.S.C. 4561(d)).
\25\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-
Announces-Equitable-Housing-Finance-Plans_for-Fannie-Mae-and-
Freddie-Mac.aspx.
\26\ See Interagency Statement on Special Purpose Credit
Programs Under the Equal Credit Opportunity Act and Regulation B
(Feb. 22, 2022), available at https://www.federalreserve.gov/supervisionreg/caletters/CA%2022-2%20Attachment%20SPCP_Interagency_Statement_for_release.pdf.
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B. Barriers to Sustainable Housing Opportunities
Ongoing disparities and challenges in the housing market persist,
limiting sustainable housing opportunities for underserved communities.
The following section discusses some of these disparities and
challenges by way of example. Both Enterprises' 2022-2024 Equitable
Housing Finance Plans also include extensive discussions of barriers to
sustainable housing opportunities.\27\ The inclusion or discussion of a
particular disparity, challenge, or underserved community is not an
indication of FHFA's views on
[[Page 25296]]
the needs of a community or what actions FHFA's regulated entities
should take.
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\27\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf; Fannie Mae 2022-2024
Equitable Housing Finance Plan (June 2022), available at https://www.fanniemae.com/media/43636/display.
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1. Disparities in Homeownership Rates and Wealth
The national homeownership rate has ranged from around 45 percent
in some eras to around 65 percent in recent years.\28\ However, there
have been persistent gaps in the homeownership rate by race and
ethnicity. In the fourth quarter of 2022, the White homeownership rate
was 74.5 percent, the Black homeownership rate was 44.9 percent, the
Latino homeownership rate was 48.5 percent, and the Asian, Native
Hawaiian and Pacific Islander homeownership rate was 61.9 percent.\29\
The Black and White homeownership gap, at 29.6 percentage points as of
the fourth quarter of 2022, has persisted over time, though there have
been some modest reductions in the gap since 2019. Even when the racial
homeownership rate is stratified by household income, there continue to
be significant disparities in homeownership amongst racial groups, even
in the highest income brackets. For example, for households with an
income over $150,000, there exists a 10 percentage point gap between
Black and White families.\30\
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\28\ See Don Layton, ``The Homeownership Rate and Housing
Finance Policy, Part 1: Learning from the Rate's History,'' August
2021, available at https://www.jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_homeownership_rate_layton_2021.pdf.
\29\ Federal Reserve Economic Data, Federal Reserve Bank of St.
Louis; Housing and Homeownership: Homeownership Rate (retrieved
February 11, 2023) available at https://fred.stlouisfed.org/release/tables?rid=296&eid=784188#snid=784199.
\30\ See Fannie Mae 2022-2024 Equitable Housing Finance Plan
(June 2022), p. 7, available at https://www.fanniemae.com/media/43636/display.
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A household's home is often its largest financial asset and key to
wealth building and intergenerational wealth transfers. The
homeownership gap therefore contributes significantly to wealth gaps
for underserved communities. The Federal Reserve, in a 2019 survey,
found that White families have the highest level of both median and
mean family wealth: $188,200 and $983,400, respectively.\31\ In
contrast, Black families' median and mean wealth is less than 15
percent that of White families, at $24,100 and $142,500, respectively.
These wealth disparities have grown between 2003 and 2018.\32\ One
study estimated that the total racial wealth gap is $10.14
trillion.\33\ This lack of intergenerational wealth transfers reduces
the likelihood that older generations can assist with down payments,
educational costs, and unexpected financial events, including natural
disasters and medical emergencies. Black families are also less likely
to receive or expect to receive an inheritance, and, if they do, it is,
on average, less than that of White households.\34\ Moreover, many
Black, Latino, and Asian households provide financial assistance to
older generations, which slows their ability to save for a down
payment.\35\
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\31\ See Neil Bhutta et al., Board of Governors of the Federal
Reserve System, ``Disparities in Wealth by Race and Ethnicity in the
2019 Survey of Consumer Finances,'' (Sept. 28, 2020), available at
https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.html.
\32\ See Earl Fitzhugh et al., McKinsey Institute for Black
Economic Mobility, ``It's time for a new approach to racial
equity,'' (Dec. 2, 2020), available at https://www.mckinsey.com/bem/our-insights/its-time-for-a-new-approach-to-racial-equity.
\33\ See Fred Dews, ``Charts of the Week: The racial wealth gap;
the middle-class income slump,'' Brookings Institution (Jan. 8,
2021), available at https://www.brookings.edu/blog/brookings-now/2021/01/08/charts-of-the-week-the-racial-wealth-gap-the-middle-class-income-slump/.
\34\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf.
\35\ See Mike Dang, ``Their Children Are Their Retirement
Plans,'' New York Times (Feb. 24, 2023), available at https://www.nytimes.com/2023/01/21/business/retirement-immigrant-families.html.
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2. Disparities Based on Disaggregated Data
For many underserved communities, it is critical to examine
disaggregated data and data at the community level.\36\ Failing to
disaggregate may result in failure to identify significant disparities
facing unique race/ethnicity subgroups for the purpose of identifying
barriers and improving housing policy. For example, although Asians and
Pacific Islanders as a whole have homeownership rates above 60 percent,
Korean Americans' homeownership rate is 54 percent and Nepalese
Americans' homeownership rate is 33 percent.\37\ Geographically, while
the overall homeownership gap between Black and White homeowners is
29.6 percentage points, in Minneapolis the gap rises to 50 percentage
points.\38\
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\36\ See Leda Bloomfield et al., FHFA Insights Blog, ``Latino
Diversity and Complexity: The Importance of Data Disaggregation,''
(Sept. 23, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Latino-Diversity-and-Complexity-The-Importance-of-Data-Disaggregation.aspx.
\37\ See Asian Real Estate Association, 2023-2024 State of Asia
America Report, available at https://areaa.org/resource-asia-america-report.
\38\ See Alanna McCargo et al., ``Mapping the black
homeownership gap,'' (Feb. 26, 2018), available at https://www.urban.org/urban-wire/mapping-black-homeownership-gap.
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There are also disparities in mortgage underwriting that may be
obscured by looking at aggregated data.\39\ For Latino communities,
Mexican applicants have slightly higher approval rates than Latino
applicants as a whole, but Puerto Rican and ``Other Hispanic''
applicants have lower approval rates. Among Asian applicants, the
Vietnamese, Filipino, and ``Other Asian'' communities experience lower
approval rates than White applicants, despite Asian applicants, as a
whole, having similar approval rates to White applicants. Similarly,
when the Pacific Islander group is disaggregated, it becomes clear that
Samoan and ``Other Pacific Islander'' applicants have significantly
lower approval rates than Native Hawaiian and Chamorro applicants.
---------------------------------------------------------------------------
\39\ See Leda Bloomfield et al., FHFA Insights Blog, ``Latino
Diversity and Complexity: The Importance of Data Disaggregation,''
(Sept. 23, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Latino-Diversity-and-Complexity-The-Importance-of-Data-Disaggregation.aspx.
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3. Challenges Accessing Sustainable Housing Opportunities
In addition to racial and ethnic gaps across homeownership and
wealth, there are other underserved communities experiencing
significant challenges in accessing sustainable housing opportunities.
This includes families living on tribal land, in rural areas, and in
rental homes. Almost half of renters are cost-burdened, paying more
than 30 percent of their income on housing, compared to only 22 percent
of homeowners.\40\ As an increasing proportion of households wish to
age in place, there is often a lack of housing opportunities that
provide for mobility and other physical impairments. By 2035, the
population 80 and over is expected to double from its level in 2016.
More than 10 million households headed by someone over 65 are cost-
burdened, with the median older renter having net wealth under $6,000
in 2019.\41\ Two percent of total housing inventory is accessible for
people with mobility disabilities, while 14 percent of Americans have
mobility disabilities.\42\ Other populations, including persons
identifying as lesbian, gay, bisexual, transgender, or queer (LGBTQ+),
continue to report facing challenges in
[[Page 25297]]
accessing the housing finance system. A study found that same-sex
applicants are 73.12 percent more likely to be denied for a
mortgage.\43\ Households with limited English proficiency (LEP), or who
are more comfortable transacting in a language other than English, may
also experience barriers to housing opportunities and housing
sustainability. Often, LEP borrowers will rely on their English-
proficient child, who may not be familiar with mortgage lending terms,
as a translator.\44\ As a result, this can leave the borrower without a
full understanding of mortgage terms and conditions.
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\40\ See National Equity Atlas, ``Housing Burden: All residents
should have access to quality, affordable homes), (retrieved Mar. 5,
2023) available at https://nationalequityatlas.org/indicators/Housing_burden#/?rentown01=2.
\41\ See Jennifer Molinsky, ``Housing for America's Older
Adults: Four Problems We Must Address,'' Joint Center for Housing
Studies of Harvard University (Aug. 18, 2022), available at https://www.jchs.harvard.edu/blog/housing-americas-older-adults-four-problems-we-must-address.
\42\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf.
\43\ See Hua Sun et al., ``Lending practices to same-sex
borrowers,'' (Apr. 16, 2019), available at https://www.pnas.org/doi/10.1073/pnas.1903592116.
\44\ See Freddie Mac and Fannie Mae, ``Language Access for
Limited English Proficiency Borrowers: Final Report,'' (Apr. 2017),
available at https://www.fhfa.gov/PolicyProgramsResearch/Policy/Documents/Borrower-Language-Access-Final-Report-June-2017.pdf.
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4. Mortgage Market Disparities
Disparities are present in the mortgage market for several
underserved communities. For example, in 2022 Black families comprised
about 14 percent of the total U.S. population, but only about 7 percent
of the loans that Fannie Mae and Freddie Mac purchased. American Indian
and Alaska Native families comprised about 3 percent of the total U.S.
population, but only about 1 percent of the loans that Fannie Mae and
Freddie Mac purchased. In contrast, White families comprised about 62
percent of the U.S. population, but they comprised about 68 percent of
Fannie Mae and Freddie Mac acquisitions.\45\
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\45\ Loan purchase data sourced from Enterprise data released by
FHFA at https://www.fhfa.gov/DataTools/Downloads/Pages/Fair-Lending-Data.aspx. Total population statistics are drawn from 2020 Census
data summarized at https://www.census.gov/library/stories/2021/08/improved-race-ethnicity-measures-reveal-united-states-population-much-more-multiracial.html. Total population statistics for White
are provided as White alone. Total population statistics for Black
and American Indian and Alaska Native are provided as alone or in
combination with another race or ethnicity category.
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FHFA has released data on Fannie Mae and Freddie Mac's automated
underwriting systems, presenting gaps in approval rates for applicants
from certain groups over time compared to other groups. These
underwriting tools complete credit risk assessments on loan applicants
to determine whether a loan is eligible for sale to the Enterprises.
Although the move to a more automated, less subjective system to assess
creditworthiness in mortgage market underwriting was an important step
in eliminating bias in subjective underwriting decisions, further
improvements in automated underwriting to reduce gaps would promote
better access to sustainable housing opportunities. In 2022, White
applicants' automated underwriting system applications had approval
rates of about 84 and 85 percent for the automated underwriting systems
of Fannie Mae and Freddie Mac, respectively; Black applicants had
approval rates of about 70 and 69 percent; Latino applicants had
approval rates of about 78 percent and 73 percent; Asian applicants had
approval rates of about 84 and 85 percent; American Indian and Alaska
Native applicants had approval rates of about 78 and 75 percent; and
Native Hawaiian and Pacific Islander applicants had approval rates of
about 78 and 74 percent.\46\
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\46\ See https://www.fhfa.gov/DataTools/Downloads/Pages/Fair-Lending-Data.aspx.
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Home Mortgage Disclosure Act (HMDA) data also shows higher denial
rates by lenders for many underserved communities. For example, an
analysis of the 2020 HMDA data found a denial rate of 27.1 percent for
Black applicants compared to 13.6 percent for White applicants.\47\ The
trend in higher denial rates has persisted in HMDA data for many
years.\48\ A 2019 study of mortgage pricing found that Black and Latino
borrowers pay 7.9 and 3.6 basis points more in interest for mortgages,
even when controlling for several factors.\49\ FHFA conducts an annual
screening, preliminary findings, and referral process for lenders
pursuant to the Safety and Soundness Act and describes the results in
its Annual Report to Congress. Based on the results of FHFA's 2019 and
2020 analysis, more than 36 percent of FHFA's preliminary findings were
based on an annual percentage rate disparity of 10 basis points or
more, with the most common preliminary findings and referrals for
Latino and Black borrowers.\50\
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\47\ See Jung H. Choi et al., ``What Different Denial Rates Can
Tell Us About Racial Disparities in the Mortgage Market,'' (Jan. 13,
2022), available at https://www.urban.org/urban-wire/what-different-denial-rates-can-tell-us-about-racial-disparities-mortgage-market.
\48\ See Laurie Goodman et al., ``Traditional Mortgage Denial
Metrics May Misrepresent Racial and Ethnic Discrimination,'' (Aug.
23, 2018), p. 5, available at https://www.urban.org/urban-wire/traditional-mortgage-denial-metrics-may-misrepresent-racial-and-ethnic-discrimination.
\49\ See Robert Bartlett et al., Haas School of Business UC
Berkely, ``Consumer-Lending Discrimination in the FinTech Era,''
(Nov. 2019), available at https://faculty.haas.berkeley.edu/morse/research/papers/discrim.pdf.
\50\ See Federal Housing Finance Agency, 2021 Report to
Congress, p. 67, available at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2021-Annual-Report-to-Congress.pdf.
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The Federal Home Loan Bank of San Francisco entered into a research
and product development initiative with a research institution to
address issues related to the racial homeownership gap.\51\ A study
resulting from this partnership noted that the heavy reliance on
certain credit attributes in the current mortgage underwriting process
to the exclusion of other attributes limits opportunities for people of
color.\52\
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\51\ See https://fhlbsf.com/about/newsroom/urban-institute-and-fhlbank-san-francisco-announce-new-efforts-close-racial?f%5B0%5D=authored_on%3A2021.
\52\ See Jung H. Choi et al., Urban Institute and Federal Home
Loan Bank of San Francisco, ``Reducing the Black-White Homeownership
Gap through Underwriting Innovations: The Potential Impact of
Alternative Data in Mortgage Underwriting,'' available at https://www.urban.org/sites/default/files/2022-10/Reducing%20the%20Black-White%20Homeownership%20Gap%20through%20Underwriting%20Innovations.pdf.
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Additional mortgage market disparities and challenges remain with
respect to rural areas, manufactured housing, and other market
segments. FHFA's Duty to Serve program works to address many of these
disparities.\53\
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\53\ See https://www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Duty-to-Serve.aspx.
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5. Appraisal and Valuation Disparities
FHFA's Uniform Appraisal Dataset (UAD) Aggregate Statistics
highlight that properties located in minority tracts have a higher
proportion of appraised values less than the contract price. According
to the 2021 appraisal statistics, 23.3 percent of homes in high
minority tracts (80.1-100 percent) experienced an appraised value less
than the contract price.\54\ This is compared to 13.4 percent of homes
in White tracts (0-50 percent) and 19.2 percent in minority tracts
(50.1-80 percent).\55\ Additionally, FHFA identified examples with
direct references to the racial and ethnic composition of the
neighborhood in appraisal reports.\56\ Freddie Mac's
[[Page 25298]]
research showed that properties in minority tracts are more likely than
properties in White tracts to receive an appraisal lower than the
contract price.\57\ A Fannie Mae publication concluded that White
borrowers' homes were overvalued at higher rates across all
neighborhoods, but stronger effects were present for White borrowers in
Black neighborhoods.\58\ Additional research has also highlighted and
analyzed disparities in property valuation.\59\ Consumer groups have
begun to conduct fair housing paired testing of appraisers, resulting
in the filing of complaints.\60\ Rural markets also experience
challenges related to appraiser availability and appraisal cost.\61\
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\54\ See Jonathan Liles, ``Exploring Appraisal Bias Using UAD
Aggregate Statistics,'' FHFA Insights Blog (Nov. 11, 2022),
available at https://www.fhfa.gov/Media/Blog/Pages/Exploring-Appraisal-Bias-Using-UAD-Aggregate-Statistics.aspx.
\55\ For 2022, 17.15 percent of home purchase appraisals were
below contract price in high minority tracts, compared to 14.3
percent in minority tracts and 11.2% in White tracts. Uniform
Appraisal Dataset Aggregate Statistics, available at https://www.fhfa.gov/DataTools/Pages/UAD-Dashboards.aspx.
\56\ See Chandra Broadnax, ``Reducing Valuation Bias by
Addressing Appraiser and Property Valuation Commentary,'' FHFA
Insights Blog (Dec. 14, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Reducing-Valuation-Bias-by-Addressing-Appraiser-and-Property-Valuation-Commentary.aspx.
\57\ See Melissa Narragon et al., ``Racial & Ethnic Valuation
Gaps in Home Purchase Appraisals--A Modeling Approach,'' (May 2022),
available at https://www.freddiemac.com/research/insight/20220510-racial-ethnic-valuation-gaps-home-purchase-appraisals-modeling-approach; Freddie Mac, ``Racial and Ethnic Valuation Gaps in Home
Purchase Appraisals,'' (Sept. 20, 2021), available at https://www.freddiemac.com/research/insight/20210920-home-appraisals.
\58\ See Jake Williamson et al., ``Appraising the Appraisal,''
(Feb. 2022) available at https://www.fanniemae.com/media/42541/display.
\59\ See, e.g., Andre Perry et al., The Brookings Institution,
``The Devaluation of Assets in Black Neighborhoods: The Case of
Residential Property (Nov. 27, 2018), available at https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/; Junia Howell et al., ``Appraised: The Persistent
Evaluation of White Neighborhoods as More Valuable Than Communities
of Color,'' (Nov. 2022), available at https://www.eruka.org/appraised; Edward Pinto et al., American Enterprise Institute, ``How
Common is Appraiser Racial Bias--An Update,'' (May 2022), available
at https://www.aei.org/wp-content/uploads/2022/06/How-Common-is-Appraiser-Racial-Bias-An-Update-May-2022-FINAL-corrected-1.pdf?x91208.
\60\ Jake Lilien, National Community Reinvestment Coalition,
``Faulty Foundations: Mystery-Shopper Testing in Home Appraisals
Exposes Racial Bias Undermining Black Wealth,'' (Oct. 2022),
available at https://ncrc.org/faulty-foundations-mystery-shopper-testing-in-home-appraisals-exposes-racial-bias-undermining-black-wealth/.
\61\ See FHFA, Request for Information on Appraisal-Related
Policies, Practices, and Processes (Dec. 28, 2020), p. 4, available
at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/RFI-Appraisal-Related-Policies.pdf.
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III. The Proposed Rule
A. FHFA Fair Lending Oversight of the Regulated Entities
The proposed rule would codify in regulation FHFA's existing fair
lending oversight functions with respect to the regulated entities,
including conducting supervisory examinations, issuing examination
findings, requiring regular and special reporting and data, and
enforcement. The proposed oversight would be substantially the same as
FHFA's current fair lending oversight functions, but would establish
FHFA's oversight of potential unfair or deceptive acts or practices by
the regulated entities and would require the regulated entities to file
certifications of compliance with fair lending and fair housing laws
with regular and special reports. It would additionally establish more
precise standards related to fair housing and fair lending and
principles of equitable housing for regulated entity boards of
directors.
B. Enterprise Equitable Housing Finance Plans
The proposed rule would codify FHFA's current requirements for the
Enterprises' Equitable Housing Finance Plans. The proposed plan
requirements would be substantially the same as FHFA's current
requirements for the Enterprises' plans, but would establish additional
public disclosure and reporting requirements and expanded program
requirements. Codifying the Enterprises' plan requirements with
additions in a regulation would make the Enterprises' obligations more
explicit and transparent to the public and would also establish greater
accountability mechanisms through FHFA's statutory enforcement and
compliance authorities.
The proposed rule has some similar elements to the HUD's
affirmatively furthering fair housing rules and requirements.\62\ HUD's
framework provides helpful guidance and information on an equity
planning process that affirmatively furthers fair housing. HUD's
framework has informed FHFA in its development of the proposed rule,
but FHFA has also taken into account the unique features of the
Enterprises, its experience in overseeing the program to date, and the
views of stakeholders as part of FHFA's requests for input and
listening sessions to develop the proposed rule.
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\62\ See, e.g., 24 CFR 5.150 et seq.
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C. Enterprise Data Collection and Reporting to FHFA
The proposed rule would require the Enterprises to collect,
maintain, and report data on language preference, homeownership
education, and housing counseling for applicants and borrowers. The
Enterprises collect this data through their automated underwriting
systems and loan delivery. The Enterprises also provide a standard form
for collection of the data--the Supplemental Consumer Information Form.
The proposed rule would codify the FHFA policy announced in May 2022
for mandatory use of the Supplemental Consumer Information Form.\63\
Consistent with current policy, the proposed rule would not require
applicants and borrowers to respond to a language preference question,
and applicants and borrowers may be provided with the option to not
respond to a question about language preference as part of the
information collection to satisfy the proposed rule.
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\63\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
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D. Application of FHFA's Prudential Standard Framework
Section 4513b of the Safety and Soundness Act (12 U.S.C. 4513b(b))
requires FHFA to establish prudential management and operations
standards for its regulated entities, authorizes FHFA to establish such
standards by regulation or guideline, and establishes a corrective
action framework if a regulated entity fails to meet a prudential
standard.\64\ To implement section 4513b, FHFA has adopted a Prudential
Management and Operations Standards (PMOS) regulation, at 12 CFR part
1236, and an Appendix to that regulation. The PMOS regulation is
primarily procedural; for example, it addresses FHFA determinations
that a regulated entity has failed to meet a standard; provides that
FHFA may base that determination on an examination, inspection, or any
other information; and addresses the contents and filing deadlines for
corrective plans.\65\ The PMOS regulation also codifies FHFA's
authority to require a regulated entity to submit a PMOS corrective
plan in conjunction with other required submissions.\66\ If a regulated
entity fails to submit a corrective plan or fails to implement an
approved corrective plan, the PMOS regulation addresses FHFA's
statutory authority to order the regulated entity to correct the
deficiency or to undertake additional corrective or remedial measures
as FHFA may require.
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\64\ 12 U.S.C. 4513b(b)(2)(B).
\65\ 12 CFR 1236.4(a).
\66\ 12 CFR 1236.4(c)(2)(ii).
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The Appendix sets forth substantive prudential management and
operational standards (Standards) that FHFA has established as
guidelines, including a statement on General Responsibilities of the
Board and Management and ten numbered Standards. These Standards
contain many elements that are relevant to components of the proposed
rule, such as responsibilities for boards and senior management with
respect to appropriate business strategies and policies; standards for
internal controls and information systems; maintenance of records;
alignment of the overall risk
[[Page 25299]]
profile with mission objectives; internal audit; compliance with laws,
regulations, and supervisory guidance; and others. Therefore,
compliance with the proposed rule, if finalized, would be subject to
applicable Standards and could be addressed through the PMOS corrective
framework.
Separately, the proposed rule would establish Subpart C, Enterprise
Equitable Housing Finance Planning, except for Sec. 1293.26, as a
prudential standard within the meaning of section 4513b. FHFA has
determined that it is legally appropriate and would be sound policy to
identify that subpart as a prudential standard. The Enterprise
equitable housing finance planning framework, as discussed above, is
consistent with the Enterprises' authorizing statute obligations and
FHFA's statutory charges related to ensuring regulated entities operate
consistent with the public interest and that FHFA furthers fair housing
in its oversight of the regulated entities. In addition to the more
general application of the PMOS framework through the Standards
discussed above, this designation of the equitable housing finance
planning framework as a Standard by regulation would provide FHFA
access to section 4513b corrective measures, if necessary, to address
deficiencies in equitable housing finance planning or implementation by
an Enterprise. Section 1293.26 is proposed to be excluded from the
designation because that section articulates a broader concept related
to ensuring Enterprise boards appropriately consider the equitable
housing finance plan alongside other longstanding mission
responsibilities in their oversight of an Enterprise and not the
required elements and process for an Equitable Housing Finance Plan.
Section 4513b makes clear that corrective actions pursuant to the
PMOS framework are in addition to any enforcement action FHFA would be
authorized to take, if FHFA determined that an Enterprise has violated
any regulation.\67\ Thus the PMOS framework does not limit FHFA's
authorities and FHFA will determine the appropriate supervisory
response based on the facts and circumstances of any failure or
violation.
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\67\ 12 U.S.C. 4513b(c).
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E. Policy Purposes for and Benefits of the Proposed Rule
All communities in the United States deserve access to sustainable
housing opportunities and well-functioning housing markets. As
acknowledged through the Duty to Serve requirements, housing goals
framework, and the Agency and the regulated entities' public purposes,
enumerated protected classes under fair housing and fair lending laws
are not the only underserved communities in the United States. The
proposed rule's incorporation of broad protections for consumers under
prohibitions against unfair or deceptive acts or practices, and
defining underserved communities broadly for the purposes of Equitable
Housing Finance Plans, will help ensure the Agency and the regulated
entities focus on underserved communities throughout the United States,
consistent with the Enterprises' Charter Acts, the Agency's public
interest duty, and the purposes of the Fair Housing Act. The proposed
rule will add to the Agency's existing set of programs and tools to
accomplish these goals.
By codifying many of FHFA's existing requirements and policies
regarding fair lending oversight, Enterprise Equitable Housing Finance
Plans, and language preference and homeownership education and housing
counseling data collection, as well as expanding certain requirements,
the proposed rule serves a number of policy purposes and would provide
a number of policy benefits.
Consistent oversight of fair housing and fair lending, along with
public participation and accountability, have been key issues that
impact the fair housing and fair lending compliance by financial
institutions and housing market actors. Codifying the requirements and
policies through rulemaking will provide greater public transparency
and input regarding the existing programs, as well as greater assurance
of the Agency's commitment. Codifying existing fair housing and fair
lending requirements and enhancing them will provide greater oversight
and accountability regarding the regulated entities' fair housing and
fair lending compliance and therefore benefit the public who are
ultimately protected by fair housing and fair lending laws.
Strategic planning for improvements in fair housing has been a key
component of fulfilling commitments to affirmatively further fair
housing and is an important way in which progress toward providing for
fair housing throughout the United States can be made. Codifying
Equitable Housing Finance Plans in regulation and providing additional
standards through rulemaking will ensure that fair housing issues can
be addressed proactively in addition to reactively through supervision
and examinations.
Establishing enhanced standards and transparency for fair housing
and fair lending generally, and for the Equitable Housing Finance
Plans, may also have the benefit of providing greater market assurance
with respect to the regulated entities' compliance with applicable
laws, thereby supporting liquidity in the secondary mortgage market and
support for underserved communities.
IV. Section-by-Section Analysis
A. Section 1293.1 General
Subpart A of the proposed rule would provide general information,
rules, definitions, and compliance and enforcement provisions that
apply to all of proposed part 1293. Proposed Sec. 1293.1(a) would
provide general information and rules, including fair lending oversight
of the regulated entities, equitable housing finance planning by the
Enterprises, and data collection and reporting by the regulated
entities (currently only including requirements for the Enterprises).
Proposed Sec. 1293.1(b) would provide that nothing in proposed part
1293 permits or requires a regulated entity to engage in any activity
that would otherwise be inconsistent with the Safety and Soundness Act,
the authorizing statutes, or other applicable law. FHFA believes it is
important to reiterate in the proposed rule that activities must be in
keeping with safety and soundness. Without safety and soundness
underlying the regulated entities' activities, they cannot truly
promote fair housing, fair lending, and principles of housing equity.
As discussed later, FHFA is also adding the prohibition on unfair or
deceptive acts or practices to the laws it oversees with respect to the
regulated entities. FHFA believes that underscoring the importance of
safety and soundness and avoiding unfair or deceptive acts or practices
complements and enhances the pursuit of solutions that further fair
housing, fair lending, and principles of housing equity and makes clear
that predatory products or activities would not be in furtherance of
the proposed rule. Proposed Sec. 1293.1(c) would provide that nothing
in proposed part 1293 creates a private right of action.
B. Section 1293.2 Definitions
Proposed Sec. 1293.2 would provide definitions that apply to
proposed part 1293.
The proposed definition of ``Equitable Housing Finance Plan''
(plan) is a key component of subpart C of the proposed rule. It is a
three-year public plan developed with public engagement and adopted by
each Enterprise describing how each Enterprise will overcome barriers
to sustainable housing opportunities faced by one or more
[[Page 25300]]
underserved communities through objectives, meaningful actions, and
measurable goals. The plan is a key element of the proposed rule, and
its requirements are more fully described in proposed Sec. Sec.
1293.22 and 1293.25. The proposed definition of ``annual plan update''
(update) is a public update to a plan for the second or third year of a
planning cycle. The proposed definition of ``performance report''
(report) is an annual public report by an Enterprise on its performance
under a plan and other information on equitable housing and fair
lending that meets the requirements of proposed Sec. 1293.23 and any
other FHFA requirements.
The proposed definition of ``barrier'' is an important element of a
plan. As part of a plan, an Enterprise would be required to identify
barriers faced by an underserved community. The proposed definition
includes Enterprise actions, products, or policies as well as aspects
of the housing market that can reasonably be influenced by an
Enterprise's actions, products, or policies that contribute to an
underserved community's limited share of sustainable housing
opportunities, difficulties in accessing those sustainable housing
opportunities, or the continuing adverse effects of discrimination
affecting their participation in the housing market. The proposed
definition focuses on an Enterprise's own actions, products, or
policies because these are what an Enterprise can most easily change.
Including aspects of the housing market that can reasonably be
influenced by an Enterprise's actions, in addition to an Enterprise's
own actions, products, or policies, encourages actions that serve the
public interest, promote access to mortgage credit throughout the
nation, and further fair housing.
The proposed definition of ``fair housing and fair lending laws''
provides an enumeration of Federal fair housing and fair lending laws
to which the regulated entities are subject and FHFA oversees pursuant
to the fair lending oversight described in the proposed rule. The
``fair housing and fair lending laws'' are the Fair Housing Act, the
Equal Credit Opportunity Act, and implementing regulations.
Additionally, with respect to an Enterprise, the ``fair housing and
fair lending laws'' include 12 U.S.C. 4545 and implementing
regulations.
The proposed definition of ``sustainable housing opportunity''
relates to the scope and type of the benefits that the plans should
seek to achieve for underserved communities through meaningful actions.
The proposed definition includes both rental and homeownership
opportunities that include one or more characteristics important to the
needs of a tenant or homeowner within its scope and includes several
illustrative characteristics of the concept, including affordability,
habitability, resilience to climate impacts, quality, locational
benefits, accessibility, long-term sustainability, and accommodations
for short-term hardships. These are important features of housing
opportunities that should help focus the Enterprises' plans. Further
standards related to the proposed definition are provided in proposed
Sec. 1293.25.
The proposed definition of ``underserved community'' is an
important element of a plan. An Enterprise chooses one or more
underserved communities on which to focus for a planning cycle.
``Underserved community'' would be defined as a group of people with
shared characteristics or an area that is subject to current
discrimination or has been subjected to past discrimination that has or
has had continuing adverse effects on the group or area's participation
in the housing market, historically has received or currently receives
a lower share of the benefits of Enterprise programs and activities
providing sustainable housing opportunities, or that otherwise has had
difficulty accessing these benefits compared with groups of people
without the shared characteristic or other areas. The proposed
definition includes characteristics protected by fair lending laws
applicable to the Enterprises, but the definition is not limited to
such characteristics. The definition provides illustrative examples, if
supported by adequate information under the requirements of proposed
Sec. 1293.25. The proposed definition makes clear that a variety of
groups or areas could be chosen by an Enterprise. The inclusion or
exclusion of any particular group from the illustrative examples is not
an indication of FHFA's views about whether or not that group
constitutes an underserved community or whether it should be the focus
of a plan.
C. Section 1293.3 Compliance and Enforcement
Proposed Sec. 1293.3 reiterates general FHFA authority related to
compliance and enforcement for proposed part 1293, inclusive of all
aspects of the proposed rule. FHFA has broad authority for compliance
and enforcement. This section notes FHFA's ability to conduct
examinations related to proposed part 1293, including fair lending
compliance, equitable housing finance, and other matters. It also notes
FHFA's ability to issue adverse examination findings and take various
forms of enforcement actions and issue civil money penalties under 12
U.S.C. 4511(b), 4513b, 4631, and 4636. This section is similar to other
sections of FHFA regulations related to oversight of specific
programmatic areas \68\ and the FHFA fair lending policy statement.\69\
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\68\ See, e.g., 12 CFR 1223.24.
\69\ See FHFA, ``Policy Statement on Fair Lending,'' (Jul. 9,
2021), available at https://www.govinfo.gov/content/pkg/FR-2021-07-09/pdf/2021-14438.pdf.
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Some examples of how FHFA's compliance and enforcement authority
could be used with respect to fair lending oversight, equitable housing
finance, or data collection or reporting include, but are not limited
to:
If FHFA found that a regulated entity had insufficient
compliance management around fair lending laws or the proposed rule,
FHFA could issue adverse examination findings and factor the
insufficient compliance management into supervisory ratings;
If FHFA found that a regulated entity had violated the
Fair Housing Act, FHFA could issue adverse examination findings, factor
the non-compliance into supervisory ratings, and enter into a consent
order with the regulated entity requiring corrective action, additional
remedies, and civil money penalties;
If an Equitable Housing Finance Plan, annual update,
performance report, or an Enterprise's actions taken under the program
did not meet the requirements of this proposed rule, FHFA could issue
an adverse examination finding, factor non-compliance into supervisory
ratings, and issue a prudential management operating standard notice
requiring the entity to submit a corrective plan; and
If FHFA found that a regulated entity had not complied
with required data collection or reporting, FHFA could issue an adverse
examination finding, factor non-compliance into supervisory ratings,
and enter into a written agreement with the regulated entity.
Neither this section of the proposed rule or the examples given
above are intended to limit FHFA's authority in any way. This section
merely restates some of the most applicable FHFA authority.
D. Section 1293.4 Preservation of Authority
Proposed Sec. 1293.4 would provide that nothing in the proposed
rule would in any way limit the authority of the agency under other
provisions of applicable law and regulations.
[[Page 25301]]
E. Section 1293.11 Regulated Entity Compliance
Subpart B of the proposed rule applies to all regulated entities
and provides standards related to compliance, responsibilities of
boards of directors, reports, data, and certification. Proposed Sec.
1293.11 addresses regulated entity compliance with fair housing and
fair lending laws. Proposed Sec. 1293.11(a) states that regulated
entities must comply with the Fair Housing Act, the Equal Credit
Opportunity Act, and 12 U.S.C. 4545 for the Enterprises. Proposed Sec.
1293.11(b) would provide that the regulated entities must comply with
15 U.S.C. 45 (Section 5 of the Federal Trade Commission Act), which
prohibits unfair or deceptive acts or practices. The prohibition
against unfair or deceptive acts or practices is an important
protection under Federal law for consumers and other market actors
against predatory and deceptive actions,\70\ and FHFA has determined it
would be appropriate to oversee the regulated entities for compliance
with this statute. Violations of these laws by the regulated entities
would, in addition, violate Sec. 1293.11(a) and (b) as proposed.\71\
The Safety and Soundness Act empowers FHFA to oversee its regulated
entities' compliance with ``other applicable law,'' 12 U.S.C.
4511(b)(2), and to engage in enforcement for noncompliance with
law.\72\ Other Federal financial regulators examine and oversee their
regulated entities on these or similar bases as part of consumer
protection under similar authority.\73\ While FHFA is including unfair
or deceptive acts or practices in the proposed rule because they are
similar to fair lending laws in the intent to ensure fair treatment,
FHFA understands unfair or deceptive acts or practices to encompass a
broad scope of activities harmful to individuals that go beyond illegal
discrimination.
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\70\ Kathleen C. Engel et al., A Tale of Three Markets: The Law
and Economics of Predatory Lending, 80 Tex. L. Rev. 1255, 1260
(2002) (noting that lending fraud or deceptive practices ``come[ ]
in endless varieties''). Ngai Pindell, The Fair Housing Act at
Forty: Predatory Lending and the City As Plaintiff, J. Affordable
Housing & Community Dev. L., Winter 2009, at 173-75 (describing
contemporary unfair and predatory lending practices).
\71\ See, e.g., 12 U.S.C. 4636.
\72\ 12 U.S.C. 4631. FHFA's cease-and-desist authority is
similar to Section 8 of the Federal Deposit Insurance Act under
which the FDIC (for example) enforces unfair and deceptive acts or
practices.
\73\ See, e.g., Federal Deposit Insurance Corporation (FDIC)
Guidance on Unfair or Deceptive Acts or Practices, FIL-57-2002 (May
30, 2002), available at https://www.fdic.gov/news/inactive-financial-institution-letters/2002/fil0257.html. See also HUD's
Mortgagee Letter 2014-10 (ML 2014-10), available at https://www.hud.gov/sites/documents/14-10ML.PDF (HUD letter ``remind[ing]
mortgagees of the Federal Housing Administration's (FHA)
requirements prohibiting misleading or deceptive advertising'').
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Proposed Sec. 1293.11(c) would establish more precise standards
related to fair housing and fair lending and the prohibition on unfair
or deceptive acts or practices for regulated entity boards of directors
in carrying out their existing responsibility under FHFA's Corporate
Governance regulation (12 CFR part 1239) to direct the operations of
the regulated entities in conformity with FHFA regulations. FHFA's
Corporate Governance regulation provides that the ultimate
responsibility for a regulated entity's oversight rests with the board
of directors, and that directors have a duty to direct the operations
of a regulated entity in conformance with the authorizing statutes, the
Safety and Soundness Act, and FHFA regulations.\74\ Board and
management oversight of fair housing and fair lending compliance has
long been recognized as a critical component of a well-functioning
compliance management system. Federal financial regulators regularly
examine their regulated entities for sufficient fair lending compliance
management, and rate regulated entities based in part on Board and
Management Oversight.\75\ Consent orders for fair housing and fair
lending violations frequently include specific requirements for
enhanced Board and Management Oversight.\76\ The standard articulated
in the proposed rule is intended to provide more clarity and guidance
to directors in how to incorporate the proposed rule into the pre-
existing duty under the Corporate Governance regulation to direct
operations in conformity with FHFA regulations. The proposed rule's
language on ``appropriately considering'' compliance with fair housing
and fair lending laws and the prohibition on unfair or deceptive acts
or practices are intended to be flexible and tailored to the particular
consideration at hand, while reinforcing the broad application of fair
housing and fair lending laws and the prohibition on unfair or
deceptive acts or practices on a regulated entity's operations and the
board's ultimate responsibility for the regulated entity's oversight.
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\74\ 12 CFR 1239.4.
\75\ See, e.g., Federal Financial Institutions Examination
Council, Uniform Interagency Consumer Compliance Rating System, 81
FR 79473 (Nov. 14, 2016) (outlining expectations for Board and
Management Oversight in consumer compliance management, including
fair lending); Federal Financial Institutions Examination Council,
Interagency Fair Lending Examination Procedures, available at
https://www.fdic.gov/regulations/examinations/fairlend.pdf
(detailing examiners' engagement with management and review of
management oversight).
\76\ See, e.g., United States v. Cadence Bank Consent Order,
available at https://www.justice.gov/crt/case-document/file/1429051/
download#:~:text=%C2%A7%C2%A7%201691%2D1691f.&text=1.,%2C%20color%2C%
20and%20national%20origin.
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F. Section 1293.12 Reports and Data
Proposed Sec. 1293.12 would provide that FHFA may require the
regulated entities to provide to FHFA regular and special reports,
including the provision of data, concerning fair lending and fair
housing. FHFA has issued fair lending reporting orders to Fannie Mae
and Freddie Mac requiring regular reports.\77\ FHFA has not issued fair
lending reporting orders to the Banks, and FHFA is not proposing to
require specific reports of the Banks through this proposed rule. FHFA
would plan to issue such reporting orders at an appropriate time, if
deemed necessary.
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\77\ See FHFA's Fair Lending Orders, available at https://
www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Fair-Lending-
Oversight-
Program.aspx#:~:text=Fair%20Lending%20Reporting%20Orders&text=The%20o
rders%20require%20the%20Enterprises,lending%20supervision%20and%20mon
itoring%20capabilities.
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Proposed Sec. 1293.12 also provides that each regular report
related to fair housing and fair lending shall include a certification
of the regulated entity's compliance with fair housing and fair lending
laws and the prohibition on unfair or deceptive acts or practices in
addition to any other required certification or declaration (such as a
declaration under 12 U.S.C. 4514(a)(4)). Under FHFA's regular and
special report authority under 12 U.S.C. 4514(a)(4), each report must
contain a declaration from an officer that the report is true and
correct to the best of such officer's knowledge and belief. This
section would add an additional requirement for a certification that
the regulated entity complies with fair housing and fair lending laws
and the prohibition on unfair or deceptive acts or practices for
reports related to fair housing and fair lending. This certification
requirement would provide additional incentive to the boards and
management of the regulated entities to ensure compliance with fair
housing and fair lending laws in their operations. Both Enterprises
require their seller/servicers to attest to compliance with fair
housing and fair lending laws.\78\ Certifications related to
[[Page 25302]]
compliance are commonly used by other Federal agencies, including with
respect to Federal housing grants, such as Community Development Block
Grants, and consent decrees and settlement agreements by the Department
of Justice and HUD in housing and lending discrimination cases.
---------------------------------------------------------------------------
\78\ See Fannie Mae Selling Guide, Compliance with Laws
available at https://selling-guide.fanniemae.com/Selling-Guide/Doing-Business-with-Fannie-Mae/Subpart-A3-Getting-Started-with-Fannie-Mae/Chapter-A3-2-Compliance-with-Requirements-and-Laws/1645975681/A3-2-01-Compliance-With-Laws-07-06-2022.htm and Freddie
Mac Seller/Service Guide, Compliance with Applicable Law available
at https://guide.freddiemac.com/app/guide/section/1301.2/03-01-2023.
---------------------------------------------------------------------------
FHFA is not proposing to include the specific certification
language in the rule, instead merely the general requirement. FHFA
believes this would allow flexibility for FHFA to make changes to the
specific certification language when necessary. However, FHFA seeks
comment on the following certification language: ``[Regulated entity]
complies and has complied in all material respects with, and maintains
policies, procedures, and internal controls to assure compliance with
fair housing and fair lending laws and the prohibition on unfair or
deceptive acts or practices.'' If a regulated entity did not believe it
could certify to that or similar language for a particular period, such
as because FHFA had identified fair lending non-compliance in a
supervisory examination that the regulated entity was still
remediating, and the regulated entity would not be able to complete
remediation by the time of certification, it could notify FHFA in
advance to discuss additional stipulations to the language.
G. Section 1293.21 General
Proposed Sec. 1293.21 provides general information that Subpart C
of the proposed rule, entitled Enterprise Equitable Housing Finance
Planning, sets forth the Enterprises' duty to engage in equitable
housing finance planning and establishes standards and procedures
related to public engagement and FHFA's oversight of the Enterprises'
planning and actions. It provides for general timing requirements when
a date falls on a non-business day. It also provides that submission
requirements and publication dates provided in the proposed rule may be
altered or waived by the Director by publication of a public order. As
discussed above, it also designates Subpart C, except for Sec.
1293.26, as a prudential standard.
H. Section 1293.22 Plans and Updates
Proposed Sec. 1293.22 provides rules related to plans and updates.
Proposed Sec. 1293.22(a) would establish the general requirement
for each Enterprise to adopt a plan covering a three-year period, with
optional updates in the second and third year of the plan period.
Proposed Sec. 1293.22(b) establishes general content requirements
for the plan, including an identification of barriers to sustainable
housing opportunities faced by one or more underserved communities,
objectives that define the outcomes the plan seeks to accomplish that
address the identified barriers, meaningful actions that describe the
high-impact activities that the Enterprise will undertake to accomplish
or further the identified objectives, which may span one or more years
(including extending beyond the period covered by the plan); specific,
measurable, and time-bound goals for those actions; and summaries of
the Enterprise's public engagement in developing the plan.
Proposed Sec. 1293.22(c) would establish a requirement for an
Enterprise to submit a plan to FHFA for review on or before September
30 of the year prior to the first year covered by the plan.
Proposed Sec. 1293.22(d) would establish general content
requirements for an update, including all changes the Enterprise is
making to its plan and a summary of any additional public engagement.
Proposed Sec. 1293.22(e) would establish a requirement for an
Enterprise to submit an update to FHFA for review on or before February
15 of the year covered by the update.
Proposed Sec. 1293.22(f) would establish standards for FHFA's
review of plans and updates. It would provide that FHFA may review each
plan and update prior to publication and may require removal of any
confidential or proprietary information; require removal of any content
that is not consistent with part 1293, the Safety and Soundness Act,
the authorizing statutes, or other applicable law; provide any feedback
for consideration; and exercise any other authority of FHFA. Inclusion
of confidential or proprietary information in plans and updates would
be inappropriate and reveal sensitive information that is not required
under the proposed rule. Further, FHFA's review may identify proposals
and plan content that are contrary to the Enterprise's authorizing
statutes, the Safety and Soundness Act, or other applicable law. FHFA
also retains all other existing authority that may be needed in
particular circumstances to address issues that arise during the review
of a plan or update. Given that a plan may only contain limited
information about a proposed action, FHFA may identify issues with the
activity through other processes, such as prior approval of new
products, or its supervision and oversight of the Enterprises. FHFA's
review of the plan would not preclude using these processes and FHFA's
full authorities if it were to later identify issues with the action,
and the public engagement opportunities throughout the plan cycle would
give FHFA additional information from the public for this purpose.
Proposed Sec. 1293.22(g) would provide that FHFA's review does not
constitute a prior approval of a plan or update or any action described
therein and that all actions included in a plan are subject to all
applicable FHFA and other requirements and authorities. For example, a
meaningful action that met the criteria for a new activity or new
product would be subject to the process described in FHFA's prior
approval for Enterprise products regulation.\79\ FHFA believes that the
process established by the proposed rule would help support the prior
approval for Enterprise products regulation by providing both FHFA and
the public information about activities being considered by the
Enterprises that may later trigger the requirements of the regulation.
---------------------------------------------------------------------------
\79\ 12 CFR part 1253.
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Proposed Sec. 1293.22(h) would provide that plans and updates must
include disclaimer language indicating the implementation of actions
may be subject to change based on certain factors. The disclaimer
language in the current plans is: ``DISCLAIMER: Implementation of the
activities and objectives in [Enterprise]'s Equitable Housing Finance
Plan may be subject to change based on factors including, without
limitation, FHFA review for compliance with [Enterprise]'s statutory
charter, specific FHFA approval requirements and safety and soundness
standards, FHFA guidance and directives, regulatory requirements,
Senior Preferred Stock Purchase Agreement obligations, and adverse
market or economic conditions, as applicable.'' FHFA seeks comment on
this disclaimer language and any changes that should be made.
Proposed Sec. 1293.22(i) would provide that each Enterprise shall
publish its plan on January 15 of the first year covered by the plan,
and each annual update on April 15 of the second and third year covered
by the plan. It would also provide that the Enterprise maintain the
plan on its website thereafter and that it ensures that the
[[Page 25303]]
plans or updates are accessible to persons with disabilities.
Proposed Sec. 1293.22(j) would provide that from time to time,
FHFA may issue public guidance on plans and updates.
I. Section 1293.23 Performance Reports
Proposed Sec. 1293.23 would provide rules related to annual
performance reports (reports). Proposed Sec. 1293.23(a) would
establish the general requirement for each Enterprise to publicly
report on its plan progress and provide other information related to
equitable housing and fair lending annually for the prior year in a
report.
Proposed Sec. 1293.23(b) would establish requirements for the
contents of the report, including: a narrative assessment about the
program; performance details for each objective, measurable goal, and
meaningful action; general outcomes categorized by group; summary of
resources dedicated to the plan; and an assessment of the Enterprise's
underwriting that includes several elements. The report section on
underwriting is similar in nature to the authorizing statutes'
requirements for assessing underwriting standards that may yield
disparate results based on the race of the borrower, including
revisions thereto that may promote fair lending, and reporting on this
assessment under the Annual Housing Activities Report.\80\ FHFA
believes that the proposed rule provides an opportunity to incorporate
this concept into a fair lending-focused report and provide details
based on it into reporting under the Equitable Housing Finance Plans.
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\80\ See, e.g., 12 U.S.C. 1723a(n)(2)(G) (``assess underwriting
standards, business practices, repurchase requirements, pricing,
fees, and procedures, that affect the purchase of mortgages for low-
and moderate-income families, or that may yield disparate results
based on the race of the borrower, including revisions thereto to
promote affordable housing or fair lending;'').
---------------------------------------------------------------------------
Proposed Sec. 1293.23(c) would establish a requirement for an
Enterprise to submit a report to FHFA for review on or before February
15 annually.
Proposed Sec. 1293.23(d) would establish standards for FHFA's
review of reports. The standards would align with the review standards
for plans and updates.
Proposed Sec. 1293.23(e) would establish a requirement for an
Enterprise to publish its report on April 15 annually. It would also
require that the report be maintained on the Enterprise's website and
that the Enterprise ensures that reports are accessible to persons with
disabilities.
Proposed Sec. 1293.23(f) would establish that FHFA may issue
public guidance on reports and also notes that FHFA may require
additional information in reports through other authorities, such as
its authority to require regular reports under 12 U.S.C. 4514. FHFA
believes that this authority may be helpful in establishing reporting
requirements in an expedited fashion for specific plans given the
differing nature of underserved communities and activities that may be
included in plans and the ongoing public engagement that is a part of
the process established by the proposed rule.
J. Section 1293.24 Public Engagement
Proposed Sec. 1293.24 establishes requirements related to public
engagement. Proposed Sec. 1293.24(a) provides that on or before June
15 annually, FHFA will conduct public engagement to gather public input
for the Enterprises and for FHFA to consider. FHFA's 2021 request for
input and listening session on the initial Equitable Housing Finance
Plan program provided valuable input and the proposed rule would
therefore codify these or similar types of public engagement as a
requirement for future plans.\81\
---------------------------------------------------------------------------
\81\ See FHFA, Enterprise Equitable Housing Finance Plans
Request for Input, (Sept. 2021), available at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Equitable-Housing-Finance-Plans-RFI.pdf; FHFA Public Listening Session: Enterprise
Equitable Housing Finance Plans RFI, (Sept. 28, 2021), available at
https://www.fhfa.gov/Videos/Pages/Enterprise-Equitable-Housing-Finance-Plans-RFI.aspx.
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Proposed Sec. 1293.24(b) of the proposed rule would provide that
the Enterprises are required to consult with stakeholders, including
members of underserved communities and housing market participants, in
development of a plan and update and describe such consultation in the
plan.
K. Section 1293.25 Program Standards
Proposed Sec. 1293.25 would establish program standards for
various elements of the Equitable Housing Finance Plan process. These
requirements are intended to provide a foundational logic model and
theory of change for a particular plan.\82\
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\82\ See, e.g., Leiha Edmonds, Urban Institute, ``Center Racial
Equity in Measurement and Evaluation: Emerging Lessons and Guidance
from Human Service Nonprofits,'' (July 2021), available at https://www.urban.org/sites/default/files/publication/104487/centering-racial-equity-in-measurement-and-evaluation_0.pdf.
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Proposed Sec. 1293.25(a) would establish requirements for
selecting one or more underserved communities to be the focus of a
plan. It would establish a requirement that an Enterprise's choice of
an underserved community be supported by information and documented in
the plan. It would also provide several factors that an Enterprise must
consider in selecting an underserved community, but would also allow
for the consideration of other factors.
Proposed Sec. 1293.25(b) would establish requirements for
objectives. It would require objectives to be logically tied to one or
more identified barriers and facilitate establishing meaningful actions
and measurable goals. Objectives establish the overall direction and
focus for the plan by defining the outcomes the plan seeks to
accomplish. Given that the definition of an underserved community can
include both a group of people with a shared characteristic or an area,
in some cases objectives could seek to provide place-based solutions to
address the needs of a specific area or may seek to provide people the
opportunity to obtain sustainable housing opportunities more broadly.
The U.S. Supreme Court has made clear that both strategies may be
appropriate and comply with the Fair Housing Act depending on the
circumstances.\83\ FHFA expects that an Enterprise would choose
appropriate strategies in developing its objectives after considering
the needs of an underserved community and feedback from public
engagement.
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\83\ See Tex. Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys.
Project, Inc., 135 S. Ct. 2507, 2512 (2015).
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Examples of objectives, if developed to meet the requirements of
the proposed rule, could include:
Developing and providing secondary market support for
special purpose credit programs that promote sustainable housing
opportunities for an underserved community;
Increasing sustainable housing opportunities for
individuals in the mortgage market, such as by expanding the number of
qualified borrowers of an underserved community, or making changes to
underwriting standards, business practices, repurchase requirements,
pricing, fees, and procedures to promote fair lending or provide
greater access to sustainable housing opportunities;
Increasing sustainable housing opportunities for renters
of an underserved community living in or seeking to live in multifamily
properties financed by the Enterprise's loan purchases, such as by
prohibiting source of income discrimination (including rental subsidies
and vouchers), providing other tenant protections, or requiring
reporting of on-time payments;
[[Page 25304]]
Reducing the homeownership gap for an underserved
community with a significant homeownership rate disparity;
Reducing disparities in acceptance rates for an
underserved community with a significant disparity in the Enterprise's
automated underwriting system;
Reducing disparities in the share of loans acquired by the
Enterprise that serve an underserved community with a significant
disparity in the share of loans acquired by the Enterprise compared to
the share of loans originated to members of that underserved community
in the overall mortgage market;
Reducing disparities in negative outcomes for an
underserved community in servicing, loan modifications, and loss
mitigation;
Reducing disparities in negative outcomes for an
underserved community in tenant screening, repayment options, and
evictions;
Increasing the supply of, and equitable access to, high-
quality affordable rental housing for an underserved community;
Reducing underinvestment and undervaluation in formerly
redlined areas or areas that are otherwise underserved or undervalued;
Increasing the supply of, and equitable access to, high-
quality affordable and accessible housing for persons with disabilities
and that is available in the most integrated setting appropriate to the
needs of an individual with a disability;
Increasing the supply of, and equitable access to, high-
quality affordable housing for families with children in areas with
access to high-quality educational, transportation, economic, and other
important opportunities;
Increasing sustainable housing opportunities for veterans;
Promoting or requiring improvements in: fair lending
standards and compliance, marketing and outreach to members of an
underserved community who are less likely to apply for certain housing
opportunities, the estimation of race and ethnicity for mortgage
applicants or housing market participants where race and ethnicity data
has not been self-reported, and fair lending self-testing by primary
lenders or other market participants that do business with the
Enterprises;
Conducting, and making available publicly, research on
advancing equity and sustainable housing opportunities for an
underserved community;
Conducting ethnographic or consumer research on how to
effectively serve an underserved community and disseminating it to
market participants to improve quality of communications and increase
community trust;
Releasing data publicly on how an Enterprise or the market
is performing in serving an underserved community, the effects of an
Enterprise's policies on an underserved community, and how an
Enterprise's actions may improve performance or address such effects;
and
Providing support to HUD program participants in
affirmatively furthering fair housing.
The inclusion or exclusion of any particular objective from the
illustrative list is not an indication of FHFA's views about whether or
not that objective should or should not be undertaken as part of a
plan. The list is intended to illustrate the flexibility of the
proposed rule.
Proposed Sec. 1293.25(c) would establish requirements for
meaningful actions. It would require that meaningful actions be
logically tied to one or more measurable goals and one or more
objectives for an identified underserved community and that they
support sustainable housing opportunities. It would also require that
meaningful actions reflect significant additional action above and
beyond actions that also serve other Enterprise objectives and goals
and reflect more than de minimis action. It would also require that
meaningful actions reflect a commitment commensurate with an
Enterprise's prominence in the housing market, its available resources,
its dedication of resources to other important efforts, the needs of
underserved communities, market conditions, and safety and soundness.
It would also require that meaningful actions comply with the Safety
and Soundness Act, the authorizing statutes, and other applicable law.
Finally, it would require that meaningful actions not be actions that
are required to remediate supervisory findings or required as a result
of enforcement actions.
Proposed Sec. 1293.25(d) would establish requirements for
measurable goals. It would require measurable goals to be logically
tied to one or more meaningful actions in a plan, be specific, be time-
bound, be focused on outcomes, and facilitate measuring Enterprise
progress, comparing Enterprise performance, and ensuring public
accountability.
L. Section 1293.26 Enterprise Board Equitable Housing and Mission
Responsibilities
Proposed Sec. 1293.26 would provide equitable housing and other
mission-related responsibilities for Enterprise boards. As discussed
above, board oversight is an important element of successful corporate
governance, and FHFA's Corporate Governance regulation establishes a
requirement for directors to direct the operations of regulated
entities in conformity with FHFA regulations. The proposal would
provide that Enterprise boards appropriately consider the objectives,
actions, and goals of the Enterprise's Equitable Housing Finance Plan,
while also appropriately considering its affordable housing goals and
Duty to Serve plans and targets, and its other mission-related
obligations, in the board's oversight of the Enterprise and the
Enterprise's business activities. The proposed rule's language on
``appropriately considering'' the equitable housing and other mission
responsibilities is intended to be flexible and tailored to the
particular consideration at hand, while reinforcing that the plan
should work in concert with the Enterprise's other mission activities
and operations as a whole. This proposed section helps clearly
articulate the ultimate responsibility of the board for oversight of
the Equitable Housing Finance Plan, the Enterprise's affordable housing
goals and Duty to Serve plans and targets, and its other mission-
related obligations, and that they should work in concert with the
Enterprise's operations as a whole.\84\
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\84\ See, e.g., Leiha Edmonds et al., Urban Institute,
``Centering Racial Equity in Measurement and evaluation,'' (July
2021), available at https://www.urban.org/sites/default/files/publication/104487/centering-racial-equity-in-measurement-and-evaluation_0.pdf.
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M. Section 1293.31 Required Enterprise Data Collection and Reporting
Proposed Sec. 1293.31 provides for certain required Enterprise
data collection and reporting related to fair housing and fair lending.
It would require the Enterprises to collect, maintain, and report data
on language preference, homeownership education, and housing counseling
for applicants and borrowers. The proposed rule would be substantially
the same as the policy announced by FHFA in May 2022.\85\ The
Enterprises currently collect this data through the automated
underwriting systems and loan delivery
[[Page 25305]]
and have established data standards for collection of the information.
The Enterprises have also issued a standard form for collection of the
data--the Supplemental Consumer Information Form.
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\85\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
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FHFA issued a request for input in 2017 that addressed improving
language access in mortgage lending and mortgage servicing.\86\ As part
of that request for input as well as through ongoing engagement,
stakeholders have noted the value of collecting the information and
certain issues related to its collection. Certain applicants or
borrowers may not wish to disclose the information; consistent with
current practice by the Enterprises, the proposed rule would not
require a response from applicants and borrowers and they could be
provided with the option to not respond to a question about language
preference as part of the information collection to satisfy the
proposed rule. Providing the applicant or borrower the option to not
respond is consistent with the collection of data on race and ethnicity
in the mortgage market.\87\ Certain stakeholders have also raised
concerns about collecting the information in compliance with the Equal
Credit Opportunity Act and Regulation B. The Consumer Financial
Protection Bureau has specified that collection of language preference
information does not violate Regulation B.\88\
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\86\ See FHFA, ``Improving Language Access in Mortgage Lending
and Servicing Request for Input,'' (May 25, 2017), available at
https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Language_Access_RFI.pdf.
\87\ 12 CFR part 1003, appendix B.
\88\ ``On May 3, 2022, the Federal Housing Finance Agency
announced that lenders will be required to use the Supplemental
Consumer Information Form, which asks about consumers' language
preference, as part of the application process for loans that will
be sold to the Enterprises. Consistent with the Consumer Financial
Protection Bureau's Nov. 2017 approval, creditors do not violate the
ECOA or Regulation B when they collect the language preference of an
applicant or borrower.'' Consumer Financial Protection Bureau,
``Resources to help industry understand, implement, and comply with
the fair lending requirements of the Equal Credit Opportunity Act
(ECOA) and Regulation B,'' available at https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/equal-credit-opportunity-act/.
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Information about homeownership education and housing counseling
provides valuable insight into these programs. In July 2022, the
Mortgage Industry Standards Maintenance Organization formed a new
working group related to housing counseling data.\89\ FHFA's National
Survey of Mortgage Originations (NSMO) includes questions related to
homeownership education and housing counseling.\90\ Researchers have
used the NSMO data to explore homeownership education and housing
counseling's effects on borrowers.\91\ Prior research has also explored
the effects of homeownership education and housing counseling on
borrowers.\92\ Consistent collection of homeownership education and
housing counseling data can facilitate research and market changes to
further make use of homeownership education and housing counseling to
assist borrowers.
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\89\ See https://www.mismo.org/about-MISMO/news/2022/07/25/mismo-issues-call-for-participants-for-new-housing-counseling-workgroup.
\90\ See FHFA, National Survey of Mortgage Originations
Technical Documentation (Dec. 13, 2022), available at https://www.fhfa.gov/DataTools/Downloads/Documents/NSMO-Public-Use-Files/NSMO-Technical-Documentation-20221213.pdf.
\91\ See Robert Argento et al., ``First-Time Homebuyer
Counseling and the Mortgage Selection Experience in the United
States: Evidence from the National Survey of Mortgage
Originations,'' CityScape, Vol. 21, Number 2, (Nov. 2019), available
at https://www.huduser.gov/portal/periodicals/cityscpe/vol21num2/ch3.pdf.
\92\ See Wei Li et al., ``NeighborWorks America's Homeownership
Education and Counseling: Who Receives It and Is it Effective?''
Urban Institute (Sept. 29, 2016), available at https://www.urban.org/research/publication/neighborworks-americas-homeownership-education-and-counseling-who-receives-it-and-it-effective; Jennifer Turnham ``Pre-Purchase Counseling Outcome
Study,'' (May 2012), available at https://www.huduser.gov/publications/pdf/pre_purchase_counseling.pdf; J. Michael Collins et
al., ``Homeownership Education and Counseling: Do We Know What
Works?'' available at https://massinc.org/wp-content/uploads/2011/06/76378_10554_Research_RIHA_Collins_Report.pdf.
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FHFA believes that the information collected on language
preference, homeownership education, and housing counseling for
applicants and borrowers can support efforts to promote sustainable
housing opportunities for underserved communities and could underlie
elements of future Equitable Housing Finance Plans.
N. Proposed Rule Timing Elements
Considering the timing aspects of the proposed rule together, in
the year prior to new plans, FHFA would conduct public engagement on or
before June 15 (e.g., FHFA would conduct public engagement on or before
June 15, 2024, to inform planning and oversight related to the 2025-
2027 plans). An Enterprise would submit the plan to FHFA for review by
September 30 in the year prior to the three-year period covered by the
plan; the Enterprise would then publish the plan on its website on
January 15 of the first year covered by the plan (e.g., a Freddie Mac
plan covering 2025-2027 would be submitted to FHFA on September 30,
2024, and published by Freddie Mac on January 15, 2025). FHFA would
conduct public engagement on or before June 15 in the first year of the
plan cycle (e.g., FHFA would conduct public engagement on or before
June 16, 2025, because it is the first business day after June 15).
Updates and reports would be submitted to FHFA by February 15 of the
second year of the plan cycle and published by an Enterprise on April
15 (e.g., a 2026 Freddie Mac update to a 2025-2027 plan would be
submitted to FHFA on February 16, 2026, because it is the first
business day after February 15, and published by Freddie Mac on April
15, 2026). FHFA would conduct public engagement on or before June 15 of
the second year of the plan cycle (e.g., FHFA would conduct public
engagement on or before June 15, 2026). Updates and reports would be
submitted to FHFA by February 15 of the third year of the plan cycle
and published by an Enterprise on April 15 (e.g., a 2027 Freddie Mac
update to a 2025-2027 plan would be submitted to FHFA on February 16,
2027, because it is the first business day after February 15, and
published by Freddie Mac on April 15, 2027). FHFA would conduct public
engagement on or before June 15 in the third year of the plan (e.g.,
FHFA would conduct public engagement on or before June 15, 2027).
Establishing expected dates by rule for submission, public
engagement, and publication provides certainty and transparency to the
public and the Enterprises, while permitting the Director to change the
dates by public order if necessary in exigent circumstances.
V. Considerations of Differences Between the Banks and the Enterprises
Under the proposed rule, both the Enterprises and the Banks would
be subject to proposed subpart A (Sec. Sec. 1293.1 through 1293.3) and
subpart B (Sec. Sec. 1293.11 through 1293.12), including general
provisions related to fair housing and fair lending laws, compliance,
examinations, oversight, and enforcement. Additionally, both the Banks
and Enterprises would be covered by FHFA's ability to require regular
and special reports and the requirement to certify compliance in
regular reports. However, FHFA has not currently issued any reporting
orders requiring regular or special fair housing and fair lending
reports from the Banks. The Equitable Housing Finance Plan and broader
equitable housing finance planning requirements described specifically
in subpart C (Sec. Sec. 1293.21 through 1293.26) would apply only to
the Enterprises and would codify in regulation and expand on the
existing equitable housing framework for the Enterprises that FHFA
established. As
[[Page 25306]]
discussed above, as part of FHFA's comprehensive review of the Banks,
commenters have suggested incorporating equitable housing
considerations for the Banks and this idea is currently under
consideration. FHFA requests public comment on whether FHFA should
codify a similar framework to subpart C for the Banks in regulation and
what elements of the framework should be included, modified, or
excluded if FHFA were to apply such a framework to the Banks through
regulation. FHFA also requests comment on other ways to incorporate
principles of equitable housing for the Banks that would meet the same
objective. Proposed subpart D (Sec. 1293.31) could include data
collection and reporting requirements that would apply to both the
Enterprises and the Banks, but currently as proposed the requirements
would apply only to the Enterprises.
When promulgating regulations or taking other actions that relate
to the Banks, section 1313(f) of the Safety and Soundness Act, as
amended by section 1201 of HERA, requires the Director to consider the
differences between the Banks and the Enterprises with respect to the
Banks' cooperative ownership structure; mission of providing liquidity
to members; affordable housing and community development mission;
capital structure; and joint and several liability.\93\ In preparing
the proposed rule, the Director has considered the differences between
the Banks and the Enterprises as they relate to the above factors and
has determined that none of the statutory factors would be adversely
affected by the proposed rule. The Director is requesting comments from
the public about whether differences related to these factors should
result in a revision of the proposed rule as it relates to the Banks.
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\93\ 12 U.S.C. 4513(f).
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VI. Comments Specifically Requested
As stated above, FHFA invites comments on all aspects of the
proposed rule and will take all comments into consideration before
issuing a final rule. In addition to comments specifically requested
within the description of the proposed rule above, FHFA also requests
comment on the questions set forth below. The most helpful comments
reference the specific questions listed, explain the reason for any
changes, and include supporting data.
General
1. The rule currently does not define equity. FHFA seeks comments
on whether the rule should define equity. If the rule should define
equity, what would be an appropriate definition?
Compliance and Enforcement
2. How can FHFA improve fair lending compliance oversight of the
regulated entities?
3. Are there other applicable consumer compliance and/or consumer
protection statutes and regulations that FHFA should include in this
section?
4. Are there any benefits or other issues FHFA should be aware of
in considering adding unfair or deceptive acts or practices to its
compliance and enforcement for regulated entities?
5. How should FHFA approach assessing compliance with non-fair
lending consumer protection authorities such as unfair or deceptive
acts or practices? Would additional guidance be helpful to regulated
entities as they assess their overall compliance management?
6. Are there alternatives FHFA should consider to the language and
approach for fair lending compliance certifications?
Equitable Housing Finance Plans and Updates
7. Is the three-year timeline for the plans adopted by the
Enterprises appropriate?
8. Should FHFA issue an evaluation of the Enterprises? Should the
rule include required evaluation metrics for the progress reports?
9. Should the rule include required or optional priority goals? If
so, who should determine which priority goals are applicable?
10. From year to year, what should be the scope of updates to the
Equitable Housing Finance Plans?
11. Should the focus of an Equitable Housing Finance Plan be
limited to one underserved community at a time?
12. Does the rule provide for sufficient public engagement?
13. Developing or supporting special purpose credit programs is one
type of meaningful action that an Enterprise could take under an
Equitable Housing Finance Plan, but the rule would not establish any
special purpose credit programs under 12 CFR 1002.8(a)(1) in the
regulation itself. Should FHFA adopt any special purpose credit
programs under 12 CFR 1002.8(a)(1) and, if so, what type of program(s)
should be adopted?
14. Are the minimum requirements for performance reports sufficient
or should performance reports contain any additional information not
included in the rule?
Federal Home Loan Banks
15. Should the Banks be required to comply with a framework similar
to that of the Equitable Housing Finance Plans by regulation?
16. What elements of the framework should be included, modified, or
excluded if FHFA were to apply such a framework to the Banks by
regulation?
17. Are there other ways to incorporate principles of equitable
housing for the Banks that would meet the same objective?
VII. Paperwork Reduction Act
The proposed rule would not contain any information collection
requirement that would require the approval of the Office of Management
and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.). Therefore, FHFA has not submitted any information to OMB for
review.
VIII. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the Agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. FHFA has considered the impact of this proposed rule under
the Regulatory Flexibility Act. FHFA certifies that this proposed rule,
if adopted as a final rule, will not have a significant economic impact
on a substantial number of small entities because the regulation would
apply only to the regulated entities, which are not small entities for
purposes of the Regulatory Flexibility Act.
List of Subjects for 12 CFR Part 1293
Government-sponsored enterprises, Fair housing, Federal home loan
banks, Mortgages, Reporting and recordkeeping requirements.
Authority and Issuance
0
Accordingly, for the reasons stated in the preamble, under the
authority of 12 U.S.C. 4511, 4513, 4526, FHFA proposes to add part 1293
to chapter XII in title 12 of the Code of Federal Regulations, to read
as follows:
[[Page 25307]]
PART 1293--FAIR LENDING OVERSIGHT AND EQUITABLE HOUSING FINANCE
Subpart A--General
Sec. 1293.1 General.
Sec. 1293.2 Definitions.
Sec. 1293.3 Compliance and enforcement.
Sec. 1293.4 Preservation of authority.
Sec. Sec. 1293.5-1293.10 [Reserved]
Subpart B--Fair Housing and Fair Lending Compliance
Sec. 1293.11 Regulated entity compliance.
Sec. 1293.12 Reports, data, and certifications.
Sec. Sec. 1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
Sec. 1293.21 General; Identification of subpart as prudential
standard.
Sec. 1293.22 Equitable housing finance plans and updates.
Sec. 1293.23 Performance reports.
Sec. 1293.24 Public engagement.
Sec. 1293.25 Program requirements.
Sec. 1293.26 Enterprise board equitable housing and mission
responsibilities.
Sec. 1293.27-1293.30 [Reserved]
Subpart D--Data Collection
Sec. 1293.31 Required Enterprise data collection and reporting.
Authority: 12 U.S.C. 1456(c)(1); 12 U.S.C. 1723a(m)(1); 12
U.S.C. 4511; 12 U.S.C. 4513; 12 U.S.C. 4513b; 12 U.S.C. 4514; 12
U.S.C. 4517; 12 U.S.C. 4526; 42 U.S.C. 3608(d).
Subpart A--General
Sec. 1293.1 General.
(a) This part sets forth requirements related to fair lending
oversight of regulated entities, equitable housing finance planning by
the Enterprises, and certain data collection and reporting by the
regulated entities.
(b) Nothing in this part permits or requires a regulated entity to
engage in any activity that would otherwise be inconsistent with the
Safety and Soundness Act, the authorizing statutes, or other applicable
law.
(c) Nothing in this part creates a private right of action.
Sec. 1293.2 Definitions.
For purposes of this part:
Annual plan update (update) means a public update to an Equitable
Housing Finance Plan for the second or third year of a planning cycle.
Barrier means an element of an Enterprise's actions, products, or
policies, or an aspect of the housing market that can reasonably be
influenced by the Enterprise's actions, products, or policies, that
contributes to an underserved community's limited share of sustainable
housing opportunities, difficulties in accessing those sustainable
housing opportunities, or the continuing adverse effects of
discrimination affecting their participation in the housing market.
Equitable Housing Finance Plan (plan) means a three-year public
plan developed with public engagement and adopted by each Enterprise
describing how each Enterprise will overcome barriers to sustainable
housing opportunities faced by one or more underserved communities
through objectives, meaningful actions, and measurable goals.
Fair housing and fair lending laws means the Fair Housing Act, the
Equal Credit Opportunity Act, and implementing regulations.
Additionally, with respect to an Enterprise, it means 12 U.S.C. 4545
and implementing regulations.
Performance report (report) means an annual public report by an
Enterprise on its performance under its Equitable Housing Finance Plan
and other information on equitable housing and fair lending that meets
the requirements of Sec. 1293.23 and any other FHFA requirements.
Sustainable housing opportunity means a rental or homeownership
opportunity that includes one or more characteristics important to the
needs of a tenant or homeowner. These include but are not limited to:
being affordable to obtain and sustain; relating to a dwelling that
meets basic habitability requirements and is reasonably able to
withstand natural disasters or other climate-related impact events;
relating to a dwelling that is improving the quality of housing stock
in an area; being located in an area with access to educational,
transportation, economic, and other important opportunities, including
community assets; being accessible for persons with disabilities and
available in the most integrated setting appropriate to the needs of an
individual with a disability; not placing the tenant or homeowner in a
position where they are unlikely to succeed in sustaining the housing
opportunity over the long term; and providing reasonable opportunities
to accommodate hardships by the renter or homeowner to allow
continuation of the housing opportunity.
Underserved community is a group of people with shared
characteristics or an area that is subject to current discrimination or
has been subjected to past discrimination that has or has had
continuing adverse effects on the group or area's participation in the
housing market, historically has received or currently receives a lower
share of the benefits of Enterprise programs and activities providing
sustainable housing opportunities, or that otherwise has had difficulty
accessing these benefits compared with groups of people without the
shared characteristic or other areas. Shared characteristics include
but are not limited to characteristics protected by fair lending laws
applicable to the Enterprises including race, color, religion, sex
(including actual or perceived sexual orientation or gender identity),
familial status, national origin, disability, marital status, age,
receipt of public assistance income, exercise of rights protected by
the Consumer Credit Protection Act, exercise of rights protected by the
Fair Housing Act, dwelling age, dwelling location, and neighborhood
age. Examples of underserved communities, if supported by adequate
information in a plan pursuant to Sec. 1239.25 of this chapter,
include: the Commonwealth of Puerto Rico, single parents, persons with
disabilities, women of color, seniors with fixed income, self-employed
individuals, individuals with limited mainstream credit and banking
history, counties which have historically received a lower share of the
benefits of Enterprise programs and activities, individuals with income
variance such as skilled tradespeople or those that receive income
through commission, persons with limited English proficiency, and
multigenerational households.
Sec. 1293.3 Compliance and enforcement.
FHFA may enforce compliance with this part in any manner and
through any means within its authority, including but not limited to
adverse examination findings or through supervision or enforcement
under 12 U.S.C. 4511(b), 4513b, 4631, or 4636. The agency may conduct
examinations of a regulated entity's activities related to this part
pursuant to 12 U.S.C. 4517.
Sec. 1293.4 Preservation of authority.
Nothing in this part in any way limits the authority of the Federal
Housing Finance Agency under other provisions of applicable law and
regulations.
Sec. Sec. 1293.5-1293.10 [Reserved]
Subpart B--Fair Housing and Fair Lending Compliance
Sec. 1293.11 Regulated entity compliance.
(a) Compliance with fair housing and fair lending laws. Regulated
entities must comply with fair housing and fair lending laws.
(b) Compliance with prohibition on unfair or deceptive acts or
practices. Regulated entities must comply with the
[[Page 25308]]
prohibition on unfair or deceptive acts or practices under 15 U.S.C.
45.
(c) Responsibilities of boards of directors. In accordance with
Sec. 1239.4(b)(4) of this chapter, directors of a regulated entity
shall direct the operations of the regulated entity in conformity with
fair housing and fair lending laws and the prohibition on unfair or
deceptive acts or practices under 15 U.S.C. 45, including by
appropriately considering compliance with fair housing and fair lending
laws and the prohibition on unfair or deceptive acts or practices under
15 U.S.C. 45 in the oversight of the regulated entity and its business
activities.
Sec. 1293.12 Reports, data, and certifications.
(a) Reports. FHFA may require the regulated entities to submit to
FHFA regular and special reports concerning fair housing and fair
lending, including the provision of data pursuant to FHFA instructions.
(b) Certifications. Each regular report concerning fair housing and
fair lending shall include a certification of the regulated entity's
compliance with fair housing and fair lending laws and with Sec.
1293.11(b) in addition to any other required certification or
declaration (such as a declaration under 12 U.S.C. 4514(a)(4)).
Sec. Sec. 1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
Sec. 1293.21 General; Identification of subpart as a prudential
standard.
(a) This subpart sets forth the Enterprise duty to engage in
equitable housing finance planning and to take meaningful actions to
support underserved communities, and establishes standards and
procedures related to public engagement and FHFA's oversight of the
Enterprises' planning and actions.
(b) If a date provided in this subpart falls on a day that is not a
business day, the date required shall be the next business day.
(c) Submission and publication dates provided in this subpart may
be changed by the Director, as determined appropriate, by public order
for a particular required submission or publication.
(d) This subpart, except for Sec. 1293.26, is a prudential
standard pursuant to section 1313B of the Safety and Soundness Act, 12
U.S.C. 4513b, and is subject to 12 CFR part 1236.
Sec. 1293.22 Equitable housing finance plans and updates.
(a) General. Every three years each Enterprise shall adopt an
Equitable Housing Finance Plan covering a three-year period. Each
Enterprise may adopt a public annual plan update to that plan for the
second and third years of the plan.
(b) Contents of plan. The plan shall include:
(1) Identification of barriers to sustainable housing opportunities
faced by one or more underserved communities;
(2) Objectives that establish the overall direction and focus for
the plan by defining the outcomes the plan seeks to accomplish, and
that are logically tied to one or more identified barriers;
(3) Meaningful actions (actions) describing the high-impact
activities the Enterprise intends to undertake to further the
identified objectives that span one or more years (including extending
beyond the period covered by the plan);
(4) Specific, measurable, and time-bound goals (goals) for each
action; and
(5) Summaries of the Enterprise's public engagement in developing
the plan.
(c) Plan submission. Each Enterprise shall submit its Plan to FHFA
for review on or before September 30 of the year prior to the first
year covered by the Plan.
(d) Contents of annual plan update. If an Enterprise chooses to
submit an update, it shall include all changes the Enterprise is making
to its plan, including any changes in identified barriers, objectives,
meaningful actions, specific, measurable, and time-bound goals, and a
summary of any additional public engagement. The update shall clearly
describe the specific reason(s) for each significant change to the
plan.
(e) Annual update submission. If an Enterprise chooses to submit an
update, it shall submit its update for FHFA review on or before
February 15 of the year covered by the update.
(f) FHFA review. FHFA shall review each plan and update and, prior
to publication, may:
(1) Require removal of any confidential or proprietary information;
(2) Require removal of any content that is not consistent with this
part, the Safety and Soundness Act, the authorizing statutes, or other
applicable law; and
(3) Provide any feedback for consideration.
(g) No prior approval of activities. FHFA's review does not
constitute a prior approval of a plan or update or any action described
therein. All actions included in a plan are subject to all applicable
FHFA and other requirements and authorities.
(h) Disclaimer included in plan and annual update. The plan and the
annual update must include disclaimer language indicating the
implementation of actions may be subject to change based on certain
factors.
(i) Plan and update publication. Each Enterprise shall publish its
plan on its website on January 15 of the first year covered by the plan
and maintain it thereafter. Each Enterprise shall publish any update on
its website on April 15 of the second and third year covered by the
plan and maintain it thereafter. Each Enterprise shall ensure that
plans and updates are accessible to persons with disabilities.
(j) Additional guidance. From time to time, FHFA may issue public
guidance on plans and updates.
Sec. 1293.23 Performance reports.
(a) General. Annually, each Enterprise shall publicly report on its
plan progress and provide other information related to equitable
housing and fair housing and fair lending for the prior year in a
performance report.
(b) Contents of the report. The report shall contain, at a minimum:
(1) A narrative assessment consisting of a review of major
successes and key accomplishments as well as lessons learned and
challenges experienced;
(2) Plan performance details for each objective, measurable goal,
and meaningful action, including outcome-based metrics;
(3) A summary of outcomes for the year categorized by type of
activity and by race and ethnicity group and underserved community
group (if available);
(4) A summary of the value of resources dedicated by the Enterprise
in supporting the outcomes categorized by type of activity and a
summary of additional value of resources contributed from third parties
as a result of the Enterprise's support of the outcomes.
(5) An assessment of the Enterprise's underwriting that includes:
(i) For the applicable year and the preceding three years, the
accept rates for the Enterprise's automated underwriting system
categorized by home purchase, rate-term refinancing, and cash-out
refinancing and by race and ethnicity group and underserved community
group (if available);
(ii) For the applicable year and the preceding three years, the
Enterprise's loan acquisitions categorized by home purchase, rate-term
refinancing, and cash-out refinancing and by race and
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ethnicity group and underserved community group (if available); and
(iii) A narrative assessment of any innovations in automated
underwriting or other policy taken during the applicable year and any
future planned work intended to address identified disparities.
(c) Report submission. Each Enterprise shall submit its report to
FHFA for review on or before February 15 annually.
(d) FHFA review. FHFA shall review each report and, prior to
publication, may:
(1) Require removal of any confidential or proprietary information;
(2) Require removal of any content that is not consistent with this
part, the Safety and Soundness Act, the authorizing statutes, or other
applicable law; and
(3) Provide any feedback for consideration.
(e) Report publication. Each Enterprise shall publish its report on
its website on April 15 annually and maintain it thereafter. Each
Enterprise shall ensure that reports are accessible to persons with
disabilities.
(f) Additional requirements and guidance. FHFA may require
additional information to be included in reports through other FHFA
authorities, such as 12 U.S.C. 4514. From time to time, FHFA may issue
public guidance on reports.
Sec. 1293.24 Public engagement.
(a) FHFA public engagement. On or before June 15 annually, FHFA
will conduct public engagement to allow the public to provide input for
the Enterprises to consider in developing and implementing their plans
and for FHFA to consider in its oversight.
(b) Enterprise consultation. The Enterprises shall consult with
stakeholders, including members of underserved communities and housing
market participants, in the development and implementation of their
plans and updates.
Sec. 1293.25 Program requirements.
(a) Requirements for underserved communities. An Enterprise shall
ensure that a plan relies on adequate information in identifying the
underserved community or communities addressed by that plan and shall
document that information as part of the plan. In selecting one or more
underserved communities to be the focus of a plan, an Enterprise shall
consider, among other factors:
(1) Input from public engagement;
(2) Whether the underserved community has previously been the focus
of a plan;
(3) The extent of the needs identified for the underserved
community, including such needs that may remain despite prior efforts
under a plan; and
(4) Whether the underserved community is covered by a different
initiative or program of the Enterprise.
(b) Requirements for objectives. Objectives identified in a plan
shall be logically tied to one or more identified barriers and
facilitate establishing meaningful actions and measurable goals.
(c) Requirements for meaningful actions--(1) Relation to objectives
and goals. Meaningful actions shall be logically tied to one or more
measurable goals and one or more objectives and support sustainable
housing opportunities for an identified underserved community.
(2) Other Enterprise goals and incremental action. Meaningful
actions may also serve other Enterprise objectives and goals; however,
a plan shall reflect significant additional action above and beyond
actions that are also serving other Enterprise objectives and goals and
shall reflect more than de minimis action.
(3) Significant dedication of resources. Meaningful actions shall
reflect a commitment commensurate with an Enterprise's prominence in
the housing market, its available resources, its dedication of
resources to other important efforts, the needs of underserved
communities, market conditions, and safety and soundness.
(4) Compliance with law. Actions that are not compliant with the
Safety and Soundness Act, the authorizing statutes, or other applicable
law do not qualify as meaningful actions.
(5) Required remedial actions. Actions that are required to
remediate supervisory findings or required as a result of enforcement
actions do not qualify as meaningful actions.
(d) Requirements for measurable goals. Measurable goals shall be:
(1) Logically tied to one or more meaningful actions identified in
a plan;
(2) Specific;
(3) Time-bound;
(4) Focused on outcomes; and
(5) Facilitative of measuring Enterprise progress, comparing
Enterprise performance, and ensuring public accountability.
Sec. 1293.26 Enterprise board equitable housing and mission
responsibilities.
An Enterprise's board of directors shall appropriately consider the
objectives, actions, and goals of the Enterprise's Equitable Housing
Finance Plan, while also appropriately considering its affordable
housing goals, Duty to Serve plans and targets, and other mission-
related obligations, in the board's oversight of the Enterprise and the
Enterprise's business activities.
Sec. Sec. 1293.27-1293.30 [Reserved]
Subpart D--Data Collection
Sec. 1293.31 Required Enterprise data collection and reporting.
Each Enterprise shall collect, maintain, and provide to FHFA the
following data relating to single-family mortgages:
(a) The language preference of applicants and borrowers; and
(b) Whether applicants and borrowers have completed homeownership
education or housing counseling and information about the homeownership
education or housing counseling.
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2023-08602 Filed 4-25-23; 8:45 am]
BILLING CODE 8070-01-P