Fair Lending, Fair Housing, and Equitable Housing Finance Plans, 42768-42788 [2024-09559]
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Federal Register / Vol. 89, No. 96 / Thursday, May 16, 2024 / Rules and Regulations
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[FR Doc. 2024–10732 Filed 5–15–24; 8:45 am]
BILLING CODE 7590–01–P
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1293
RIN 2590–AB29
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Fair Lending, Fair Housing, and
Equitable Housing Finance Plans
Federal Housing Finance
Agency.
ACTION: Final rule.
AGENCY:
The Federal Housing Finance
Agency (FHFA or the Agency) is issuing
this final rule that addresses barriers to
sustainable housing opportunities for
SUMMARY:
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underserved communities by codifying
existing FHFA practices in regulation
and adding new requirements related to
fair lending, fair housing, unfair or
deceptive acts or practices, and
Equitable Housing Finance Plans. The
final rule furthers FHFA’s fulfillment of
its statutory purposes and its oversight
of the Federal National Mortgage
Association (Fannie Mae), the Federal
Home Loan Mortgage Corporation
(Freddie Mac), and the Federal Home
Loan Banks (Banks) (Fannie Mae and
Freddie Mac collectively, the
Enterprises; the Enterprises and the
Banks collectively, the regulated
entities), and their fulfillment of their
statutory purposes.
DATES: This rule is effective on July 15,
2024, except for subpart D to part 1293
(amendatory instruction 2), which will
become effective on February 15, 2026.
FOR FURTHER INFORMATION CONTACT:
Renita Roberts, Policy Analyst, Office of
Fair Lending Oversight, (202) 809–2610,
Renita.Roberts@fhfa.gov, Federal
Housing Finance Agency, Constitution
Center, 400 7th Street SW, Washington,
DC 20219; or Lindsey Cope, Attorney
Advisor, Office of Fair Lending
Oversight, (202) 875–4047,
Lindsey.Cope@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:
Table of Contents
I. Introduction
A. Background
B. Overview of the Proposed Rule
II. Discussion of Comments and Agency
Response
A. Overview of Comments Received
B. Unfair or Deceptive Acts or Practices
C. Board Standards and Responsibilities
D. Certification of Compliance
E. Mission-Specific Board Standards and
Responsibilities
F. Determination Not To Designate
Enterprise Equitable Housing Finance
Planning as a Prudential Management
and Operations Standard
G. Determination Not To Define ‘‘Equity’’
H. Resource Disclosures
I. Public Engagement
J. Program Evaluation
K. Reporting on Bank Voluntary Actions
To Address Barriers to Sustainable
Housing Opportunities
L. Data Collection
M. Authority and Consistency With Law
III. Summary of Changes in the Final Rule
A. Section 1293.1(d), Severability Clause
B. Section 1293.12(a), Reports, Data, and
Certification
C. Section 1293.12(b), Certification of
Compliance
D. Section 1293.21, General
E. Section 1293.23, Resource Disclosures,
Additions, and Clarifying Edits
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F. Section 1293.27, Program Evaluation
G. Section 1293.31, Federal Home Loan
Bank Equitable Housing Finance
Planning
IV. Consideration of Differences Between the
Banks and the Enterprises
V. Regulatory Analyses
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. Congressional Review Act
I. Introduction
Federal agency oversight of fair
housing, fair lending, and other relevant
laws, as well as strategic planning to
address barriers faced by renters and
borrowers, are important in promoting
sustainable housing opportunities 1 for
underserved communities.2 The final
rule addresses barriers to sustainable
housing opportunities for underserved
communities by codifying existing
FHFA practices in regulation and
adding new requirements. Collectively,
the actions in the final rule will improve
FHFA’s fulfillment of its statutory
purposes and its oversight of the
regulated entities and their fulfillment
of their statutory purposes.
The final rule codifies in regulation
much of FHFA’s existing practices and
programs regarding fair housing and fair
lending oversight of its regulated
entities, the Equitable Housing Finance
Plan program for the Enterprises, and
requirements for the Enterprises to
collect and report language preference,
homeownership education, and housing
counseling information. The final rule
makes changes to the Equitable Housing
Finance Plan program to promote
greater accountability for the Enterprises
and public transparency, adds oversight
of unfair or deceptive acts or practices
to FHFA’s fair housing and fair lending
oversight programs, requires additional
certification of compliance by the
regulated entities, and establishes more
precise standards related to fair housing,
fair lending, and principles of equitable
housing for regulated entity boards of
directors (boards). The final rule also
establishes a requirement for the Banks
1 Sustainable housing opportunity is defined
more completely later in the final rule, but
generally encompasses rental or homeownership
opportunities that include one or more
characteristics important to the needs of a tenant or
homeowner.
2 Underserved community is defined more
completely later in the final rule, but generally
encompasses a group of people with shared
characteristics or an area that is subject to current
discrimination or has been subjected to past
discrimination that has or has had continuing
adverse effects on the group’s or area’s participation
in the housing market, historically has received or
currently receives a lower share of the benefits of
Enterprise programs and activities providing
sustainable housing opportunities, or that otherwise
has had difficulty accessing these benefits
compared with groups of people without the shared
characteristic or other areas.
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Federal Register / Vol. 89, No. 96 / Thursday, May 16, 2024 / Rules and Regulations
to report annually on any actions they
voluntarily take to address barriers to
sustainable housing opportunity for
underserved communities in order to
provide public transparency but does
not require the Banks to undertake such
actions or engage in the planning
process required of the Enterprises.
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A. Background
FHFA, the Regulated Entities, and
their Public Purposes. Fannie Mae and
Freddie Mac are federally chartered
housing finance enterprises whose
purposes include: providing stability to
the secondary market for residential
mortgages; providing ongoing assistance
to the secondary market for residential
mortgages (including activities related
to mortgages for low- and moderateincome 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 (Bank
Act),4 and today consists of 11 regional
Banks and the System’s fiscal agent, the
Office of Finance. Each Bank is a
separate, government-chartered,
member-owned corporation.
Congress established FHFA to oversee
the regulated entities to ensure that the
purposes of the Federal Housing
Enterprises Financial Safety and
Soundness Act of 1992 (Safety and
Soundness Act), as amended, the
authorizing statutes, and any other
applicable laws are carried out.5 In
doing so, Congress recognized that the
regulated entities have important public
purposes reflected in their authorizing
statutes, and that they must be managed
safely and soundly so that they continue
to accomplish their public missions.6
3 See
12 U.S.C. 1451 (note) and 1716.
12 U.S.C. 1421 et seq.
5 See 12 U.S.C. 4511(b).
6 See 12 U.S.C. 4501(1) (the Enterprises and
Banks have important public missions), (2) (their
continued ability to accomplish their public
missions is important, and effective regulation is
needed to reduce risk of failure), and (7) (the
Enterprises have an affirmative obligation to
4 See
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With respect to the statutory mission
of the Enterprises, a number of statutory
and regulatory authorities that apply to
FHFA and the Enterprises speak to the
need to promote sustainable housing
opportunities for all homebuyers,
homeowners, and tenants in the housing
market.7 FHFA’s principal duties
include ensuring that the Enterprises
operate consistent with safety and
soundness and with the public interest.8
FHFA and the Enterprises also have
statutory duties and other commitments
to advance equitable solutions for
borrowers and tenants in the housing
market. The Enterprises’ authorizing
statutes, for example, provide that one
of their purposes is to promote access to
mortgage credit throughout the Nation
(including central cities, rural areas, and
underserved areas).9 The authorizing
statutes require the Enterprises, as part
of their annual housing reports, to
assess their underwriting standards,
policies, and business practices that
affect low- and moderate-income
families or cause racial disparities,
along with any revisions to these
standards, policies, or practices that
promote affordable housing or fair
lending.10
The Housing Goals and Duty to Serve
requirements 11 are important
components for ensuring that the
Enterprises fulfill their statutory
mission and charters and serve low- and
moderate-income families and
underserved markets.12 The Safety and
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 the Enterprises’ underwriting
standards and business practices that affect their
purchases of mortgages for low- and moderateincome families, and revisions to their standards
and practices that promote affordable housing or
fair lending. 12 U.S.C. 1723a(n)(2)(G) (Fannie Mae
charter), 1456(f)(2)(G) (Freddie Mac charter).
8 See 12 U.S.C. 4513(a)(1)(B)(i), (v).
9 See 12 U.S.C. 1716(4) (Fannie Mae charter);
1451 note (b)(4) (Freddie Mac charter).
10 See 12 U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
11 See 12 U.S.C. 4565; 12 CFR part 1282, subpart
C.
12 See 12 U.S.C. 4561(a) (FHFA to establish
annual housing goals by regulation), 4562
(establishment of required categories of single-
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Soundness Act provides that, in meeting
these requirements, the Enterprises are
required to take affirmative steps to
assist primary lenders to make housing
credit available in areas with
concentrations of low-income and
minority families.13 The Safety and
Soundness Act also requires the
Enterprises to transfer an amount equal
to 4.2 basis points for each dollar of
unpaid principal balance of new
purchases to the U.S. Department of
Housing and Urban Development’s
(HUD) administration of the Housing
Trust Fund and the U.S. Department of
the Treasury’s administration of the
Capital Magnet Fund.14 Both funds are
designed to support affordable housing
initiatives by providing capital for the
production or preservation of affordable
housing and related economic
development activities. For the 2023
year, the Enterprises transferred $301
million into the funds.15
Several provisions of the Bank Act
denote the statutory missions of the
Banks, including their role in making
secured long-term advances to members
to support residential housing finance,
specific community support
requirements, establishment of
community investment programs and
affordable housing programs,
compliance with housing goals, and the
requirement that certain board directors
have experience in public interest
areas.16 FHFA launched a
comprehensive review of the System in
August 2022.17 Among the areas FHFA
explored as part of the review were the
Banks’ role in promoting affordable,
sustainable, equitable, and resilient
housing and community investment,
including rental housing, and in
addressing the unique needs of tribal
communities, communities of color,
rural communities, and other financially
vulnerable and underserved
communities. FHFA issued a Report
based on its comprehensive review in
November 2023, ‘‘The Federal Home
Loan Bank System at 100: Focusing on
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 moderateincome families in certain underserved markets).
13 See 12 U.S.C. 4565(b)(3)(A).
14 See 12 U.S.C. 4567.
15 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-301-Million-forAffordable-Housing-Programs.aspx.
16 See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii) states that
Directors must have experience ‘‘representing
consumer or community interests on banking
services, credit needs, housing, or financial
consumer protections[;]’’ 12 U.S.C. 1430(g), (i), (j);
12 U.S.C. 1430c.
17 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Comprehensive-Review-ofthe-FHLBank-System.aspx.
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Federal Register / Vol. 89, No. 96 / Thursday, May 16, 2024 / Rules and Regulations
the Future.’’ 18 The Report noted the
passage of the Fair Housing Act as a
significant milestone in the
development of the mortgage finance
system and noted that compliance with
fair housing and fair lending laws and
equity initiatives is not currently
assessed in supervisory ratings for the
Banks. The Report also noted that
participants in FHFA’s comprehensive
review of the System suggested that
FHFA consider requiring the Banks to
prepare an affordable housing strategy
or equitable housing finance plan that
would describe their planned activities
and summarize actions taken in the
prior year.
Under the Fair Housing Act, all
Federal agencies which have regulatory
or supervisory authority over financial
institutions, including FHFA, are
required to administer their programs
and activities relating to housing and
urban development in a manner that
affirmatively furthers the purposes of
the Fair Housing Act, which includes
providing for fair housing throughout
the United States.19 FHFA has included
considerations of fair housing and fair
lending in rulemaking since its
establishment.20 FHFA also issued a
policy statement on fair lending which
describes its regulatory and oversight
authorities to supervise and enforce fair
lending laws with respect to its
regulated entities.21 FHFA issued orders
to Fannie Mae and Freddie Mac for
regular and special reports related to fair
housing and fair lending.22 FHFA issued
guidance for the Enterprises on fair
housing and fair lending supervisory
expectations.23 FHFA coordinates with
HUD on fair lending and fair housing
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18 See
https://www.fhfa.gov/AboutUs/Reports/
ReportDocuments/FHLBank-System-at-100Report.pdf.
19 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
20 See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR
31602, 31603, 31606 (July 2, 2009), 12 CFR
1254.6(a)(2) and 1254.8(b)(2); 84 FR 41886, 41905,
41906, 41907 (Aug. 16, 2019), and 12 CFR
1291.23(e); 83 FR 61186, 61208, 61238 (Nov. 28,
2018).
21 86 FR 36199 (July 9, 2021).
22 See FHFA Orders In Re: Enterprise Compliance
and Information Submission with Respect to Fair
Lending, Nos. 2021–OR–FNMA–2 and 2021–OR–
FHLMC–2 (FHFA’s Fair Lending Orders), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Pages/Fair-Lending-OversightProgram.aspx#:∼:text=Fair%20Lending%
20Reporting%20Orders&text=The%20orders%20
require%20the%20Enterprises,lending%
20supervision%20and%20monitoring%20
capabilities.
23 Advisory Bulletin AB 2021–04, Enterprise Fair
Lending and Fair Housing Compliance (December
20, 2021), available at https://www.fhfa.gov/
SupervisionRegulation/AdvisoryBulletins/
AdvisoryBulletinDocuments/AB%202021-04%20
Enterprise%20Fair%20Lending
%20and%20Fair%20Housing%20Compliance.pdf.
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oversight,24 and established a fair
lending oversight data system in part to
facilitate cooperation in interagency fair
housing and fair lending oversight.25
FHFA has also implemented the referral
program for potential mortgage pricing
disparities across mortgage lenders
based on the Enterprises’ data, as
required by Congress in section 1128 of
the Housing and Economic Recovery
Act of 2008 (HERA).26 FHFA also
established the Equitable Housing
Finance Plan program for the
Enterprises to develop a framework for
addressing barriers to sustainable
housing opportunities for underserved
communities through strategic planning
and public participation.27 FHFA joined
other agencies in issuing the Interagency
Statement on Special Purpose Credit
Programs Under the Equal Credit
Opportunity Act and Regulation B in
2022.28 In 2023, FHFA established a
supervisory rating system for the
Enterprises that evaluates compliance
with fair housing and fair lending laws
and equity initiatives.29
Barriers to Sustainable Housing
Opportunities. Ongoing disparities and
challenges in the housing market
persist, which limit sustainable housing
opportunities for underserved
communities. The rest of Part A
discusses some of these disparities and
challenges by way of example. Both
Enterprises’ 2022–2024 Equitable
Housing Finance Plans identify Black
and Latino communities as underserved
and include extensive discussions of
barriers to sustainable housing
opportunities.30 The inclusion or
24 Memorandum of Understanding by and
between the U.S. Department of Housing and Urban
Development and the Federal Housing Finance
Agency regarding Fair Housing and Fair Lending
Coordination (Aug. 12, 2021), available at https://
www.fhfa.gov/Media/PublicAffairs/
PublicAffairsDocuments/FHFA-HUD-MOU_
8122021.pdf.
25 Fair Lending Oversight Data System of Records
Notice, 87 FR 30947 (May 20, 2022), available at
https://www.govinfo.gov/content/pkg/FR-2022-0520/pdf/2022-10798.pdf.
26 Public Law 110–289, 122 Stat. 2696, 2697
(2008) (codified at 12 U.S.C. 4561(d)).
27 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Equitable-HousingFinance-Plans--for-Fannie-Mae-and-FreddieMac.aspx.
28 See Interagency Statement on Special Purpose
Credit Programs Under the Equal Credit
Opportunity Act and Regulation B (Feb. 22, 2022),
available at https://www.federalreserve.gov/
supervisionreg/caletters/CA%20222%20Attachment%20SPCP_Interagency_
Statement_for_release.pdf.
29 See Advisory Bulletin AB 2023–05: Enterprise
Fair Lending and Fair Housing Rating System
(September 27, 2023), available at: https://
www.fhfa.gov/SupervisionRegulation/
AdvisoryBulletins/Pages/AB_2023-05_EnterpriseFair-Lending-and-Fair-Housing-Rating-System.aspx.
30 See Freddie Mac 2022–2024 Equitable Housing
Finance Plan (June 2022), available at https://
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discussion of a particular disparity,
challenge, or underserved community is
not an indication of FHFA’s views on
the needs of a community or what
actions FHFA’s regulated entities
should take.
Challenges Accessing Sustainable
Housing Opportunities. There are many
underserved communities experiencing
significant challenges in accessing
sustainable housing opportunities. This
includes, for example, families living on
tribal land, in rural areas, and in rental
homes. Almost half of renters are costburdened, paying more than 30 percent
of their income on housing, compared to
only 22 percent of homeowners.31 More
than 10 million households headed by
someone over age 65 are cost-burdened,
with the median older renter having net
worth under $6,000 in 2019.32 By 2035,
the population age 80 and over is
expected to double from its level in
2016. The population in rural areas is
older and more likely to have lower
income levels, with the median income
for renters in high needs rural areas
being $26,422 compared to $40,505
nationally.33 Lower incomes can lead to
greater cost burdens in rural areas,
particularly for renters. For example, in
Middle Appalachia, 49 percent of
renters are cost-burdened.34 Individuals
with disabilities also face housing
challenges. As an increasing proportion
of households wish to age in place,
there is often a lack of housing
opportunities that provide for mobility
and other physical impairments. Two
percent of total housing inventory is
accessible for people with mobility
disabilities, while 14 percent of
Americans have mobility disabilities.35
www.freddiemac.com/about/pdf/2022-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.
31 When disaggregated by race, 57 percent of
Black renter households were cost-burdened, and
31 percent of Black homeowner households were
cost-burdened. See Joint Center for Housing Studies
of Harvard University, The State of the Nation’s
Housing 2023, available at https://
www.jchs.harvard.edu/sites/default/files/reports/
files/Harvard_JCHS_The_State_of_the_Nations_
Housing_2023.pdf.
32 See Jennifer Molinsky, ‘‘Housing for America’s
Older Adults: Four Problems We Must Address,’’
Joint Center for Housing Studies of Harvard
University (Aug. 18, 2022), available at https://
www.jchs.harvard.edu/blog/housing-americasolder-adults-four-problems-we-must-address.
33 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (Apr. 7, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf.
34 Id.
35 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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Other populations, including persons
identifying as lesbian, gay, bisexual,
transgender, or queer (LGBTQ+), Native
Americans, single parents, individuals
with limited mainstream credit and
banking history, and households with
limited English proficiency (LEP),
continue to report facing challenges in
accessing the housing finance system. A
study found that same-sex applicants
are 73.12 percent more likely than
different-sex applicants to be denied for
a mortgage.36 Mortgage financing
opportunities for people living on
Native American trust lands remain
limited.37 Research has found that the
median single mothers of minor
children possess only about $7,000 in
family wealth, by far the lowest median
wealth among all singles.38 And
relatedly, one study of census data
found that only 31 percent of single
mothers are also homeowners,
compared to 64 percent of households
overall.39 Borrowers with limited credit
histories, who are disproportionately
likely to be Black or Hispanic or live in
low-income neighborhoods, have
difficulty accessing affordable credit.40
Additionally, LEP households, or those
who are more comfortable transacting in
a language other than English, may also
experience barriers to housing
opportunities and housing
sustainability. Often, LEP borrowers
will rely on their English-proficient
child, who may not be familiar with
mortgage lending terms, as a
translator.41 As a result, this can leave
the borrower without a full
36 See Hua Sun et al., ‘‘Lending practices to samesex borrowers,’’ (Apr. 16, 2019), available at https://
www.pnas.org/doi/10.1073/pnas.1903592116.
37 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April 7, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf.
38 Federal Reserve Bank of St. Louis, ‘‘Single
Mothers Face Difficulties with Slim Financial
Cushions’’ (May 9, 2022) (defining singles as ‘‘those
who have never married, are divorced, widowed or
separated’’), https://www.stlouisfed.org/on-theeconomy/2022/may/single-mothers-slim-financialcushions.
39 Dana Anderson, ‘‘McAllen, Texas, Salt Lake
City and Grand Rapids Have the Highest
Homeownership Rates for Single Mothers,’’ Redfin
News (June 24, 2019), https://www.redfin.com/
news/single-mother-homeownership-rate-us/
#:∼:text=McAllen%2C%20Texas%
2C%20where%20the%20typical,%25
%20and%20Minneapolis%20(40.3%25).
40 CFPB, Data Point: Credit Invisibles at 6 (May
2015), https://files.consumerfinance.gov/f/201505_
cfpb_data-point-credit-invisibles.pdf.
41 See Freddie Mac and Fannie Mae, ‘‘Language
Access for Limited English Proficiency Borrowers:
Final Report,’’ (Apr. 2017), available at https://
www.fhfa.gov/PolicyProgramsResearch/Policy/
Documents/Borrower-Language-Access-FinalReport-June-2017.pdf.
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understanding of mortgage terms and
conditions.
Disparities in Homeownership Rates
and Wealth. The national
homeownership rate has ranged from
around 45 percent in some eras to
around 65 percent in recent years.42
However, there have been persistent
gaps in the homeownership rate by race
and ethnicity. In the fourth quarter of
2023, the White homeownership rate
was 73.8 percent, the Black
homeownership rate was 45.9 percent,
the Latino homeownership rate was 49.8
percent, and the Asian, Native Hawaiian
and Pacific Islander homeownership
rate was 63.0 percent.43 The Black and
White homeownership gap, at 27.9
percentage points as of the fourth
quarter of 2023, has persisted over time,
though there have been some modest
reductions in the gap since 2019. Even
when the racial homeownership rate is
stratified by household income, there
continue to be significant disparities in
homeownership between racial groups,
even in the highest income brackets. For
example, for households with an
income over $150,000, there exists a 10percentage point gap between Black and
White families.44
A household’s home is often its
largest financial asset and key to wealth
building and intergenerational wealth
transfers, which in turn enable future
generations to achieve homeownership.
The Federal Reserve, in a 2022 survey,
found that White families have the
highest level of both median and mean
family wealth: $285,000 and $1,367,170,
respectively.45 In contrast, Black
families’ median and mean wealth was
$44,890 and $211,450, respectively. In
other words, the typical Black family
has about $16 in wealth for every $100
42 See Don Layton, ‘‘The Homeownership Rate
and Housing Finance Policy, Part 1: Learning from
the Rate’s History,’’ August 2021, available at
https://www.jchs.harvard.edu/sites/default/files/
research/files/harvard_jchs_homeownership_rate_
layton_2021.pdf.
43 Federal Reserve Economic Data, Federal
Reserve Bank of St. Louis; Housing and
Homeownership: Homeownership Rate (retrieved
February 13, 2024) available at https://
fred.stlouisfed.org/release/
tables?rid=296&eid=784188#snid=784199; https://
www.federalreserve.gov/econres/notes/feds-notes/
greater-wealth-greater-uncertainty-changes-inracial-inequality-in-the-survey-of-consumerfinances-accessible-20231018.htm#fig1.
44 See Fannie Mae 2022–2024 Equitable Housing
Finance Plan (June 2022), p. 7, available at https://
www.fanniemae.com/media/43636/display.
45 See Aditya Aladangady et al., Board of
Governors of the Federal Reserve System, ‘‘Greater
Wealth, Greater Uncertainty: Changes in Racial
Inequality in the Survey of Consumer Finances,’’
(Oct. 18, 2023), available at https://
www.federalreserve.gov/econres/notes/feds-notes/
greater-wealth-greater-uncertainty-changes-inracial-inequality-in-the-survey-of-consumerfinances-20231018.html.
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held by the typical White family. These
wealth disparities grew between 2003
and 2018, though have narrowed
slightly since 2018.46 One study
estimated that the total racial wealth gap
is $10.14 trillion.47 Black families are
less likely to receive or expect to receive
an inheritance, and, if they do, it is, on
average, less than that of White
households.48 Black families are also
less likely to obtain financial assistance
from their personal networks, with 41
percent of Black families reporting they
could receive $3,000 from family or
friends compared to 72 percent of White
families.49 Black households are less
likely to receive familial assistance with
down payments and the other forms of
financial support that can make
homeownership achievable and
sustainable.50 Moreover, many Black,
Latino, and Asian households provide
financial assistance to older generations,
which slows their ability to save for a
down payment.51
Disparities Based on Disaggregated
Data. For many underserved
communities, it is critical to examine
disaggregated data and data at the
community level.52 Failing to
disaggregate may result in failure to
identify significant disparities facing
unique subgroups for the purpose of
identifying barriers and improving
housing policy. For example, although
Asians and Pacific Islanders as a whole
have homeownership rates above 60
percent, Korean Americans’
homeownership rate is 54 percent and
46 See Earl Fitzhugh et al., McKinsey Institute for
Black Economic Mobility, ‘‘It’s time for a new
approach to racial equity,’’ (Dec. 2, 2020), available
at https://www.mckinsey.com/bem/our-insights/itstime-for-a-new-approach-to-racial-equity.
47 See Fred Dews, ‘‘Charts of the Week: The racial
wealth gap; the middle-class income slump,’’ The
Brookings Institution (Jan. 8, 2021), available at
https://www.brookings.edu/blog/brookings-now/
2021/01/08/charts-of-the-week-the-racial-wealthgap-the-middle-class-income-slump/.
48 See Freddie Mac 2022–2024 Equitable Housing
Finance Plan (June 2022), available at Freddie Mac
Equitable Housing Finance Plan.
49 Neil Bhutta et al., Disparities in Wealth by Race
and Ethnicity in the 2019 Survey of Consumer
Finances, Bd. of Governors of the Fed. Res. Sys.:
FEDS Notes (Sept. 28, 2020), https://
www.federalreserve.gov/econres/notes/feds-notes/
disparities-in-wealth-by-race-and-ethnicity-in-the2019-survey-of-consumer-finances-20200928.html.
50 Michael Stegman and Mike Loftin. 2021. ‘‘An
Essential Role for Down Payment Assistance in
Closing America’s Racial Homeownership and
Wealth Gaps.’’ Washington, DC: Urban Institute.
51 See Mike Dang, ‘‘Their Children Are Their
Retirement Plans,’’ New York Times (Feb. 24, 2023),
available at https://www.nytimes.com/2023/01/21/
business/retirement-immigrant-families.html.
52 See Leda Bloomfield et al., FHFA Insights Blog,
‘‘Latino Diversity and Complexity: The Importance
of Data Disaggregation,’’ (Sept. 23, 2021), available
at https://www.fhfa.gov/Media/Blog/Pages/LatinoDiversity-and-Complexity-The-Importance-of-DataDisaggregation.aspx.
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Nepalese Americans’ homeownership
rate is 33 percent.53 There can be
geographic differences, as well: while
the overall homeownership gap between
Black and White homeowners is 29.6
percentage points, in Minneapolis, the
gap rises to 50 percentage points.54
There are also disparities in mortgage
underwriting that may be obscured by
looking at aggregated data.55 For Latino
communities, Mexican applicants have
slightly higher approval rates than
Latino applicants as a whole, but Puerto
Rican and ‘‘Other Hispanic’’ applicants
have lower approval rates. Among Asian
applicants, the Vietnamese, Filipino,
and ‘‘Other Asian’’ communities
experience lower approval rates than
White applicants, despite Asian
applicants, as a whole, having similar
approval rates to White applicants.
Similarly, when the Pacific Islander
group is disaggregated, it becomes clear
that Samoan and ‘‘Other Pacific
Islander’’ applicants have significantly
lower approval rates than Native
Hawaiian and Chamorro applicants.
Mortgage Market Disparities.
Disparities are present in the mortgage
market for several underserved
communities. For example, in 2022,
Black families comprised about 14
percent of the total U.S. population, but
only about 7 percent of the loans that
Fannie Mae and Freddie Mac
purchased. American Indian and Alaska
Native families comprised about 3
percent of the total U.S. population, but
only about 1 percent of the loans that
Fannie Mae and Freddie Mac
purchased. In contrast, White families
comprised about 62 percent of the U.S.
population, but comprised about 68
percent of Fannie Mae and Freddie Mac
acquisitions.56
FHFA has released data on Fannie
Mae’s and Freddie Mac’s automated
53 See Asian Real Estate Association, 2023–2024
State of Asia America Report, available at https://
areaa.org/resource-asia-america-report.
54 See Alanna McCargo et al., ‘‘Mapping the black
homeownership gap,’’ (Feb. 26, 2018), available at
https://www.urban.org/urban-wire/mapping-blackhomeownership-gap.
55 See Leda Bloomfield et al., FHFA Insights Blog,
‘‘Asian Americans, Native Hawaiians, and Pacific
Islanders: Visible Together,’’ (May 30, 2023),
available at https://www.fhfa.gov/Media/Blog/
Pages/Asian-Americans-Native-Hawaiians-andPacific-Islanders-Visible-Together.aspx.
56 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 systems, presenting gaps
in approval rates for applicants from
certain groups over time compared to
other groups. These underwriting tools
complete credit risk assessments on
loan applicants to determine whether a
loan is eligible for sale to the
Enterprises. Although the move to a
more automated, less subjective system
to assess creditworthiness in mortgage
market underwriting was an important
step in eliminating bias in subjective
underwriting decisions, further
improvements in automated
underwriting to reduce gaps would
promote better access to sustainable
housing opportunities. In the fourth
quarter of 2023, White applicants’
automated underwriting system
applications had approval rates of about
83 percent and 89 percent for the
automated underwriting systems of
Fannie Mae and Freddie Mac,
respectively; Black applicants had
approval rates of about 65 percent and
73 percent; Latino applicants had
approval rates of about 75 percent and
80 percent; Asian applicants had
approval rates of about 86 percent and
90 percent; American Indian and Alaska
Native applicants had approval rates of
about 76 percent and 78 percent; and
Native Hawaiian and Pacific Islander
applicants had approval rates of about
77 percent and 82 percent.57
Home Mortgage Disclosure Act
(HMDA) data also shows higher denial
rates by lenders for many underserved
communities. For example, an analysis
of the 2020 HMDA data found a denial
rate of 27.1 percent for Black applicants
compared to 13.6 percent for White
applicants.58 The trend in higher denial
rates has persisted in HMDA data for
many years.59 A 2019 study of mortgage
pricing found that Latino and Black
borrowers pay 7.9 and 3.6 basis points
more in interest for mortgages,
respectively, even when controlling for
several factors.60 Pursuant to the Safety
and Soundness Act, FHFA conducts an
annual screening, preliminary findings,
57 See https://www.fhfa.gov/DataTools/
Downloads/Pages/Fair-Lending-Data.aspx.
58 See Jung H. Choi et al., ‘‘What Different Denial
Rates Can Tell Us About Racial Disparities in the
Mortgage Market,’’ (Jan. 13, 2022), available at
https://www.urban.org/urban-wire/what-differentdenial-rates-can-tell-us-about-racial-disparitiesmortgage-market.
59 See Laurie Goodman et al., ‘‘Traditional
Mortgage Denial Metrics May Misrepresent Racial
and Ethnic Discrimination,’’ (Aug. 23, 2018), p. 5,
available at https://www.urban.org/urban-wire/
traditional-mortgage-denial-metrics-maymisrepresent-racial-and-ethnic-discrimination.
60 See Robert Bartlett et al., Haas School of
Business UC Berkeley, ‘‘Consumer-Lending
Discrimination in the FinTech Era,’’ (Nov. 2019),
available at https://faculty.haas.berkeley.edu/
morse/research/papers/discrim.pdf.
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and referral process for lenders that
demonstrate patterns of interest rate
disparities for minority borrowers when
compared with borrowers who are not
minorities and describes the results in
its Annual Report to Congress.61 Based
on the results of FHFA’s 2019 and 2020
analyses, more than 36 percent of
FHFA’s preliminary findings were based
on an annual percentage rate disparity
of 10 basis points or more, with the
most common preliminary findings and
referrals for Latino and Black
borrowers.62
The Federal Home Loan Bank of San
Francisco entered into a research and
product development initiative with a
research institution to address issues
related to the racial homeownership
gap.63 A study resulting from this
partnership noted that the heavy
reliance on certain credit attributes in
the current mortgage underwriting
process to the exclusion of other
attributes limits opportunities for
people of color.64
Additional mortgage market
disparities and challenges remain with
respect to rural areas, manufactured
housing, and other market segments. For
example, rural areas suffer from a lack
of affordable multifamily and singlefamily capital, and borrowers typically
have lower credit scores and higher
mortgage denial rates than the overall
population of borrowers.65
Manufactured housing represents 13
percent of housing stock in rural areas,
compared to 6.1 percent of the housing
stock nationally.66 Residents of owner61 12
U.S.C. 4561(d).
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.
63 See https://fhlbsf.com/about/newsroom/urbaninstitute-and-fhlbank-san-francisco-announce-newefforts-close-racial?f%5B0%5D=authored_
on%3A2021.
64 See Jung H. Choi et al., Urban Institute and
Federal Home Loan Bank of San Francisco,
‘‘Reducing the Black-White Homeownership Gap
through Underwriting Innovations: The Potential
Impact of Alternative Data in Mortgage
Underwriting,’’ available at https://www.urban.org/
sites/default/files/2022-10/Reducing%20
the%20Black-White%20Homeownership%20
Gap%20through%20Underwriting%20
Innovations.pdf.
65 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf; Freddie Mac 2022–2024 Duty to
Serve Underserved Markets Plan (April, 2022),
available at https://www.fhfa.gov/PolicyPrograms
Research/Programs/Documents/FreddieMac202224DTSPlan-April2022.pdf.
66 Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf; Freddie Mac 2022–2024 Duty to
Serve Underserved Markets Plan (April, 2022),
62 See
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occupied manufactured housing have
lower incomes and lower net worth than
residents of site-built homes, and lack
adequate mortgage financing options.67
FHFA’s Duty to Serve program works to
address many of these disparities.68
Appraisal and Valuation Disparities.
FHFA’s Uniform Appraisal Dataset
(UAD) Aggregate Statistics highlight that
properties located in minority tracts
have a higher proportion of appraised
values less than the contract price.
According to the 2021 appraisal
statistics, 23.3 percent of homes in high
minority tracts (80.1–100 percent)
experienced an appraised value less
than the contract price.69 This is
compared to 13.4 percent of homes in
White tracts (0–50 percent) and 19.2
percent of homes in minority tracts
(50.1–80 percent).70 Additionally, FHFA
identified examples of appraisal reports
with direct references to the racial and
ethnic composition of the
neighborhood.71 FHFA also identified
time adjustments as a factor in
appraisals that contributes to appraised
values less than contract price, and
racial disparities in appraisal
outcomes.72 Freddie Mac’s research
available at https://www.fhfa.gov/PolicyPrograms
Research/Programs/Documents/FreddieMac202224DTSPlan-April2022.pdf.
67 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf; Freddie Mac 2022–2024 Duty to
Serve Underserved Markets Plan (April, 2022),
available at https://www.fhfa.gov/PolicyPrograms
Research/Programs/Documents/FreddieMac202224DTSPlan-April2022.pdf.
68 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf; Freddie Mac 2022–2024 Duty to
Serve Underserved Markets Plan (April, 2022),
available at https://www.fhfa.gov/PolicyPrograms
Research/Programs/Documents/FreddieMac202224DTSPlan-April2022.pdf.
69 See Jonathan Liles, ‘‘Exploring Appraisal Bias
Using UAD Aggregate Statistics,’’ FHFA Insights
Blog (Nov. 2, 2022), available at https://
www.fhfa.gov/Media/Blog/Pages/ExploringAppraisal-Bias-Using-UAD-AggregateStatistics.aspx.
70 For 2022, 17.15 percent of home purchase
appraisals were below contract price in high
minority tracts, compared to 14.3 percent in
minority tracts and 11.2 percent in White tracts.
Uniform Appraisal Dataset Aggregate Statistics,
available at https://www.fhfa.gov/DataTools/Pages/
UAD-Dashboards.aspx.
71 See Chandra Broadnax, ‘‘Reducing Valuation
Bias by Addressing Appraiser and Property
Valuation Commentary,’’ FHFA Insights Blog (Dec.
14, 2021), available at https://www.fhfa.gov/Media/
Blog/Pages/Reducing-Valuation-Bias-byAddressing-Appraiser-and-Property-ValuationCommentary.aspx.
72 See Scott Susin, ‘‘Underutilization of Appraisal
Time Adjustments,’’ (Jan. 2024), available at
https://www.fhfa.gov/Media/Blog/Pages/
Underutilization-of-Appraisal-TimeAdjustments.aspx; Scott Susin, ‘‘Underappraisal
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showed that properties in minority
tracts are more likely than properties in
White tracts to receive an appraisal
lower than the contract price.73 A
Fannie Mae publication concluded that
White borrowers’ homes were
overvalued at higher rates across all
neighborhoods, but stronger effects were
present for White borrowers in Black
neighborhoods.74 Additional research
has also highlighted and analyzed
disparities in property valuation.75
Consumer groups have begun to
conduct fair housing paired testing of
appraisers, resulting in the filing of
complaints.76 Rural markets also
experience challenges related to
appraiser availability and appraisal
cost.77 Similarly, the availability of
appraisals for manufactured housing is
limited due in part to the lack of
comparable property data and the lack
of familiarity with appraising
techniques surrounding manufactured
housing.78
Disparities and Time Adjustments,’’ (Jan. 2024),
available at https://www.fhfa.gov/Media/Blog/
Pages/Underappraisal-Disparities-and-TimeAdjustments.aspx.
73 See Melissa Narragon et al., ‘‘Racial & Ethnic
Valuation Gaps in Home Purchase Appraisals—A
Modeling Approach,’’ (May 2022), available at
https://www.freddiemac.com/research/insight/
20220510-racial-ethnic-valuation-gaps-homepurchase-appraisals-modeling-approach; Freddie
Mac, ‘‘Racial and Ethnic Valuation Gaps in Home
Purchase Appraisals-A Modeling Approach,’’ (Sept.
20, 2021), available at https://www.freddiemac.
com/research/insight/20210920-home-appraisals.
74 See Jake Williamson et al., ‘‘Appraising the
Appraisal,’’ (Feb. 2022) available at https://
www.fanniemae.com/media/42541/display.
75 See, e.g., Andre Perry et al., The Brookings
Institution, ‘‘The Devaluation of Assets in Black
Neighborhoods: The Case of Residential Property
(Nov. 27, 2018), available at https://www.brookings.
edu/research/devaluation-of-assets-in-blackneighborhoods/; 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/HowCommon-is-Appraiser-Racial-Bias-An-Update-May2022-FINAL-corrected-1.pdf?x91208.
76 Jake Lilien, National Community Reinvestment
Coalition, ‘‘Faulty Foundations: Mystery-Shopper
Testing in Home Appraisals Exposes Racial Bias
Undermining Black Wealth,’’ (Oct. 2022), available
at https://ncrc.org/faulty-foundations-mysteryshopper-testing-in-home-appraisals-exposes-racialbias-undermining-black-wealth/.
77 See FHFA, Request for Information on
Appraisal-Related Policies, Practices, and Processes
(Dec. 28, 2020), p. 4, available at https://www.fhfa.
gov/Media/PublicAffairs/PublicAffairsDocuments/
RFI-Appraisal-Related-Policies.pdf; Freddie Mac
2022–2024 Duty to Serve Underserved Markets Plan
(April, 2022), p. 49, available at https://
www.fhfa.gov/PolicyProgramsResearch/Programs/
Documents/FreddieMac2022-24DTSPlanApril2022.pdf.
78 See Fannie Mae 2022–2024 Duty to Serve
Underserved Markets Plan (April, 2022), available
at https://www.fhfa.gov/PolicyProgramsResearch/
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Enterprise Contributions Pursuant to
the Equitable Housing Finance Planning
Framework and FHFA Oversight. In
accordance with the authorizing
statutes, each Enterprise’s mission
includes promoting access to mortgage
credit throughout the Nation,79 and, as
discussed above, a number of statutory
authorities speak to the Enterprises’
statutory purposes and FHFA’s statutory
duties to ensure the Enterprises meet
those purposes. FHFA’s experience in
overseeing the Equitable Housing
Finance Plan program since it was
originally established in 2021 has
informed the rule. In addition, FHFA
finds that the programs undertaken by
the Enterprises under their 2022–2024
Equitable Housing Finance Plans have
helped the Enterprises comply with the
authorizing statutes, and that the
program and oversight framework has
helped FHFA fulfill its statutory duties.
For the first Equitable Housing
Finance Plan cycle, the Enterprises
focused on addressing inequities and
removing barriers to housing
opportunities in a manner consistent
with safety and soundness, and
borrower sustainability for Black and
Latino borrowers, as these borrower
populations have been historically
denied consistent and systemic fair,
just, and impartial treatment and face
persistent disparities in accessing
housing. Although the Enterprises
focused their 2022–2024 Equitable
Housing Finance Plans on addressing
barriers faced by Black and Latino
borrowers, all implemented actions
were beneficial to numerous
underserved communities.
Freddie Mac pursued a variety of
activities under its 2022–2024 Equitable
Housing Finance Plan to achieve its
objectives. To help eliminate disparities
for Black and Latino communities in the
Multifamily sector, Freddie Mac
expanded financing for affordable
housing developers and improved
access to education and financing
opportunities for diverse and emerging
multifamily developers through its
Develop the Developer program. Freddie
Mac also established a fair servicing
process to help identify gaps in loss
mitigation outcomes, promoted
Borrower Help Centers, and expanded
use of its own renovation products to
preserve affordable single-family homes.
It financed rehabilitation loans to
Programs/Documents/FannieMae2022-24DTSPlanApril2022.pdf; Freddie Mac 2022–2024 Duty to
Serve Underserved Markets Plan (April, 2022),
available at https://www.fhfa.gov/PolicyPrograms
Research/Programs/Documents/FreddieMac202224DTSPlan-April2022.pdf.
79 12 U.S.C. 1716(4) (Fannie Mae charter); 1451
note (b)(4) (Freddie Mac charter).
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maintain and improve the quality of
existing affordable housing stock and
used its preservation loan agreements to
preserve affordable rents at affordable
housing properties that do not receive
government subsidies. To promote
renter empowerment at multifamily
properties, Freddie Mac established a
Renter Resource Organization program
and expanded CreditSmart, a free
financial and homeownership education
curriculum for renters and borrowers.
Freddie Mac employed affirmative
outreach methods to ensure housing
professionals were equipped with
equity-related information, education,
and resources to ensure its servicing and
oversight policies promote positive
borrower-home retention outcomes.
Freddie Mac followed up with its
Mission Servicing Oversight Framework
that allows the Enterprise to work with
servicers that provide high-touch
engagement with at-risk borrowers to
offer early delinquency counseling and
help mitigate mortgage defaults. To
combat appraisal bias, a text detection
method was added to Freddie Mac’s
Loan Collateral Advisor tool to flag
subjective words and phrases that could
indicate bias to better educate
appraisers and correct the use of
potentially biased language in appraisal
reports with real-time feedback. Finally,
both Freddie Mac and Fannie Mae
continued the Appraiser Diversity
Initiative to provide scholarships and
promote the diversity of new entrants to
the residential appraisal profession by
reducing the barriers to entry, including
education, training, and experience
requirements.
Fannie Mae also pursued a variety of
activities under its 2022–2024 Equitable
Housing Finance Plan to achieve its
objectives. Fannie Mae introduced
HomeView, a free online
homeownership education course
designed to address misconceptions and
knowledge gaps about the home
purchase and mortgage qualification
process. Fannie Mae also made the
HomeView course available in Spanish.
Fannie Mae used its Here2Help program
to provide counseling services for
renters and homeowners facing
financial hardships and offered its
Future Housing Leaders program to
connect college students from diverse
institutions to career opportunities in
the housing industry. In its efforts to
assist Black and Latino renters and
support affordable housing in the
Multifamily sector, Fannie Mae offered
pricing and underwriting incentives for
multifamily borrowers that set aside at
minimum 20 percent of a property’s
units as affordable units for renters
earning up to 120 percent of the area
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median income (AMI) in very lowincome markets through their SponsorDedicated Workforce and SponsorInitiated Affordability programs. Fannie
Mae also introduced the Multifamily
Positive Rental Payment History
program to help renters establish and
improve credit scores using bank
transaction data and is currently
exploring ways to decrease renters’
upfront security deposits, which can
then be saved as cash reserves and later
used towards down payment and/or
closing costs. Fannie Mae also agreed to
partner with local housing organizations
to support the revitalization and
expansion of housing opportunities in
historically Black neighborhoods.
In their efforts to advance equity as
part of their Equitable Housing Finance
Plans, both Enterprises provided
liquidity for eligible lender-developed
Special Purpose Credit Programs
(SPCPs) and developed their own SPCPs
to expand access to mortgage funding
for historically underserved
communities.80
Fannie Mae initiated several appraisal
modernization efforts, including
appraisal text scanning reviews and
introduction of the Value Acceptance/
Property Data option that permits
lenders to bypass an appraisal if interior
and exterior property data collection is
provided to verify the property’s
eligibility prior to the note date. In order
to extend credit access to underserved
communities that have a low credit
score or no credit score established,
Freddie Mac improved its automated
underwriting system, Loan Product
Advisor (LPA), to increase accuracy and
fairness by removing reliance on thirdparty credit scores and using a
proprietary, enhanced credit view that
focuses specifically on mortgage credit
risk. LPA was also improved to consider
bank transaction data, allowing positive
cash flow and on-time rent payments to
be factored into loan purchase
decisions. Fannie Mae also improved its
automated underwriting system,
Desktop Underwriter (DU), to consider a
borrower’s positive rent payment
80 15 U.S.C. 1691(c)(3); 12 CFR 1002.8(a); Federal
Housing Finance Agency et. al., Interagency
Statement on Special Purpose Credit Programs
Under the Equal Credit Opportunity Act and
Regulation B (Feb. 22, 2022), https://www.fhfa.gov/
PolicyProgramsResearch/Programs/Documents/
SPCP_Interagency_Statement_2022_02_22.pdf; see
also Susan M. Bernard and Patrice Alexander
Ficklin, CFPB, ‘‘Expanding access to credit to
underserved communities’’ (July 31, 2020), https://
www.consumerfinance.gov/about-us/blog/
expanding-access-credit-underservedcommunities/. See OCC, ‘‘OCC Announces Project
REACh to Promote Greater Access to Capital and
Credit for Underserved Populations’’ (July 10,
2020), https://www.occ.gov/news-issuances/newsreleases/2020/nr-occ-2020-89.html..
PO 00000
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history as part of the credit risk
assessment and allow for cash-flow
assessments using a borrower’s bank
transaction data in cases when the
borrower has no established credit
score.
The Enterprises’ respective
performance reports demonstrate their
efforts to ensure all communities have
greater access to sustainable rental and
homeownership opportunities and
better preparedness for obtaining a
mortgage loan, all while fulfilling their
statutory missions to promote affordable
housing, serve the public interest, and
ensure safety and soundness.
Ultimately, FHFA expects that
Enterprise changes implemented as part
of the inaugural Equitable Housing
Finance Plans will have long-standing
impacts, even as the Enterprises proceed
to devise new objectives to advance
sustainable housing opportunities and
address a new set of barriers impacting
the spectrum of underserved
communities for the 2025–2027
Equitable Housing Finance Plans.
Based on FHFA’s experience in
overseeing the activities undertaken by
the Enterprises pursuant to their 2022–
2024 Equitable Housing Finance Plans
and the public reporting provided by
the Enterprises, FHFA finds that the
Enterprises’ activities and the EHFP
program have helped the Enterprises
meet their statutory purposes under the
authorizing statutes and helped FHFA
fulfill its statutory duties. FHFA finds
these activities have assisted the
Enterprises in fulfilling their mission to
provide stability to the secondary
market for residential mortgages;
provide ongoing assistance to the
secondary market for residential
mortgages (including activities related
to mortgages on housing for low- and
moderate-income families) by increasing
the liquidity of mortgage investments
and improving distribution of
investment capital available for
residential mortgage financing; and
promote access to mortgage credit
throughout the United States.81 FHFA
finds that establishing the Equitable
Housing Finance Plan program and
overseeing the Enterprises’ performance
has assisted FHFA in fulfilling its duties
to ensure the purposes of the Safety and
Soundness Act, the authorizing statutes,
and other applicable laws (including the
Fair Housing Act, the Equal Credit
Opportunity Act, and Section 5 of the
Federal Trade Commission Act (FTC
Act)) are carried out.82
81 12
82 12
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B. Overview of the Proposed Rule
FHFA Fair Lending Oversight of the
Regulated Entities. The proposed rule
included regulatory codification of
many of FHFA’s existing fair lending
oversight functions with respect to the
regulated entities, including conducting
supervisory examinations, issuing
examination findings, requiring regular
and special reporting and data ,83 and
taking enforcement actions. The
proposed rule also included codification
of FHFA’s oversight of potential unfair
or deceptive acts or practices (UDAP) by
the regulated entities and requirements
for the regulated entities to file
certifications of compliance with fair
lending, fair housing, and UDAP laws
with regular reports. The proposed rule
also articulated more precise standards
related to fair housing, fair lending, and
UDAP and principles of equitable
housing for regulated entity boards of
directors.
Enterprise Equitable Housing Finance
Plans. The proposed rule included
regulatory codification of FHFA’s
current requirements for the Enterprises’
Equitable Housing Finance Plans along
with establishment of additional public
disclosure and reporting requirements
and expanded program requirements.
The proposed rule did not propose to
codify these standards for the Banks but
asked commenters how equitable
housing finance should be addressed for
the Banks.
Enterprise Data Collection and
Reporting to FHFA. The proposed rule
included regulatory codification for the
Enterprises to collect, maintain, and
report data on language preference,
homeownership education, and housing
counseling for applicants and
borrowers. This regulatory codification
is consistent with FHFA policy
announced in May 2022 for mandatory
use of the Supplemental Consumer
Information Form.84
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II. Discussion of Comments and Agency
Response
A. Overview of Comments Received
A total of 121 public comments were
posted to the public docket for the
proposed rule. The comments submitted
include comments from members of the
public, trade associations, industry
participants, FHFA regulated entities,
consumer advocacy organizations,
research organizations, think tanks, and
others. Several comment letters were
83 See https://www.fhfa.gov/
SupervisionRegulation/LegalDocuments/Pages/
Orders.aspx.
84 See https://www.fhfa.gov/Media/PublicAffairs/
Pages/FHFA-Announces-Mandatory-Use-of-theSupplemental-Consumer-Information-Form.aspx.
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signed by coalitions of organizations.
Several comments primarily pertained
to matters outside the scope of the
rulemaking, such as complaints about
conditions at particular multifamily
properties, comments regarding
Enterprise guarantee fees, or proposals
for future language access policies. Four
of the posted comments are meeting
summaries from FHFA meetings with
Fannie Mae, Freddie Mac, Ceres, and
the National Fair Housing Alliance that
were documented and posted in
accordance with FHFA’s Policy on
Communications with Outside Parties
in Connection with FHFA
Rulemakings.85 Members of Congress
submitted a letter to FHFA that FHFA
posted to the public docket and treated
as a comment letter on the rule in
accordance with the Members’ wishes.
Comments received and FHFA’s
responses are summarized by topic
below.
B. Unfair or Deceptive Acts or Practices
FHFA proposed to codify in
regulation the regulated entities’
existing obligations to comply with the
FTC Act’s prohibition on UDAP.86
FHFA received ten comments on this
proposed section from the regulated
entities, consumer and civil rights
advocates, and industry participants.
Comments from regulated entities
requested additional guidance from
FHFA on UDAP compliance. FHFA
expects to address these requests by
issuing additional advisory guidance
that will provide further clarity on
FHFA’s supervisory expectations, as
other agencies have done for the entities
they regulate.87 Consumer advocate
85 Policy on Communications with Outside
Parties in Connection with FHFA Rulemakings
(March 5, 2019), available at https://www.fhfa.gov/
AboutUs/Policies/Documents/Ex-ParteCommunications-Public-Policy_3-5-19.pdf.
86 15 U.S.C. 45(a)(1).
87 See Federal Reserve et. al., Interagency
Guidance Regarding Unfair or Deceptive Credit
Practices (Aug. 22, 2014), available at https://
ncua.gov/regulation-supervision/letters-creditunions-other-guidance/unfair-or-deceptive-creditpractices/interagency-guidance-regarding-unfairdeceptive-credit-practices; Consumer Financial
Protection Bureau, Unfair, Deceptive, or Abusive
Acts or Practices (UDAAPs) examination
procedures (Oct. 1, 2012), available at https://
www.consumerfinance.gov/compliance/
supervision-examinations/unfair-deceptive-orabusive-acts-or-practices-udaaps-examinationprocedures/; Board of Governors of the Federal
Reserve System & Federal Deposit Insurance
Corporation, Unfair or Deceptive Acts or Practices
by State-Chartered Banks (March 11, 2004),
available at https://www.federalreserve.gov/
boarddocs/press/bcreg/2004/20040311/
attachment.pdf; see also Federal Deposit Insurance
Corporation, Inactive Financial Institution Letters:
Guidance on Unfair or Deceptive Acts or Practices
(May 30, 2002), available at https://www.fdic.gov/
news/inactive-financial-institution-letters/2002/
fil0257.html.
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42775
commenters supported the proposed
requirement to codify UDAP
compliance and asserted it was
consistent with FHFA’s authority and
the oversight of financial institutions by
other Federal financial regulators.
Industry commenters challenged
codification of FHFA’s oversight of the
regulated entities’ compliance with
UDAP, arguing that UDAP is distinct
from fair lending and fair housing, and
exceeds congressional intent for FHFA’s
authority. Commenters also raised
concerns that codification of UDAP
compliance oversight may result in
unintentional consequences for primary
mortgage market lenders and asserted
that codifying UDAP compliance in
regulation was legally unnecessary. One
commenter similarly contended that
because the regulated entities do not
interact with consumers in the same
way as other lenders subject to UDAP,
UDAP compliance requirements for the
regulated entities were inappropriate.
FHFA considered these comments
and determined that the proposed
provisions are necessary to carry out its
statutory duties and purposes and the
benefits of codifying FHFA’s oversight
of regulated entity UDAP compliance in
regulation otherwise outweigh
commenters’ concerns. The broad
language of Section 5 of the FTC Act
prohibits ‘‘unfair or deceptive acts or
practices in or affecting commerce,’’
which would encompass activities of
FHFA’s regulated entities.88 The Safety
and Soundness Act charges FHFA with
overseeing its regulated entities’
compliance not only with the purposes
of the Safety and Soundness Act and the
authorizing statutes, but also with ‘‘any
other applicable law,’’ 89 and to engage
in enforcement for noncompliance with
law.90
FHFA acknowledges that UDAP is
distinct from fair lending and fair
housing. In the proposed rule, FHFA
distinguished between the two by
separating UDAP specific language from
fair lending specific language to clarify
that FHFA does not view UDAP
compliance and fair lending compliance
as identical.91 Furthermore, FHFA
88 15
U.S.C. 45(a)(1).
U.S.C. 4511(b)(2).
90 12 U.S.C. 4511(b)(2), 4526(a), 4513(a)(1)(B)(v),
and 4631. FHFA’s cease-and-desist authority is
similar to Section 8 of the Federal Deposit
Insurance Act under which the FDIC (for example)
enforces unfair or deceptive acts or practices. See
also Faiella v. Green Tree Servicing, LLC, No. 16cv-088–JD, 2017 WL 589096, *7 (D.N.H. Sept. 14,
2017) (‘‘These statutory grants of power can
reasonably be construed to grant FHFA regulatory
authority over Fannie Mae’s mortgage and
foreclosure practices and any unfair or deceptive
practices arising from them.’’).
91 See 88 FR 25293, 25307–08 (Apr. 26, 2023).
89 12
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believes that both frameworks have
related goals of consumer protection
and fair dealing in the mortgage market,
and notes that other financial regulators
treat both as related consumer
protection standards. Thus, FHFA
believes this final rule is an appropriate
vehicle for affirming UDAP compliance
obligations 92 for the regulated
entities.93
FHFA does not expect the final rule
will impact primary market lenders, as
they are already subject to UDAP
compliance requirements from the other
Federal financial regulators, including
the Consumer Financial Protection
Bureau, and the Federal Trade
Commission.94 This final rule does not
apply to primary market lenders and
FHFA’s enforcement and supervision
would be limited to its own regulated
entities.
Codification of the Enterprises’ and
the Banks’ existing UDAP compliance
obligations would be consistent with the
broad nature of Section 5 of the FTC
Act, the actions of the prudential
regulators for their regulated entities,
and FHFA’s supervisory
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92 FHFA
is codifying its authority as a primary
regulator to oversee the regulated entities
compliance with existing obligations, including
UDAP. See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601
(FHA); 15 U.S.C. 1691 (ECOA); 12 U.S.C. 4517
(stating that ‘‘[FHFA] examiners shall have the same
authority . . . applicable to examiners employed by
the Federal Reserve banks’’).
93 See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601
(FHA); 15 U.S.C. 1691 (ECOA); 12 U.S.C.
4513(a)(1)(B)(v) (stating that a principal duty of the
FHFA Director is to ensure that ‘‘the activities of
each regulated entity and the manner in which such
regulated entity is operated are consistent with the
public interest.’’).
94 See, e.g., Consumer Financial Protection
Bureau, Unfair, Deceptive, or Abusive Acts or
Practices (UDAAPs) examination procedures (Oct.
1, 2012), available at https://
www.consumerfinance.gov/compliance/
supervision-examinations/unfair-deceptive-orabusive-acts-or-practices-udaaps-examinationprocedures/; Federal Trade Commission, Policy
Statement on Unfairness (Dec. 17, 1980), available
at: https://www.ftc.gov/legal-library/browse/ftcpolicy-statement-unfairness; Federal Trade
Commission, Policy Statement on Deception (Oct.
14, 1983), available at https://www.ftc.gov/system/
files/documents/public_statements/410531/
831014deceptionstmt.pdf; Office of the Comptroller
of the Currency, Unfair or Deceptive Acts or
Practices and Unfair, Deceptive, or Abusive Acts or
Practices (June 2020), available at https://
www.occ.gov/publications-and-resources/
publications/comptrollers-handbook/files/unfairdeceptive-act/pub-ch-udap-udaap.pdf; National
Credit Union Administration, Unfair or Deceptive
Credit Practices (August 2014), available at https://
ncua.gov/regulation-supervision/letters-creditunions-other-guidance/unfair-or-deceptive-creditpractices; Board of Governors of the Federal
Reserve System & Federal Deposit Insurance
Corporation, Unfair or Deceptive Acts or Practices
by State-Chartered Banks (March 11, 2004),
available at https://www.federalreserve.gov/
boarddocs/press/bcreg/2004/20040311/
attachment.pdf.
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responsibilities.95 For example, such
compliance would support FHFA’s
principal duty to ensure that the
regulated entities manage risks and
foster fair, efficient, and competitive
housing finance markets. Indeed, one of
the core purposes served by UDAP
prohibitions is to correct actions that
impede efficient and competitive
marketplaces, such as those that
‘‘unreasonably create[ ] or take[ ]
advantage of an obstacle to the free
exercise of consumer decisionmaking.’’ 96 Given the strong statutory
support for fair lending oversight,
FHFA’s concurrent oversight of UDAPs
in connection with fair lending
oversight would further the efficient
supervision and examination of the
regulated entities. Ensuring UDAP
compliance can also reasonably be
understood to be part of FHFA’s duty to
ensure that the regulated entities’
activities and operations are consistent
with the ‘‘public interest.’’
Furthermore, FHFA’s regulated
entities have significant impacts on
consumers. The Enterprises maintain
underwriting models and other
automated systems and lending and
servicing standards that have substantial
potential to affect consumers and the
housing market. There are certain
circumstances involving mortgage
servicing and disposition of Real Estate
Owned (REO) properties where FHFA’s
regulated entities or their agents interact
with consumers. The regulated entities
also provide consumer education and
95 See, e.g., Consumer Financial Protection
Bureau, Unfair, Deceptive, or Abusive Acts or
Practices (UDAAPs) examination procedures (Oct.
1, 2012), available at: https://
www.consumerfinance.gov/compliance/
supervision-examinations/unfair-deceptive-orabusive-acts-or-practices-udaaps-examinationprocedures/; Federal Trade Commission, Policy
Statement on Unfairness (Dec. 17, 1980), available
at https://www.ftc.gov/legal-library/browse/ftcpolicy-statement-unfairness; Federal Trade
Commission, Policy Statement on Deception (Oct.
14, 1983), available at: https://www.ftc.gov/system/
files/documents/public_statements/410531/
831014deceptionstmt.pdf; Office of the Comptroller
of the Currency, Unfair or Deceptive Acts or
Practices and Unfair, Deceptive, or Abusive Acts or
Practices (June 2020), available at https://
www.occ.gov/publications-and-resources/
publications/comptrollers-handbook/files/unfairdeceptive-act/pub-ch-udap-udaap.pdf; National
Credit Union Administration, Unfair or Deceptive
Credit Practices (August 2014), available at https://
ncua.gov/regulation-supervision/letters-creditunions-other-guidance/unfair-or-deceptive-creditpractices; Board of Governors of the Federal
Reserve System & Federal Deposit Insurance
Corporation, Unfair or Deceptive Acts or Practices
by State-Chartered Banks (March 11, 2004),
available at https://www.federalreserve.gov/
boarddocs/press/bcreg/2004/20040311/
attachment.pdf.
96 Federal Trade Commission, ‘‘Policy Statement
on Unfairness’’ (Dec. 17, 1980), available at https://
www.ftc.gov/legal-library/browse/ftc-policystatement-unfairness.
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outreach activities to borrowers and
applicants. Additionally, UDAP is not
limited to consumers 97 and the
Enterprises and Banks have a duty to
ensure that their dealings with other
parties protected by UDAP standards are
compliant and that their standards that
affect primary market lenders are
consistent with UDAP. FHFA plans to
give due consideration to any effects on
primary market participants in the
supervision and regulation of regulated
entity UDAP compliance, just as it does
in all aspects of its work, and to
coordinate with other regulators as
appropriate. FHFA agrees that it is not
necessary for FHFA to issue a rule to
supervise the regulated entities for
UDAP compliance.98 However, given
that FHFA had not previously
supervised and enforced UDAP
standards, FHFA believes that it was
valuable to provide notice and
opportunity for comment to both the
regulated entities and the public.
Accordingly, FHFA is adopting
§ 1293.11(b) of the final rule on
regulated entity UDAP compliance with
no changes from the proposed rule.
C. Board Standards and Responsibilities
FHFA proposed to require the board
of directors of a regulated entity to
direct the entity’s operations in
conformity with fair lending, fair
housing, and UDAP laws. FHFA
received two comments from the
Enterprises regarding the
responsibilities of boards of directors.
One comment raised concerns that
requiring boards of directors to direct
the operations of a regulated entity
consistent with fair housing, fair
lending, and UDAP authorities is
duplicative of existing compliance
duties and places fair lending above
other compliance obligations.
FHFA believes that the proposed
language clarifies rather than duplicates
existing compliance duties. The
regulated entities are currently required
to comply with fair housing, fair
lending, and UDAP laws,99 and the
regulated entities’ boards of directors
are required to oversee compliance
97 See Federal Trade Commission v. IFC Credit
Corp., 543 F. Supp. 2d 925, 941 (N.D. Ill. 2008).
98 See Faiella v. Green Tree Servicing, LLC, No.
16–cv–088–JD, 2017 WL 589096, *7 (D.N.H. Sept.
14, 2017) (‘‘These statutory grants of power can
reasonably be construed to grant FHFA regulatory
authority over Fannie Mae’s mortgage and
foreclosure practices and any unfair or deceptive
practices arising from them.’’).
99 See FHFA Advisory Bulletin AB 2021–04:
Enterprise Fair Lending and Fair Housing
Compliance (Dec. 20, 2021), available at https://
www.fhfa.gov/SupervisionRegulation/
AdvisoryBulletins/Pages/Enterprise-Fair-Lendingand-Fair-Housing-Compliance.aspx.
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risks.100 The proposed language
clarified that the board of directors must
consider fair lending, fair housing, and
UDAP compliance in its oversight of the
regulated entity. The proposed section
referenced 12 CFR 1239.4(b)(4), which
sets out the duties of the regulated
entities’ boards of directors. Section
1239.4(b)(4) states that each director on
the board of a regulated entity has a
duty to ‘‘[d]irect the operations of the
regulated entity in conformity with the
requirements set forth in the authorizing
statutes, the Safety and Soundness Act,
and this chapter[.]’’ The proposed
language referenced the general board
responsibilities laid out in § 1239.4(b)(4)
and makes clear that that responsibility
includes directing the regulated entity’s
behavior in compliance with fair
lending, fair housing, and UDAP laws in
addition to compliance with the Safety
and Soundness Act and other
authorizing statutes such as the
Enterprises’ charter acts, not in lieu of
compliance with other authorities.101
Furthermore, supervisory rating
systems routinely consider board
engagement in entities’ compliance
management programs and dedication
to compliance management in rating an
entity. For example, the Federal
Financial Institutions Examination
Council (FFIEC) Uniform Interagency
Consumer Compliance Rating System
measures entities based on their board
oversight of and commitment to the
compliance management system.102
One commenter objected to the use of
‘‘directs’’ as the board of directors’
responsibility, arguing that a board of
directors actually ‘‘oversees’’ the
operations of an entity. Section
1239.4(b)(4) uses the term ‘‘direct’’ in
regard to the board of directors’
oversight responsibility.103 In the
preamble of the final rule promulgating
§ 1239.4(b)(4), FHFA responded to a
comment asking whether ‘‘directs’’ was
the appropriate language for a board’s
responsibilities.104 FHFA explained that
the language had originated in
regulations promulgated by FHFA’s
predecessor agencies, the Federal
Housing Finance Board and the Office
of Federal Housing Enterprise
Oversight.105 After analysis of state laws
100 See 12 CFR part 1236, Appendix: Prudential
Management Standards & Operations Standards 8,
Overall Risk Management Processes; see also 12
CFR 1239.4, Duties and responsibilities of directors;
and 12 CFR 1239.12, Compliance Program.
101 See 12 CFR 1239.4.(b)(4).
102 FFIEC Uniform Interagency Consumer
Compliance Rating System, at 21, available at
https://www.ffiec.gov/press/PDF/FFIEC_CCR_
SystemFR_Notice.pdf.
103 See 12 CFR 1239.4(b)(4).
104 80 FR 72327, 723330 (Nov. 19, 2015).
105 Id.
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governing the Enterprises’ corporate
responsibility duties, FHFA revised the
proposed language to read that
management of the entity should be ‘‘by
or under the direction of’’ of the
board.106 FHFA expects boards of
directors to direct management
consideration of whether and how much
potential decisions heighten or mitigate
fair lending, fair housing, and UDAP
risk, as appropriate, prior to making
decisions. After consideration, FHFA
believes that the use of ‘‘direct’’ in the
proposed rule is consistent with the
language in § 1239.4(b)(4) of this chapter
as it appropriately reflects a board’s
responsibilities and has retained it in
this final rule.
Finally, while not raised by any
commenters, FHFA is aware of the
holding in Meyer v. Holley that directors
of a board are generally not vicariously
liable for the conduct of their employees
or agents under the Fair Housing Act,
even if the corporation itself is held
vicariously liable.107 FHFA believes that
this final rule is consistent with that
holding.
Accordingly, FHFA is adopting
§ 1293.11 of the final rule with no
changes from the proposed rule.
D. Certification of Compliance
FHFA proposed to require the
regulated entities to certify compliance
with fair lending, fair housing, and
UDAP laws with each regular report
concerning fair housing and fair lending
submitted. FHFA received five
comments regarding the proposal to
require certifications of compliance.
Comments from the regulated entities
uniformly opposed the proposed
requirement for certifications of
compliance with fair housing, fair
lending, and UDAP laws, stating it
would be too burdensome and could
create liability. One commenter
suggested that such a certification
would place fair lending and fair
housing above other compliance
concerns. A second commenter
suggested that such a certification
would require ‘‘absolute compliance’’
and suggested instead that FHFA
require a certification of accuracy or
certification of a ‘‘system reasonably
assured to ensure compliance.’’ A third
commenter opposed the proposed
requirement on the basis that it was too
broad and recommended altering the
language to certify compliance ‘‘to the
best of one’s knowledge and belief
following reasonable or due inquiry of
the certifying official.’’
106 Id.
at 723331.
v. Holley, 537 U.S. 280, 290–91 (2003).
107 Meyer
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One civil rights advocate commenter
observed that FHFA has authority for
requiring certifications and proposed
expanding the language to apply to
special reports and regular reports, and
to cite Section 5 of the FTC Act directly.
One industry commenter opposed
requiring certification of compliance
with UDAP, stating that inclusion of
UDAP was inappropriate and could
have unintended consequences for
primary market participants. FHFA
understood this comment to be more
directly related to proposed § 1293.11(b)
and responded to it in Section II.B.
above.
FHFA does not intend to create
liability with this certification, but
instead to incentivize consideration of
fair lending compliance throughout
decision-making processes. FHFA’s
stated intention not to create liability is
consistent with proposed § 1293.1(c),
which further states that ‘‘[n]othing in
this part creates a private right of
action.’’ FHFA also believes that a
requirement to certify compliance
would be consistent with the
Enterprises’ own practices in
certifications required of seller/
servicers 108 and HUD’s practices in
certifications required for grantees.109
After consideration of the various
alternatives proposed by the
commenters, FHFA believes that
qualifying the certification ‘‘to the best
of the certifier’s knowledge and belief
following reasonable or due inquiry of
the certifying official’’ adequately
incentivizes compliance management
efforts without creating an undue
burden of certifying absolute
compliance.
Accordingly, FHFA has revised
§ 1293.12(b) of the final rule by adding
‘‘to the best of the certifier’s knowledge
and belief following reasonable or due
inquiry of the certifying official’’ to the
certification of compliance. FHFA
intends this revision to make clear that
identification of a fair lending
compliance risk following the
completion of the certification does not
on its own create liability for the
regulated entity.
108 See Fannie Mae, Mortgage Selling and Servicer
Contract: Instructions to the Lender, at 6 (July
2005), available at https://
singlefamily.fanniemae.com/media/35796/display;
Freddie Mac, Seller/Service Guide Section 1301.2:
Compliance with applicable law, available at
https://guide.freddiemac.com/app/guide/section/
1301.2.
109 See U.S. Department of Housing and Urban
Development, Form 424–B: Applicant and
Recipient Assurances and Certifications (Jan. 27,
2023), available at https://www.hud.gov/sites/
dfiles/OCHCO/documents/424-B.pdf.
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E. Mission-Specific Board Standards
and Responsibilities
FHFA proposed to require an
Enterprise’s board of directors to
consider mission goals, including the
Equitable Housing Finance Plans, Duty
to Serve Plans, and affordable housing
goals, alongside other mission-related
obligations in the board’s oversight of
the Enterprise and its business
activities. FHFA received no comments
on this proposal except for a comment
requesting that an effective date for this
section be ‘‘in accordance with the
APA.’’ The effective date of this rule is
60 days from the date of its publication
in the Federal Register, which is in
accordance with the Administrative
Procedure Act (APA). Accordingly,
FHFA is adopting § 1293.26 of the final
rule with no changes from the proposed
rule.
F. Determination Not To Designate
Enterprise Equitable Housing Finance
Planning as a Prudential Management
and Operations Standard
FHFA proposed the designation of the
Equitable Housing Finance Planning
subpart (proposed subpart C) as a
Prudential Management and Operations
Standard (‘‘PMOS’’ or ‘‘prudential
standard’’). While some commenters
supported a PMOS designation, most
commenters did not support it, and
suggesting it was an inappropriate use
of PMOS authority. As discussed in the
proposed rule preamble, FHFA
proposed the PMOS designation
because the Enterprise equitable
housing finance planning framework is
consistent with the Enterprises’
authorizing statute obligations and
FHFA’s statutory charges related to
ensuring the regulated entities operate
consistent with the public interest and
that FHFA furthers fair housing in its
oversight of the regulated entities.110
FHFA noted that the PMOS designation
would provide FHFA access to section
4513b corrective measures, if necessary,
to address deficiencies in equitable
housing finance planning or
implementation by an Enterprise.111
FHFA has previously designated
discretionary rules undertaken as part of
its general rulemaking authority that are
consistent with its authority and the
mission of the Enterprises as PMOS.112
In response to comments and after
reviewing existing PMOS guidelines
and other FHFA supervisory and
enforcement authorities, FHFA has
determined not to designate this final
rule as a Prudential Management and
110 88
FR 25293, 25299 (Apr. 26, 2023).
111 Id.
112 See,
e.g., 12 CFR 1242.1(b).
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Operations Standard at this time. FHFA
believes that this decision is responsive
to concerns expressed by commenters,
and that other existing supervisory and
enforcement authorities should provide
appropriate means to address any
deficiencies by the Enterprises.
FHFA does disagree with the limited
view of PMOS authority expressed by
certain commenters, and notes that the
Safety and Soundness Act is not limited
to prudential safety and soundness
standards.113 The existing Prudential
Management and Operations Standards
established for the Enterprises cover a
broad range of situations and
acknowledge the Enterprises’ mission to
promote access to mortgage credit
throughout the Nation.114
Moreover, the existing Prudential
Management and Operations Standards
contain several elements that could be
relevant to components of equitable
housing finance planning. For example,
the prudential standards regarding
adopting and implementing business
strategies, policies, and procedures for
boards and senior management may be
relevant if FHFA determines the
Enterprise failed to provide adequate
resources or to establish appropriate
controls to effectively execute business
strategies, policies, or procedures
related to the equitable housing finance
planning requirements.115 The
prudential standards regarding internal
controls and information systems may
be relevant if FHFA determines an
Enterprise failed to monitor the overall
effectiveness of its internal controls and
key risks on an ongoing basis and
ensure that business units and internal
and external audit teams conduct
periodic evaluations related to the
equitable housing finance planning
requirements.116 The prudential
standards for independence and
adequacy of internal audit systems may
also be relevant if FHFA determines an
Enterprise failed to conduct risk-based
audits related to equitable housing
finance planning, or an Enterprise’s
internal audit department failed to
determine whether violations, findings,
113 See
12 U.S.C. 4513b(a).
e.g., 12 CFR part 1236, Appendix—
Prudential Management and Operations Standards,
Responsibilities of the Board of Directors and
Senior Management, paragraph 10; Standard 4,
paragraph 4; Standard 6, paragraph 4; Standard 7
(references to mission in paragraphs 2, 3, 4);
Standard 8, paragraph 2.
115 See, e.g., 12 CFR part 1236, Appendix—
Prudential Management and Operations Standards,
Responsibilities of the Board of Directors and
Senior Management, paragraphs 1, 5, and 6.
116 See, e.g., 12 U.S.C. 4513b(a)(1), 12 CFR part
1236, Appendix—Prudential Management and
Operations Standards, Standard 1—Internal
Controls and Information Systems, paragraph 14.
114 See,
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weaknesses, and other issues reported
by FHFA with regard to the equitable
housing finance planning have been
promptly addressed.117 Lastly, the
prudential standard for the board and
senior management to ensure an
Enterprise’s risk profile is aligned with
its mission objectives and the prudential
standard related to overall risk
management and compliance with laws,
regulations and supervisory guidance
may be relevant if FHFA determined an
Enterprise’s equitable housing finance
planning efforts did not reflect
adherence to the authorizing statutes,
the Fair Housing Act, the Equal Credit
Opportunity Act, the requirements of
the final rule, and other relevant
guidance and regulations, and posed
reputational or other material risks to
the Enterprise.118 Although FHFA is not
designating any part of the final rule as
a new PMOS, an Enterprise’s failure to
properly engage in equitable housing
finance planning could result in a
determination that it has failed to meet
one or more of the existing PMOS, and
must take corrective action.
FHFA continues to recognize the
Enterprises’ duty to overcome barriers to
sustainable housing opportunities faced
by one or more underserved
communities through objectives,
meaningful actions, and measurable
goals, as outlined in the final rule, as an
important component of their public
interest mission and Charter Act
obligation to promote access to mortgage
credit throughout the Nation. In
addition to the existing PMOS discussed
above which may be relevant to ensure
compliance by the Enterprises, the final
rule provides that FHFA may enforce
compliance in any manner and through
any means within its authority,
including but not limited to adverse
examination findings or through
supervision or enforcement under 12
U.S.C. 4511(b), 4513b, 4631, or 4636.
Designation of the equitable housing
finance planning requirements as a
PMOS remains an option for future
rulemaking based on experience FHFA
gains in supervising and enforcing
compliance with the final rule.
G. Determination Not To Define
‘‘Equity’’
FHFA asked commenters on the
proposed rule whether ‘‘equity’’ should
117 See 12 U.S.C. 4513b(a)(2), 12 CFR part 1236,
Appendix—Prudential Management and Operations
Standards, Standard 2—Independence and
Adequacy of Internal Audit Systems.
118 See 12 U.S.C. 4513b(a)(8), 12 CFR part 1236,
Appendix—Prudential Management and Operations
Standards, Responsibilities of the Board of Directors
and Senior Management, paragraph 10, and
Standard 8—Overall Risk Management Processes,
paragraph 12.
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be defined in the rule. Most commenters
supported FHFA defining ‘‘equity’’ in
the regulatory text to prevent confusion
and ensure the Enterprises take actions
that promote the Agency’s definition of
‘‘equity.’’ Two commenters argued that
imposing an ‘‘equity’’ definition and
requirements on the regulated entities is
outside FHFA’s statutory mission.
FHFA recognizes that a definition of
‘‘equity’’ has been explicitly provided in
HUD’s most recent proposed
Affirmatively Furthering Fair Housing
(AFFH) rule,119 which would require
equity plans from HUD program
participants and which FHFA reviewed
in developing the proposed and final
rules given that both equity plans are
grounded in the statutory requirement
to affirmatively further fair housing.120
According to a 2021 Presidential
Memorandum, the AFFH mandate ‘‘. . .
is not only a mandate to refrain from
discrimination but a mandate to take
actions that undo historic patterns of
segregation and other types of
discrimination and that afford access to
long-denied opportunities.’’ 121
Executive Order 13985 defined ‘‘equity’’
for purposes of that order as ‘‘the
consistent and systematic fair, just, and
impartial treatment of all individuals,
including individuals who belong to
underserved communities that have
been denied such treatment.’’ 122 The
definition provided in HUD’s proposed
rule shares many similarities with the
Executive Order 13985, but is not
identical.
The proposed rule did not specifically
define ‘‘equity,’’ but did include defined
terms that would form the basis of the
rule’s requirements, informed by the
concept of equity as it has been
119 88
FR 8516, 8558 (Feb. 9, 2023).
42 U.S.C. 3608(d), 3608(e)(5). See also
Executive Order 12892, Leadership and
Coordination of Fair Housing in Federal Programs:
Affirmatively Furthering Fair Housing, 59 FR 2939
(Jan. 20, 1994).
121 See Memorandum on Redressing Our Nation’s
and the Federal Government’s History of
Discriminatory Housing Practices and Policies (Jan.
26, 2021), available at: https://
www.whitehouse.gov/briefing-room/presidentialactions/2021/01/26/memorandum-on-redressingour-nations-and-the-federal-governments-history-ofdiscriminatory-housing-practices-and-policies/. As
acknowledged by the memorandum: ‘‘[t]hroughout
much of the 20th century, the Federal Government
systematically supported discrimination and
exclusion in housing and mortgage lending. While
many of the Federal Government’s housing policies
and programs expanded homeownership across the
country, many knowingly excluded Black people
and other persons of color, and promoted and
reinforced housing segregation. Federal policies
contributed to mortgage redlining and lending
discrimination against persons of color.’’
122 See Executive Order 13985, Advancing Racial
Equity and Support for Underserved Communities
Through the Federal Government, 86 FR 7009 (Jan.
25, 2021).
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120 See
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interpreted under the Fair Housing Act’s
affirmatively furthering statutory
provision, the proposed AFFH rule,
Presidential Memoranda, and Executive
Orders noted above, as well as
incorporating concepts to ensure
consistency with FHFA’s public interest
duty and the Enterprises’ Charter Act
obligation to promote access to mortgage
credit throughout the Nation. The
proposed rule provides a concrete
framework through which the
Enterprises may work to promote
sustainable housing opportunities for all
homebuyers, homeowners, and tenants
by taking meaningful actions under an
‘‘equitable housing finance plan’’ to
overcome ‘‘barriers’’ faced by
‘‘underserved communities’’ throughout
the country.123 For example, the
proposed rule’s ‘‘underserved
community’’ definition includes groups
with a shared characteristic or
geographic area that previously had or
currently have difficulty accessing
housing opportunities compared with
groups of people without the shared
characteristic or other areas.124 The
proposed rule defined ‘‘barrier’’ to refer
to Enterprise actions, products, or
policies, or aspects of the housing
market that can reasonably be
influenced by the Enterprise’s actions,
products, or policies, that contribute to
inequitable housing opportunities and
outcomes for underserved
communities.125 The ‘‘equitable housing
finance plan’’ requires an Enterprise to
identify barriers to sustainable housing
opportunities faced by one or more
underserved communities, and
subsequently, establish objectives that
demonstrate a focus to combat those
identified barriers through the EHFP
plan and the outcomes sought.126
FHFA believes the Equitable Housing
Finance Planning program standards
and provided definitions of
‘‘underserved community,’’ ‘‘barrier,’’
and ‘‘equitable housing finance plan’’
provide a clear framework for the
Enterprises’ work to advance the
availability of mortgage credit and
housing for all individuals. FHFA
believes it is important to recognize
there are many underserved
communities throughout the nation, and
it is important to understand each
community’s unique barriers, starting
points, and access to opportunities that
have been shaped by history and the
present day. FHFA believes the
proposed rule’s approach provides a
flexible and adaptable framework for
123 See
12 CFR 1293.2.
124 Id.
125 Id.
126 See
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42779
addressing the needs of underserved
communities that exist today, or that
may arise in the future. Accordingly,
consistent with the proposed rule, the
final rule does not include a definition
of ‘‘equity.’’ FHFA may consider issuing
additional guidance or engaging in
future rulemaking on this topic based on
additional experience with the program
and engagement with stakeholders.
H. Resource Disclosures
FHFA proposed a requirement in
§ 1293.23(b)(4) for the Enterprises to
submit disclosures of resources
dedicated to the Equitable Housing
Finance Plans as part of their
performance reports. Commenters who
specifically addressed this issue
opposed the proposed requirement.
Some commenters expressed concerns
about reputational risks, due to the high
potential for subjectivity when different
parties examine the same value. For
example, consumer advocates may posit
that the Enterprises’ financial
expenditures for meaningful actions are
inadequate, while industry commenters
may view the same value as an
excessive and unnecessary expenditure.
Other commenters suggested a financial
disclosure requirement would be
burdensome for the Enterprises and
difficult to calculate accurately, as
‘‘resources’’ could be interpreted to
include anything from closing cost
credits to administrative costs.
Based on the comments, FHFA
considered the requirement in the
proposed rule as well as an alternative
limited resource disclosure requirement
and removing the requirement. The
limited disclosure requirement would
mandate the Enterprises to publish a
summary of cost savings and benefits
delivered to consumers for
homeownership programs or products
created pursuant to an Equitable
Housing Finance Plan to support
Enterprise accountability and
transparency. However, concerns of
subjectivity when interpreting any
financial disclosures and whether
financial disclosures are sufficient or
excessive would still remain. Further, it
could be difficult for the Enterprises to
determine what monetary threshold
constitutes sufficient resource
dedication, and what constitutes a
resource for Plan purposes, as some
resources are not easily quantifiable or
may be issued by a third party because
of Enterprise efforts. Accordingly, for
these reasons, FHFA has not included
this alternative more limited financial
disclosure requirement in the final rule.
FHFA finds the comments on the
proposed financial disclosures
requirement persuasive and has
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determined not to include that
requirement in the final rule at this
time. FHFA agrees with commenters
that it can be difficult to fully and
uniformly account for resource
expenditures. In contrast to federal
grant-making, the Enterprises provide
support to underserved communities
through the Equitable Housing Finance
Plans through a variety of mechanisms.
These mechanisms include both direct
spending and indirect support,
including but not limited to closing cost
credits, special pricing, and policy
enhancements. The Enterprises’ indirect
support can be difficult to quantify and
compare across projects. Further,
‘‘typical’’ or customary costs may differ
significantly across markets, resulting in
aggregated data that does not provide
meaningful insights and transparency.
For these reasons, FHFA does not
believe at this time that the potential
burdens of the proposed rule provision
or the alternative more limited
disclosure requirement discussed above
would be outweighed by the usefulness
of information provided.
FHFA recognizes that although
financial disclosures are one way to
monitor program effectiveness and
prioritization of housing equity, other
performance metrics may better
illustrate the impact of the Plans,
including accept rate gaps, home loan
acquisitions, and other performance
metrics that are included in the
Enterprises’ performance reports.127
Enterprise accountability can also be
achieved through FHFA’s Enterprise
Fair Lending and Fair Housing Rating
System (Rating System).128 This Rating
System will directly evaluate Enterprise
impact, performance, public
engagement, and overall commitment to
addressing barriers to sustainable
housing opportunities for underserved
communities as part of FHFA’s
confidential supervisory ratings.
Additionally, as discussed below, FHFA
is also adopting a requirement in
§ 1293.27 of the final rule for a public
narrative assessment of the Plans that
will also contribute to Enterprise
accountability and public transparency.
FHFA may consider implementing a
financial disclosure requirement in the
future based on additional experience
with the program and engagement with
stakeholders.
127 See
12 CFR 1293.23.
Advisory Bulletin AB 2023–05: Enterprise
Fair Lending and Fair Housing Rating System
(September 27, 2023), available at https://
www.fhfa.gov/SupervisionRegulation/Advisory
Bulletins/Pages/AB_2023-05_Enterprise-FairLending-and-Fair-Housing-Rating-System.aspx.
128 See
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I. Public Engagement
Proposed § 1293.24 included an
annual public engagement requirement
for FHFA, and a requirement for the
Enterprises to consult with the public,
including members of underserved
communities and housing market
participants, in the development and
implementation of their Equitable
Housing Finance Plans and updates,
and describe such consultation in their
Plans. The Enterprises’ comments on
the proposal requested additional
instructions and flexibility for public
engagement and input. Some other
commenters were concerned that the
absence of detailed public engagement
requirements in the proposed rule could
lead to inadequate public outreach and
requested more rigorous requirements.
One commenter recommended
mandating the Enterprises provide
several opportunities for input during
the year via public meetings in each of
the nine census divisions.
Although FHFA agrees that the
Enterprises should provide ongoing
opportunities for public engagement,
FHFA does not believe the rule should
state specific requirements for the
Enterprises’ public engagement because
it may cause the Enterprises to limit
public engagement efforts only to those
specified in the rule and may otherwise
inhibit flexibility in how public
engagement is achieved. FHFA also
believes mandating Enterprise
engagement by census division is
inappropriate at this time, as the census
divisions are not prominently known to
the public and may be unduly
burdensome for the Enterprises, due to
the additional resources necessary to
employ multiple meetings in the various
census divisions across the country, and
subsequently, incorporate the public
input in their EHFP reports each year
before the September 30 due date.
Making this provision too prescriptive
could have the unintended consequence
of hindering an Enterprise’s innovative
and flexible ways of engaging with the
public. Due to the specifics of the final
rule, the underserved communities and
barriers addressed with meaningful
actions will continuously change, and
the program standards must be flexible
enough to allow for that. FHFA expects
that the Enterprises would seek
feedback from stakeholder groups about
how best to design their Plans.
Affording flexibility regarding public
engagement will allow for more focused
and targeted Plans based on specific
Enterprise public outreach efforts,
which must be described in the Plan as
part of the public engagement
requirement. Accordingly, FHFA has
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not implemented any changes to the
public engagement requirements in this
final rule. FHFA may provide further
guidance on the adequacy of public
engagement in the future based on
additional experience with the program
and engagement with stakeholders.
J. Program Evaluation
FHFA asked commenters on the
proposed rule whether an evaluation of
the Enterprises’ equitable housing
performance should be publicly issued,
or whether evaluation metrics should be
included in the Enterprises’ public
performance reports. Commenters
generally supported FHFA publishing
an evaluative narrative to facilitate
constructive public input and increase
Enterprise transparency and
accountability. Two commenters
suggested the Enterprises should
granularly disclose the success or failure
of reports, and provide full reporting on
all Enterprise pilot programs at the local
level.
FHFA’s Rating System assesses the
Enterprises’ compliance with fair
lending and fair housing standards and
their planning and execution with
respect to Equitable Housing Finance
Plans.129 One of the four rating
components is equitable housing
finance, which measures the
performance of each Enterprise under
its Equitable Housing Finance Plan
activities. The Rating System
complements other existing FHFA
supervisory rating systems used by
FHFA’s Division of Bank Regulation,
Division of Enterprise Regulation, and
Office of Minority and Women
Inclusion.130 FHFA generally prohibits
disclosure of non-public Agency
information.131 Supervisory ratings are
generally confidential supervisory
information and have not historically
been publicly disclosed in order to
encourage greater candor, cooperation,
and compliance by the regulated entity.
One exception to this general policy in
financial regulation is the disclosure of
Community Reinvestment Act (CRA)
ratings.132
As part of evaluating comments on
this issue, FHFA considered disclosing
the supervisory ratings, disclosing a
narrative assessment of the equitable
housing finance component, and
129 Id.
130 See Advisory Bulletin AB 2012–03: FHFA
Examination Rating System (December 19, 2012),
available at https://www.fhfa.gov/
SupervisionRegulation/AdvisoryBulletins/Pages/
AB-2012-03-FHFA-EXAMINATION-RATINGSYSTEM.aspx.
131 See 12 CFR part 1214, from 78 FR 39957,
39958 (July 3, 2013).
132 See https://www.ffiec.gov/craratings/.
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developing separate public evaluation
metrics. FHFA believes that maintaining
the confidential supervisory nature of
the ratings under the Rating System,
including the equitable housing finance
component, is most consistent with
agency policy of maintaining
confidentiality of supervisory
information. While FHFA considered
public evaluation metrics similar to
those provided under the Duty to Serve
program,133 FHFA believes that
implementation of two separate
evaluation systems—one internal to
FHFA and one public-facing—to assess
the equitable housing finance program
metrics would likely create
implementation challenges for FHFA
and the Enterprises. However, FHFA
does agree with the commenters that
favored some form of public evaluation
and has added a provision in § 1293.27
of the final rule requiring FHFA to
publish a narrative evaluative
assessment of each Enterprise’s program
performance. FHFA believes this change
will foster greater public transparency
and Enterprise accountability, while
reducing the burden associated with
developing separate public evaluation
metrics. This provision requires FHFA,
by May 15 of each year, to publish on
its website a narrative assessment
evaluating each Enterprise’s
performance under its respective
Equitable Housing Finance Plans. This
requirement will also provide greater
alignment of the Equitable Housing
Finance Program with the CRA, though
FHFA acknowledges the CRA
examinations ratings disclosures are
more extensive.
K. Reporting on Bank Voluntary Actions
To Address Barriers to Sustainable
Housing Opportunities
FHFA asked commenters on the
proposed rule whether the Banks should
be required to comply with the same
Equitable Housing Finance Planning
requirements as the Enterprises,
including submission of Equitable
Housing Finance Plans. Some
commenters suggested that imposing
such requirements on the Banks would
be too burdensome and unnecessary,
stating that the Banks’ Affordable
Housing Programs and Community
Investment Programs already address
the needs of underserved
communities.134 Several other
commenters requested that FHFA
ensure the Banks do more to promote
fair and affordable housing by
determining appropriate mechanisms
133 See 12 CFR part 1282, subpart C (Duty to
Serve).
134 See 12 CFR parts 1291, 1292.
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and structures to assess the Banks’
equity efforts. The regulated entities’
comments emphasized the differences
between the Enterprises and the Banks,
including contrasts in acquisition
volume, market share, and the Banks’
issuance of advances to their members.
FHFA believes addressing barriers to
sustainable housing opportunities for
underserved communities should be a
priority for all its regulated entities and,
after considering comments requesting
appropriate mechanisms for the Banks,
FHFA is adopting a requirement in the
final rule for the Banks to report any
voluntary meaningful actions taken to
further equity in the past year. FHFA
expects to engage in future guidance
and rulemaking specific to the Banks, in
response to and consistent with ‘‘The
Federal Home Loan Bank System at 100:
Focusing on the Future’’ Report.
Although FHFA recognizes the Banks’
activities have less influence on aspects
of the housing market in comparison to
the Enterprises’ activities, FHFA
believes addressing barriers to
sustainable housing opportunities
should be a priority for all regulated
entities and is consistent with the
public interest and acknowledges
commenters’ requests for FHFA to
develop appropriate mechanisms for the
Banks. FHFA recognizes that equitable
housing finance planning requires time,
effort, and financial and administrative
resources from the Enterprises, which
may not be feasible for the Banks to
provide at the same level, considering
the difference in their resources.
Therefore, consistent with the proposed
rule, the final rule does not adopt the
equitable housing finance planning
requirements for the Banks, but requires
instead the reporting of voluntary
meaningful Bank efforts for addressing
barriers to sustainable housing
opportunities in new subpart D.
This addition recognizes the
importance of equitable housing finance
planning for all regulated entities, while
also recognizing the differences between
the Banks and the Enterprises and
providing FHFA and stakeholders
additional time and information to
further refine any potential future
requirements for the Banks. FHFA has
determined that a delayed effective date
for this subpart is appropriate,
considering the differences between the
Banks and the Enterprises and that the
Enterprises are conforming to similar
requirements already. Subpart D will be
effective on February 15, 2026.
L. Data Collection
The proposed rule included
codification, in substantially similar
form, of the existing FHFA policy under
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42781
which the Enterprises collect data on (a)
housing counseling and homeownership
education, and (b) the language
preference of mortgage applicants and
borrowers. An Enterprise requested
clarification of the proposed housing
counseling data collection requirement.
Commenters on the proposed rule
generally supported codifying the data
collection requirements for collecting
language preference and data regarding
completion of housing counseling and
homeownership courses, though some
commenters did not support the
requirement. Some commenters
provided suggestions for future policies
that would support limited English
proficient (LEP) communities.
Additionally, the proposed requirement
is substantially the same as the policy
announced by FHFA in May 2022
mandating lender use of the
Supplemental Consumer Information
Form (SCIF) as part of the application
process for loans that will be sold to the
Enterprises.135
FHFA believes that the data collected
on language preference, homeownership
education, and housing counseling for
applicants and borrowers will support
efforts to promote sustainable housing
opportunities for underserved
communities and could underlie
elements of future Equitable Housing
Finance Plans. FHFA is adopting the
proposed rule text without change in
the final rule and believes that it should
not require any additional resources
from the regulated entities or market
participants given the existing policy.
As noted above, an Enterprise
requested clarification of the proposed
housing counseling data collection
requirement. At this time, the
Enterprises’ SCIF instructions require
lenders to provide an opportunity for
the borrower to indicate a language
preference or that they would prefer not
to respond.136 The instructions require
completion of the housing counseling
and homeownership education section
if housing counseling or
homeownership education is required
by an Enterprise’s loan program.137 The
housing counseling and homeownership
section may also be voluntarily
completed by the borrower even if
housing counseling or homeownership
135 See FHFA Announces Mandatory Use of the
Supplemental Consumer Information Form (May 3,
2022), available at https://www.fhfa.gov/Media/
PublicAffairs/Pages/FHFA-Announces-MandatoryUse-of-the-Supplemental-Consumer-InformationForm.aspx.
136 See Fannie Mae and Freddie Mac, Instructions
for Completing the Supplemental Consumer
Information Form (SCIF), available at https://
sf.freddiemac.com/docs/pdf/press-release/july-62022-gse-scif-announcement.pdf.
137 Id.
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education was not required by a loan
program, and analysis of current data
indicates that voluntary data is being
provided in some circumstances.138
FHFA did not intend to change the
existing policy or instructions as part of
the proposed rule, which was intended
to codify the existing policy and
practice. FHFA believes that the
instructions and current practice
comply with the proposed and final rule
text. FHFA appreciates the comments
provided on future LEP policy, but
based on the scope of the final rule, is
not addressing them in the final rule.
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M. Authority and Consistency With Law
Some commenters on the proposed
rule questioned FHFA’s authority to
codify the equitable housing finance
plan program in regulation and the
consistency of the proposed rule with
the U.S. Constitution and law. FHFA’s
rulemaking authority is discussed and
set forth throughout both the proposed
rule preamble and the final rule
preamble but is summarized below in
response to the concerns raised by these
commenters.
FHFA’s Rulemaking Authority.
FHFA’s authority under the Safety and
Soundness Act includes exercising
general regulatory authority to ensure
the purposes of the Safety and
Soundness Act, the authorizing statutes,
and other applicable laws are carried
out.139 FHFA’s authority also includes
the authority to exercise incidental
powers that may be necessary or
appropriate to fulfill the duties and
responsibilities of the Agency.140 In
addition, FHFA’s authority includes
issuing regulations necessary to carry
out the duties of the Agency and ensure
the purposes of the Safety and
Soundness Act and the authorizing
statutes are accomplished.141
This final rule’s subject matter is well
supported by the core purposes and
duties of the Agency found in the Safety
and Soundness Act, including
Congress’s finding that the regulated
entities have important public
missions,142 the duty of the Agency to
ensure the regulated entities operate in
the public interest,143 and the duty to
ensure the purposes of applicable law
(including the Fair Housing Act, the
Equal Credit Opportunity Act, and the
FTC Act’s prohibition on unfair or
138 Id.
139 12
U.S.C. 4511(b).
U.S.C. 4513(a)(2)(B).
141 12 U.S.C. 4526. FHFA also has explicit
authority to require the regulated entities to submit
regular and special reports on a range of topics, 12
U.S.C. 4514.
142 12 U.S.C. 4501.
143 12 U.S.C. 4513.
140 12
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deceptive acts or practices) are carried
out,144 as well as the Enterprises’
chartered purposes (including
promoting access to mortgage credit
throughout the Nation).145 FHFA also
has an overarching obligation to
affirmatively further fair housing in
exercising these authorities and
understanding the public missions set
forth in relevant statutes.146 Other parts
of the relevant statutes also make clear
the connection that equitable housing
finance, fair housing, and fair lending
have to FHFA’s statutory authority and
duties and responsibilities. These
include the requirement for the
Enterprises to assess and report on
aspects of their operations that cause
disparities and actions taken to promote
fair lending,147 the requirement for
FHFA to obtain data on pricing
disparities from the Enterprises and
refer lenders for fair lending
purposes,148 and the requirement for the
Enterprises to take affirmative steps to
assist the primary market in making
housing credit available in areas with
concentrations of low-income and
minority families.149 Finally, data
collection and reporting
requirements 150 and other missionrelated obligations of FHFA and the
Enterprises speak more generally about
the need to promote sustainable housing
opportunities.151
HUD and FHFA’s Fair Housing
Responsibility. Some commenters
asserted that fair housing and fair
lending with respect to the Enterprises
are solely HUD’s responsibility, because
12 U.S.C. 4545 directs the Secretary of
HUD to take certain actions related to
144 12
U.S.C. 4511(b).
U.S.C. 1716(4) and 12 U.S.C. 1451 note
(b)(4); see also 12 U.S.C. 1716(3) and 12 U.S.C. 1451
note (b)(3).
146 42 U.S.C. 3608(d); see also 12 U.S.C. 4513(a).
147 12 U.S.C. 1723a(n)(2)(G) and 12 U.S.C.
1456(f)(2)(G).
148 12 U.S.C. 4561(d)(1).
149 12 U.S.C. 4565(b)(3)(A). Some commenters
asserted this language should be interpreted only to
authorize actions that target areas that are both lowincome concentrated and minority concentrated.
FHFA does not believe this is a reasonable
interpretation of the statute. Applying the
commenters’ reading to the section 4565 as a whole
makes clear that it is not a reasonable reading, as
there are numerous categories which are joined by
‘‘and’’ which are mutually exclusive or clear from
the context that they are not intended to be joined
requirements which must all be satisfied
simultaneously by individual actions. Regardless,
the final rule does not rest solely on this provision.
150 12 U.S.C. 1723a(m)(1) and 12 U.S.C.
1456(e)(1); 12 U.S.C. 4544(b).
151 See 12 U.S.C. 4561(a), 4562, and 4563
(Enterprise affordable housing goals); 12 CFR part
1282, subpart B (housing goals); 12 U.S.C. 4565
(Enterprise Duty to Serve affordable housing needs
of certain underserved markets); 12 CFR part 1282,
subpart C (Duty to Serve).
145 12
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fair housing and the Enterprises.152 This
provision does not mean that FHFA is
not responsible for overseeing fair
housing and fair lending compliance at
the Enterprises. In addition to HUD’s
authority and FHFA’s supervisory
authority, FHFA is empowered to
initiate enforcement actions for
Enterprise violations of 12 U.S.C. 4545
and HUD’s implementing regulations
under the Safety and Soundness Act.153
FHFA has a responsibility to use its
authority to further fair housing, and
FHFA’s oversight of its regulated
entities for fair lending and fair housing
is consistent with that of other Federal
financial regulators.154
Equal Protection and Strict Scrutiny.
Some commenters asserted that the rule
would be illegal under the Equal
Protection Clause. FHFA disagrees. The
final rule sets forth a strategic planning,
public input, and public reporting
process for addressing the needs of
underserved communities, which will
necessarily vary over time. The term
‘‘underserved community’’ is defined
broadly to encompass many different
types of communities, including
communities that do not share any
particular race or ethnicity, and the rule
does not impose any requirement to take
actions that are racially restricted.
Further, the Plans merely provide
public transparency into the
Enterprise’s analyses, the barriers
experienced by that underserved
community, and actions the Enterprises
intends to take to attempt to overcome
those barriers. Any such actions are
subject to fair lending and fair housing
laws, including the Equal Credit
Opportunity Act and the Fair Housing
Act, which generally prohibit
discrimination based on prohibited
characteristics with limited exceptions
(which include special purpose credit
programs). This final rule specifies that
unlawful actions are not permitted in
several provisions, including
§§ 1293.1(b), 1293.11(a), (b), 1293.12(b),
1293.22(f)(2), (g), 1293.23(d)(2), and
1293.32(d)(2). Current Equitable
Housing Finance Plan reports
demonstrate that actions taken under
the current Plans, which identify Black
and Latino communities as underserved
communities, benefit applicants,
borrowers, and renters of all races.155 To
152 See
12 U.S.C. 4545.
59 FR 18266 (Apr. 15, 1994); 86 FR 36199
(July 9, 2021); HUD–FHFA Memorandum of
Understanding Regarding Fair Housing and Fair
Lending Coordination (Aug. 12, 2021), available at
https://www.hud.gov/sites/dfiles/PA/documents/
FHFA-HUD-MOU_8122021.pdf.
154 See 42 U.S.C. 3608(d).
155 See Freddie Mac, 2022 Equitable Housing
Finance Plan Performance Report, available at
153 See
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the extent that any specific activity
undertaken or proposed to be
undertaken by the Enterprises raised
concerns of Constitutional or other legal
compliance, FHFA’s supervisory and
enforcement authority described in the
final rule, combined with the public
input and public reporting processes in
the final rule, provide means to address
concerns with specific activities.
The Major Questions Doctrine. Some
commenters asserted that the rule
would not be consistent with the U.S.
Supreme Court’s ‘‘major questions’’
doctrine.156 FHFA disagrees. The final
rule is not a sweeping change either
with respect to oversight of the
regulated entities or with respect to the
equitable housing finance plan program.
Much of the content of the final rule
codifies existing policy. Further, the
final rule is consistent with FHFA’s core
statutory purposes as discussed above.
With respect to equitable housing
finance as well as other aspects, the
final rule does not impose changes of
vast economic or political significance.
It requires a strategic planning process
supported by broad stakeholder input
and program standards to more
effectively achieve FHFA’s and the
Enterprises’ public mission, in concert
with other FHFA programs and
requirements. It also includes guardrails
and processes for self-correction to
ensure activities remain consistent with
the law and the Enterprises’
Congressionally chartered purposes and
that FHFA’s oversight remains within
the bounds of the law and the
Constitution.
III. Summary of Changes in the Final
Rule
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A. Section 1293.1(d), Severability
Clause
FHFA has added a severability clause
in § 1293.1(d) of the final rule. FHFA
believes that it is appropriate to make
clear its intention in the final rule that
all provisions of the final rule be
severable given that the final rule
contains many thematically related but
ultimately independent regulatory
requirements, each of which FHFA
believes is independently important to
pursue through rulemaking and can
function independently.
https://www.freddiemac.com/about/pdf/FreddieMac-Equitable-Housing-Finance-Plan-2022Performance-Report.pdf; Fannie Mae, 2022
Equitable Housing Finance Plan Performance
Report, available at https://www.fanniemae.com/
media/46616/display.
156 See, e.g., West Virginia v. EPA, 142 S. Ct. 2587
(June 30, 2022).
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B. Section 1293.12(a), Reports, Data,
and Certification
FHFA has added a reference to
§ 1293.11(b) in § 1293.12(a) of the final
rule to make clear that reports to FHFA
may be required to include matters
related to UDAP compliance, consistent
with the certification attached to the
report required in § 1293.12(b). FHFA
has also changed the title of subpart B
to include UDAP.
C. Section 1293.12, Certification of
Compliance
FHFA has revised § 1293.12(b) in the
final rule by qualifying the required
certification of compliance with fair
lending, fair housing, and UDAP laws
‘‘to the best of the certifier’s knowledge
and belief following reasonable or due
inquiry of the certifying official.’’ FHFA
determined that certifying compliance
to the best of the certifier’s knowledge
and belief will adequately incentivize
identification of risk without imposing
additional liability for certifying to
absolute compliance.
D. Section 1293.21, General
FHFA has not included in the final
rule the proposed rule provision that
would have identified Enterprise
Equitable Housing Finance Planning as
a prudential standard by regulation
pursuant to section 4513(b) of the Safety
and Soundness Act. Accordingly, the
title of § 1293.21 has changed to remove
‘‘Identification of subpart as a
prudential standard,’’ and now states
‘‘General’’ only. Based on comments
received, FHFA determined it is not
necessary to designate this rule as a
prudential standard at this time. FHFA
acknowledges that Enterprise failure to
adhere to EHFP program standards can
be addressed by other enforcement and
supervision methods, and certain
deficiencies may also be failures to meet
existing PMOS standards that may
trigger corrective action pursuant to
section 4513(b) of the Safety and
Soundness Act and 12 CFR part 1236.
E. Section 1293.23, Resource
Disclosures, Additions, and Clarifying
Edits
In response to comments, FHFA has
not included in the final rule proposed
§ 1293.23(b)(4), which would have
required the Enterprises to submit a
summary of the value of resources
dedicated to supporting the outcomes
categorized by type of activity and a
summary of additional value of
resources contributed from third parties
because of the Enterprise’s support of
the outcomes. Instead, Enterprise
accountability will be evaluated by
FHFA’s Rating System and performance
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42783
metrics, including but not limited to
accept rate gaps and home loan
acquisitions. The Rating System will
assess Enterprise reports, performance,
and overall commitment to equity.
FHFA also may consider implementing
a financial disclosure requirement in a
future rule and will examine the
Enterprises’ equitable housing finance
planning under the rule.
FHFA has made additions and
clarifying edits to § 1293.23 in the final
rule, including distinguishing between
multifamily and single-family
acquisition reporting, adding
neighborhood race and ethnicity
reporting where appropriate, adding
narrative description requirements for
the underwriting sections of the
performance reports, adding a separate
reporting requirement for all
homeownership programs to facilitate
better comparison between the
Enterprises, and clarifying that FHFA
may use its order authority under 12
U.S.C. 4514 to establish requirements
for reporting.
F. Section 1293.27, Program Evaluation
In response to comments, FHFA has
added § 1293.27 ‘‘Program Evaluation’’
in the final rule, which provides that
FHFA will publish on its website a
narrative assessment evaluating each
Enterprise’s performance under its
respective Equitable Housing Finance
Planning program standards by May 15
of each year. FHFA believes this change
will foster greater public transparency
and Enterprise accountability, while
reducing burden and complexity
associated with developing separate
evaluation metrics for public
consumption. It will also further align
the Equitable Housing Finance Program
with the Community Reinvestment Act,
in that both programs require review
and public disclosure by their
respective agencies of the performance
of the entities they regulate.
G. Section 1293.31, Federal Home Loan
Bank Equitable Housing Finance
Planning
In response to comments, FHFA has
added a new Subpart D—Federal Home
Loan Bank Equitable Housing Finance
Planning in the final rule, requiring the
Banks to report on any meaningful
actions voluntarily taken to support
underserved communities and such
actions currently planned for the
coming year, or to provide a public
notice that it has not taken any
voluntary actions and does not currently
have any such voluntary meaningful
actions planned for the coming year.
This requirement recognizes the
importance of addressing barriers to
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sustainable housing for all regulated
entities, while also recognizing and
considering the differences between the
Banks and Enterprises. FHFA may
engage in future rulemaking and
guidance specific to the Banks regarding
equitable housing finance planning.
IV. Consideration of Differences
Between the Banks and the Enterprises
Under the final rule, both the
Enterprises and the Banks would be
subject to subpart A (§§ 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 the Enterprises would be
covered by FHFA’s authority to require
regular and special reports and the
requirement to certify compliance in
regular reports. However, FHFA has not
currently issued any reporting orders
requiring regular or special fair housing
and fair lending reports from the Banks.
The Equitable Housing Finance Plan
and broader equitable housing finance
planning requirements described
specifically in subpart C (§§ 1293.21
through 1293.26) would apply only to
the Enterprises and would codify in
regulation, and expand on, the existing
equitable housing framework for the
Enterprises that FHFA previously
established. In response to comments,
FHFA has added subpart D in the final
rule which requires the Banks to report
on any voluntary equitable housing
finance actions taken or planned but
does not require any actions by the
Banks other than the reports or notices
that there are no actions to report.
Subpart E (§ 1293.41) could include data
collection and reporting requirements
that would apply to both the Enterprises
and the Banks, but currently the
requirements would apply only to the
Enterprises.
When promulgating any regulation
that may have future effect relating to
the Banks, the Director is required by
section 1313(f) of the Safety and
Soundness Act to consider the
differences between the Banks and the
Enterprises with respect to the Banks’
cooperative ownership structure,
mission of providing liquidity to
members, affordable housing and
community development mission,
capital structure, and joint and several
liability.157 FHFA requested comments
from the public about whether
differences related to these factors
should result in a revision of the
proposed rule as it relates to the Banks.
157 12
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PART 1293—FAIR LENDING
OVERSIGHT AND EQUITABLE
HOUSING FINANCE
V. Regulatory Analyses
Subpart B—Fair Housing, Fair Lending, and
Unfair or Deceptive Acts or Practices
Compliance
1293.11 Regulated entity compliance.
1293.12 Reports, data, and certifications.
1293.13–1293.20 [Reserved]
A. Paperwork Reduction Act
The final rule does not contain any
information collection requirement that
would require the approval of the Office
of Management and Budget (OMB)
under the Paperwork Reduction Act (44
U.S.C. 3501 et seq.). Therefore, FHFA
has not submitted any information to
OMB for review.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities must include
an analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has
considered the impact of the final rule
under the Regulatory Flexibility Act.
FHFA certifies that the final rule will
not have a significant economic impact
on a substantial number of small entities
because the regulation applies only to
the Enterprises and the Banks, which
are not small entities for purposes of the
Regulatory Flexibility Act.
C. Congressional Review Act
In accordance with the Congressional
Review Act (5 U.S.C. 801 et seq.), FHFA
has determined that this final rule is a
major rule and has verified this
determination with the Office of
Information and Regulatory Affairs of
OMB.
List of Subjects for 12 CFR Part 1293
Fair housing, Federal home loan
banks, Government-sponsored
enterprises, Mortgages, Reporting and
recordkeeping requirements.
For the reasons stated in the
preamble, the Federal Housing Finance
Agency amends chapter XII in title 12
of the Code of Federal Regulations, as
follows:
■
U.S.C. 4513(f).
VerDate Sep<11>2014
FHFA’s adoption of new subpart D in
the final rule reflects its consideration of
the comments and appropriate
consideration of the differences between
the Banks and the Enterprises. The
Director considered the differences
between the Banks and the Enterprises,
as they relate to the above factors, and
determined that this final rule is
appropriate.
Jkt 262001
1. Add part 1293 to read as follows:
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Subpart A—General
Sec.
1293.1 General.
1293.2 Definitions.
1293.3 Compliance and enforcement.
1293.4 Preservation of authority.
1293.5–1293.10 [Reserved]
Subpart C—Enterprise Equitable Housing
Finance Planning
1293.21 General.
1293.22 Equitable housing finance plans
and updates.
1293.23 Performance reports.
1293.24 Public engagement.
1293.25 Program requirements.
1293.26 Enterprise board equitable housing
and mission responsibilities.
1293.27 Program evaluation.
1293.28–1293.30 [Reserved]
Subpart D—[Reserved]
Subpart E—Data Collection
1293.41 Required Enterprise data collection
and reporting.
Authority: 12 U.S.C. 1456(c)(1); 12 U.S.C.
1723a(m)(1); 12 U.S.C. 4511; 12 U.S.C. 4513;
12 U.S.C. 4514; 12 U.S.C. 4517; 12 U.S.C.
4526; 42 U.S.C. 3608(d).
Subpart A—General
§ 1293.1
General.
(a) This part sets forth requirements
related to fair lending oversight of
regulated entities, equitable housing
finance planning by the Enterprises, and
certain data collection and reporting by
the regulated entities.
(b) Nothing in this part permits or
requires a regulated entity to engage in
any activity that would otherwise be
inconsistent with the Safety and
Soundness Act, the authorizing statutes,
or other applicable law.
(c) Nothing in this part creates a
private right of action.
(d) If any provision of this part, or any
application of a provision, is stayed or
determined to be invalid, the remaining
provisions or applications are severable
and shall continue in effect.
§ 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
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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 § 1293.23 and any other FHFA
requirements.
Sustainable housing opportunity
means a rental or homeownership
opportunity that includes one or more
characteristics important to the needs of
a tenant or homeowner. These
characteristics include but are not
limited to: being affordable to obtain
and sustain; relating to a dwelling that
meets basic habitability requirements
and is reasonably able to withstand
natural disasters or other climate-related
impact events; relating to a dwelling
that is improving the quality of housing
stock in an area; being located in an area
with access to educational,
transportation, economic, and other
important opportunities, including
community assets; being accessible for
persons with disabilities and available
in the most integrated setting
appropriate to the needs of an
individual with a disability; not placing
the tenant or homeowner in a position
where they are unlikely to succeed in
sustaining the housing opportunity over
the long term; and providing reasonable
opportunities to accommodate
hardships by the renter or homeowner
to allow continuation of the housing
opportunity.
Underserved community is a group of
people with shared characteristics or an
area that is subject to current
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17:01 May 15, 2024
Jkt 262001
discrimination or has been subjected to
past discrimination that has or has had
continuing adverse effects on the group
or area’s participation in the housing
market, historically has received or
currently receives a lower share of the
benefits of Enterprise programs and
activities providing sustainable housing
opportunities, or that otherwise has had
difficulty accessing these benefits
compared with groups of people
without the shared characteristic or
other areas. Shared characteristics
include but are not limited to
characteristics protected by fair housing
and fair lending laws applicable to the
Enterprises including race, color,
religion, sex (including actual or
perceived sexual orientation or gender
identity), familial status, national origin,
disability, marital status, age, receipt of
public assistance income, exercise of
rights protected by the Consumer Credit
Protection Act, exercise of rights
protected by the Fair Housing Act,
dwelling age, dwelling location, and
neighborhood age. Examples of
underserved communities, if supported
by adequate information in a plan
pursuant to § 1293.25, include: the
Commonwealth of Puerto Rico, single
parents, persons with disabilities,
women of color, seniors with fixed
income, self-employed individuals,
individuals with limited mainstream
credit and banking history, counties
which have historically received a lower
share of the benefits of Enterprise
programs and activities, individuals
with income variance such as skilled
tradespeople or those that receive
income through commission, persons
with limited English proficiency, and
multigenerational households.
§ 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.
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§§ 1293.5–1293.10
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[Reserved]
Subpart B—Fair Housing, Fair
Lending, and Unfair or Deceptive Acts
or Practices 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
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, fair lending, and
compliance with § 1293.11(b) including
the provision of data pursuant to FHFA
instructions.
(b) Certifications. Each regular report
concerning fair housing and fair lending
shall include a certification of the
regulated entity’s compliance with fair
housing and fair lending laws and with
§ 1293.11(b) to the best of the certifier’s
knowledge and belief following
reasonable or due inquiry of the
certifying official in addition to any
other required certification or
declaration (such as a declaration under
12 U.S.C. 4514(a)(4)).
§§ 1293.13–1293.20
[Reserved]
Subpart C—Enterprise Equitable
Housing Finance Planning
§ 1293.21
General.
(a) This subpart sets forth the
Enterprise duty to engage in equitable
housing finance planning and to take
meaningful actions to support
underserved communities, and
establishes standards and procedures
related to public engagement and
FHFA’s oversight of the Enterprises’
planning and actions.
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(b) If a date provided in this subpart
falls on a day that is not a business day,
the date required shall be the next
business day.
(c) Submission and publication dates
provided in this subpart may be
changed by the Director, as determined
appropriate, by public order for a
particular required submission or
publication.
(d) Plans and reports under this
subpart are reports required under 12
U.S.C. 4514(a) and therefore must
include a notice and declaration in
compliance with 12 U.S.C. 4514(a)(4).
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§ 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.
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17:01 May 15, 2024
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(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.
§ 1293.23
Performance reports.
(a) General. Annually, each Enterprise
shall publicly report on its plan progress
and provide other information related to
equitable housing and fair housing and
fair lending for the prior year in a
performance report.
(b) Contents of the report. The report
shall contain, at a minimum:
(1) A narrative assessment consisting
of a review of major successes and key
accomplishments, as well as lessons
learned and challenges experienced;
(2) Plan performance details for each
objective, meaningful action,
measurable goal, including 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 outcomes for the
year for homeownership programs or
products created pursuant to the Plan by
race and ethnicity group and
underserved community group (if
available);
(5) An assessment of the Enterprise’s
underwriting that includes:
PO 00000
Frm 00020
Fmt 4700
Sfmt 4700
(i) For the applicable year and the
preceding three years, the accept rates
for the Enterprise’s automated
underwriting system categorized by
home purchase, rate-term refinancing,
cash-out refinancing and by race and
ethnicity group and by underserved
community group (if available);
(ii) For the applicable year and the
preceding three years, the Enterprise’s
single-family loan acquisitions
categorized by home purchase, rate-term
refinancing, cash-out refinancing, and
by race and ethnicity group,
neighborhood race and ethnicity, and
underserved community group (if
available);
(iii) For the applicable year and the
preceding three years, the Enterprise’s
multifamily loan acquisitions
categorized by neighborhood race and
ethnicity;
(iv) A narrative description of
paragraphs (b)(5)(i)through (iii) of this
section; and
(v) A narrative assessment of any
innovations in automated underwriting
or other policy taken during the
applicable year and any future planned
work intended to address identified
disparities.
(c) Report submission. Each
Enterprise shall submit its report to
FHFA for review on or before February
15 annually.
(d) FHFA review. FHFA shall review
each report and, prior to publication,
may:
(1) Require removal of any
confidential or proprietary information;
(2) Require removal of any content
that is not consistent with this part, the
Safety and Soundness Act, the
authorizing statutes, or other applicable
law; and
(3) Provide any feedback for
consideration.
(e) Report publication. Each
Enterprise shall publish its report on its
website on April 15 annually and
maintain it thereafter. Each Enterprise
shall ensure that reports are accessible
to persons with disabilities.
(f) Additional requirements and
guidance. FHFA may require additional
information to be included in reports
through other FHFA authorities, such as
an order under 12 U.S.C. 4514. From
time to time, FHFA may issue public
guidance on reports.
§ 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.
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(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 RULES1
§ 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.
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17:01 May 15, 2024
Jkt 262001
(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,
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
Program evaluation.
FHFA shall publish on its website a
narrative assessment evaluating each
Enterprise’s performance under their
respective Equitable Housing Finance
Plans by May 15 of each year.
§§ 1293.28–1293.30
[Reserved]
Subpart D—[Reserved]
Subpart E—Data Collection
§ 1293.41 Required Enterprise data
collection and reporting.
Each Enterprise shall collect,
maintain, and provide to FHFA the
following data relating to single-family
mortgages:
(a) The language preference of
applicants and borrowers; and
(b) Whether applicants and borrowers
have completed homeownership
education or housing counseling and
information about the homeownership
education or housing counseling.
2. Effective February 15, 2026, add
subpart D to part 1293 to read as
follows:
■
Subpart D—Federal Home Loan Bank
Equitable Housing Finance Planning
Sec.
1293.31 General.
1293.32 Equitable housing reports.
1293.33–1293.40 [Reserved]
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
42787
Subpart D—Federal Home Loan Bank
Equitable Housing Finance Planning
§ 1293.31
General.
(a) This subpart sets forth the Federal
Home Loan Banks’ (Banks) duty to
report on actions voluntarily taken to
support underserved communities.
(b) If a date provided in this subpart
falls on a day that is not a business day,
the date required shall be the next
business day.
(c) Submission and publication dates
provided in this subpart may be
changed by the Director, as determined
appropriate, by public order for a
particular required submission or
publication.
(d) Reports under this subpart are
reports required under 12 U.S.C. 4514(a)
and therefore must include a notice and
declaration in compliance with 12
U.S.C. 4514(a)(4).
§ 1293.32
Equitable housing reports.
(a) General. Annually, each Bank
shall publicly provide information
related to actions voluntarily to taken to
overcome barriers to sustainable
housing opportunities faced by one or
more underserved communities for the
prior year and such actions currently
planned for the coming year or shall
provide a notice that it has not taken
any voluntary actions and does not
currently have any such voluntary
meaningful actions planned for the
coming year.
(b) Contents of the report. The report
shall contain, at a minimum, a narrative
assessment consisting of:
(1) A review of voluntary actions
taken, including, as applicable major
successes, key accomplishments,
lessons learned, and challenges
experienced; and
(2) A description of any future
planned voluntary actions.
(c) Report or notice submission. Each
Bank shall submit its report to FHFA for
review on or before February 15
annually or shall submit a notice to
FHFA that it has not taken any
voluntary actions and does not currently
have such voluntary meaningful actions
planned for the coming year.
(d) FHFA review. FHFA shall review
each report and, prior to publication,
may:
(1) Require removal of any
confidential or proprietary information;
(2) Require removal of any content
that is not consistent with this part, the
Safety and Soundness Act, the
authorizing statutes, or other applicable
law; and
(3) Provide any feedback for
consideration.
(e) Report or notice publication. Each
Bank shall publish its report or notice
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Federal Register / Vol. 89, No. 96 / Thursday, May 16, 2024 / Rules and Regulations
that it has not taken voluntary actions
and does not currently have such
voluntary actions planned for the future
on its website on April 15 annually and
maintain it thereafter. Each Bank shall
ensure that reports are accessible to
persons with disabilities.
(f) Additional requirements and
guidance. FHFA may require additional
information to be included in reports
through other FHFA authorities, such as
an order under 12 U.S.C. 4514. From
time to time, FHFA may issue public
guidance on reports.
§§ 1293.33–1293.40
[Reserved]
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
BILLING CODE 8070–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. No. FAA–2021–1032; Special
Conditions No. 25–854–SC]
Special Conditions: Airbus Model
A321neo XLR Airplanes; Flight
Envelope Protection, Icing and NonIcing Conditions; High Incidence
Protection
Federal Aviation
Administration (FAA), DOT.
ACTION: Final special conditions.
AGENCY:
These special conditions are
issued for the Airbus Model A321neo
XLR airplane. This airplane will have a
novel or unusual design feature when
compared to the state of technology
envisioned in the applicable
airworthiness standards for transport
category airplanes. This design feature
is flight-envelope protections, in icing
and non-icing conditions, that use highincidence protection and an alpha-floor
system to automatically advance
throttles when the airplane angle of
attack reaches a predetermined value.
The applicable airworthiness
regulations do not contain adequate or
appropriate safety standards for this
design feature. These special conditions
contain the additional safety standards
that the Administrator considers
necessary to establish a level of safety
equivalent to that established by the
existing airworthiness standards.
DATES: Effective June 17, 2024.
FOR FURTHER INFORMATION CONTACT: Troy
Brown, Performance and Environment
Unit, AIR–621A, Technical Policy
Branch, Policy and Standards Division,
ddrumheller on DSK120RN23PROD with RULES1
VerDate Sep<11>2014
17:01 May 15, 2024
Jkt 262001
Background
On September 16, 2019, Airbus
applied for an amendment to Type
Certificate No. A28NM to include the
new Model A321neo XLR airplane.
These airplanes are twin-engine,
transport-category airplanes with
seating for 244 passengers, and a
maximum take-off weight of 222,000
pounds.
Type Certification Basis
[FR Doc. 2024–09559 Filed 5–15–24; 8:45 am]
SUMMARY:
Aircraft Certification Service, Federal
Aviation Administration, 1801 S Airport
Rd., Wichita, KS 67209–2190; telephone
and fax 405–666–1050; email
troy.a.brown@faa.gov.
SUPPLEMENTARY INFORMATION:
Under the provisions of 14 CFR
21.101, Airbus must show that the
Model A321neo XLR airplane meets the
applicable provisions of the regulations
listed in Type Certificate No. A28NM, or
the applicable regulations in effect on
the date of application for the change,
except for earlier amendments as agreed
upon by the FAA.
If the Administrator finds that the
applicable airworthiness regulations
(e.g., 14 CFR part 25) do not contain
adequate or appropriate safety standards
for the Airbus Model A321neo XLR
airplanes because of a novel or unusual
design feature, special conditions are
prescribed under the provisions of
§ 21.16.
Special conditions are initially
applicable to the model for which they
are issued. Should the type certificate
for that model be amended later to
include any other model that
incorporates the same novel or unusual
design feature, or should any other
model already included on the same
type certificate be modified to
incorporate the same novel or unusual
design feature, these special conditions
would also apply to the other model
under § 21.101.
In addition to the applicable
airworthiness regulations and special
conditions, the Airbus Model A321neo
XLR airplane must comply with the
fuel-vent and exhaust-emission
requirements of 14 CFR part 34, and the
noise-certification requirements of 14
CFR part 36.
The FAA issues special conditions, as
defined in § 11.19, in accordance with
§ 11.38, and they become part of the
type certification basis under 14 CFR
21.101.
Novel or Unusual Design Feature
The Airbus Model A321neo XLR
airplane will incorporate the following
novel or unusual design feature:
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
Flight-envelope protections, in icing
and non-icing conditions, that use highincidence protection and an alpha-floor
function to automatically advance
throttles when the airplane angle of
attack (AoA) reaches a predetermined
value.
Discussion
The current airworthiness standards
do not contain adequate safety
standards for the high-incidence
protection system and the alpha-floor
system for the Airbus Model A321neo
XLR series airplanes. This is because the
FAA’s current standards were designed
for more traditional electronic flight
control systems (EFCS), which involve
less advanced envelope protections,
such as stick shakers and pushers.
These special conditions address the
more advanced flight envelope
protections, including icing and nonicing conditions, that are part of the
EFCS design of the A321neo XLR
airplane.
The high-incidence protection system
prevents the airplane from stalling and,
therefore, the stall warning system is not
needed during normal flight conditions.
However, during failure conditions
which are not shown to be extremely
improbable, the requirements of
§§ 25.203 and 25.207 apply, although
slightly modified by these conditions. If
there are failures not shown to be
extremely improbable, the flight
characteristics at the angle-of-attack for
CLMAX must be suitable in the
traditional sense, and stall warning
must be provided in a conventional
manner. These special conditions
address the need for modification
during icing conditions and non-icing
conditions.
The alpha-floor function
automatically advances the throttles on
the operating engines under flight
circumstances of low speed if the
airplane reaches a predetermined high
AoA. This function is intended to
provide increased climb capability.
These special conditions address this
novel or unusual design feature on the
Airbus Model A321neo XLR and
contain the additional safety standards
that the Administrator considers
necessary to establish a level of safety
equivalent to that established by the
existing airworthiness standards.
Discussion of Comments
The FAA issued Notice of Special
Conditions No. 25–23–03–SC for the
Airbus Model A321neo XLR airplane.
They were published in the Federal
Register on November 3, 2023 (88 FR
75513). The FAA received comments
from Airbus Commercial Aircraft
E:\FR\FM\16MYR1.SGM
16MYR1
]]>Agencies
[Federal Register Volume 89, Number 96 (Thursday, May 16, 2024)]
[Rules and Regulations]
[Pages 42768-42788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-09559]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1293
RIN 2590-AB29
Fair Lending, Fair Housing, and Equitable Housing Finance Plans
AGENCY: Federal Housing Finance Agency.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is
issuing this final rule that addresses barriers to sustainable housing
opportunities for underserved communities by codifying existing FHFA
practices in regulation and adding new requirements related to fair
lending, fair housing, unfair or deceptive acts or practices, and
Equitable Housing Finance Plans. The final rule furthers FHFA's
fulfillment of its statutory purposes and its oversight of the Federal
National Mortgage Association (Fannie Mae), the Federal Home Loan
Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks
(Banks) (Fannie Mae and Freddie Mac collectively, the Enterprises; the
Enterprises and the Banks collectively, the regulated entities), and
their fulfillment of their statutory purposes.
DATES: This rule is effective on July 15, 2024, except for subpart D to
part 1293 (amendatory instruction 2), which will become effective on
February 15, 2026.
FOR FURTHER INFORMATION CONTACT: Renita Roberts, Policy Analyst, Office
of Fair Lending Oversight, (202) 809-2610, [email protected],
Federal Housing Finance Agency, Constitution Center, 400 7th Street SW,
Washington, DC 20219; or Lindsey Cope, Attorney Advisor, Office of Fair
Lending Oversight, (202) 875-4047, [email protected]. These are not
toll-free numbers. For TTY/TRS users with hearing and speech
disabilities, dial 711 and ask to be connected to any of the contact
numbers above.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Background
B. Overview of the Proposed Rule
II. Discussion of Comments and Agency Response
A. Overview of Comments Received
B. Unfair or Deceptive Acts or Practices
C. Board Standards and Responsibilities
D. Certification of Compliance
E. Mission-Specific Board Standards and Responsibilities
F. Determination Not To Designate Enterprise Equitable Housing
Finance Planning as a Prudential Management and Operations Standard
G. Determination Not To Define ``Equity''
H. Resource Disclosures
I. Public Engagement
J. Program Evaluation
K. Reporting on Bank Voluntary Actions To Address Barriers to
Sustainable Housing Opportunities
L. Data Collection
M. Authority and Consistency With Law
III. Summary of Changes in the Final Rule
A. Section 1293.1(d), Severability Clause
B. Section 1293.12(a), Reports, Data, and Certification
C. Section 1293.12(b), Certification of Compliance
D. Section 1293.21, General
E. Section 1293.23, Resource Disclosures, Additions, and
Clarifying Edits
F. Section 1293.27, Program Evaluation
G. Section 1293.31, Federal Home Loan Bank Equitable Housing
Finance Planning
IV. Consideration of Differences Between the Banks and the
Enterprises
V. Regulatory Analyses
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. Congressional Review Act
I. Introduction
Federal agency oversight of fair housing, fair lending, and other
relevant laws, as well as strategic planning to address barriers faced
by renters and borrowers, are important in promoting sustainable
housing opportunities \1\ for underserved communities.\2\ The final
rule addresses barriers to sustainable housing opportunities for
underserved communities by codifying existing FHFA practices in
regulation and adding new requirements. Collectively, the actions in
the final rule will improve FHFA's fulfillment of its statutory
purposes and its oversight of the regulated entities and their
fulfillment of their statutory purposes.
---------------------------------------------------------------------------
\1\ Sustainable housing opportunity is defined more completely
later in the final rule, but generally encompasses rental or
homeownership opportunities that include one or more characteristics
important to the needs of a tenant or homeowner.
\2\ Underserved community is defined more completely later in
the final rule, but generally encompasses a group of people with
shared characteristics or an area that is subject to current
discrimination or has been subjected to past discrimination that has
or has had continuing adverse effects on the group's or area's
participation in the housing market, historically has received or
currently receives a lower share of the benefits of Enterprise
programs and activities providing sustainable housing opportunities,
or that otherwise has had difficulty accessing these benefits
compared with groups of people without the shared characteristic or
other areas.
---------------------------------------------------------------------------
The final rule codifies in regulation much of FHFA's existing
practices and programs regarding fair housing and fair lending
oversight of its regulated entities, the Equitable Housing Finance Plan
program for the Enterprises, and requirements for the Enterprises to
collect and report language preference, homeownership education, and
housing counseling information. The final rule makes changes to the
Equitable Housing Finance Plan program to promote greater
accountability for the Enterprises and public transparency, adds
oversight of unfair or deceptive acts or practices to FHFA's fair
housing and fair lending oversight programs, requires additional
certification of compliance by the regulated entities, and establishes
more precise standards related to fair housing, fair lending, and
principles of equitable housing for regulated entity boards of
directors (boards). The final rule also establishes a requirement for
the Banks
[[Page 42769]]
to report annually on any actions they voluntarily take to address
barriers to sustainable housing opportunity for underserved communities
in order to provide public transparency but does not require the Banks
to undertake such actions or engage in the planning process required of
the Enterprises.
A. Background
FHFA, the Regulated Entities, and their Public Purposes. Fannie Mae
and Freddie Mac are federally chartered housing finance enterprises
whose purposes include: providing stability to the secondary market for
residential mortgages; providing ongoing assistance to the secondary
market for residential mortgages (including activities related to
mortgages for low- and moderate-income families) by increasing the
liquidity of mortgage investments and improving distribution of
investment capital available for residential mortgage financing; and
promoting access to mortgage credit throughout the United States,
including central cities, rural areas, and underserved areas, by
increasing the liquidity of mortgage investments and improving the
distribution of investment capital available for residential mortgage
financing.\3\
---------------------------------------------------------------------------
\3\ See 12 U.S.C. 1451 (note) and 1716.
---------------------------------------------------------------------------
The Federal Home Loan Bank System (the System) provides a stable
and reliable source of liquidity for its members and provides support
for affordable housing and community development for the communities
they serve. It was established in 1932 by the Federal Home Loan Bank
Act (Bank Act),\4\ and today consists of 11 regional Banks and the
System's fiscal agent, the Office of Finance. Each Bank is a separate,
government-chartered, member-owned corporation.
---------------------------------------------------------------------------
\4\ See 12 U.S.C. 1421 et seq.
---------------------------------------------------------------------------
Congress established FHFA to oversee the regulated entities to
ensure that the purposes of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (Safety and Soundness Act), as
amended, the authorizing statutes, and any other applicable laws are
carried out.\5\ In doing so, Congress recognized that the regulated
entities have important public purposes reflected in their authorizing
statutes, and that they must be managed safely and soundly so that they
continue to accomplish their public missions.\6\
---------------------------------------------------------------------------
\5\ See 12 U.S.C. 4511(b).
\6\ See 12 U.S.C. 4501(1) (the Enterprises and Banks have
important public missions), (2) (their continued ability to
accomplish their public missions is important, and effective
regulation is needed to reduce risk of failure), and (7) (the
Enterprises have an affirmative obligation to facilitate financing
of affordable housing for low- and moderate-income families
consistent with their public purposes, while maintaining a strong
financial condition and a reasonable economic return).
---------------------------------------------------------------------------
With respect to the statutory mission of the Enterprises, a number
of statutory and regulatory authorities that apply to FHFA and the
Enterprises speak to the need to promote sustainable housing
opportunities for all homebuyers, homeowners, and tenants in the
housing market.\7\ FHFA's principal duties include ensuring that the
Enterprises operate consistent with safety and soundness and with the
public interest.\8\ FHFA and the Enterprises also have statutory duties
and other commitments to advance equitable solutions for borrowers and
tenants in the housing market. The Enterprises' authorizing statutes,
for example, provide that one of their purposes is to promote access to
mortgage credit throughout the Nation (including central cities, rural
areas, and underserved areas).\9\ The authorizing statutes require the
Enterprises, as part of their annual housing reports, to assess their
underwriting standards, policies, and business practices that affect
low- and moderate-income families or cause racial disparities, along
with any revisions to these standards, policies, or practices that
promote affordable housing or fair lending.\10\
---------------------------------------------------------------------------
\7\ These include providing ongoing assistance to the secondary
market for residential mortgages, including mortgages on housing for
low- and moderate-income families involving a reasonable economic
return that may be less than the return earned on other activities.
12 U.S.C. 1716(3) and (4) (Fannie Mae charter purposes); 12 U.S.C.
1451 note (b)(3) and (4) (Freddie Mac charter purposes). They also
include Enterprise affordable housing goals, see 12 U.S.C. 4561(a),
4562, and 4563; 12 CFR part 1282, subpart B, and Enterprise Duty to
Serve affordable housing needs of certain underserved markets, see
12 U.S.C. 4565; 12 CFR part 1282, subpart C. In addition, the
Enterprises are required to report annually to Congress on, among
other things, assessments of the Enterprises' underwriting standards
and business practices that affect their purchases of mortgages for
low- and moderate-income families, and revisions to their standards
and practices that promote affordable housing or fair lending. 12
U.S.C. 1723a(n)(2)(G) (Fannie Mae charter), 1456(f)(2)(G) (Freddie
Mac charter).
\8\ See 12 U.S.C. 4513(a)(1)(B)(i), (v).
\9\ See 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4)
(Freddie Mac charter).
\10\ See 12 U.S.C. 1723a(n)(2)(G), 1456(f)(2)(G).
---------------------------------------------------------------------------
The Housing Goals and Duty to Serve requirements \11\ are important
components for ensuring that the Enterprises fulfill their statutory
mission and charters and serve low- and moderate-income families and
underserved markets.\12\ The Safety and Soundness Act provides that, in
meeting these requirements, the Enterprises are required to take
affirmative steps to assist primary lenders to make housing credit
available in areas with concentrations of low-income and minority
families.\13\ The Safety and Soundness Act also requires the
Enterprises to transfer an amount equal to 4.2 basis points for each
dollar of unpaid principal balance of new purchases to the U.S.
Department of Housing and Urban Development's (HUD) administration of
the Housing Trust Fund and the U.S. Department of the Treasury's
administration of the Capital Magnet Fund.\14\ Both funds are designed
to support affordable housing initiatives by providing capital for the
production or preservation of affordable housing and related economic
development activities. For the 2023 year, the Enterprises transferred
$301 million into the funds.\15\
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\11\ See 12 U.S.C. 4565; 12 CFR part 1282, subpart C.
\12\ See 12 U.S.C. 4561(a) (FHFA to establish annual housing
goals by regulation), 4562 (establishment of required categories of
single-family housing goals), and 4563 (establishment of required
multifamily affordable housing goals); 12 U.S.C. 4565 (Enterprise
duty to facilitate secondary mortgage market for very low-, low-,
and moderate-income families in certain underserved markets).
\13\ See 12 U.S.C. 4565(b)(3)(A).
\14\ See 12 U.S.C. 4567.
\15\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-301-Million-for-Affordable-Housing-Programs.aspx.
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Several provisions of the Bank Act denote the statutory missions of
the Banks, including their role in making secured long-term advances to
members to support residential housing finance, specific community
support requirements, establishment of community investment programs
and affordable housing programs, compliance with housing goals, and the
requirement that certain board directors have experience in public
interest areas.\16\ FHFA launched a comprehensive review of the System
in August 2022.\17\ Among the areas FHFA explored as part of the review
were the Banks' role in promoting affordable, sustainable, equitable,
and resilient housing and community investment, including rental
housing, and in addressing the unique needs of tribal communities,
communities of color, rural communities, and other financially
vulnerable and underserved communities. FHFA issued a Report based on
its comprehensive review in November 2023, ``The Federal Home Loan Bank
System at 100: Focusing on
[[Page 42770]]
the Future.'' \18\ The Report noted the passage of the Fair Housing Act
as a significant milestone in the development of the mortgage finance
system and noted that compliance with fair housing and fair lending
laws and equity initiatives is not currently assessed in supervisory
ratings for the Banks. The Report also noted that participants in
FHFA's comprehensive review of the System suggested that FHFA consider
requiring the Banks to prepare an affordable housing strategy or
equitable housing finance plan that would describe their planned
activities and summarize actions taken in the prior year.
---------------------------------------------------------------------------
\16\ See, e.g., 12 U.S.C. 1427(a)(3)(B)(ii) states that
Directors must have experience ``representing consumer or community
interests on banking services, credit needs, housing, or financial
consumer protections[;]'' 12 U.S.C. 1430(g), (i), (j); 12 U.S.C.
1430c.
\17\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx.
\18\ See https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHLBank-System-at-100-Report.pdf.
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Under the Fair Housing Act, all Federal agencies which have
regulatory or supervisory authority over financial institutions,
including FHFA, are required to administer their programs and
activities relating to housing and urban development in a manner that
affirmatively furthers the purposes of the Fair Housing Act, which
includes providing for fair housing throughout the United States.\19\
FHFA has included considerations of fair housing and fair lending in
rulemaking since its establishment.\20\ FHFA also issued a policy
statement on fair lending which describes its regulatory and oversight
authorities to supervise and enforce fair lending laws with respect to
its regulated entities.\21\ FHFA issued orders to Fannie Mae and
Freddie Mac for regular and special reports related to fair housing and
fair lending.\22\ FHFA issued guidance for the Enterprises on fair
housing and fair lending supervisory expectations.\23\ FHFA coordinates
with HUD on fair lending and fair housing oversight,\24\ and
established a fair lending oversight data system in part to facilitate
cooperation in interagency fair housing and fair lending oversight.\25\
FHFA has also implemented the referral program for potential mortgage
pricing disparities across mortgage lenders based on the Enterprises'
data, as required by Congress in section 1128 of the Housing and
Economic Recovery Act of 2008 (HERA).\26\ FHFA also established the
Equitable Housing Finance Plan program for the Enterprises to develop a
framework for addressing barriers to sustainable housing opportunities
for underserved communities through strategic planning and public
participation.\27\ FHFA joined other agencies in issuing the
Interagency Statement on Special Purpose Credit Programs Under the
Equal Credit Opportunity Act and Regulation B in 2022.\28\ In 2023,
FHFA established a supervisory rating system for the Enterprises that
evaluates compliance with fair housing and fair lending laws and equity
initiatives.\29\
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\19\ 42 U.S.C. 3608(d); 42 U.S.C. 3601 et seq.
\20\ See, e.g., 12 CFR 1253.4(b)(3)(viii); 74 FR 31602, 31603,
31606 (July 2, 2009), 12 CFR 1254.6(a)(2) and 1254.8(b)(2); 84 FR
41886, 41905, 41906, 41907 (Aug. 16, 2019), and 12 CFR 1291.23(e);
83 FR 61186, 61208, 61238 (Nov. 28, 2018).
\21\ 86 FR 36199 (July 9, 2021).
\22\ See FHFA Orders In Re: Enterprise Compliance and
Information Submission with Respect to Fair Lending, Nos. 2021-OR-
FNMA-2 and 2021-OR-FHLMC-2 (FHFA's Fair Lending Orders), available
at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Pages/Fair-
Lending-Oversight-
Program.aspx#:~:text=Fair%20Lending%20Reporting%20Orders&text=The%20o
rders%20require%20the%20Enterprises,lending%20supervision%20and%20mon
itoring%20capabilities.
\23\ Advisory Bulletin AB 2021-04, Enterprise Fair Lending and
Fair Housing Compliance (December 20, 2021), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf.
\24\ Memorandum of Understanding by and between the U.S.
Department of Housing and Urban Development and the Federal Housing
Finance Agency regarding Fair Housing and Fair Lending Coordination
(Aug. 12, 2021), available at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/FHFA-HUD-MOU_8122021.pdf.
\25\ Fair Lending Oversight Data System of Records Notice, 87 FR
30947 (May 20, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-05-20/pdf/2022-10798.pdf.
\26\ Public Law 110-289, 122 Stat. 2696, 2697 (2008) (codified
at 12 U.S.C. 4561(d)).
\27\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-
Announces-Equitable-Housing-Finance-Plans_for-Fannie-Mae-and-
Freddie-Mac.aspx.
\28\ See Interagency Statement on Special Purpose Credit
Programs Under the Equal Credit Opportunity Act and Regulation B
(Feb. 22, 2022), available at https://www.federalreserve.gov/supervisionreg/caletters/CA%2022-2%20Attachment%20SPCP_Interagency_Statement_for_release.pdf.
\29\ See Advisory Bulletin AB 2023-05: Enterprise Fair Lending
and Fair Housing Rating System (September 27, 2023), available at:
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB_2023-05_Enterprise-Fair-Lending-and-Fair-Housing-Rating-System.aspx.
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Barriers to Sustainable Housing Opportunities. Ongoing disparities
and challenges in the housing market persist, which limit sustainable
housing opportunities for underserved communities. The rest of Part A
discusses some of these disparities and challenges by way of example.
Both Enterprises' 2022-2024 Equitable Housing Finance Plans identify
Black and Latino communities as underserved and include extensive
discussions of barriers to sustainable housing opportunities.\30\ The
inclusion or discussion of a particular disparity, challenge, or
underserved community is not an indication of FHFA's views on the needs
of a community or what actions FHFA's regulated entities should take.
---------------------------------------------------------------------------
\30\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(June 2022), available at https://www.freddiemac.com/about/pdf/2022-Freddie-Mac-Equitable-Housing-Finance-Plan.pdf; Fannie Mae 2022-2024
Equitable Housing Finance Plan (June 2022), available at https://www.fanniemae.com/media/43636/display.
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Challenges Accessing Sustainable Housing Opportunities. There are
many underserved communities experiencing significant challenges in
accessing sustainable housing opportunities. This includes, for
example, families living on tribal land, in rural areas, and in rental
homes. Almost half of renters are cost-burdened, paying more than 30
percent of their income on housing, compared to only 22 percent of
homeowners.\31\ More than 10 million households headed by someone over
age 65 are cost-burdened, with the median older renter having net worth
under $6,000 in 2019.\32\ By 2035, the population age 80 and over is
expected to double from its level in 2016. The population in rural
areas is older and more likely to have lower income levels, with the
median income for renters in high needs rural areas being $26,422
compared to $40,505 nationally.\33\ Lower incomes can lead to greater
cost burdens in rural areas, particularly for renters. For example, in
Middle Appalachia, 49 percent of renters are cost-burdened.\34\
Individuals with disabilities also face housing challenges. As an
increasing proportion of households wish to age in place, there is
often a lack of housing opportunities that provide for mobility and
other physical impairments. Two percent of total housing inventory is
accessible for people with mobility disabilities, while 14 percent of
Americans have mobility disabilities.\35\
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\31\ When disaggregated by race, 57 percent of Black renter
households were cost-burdened, and 31 percent of Black homeowner
households were cost-burdened. See Joint Center for Housing Studies
of Harvard University, The State of the Nation's Housing 2023,
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
\32\ See Jennifer Molinsky, ``Housing for America's Older
Adults: Four Problems We Must Address,'' Joint Center for Housing
Studies of Harvard University (Aug. 18, 2022), available at https://www.jchs.harvard.edu/blog/housing-americas-older-adults-four-problems-we-must-address.
\33\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (Apr. 7, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf.
\34\ Id.
\35\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(Apr. 2023), available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan.pdf.
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[[Page 42771]]
Other populations, including persons identifying as lesbian, gay,
bisexual, transgender, or queer (LGBTQ+), Native Americans, single
parents, individuals with limited mainstream credit and banking
history, and households with limited English proficiency (LEP),
continue to report facing challenges in accessing the housing finance
system. A study found that same-sex applicants are 73.12 percent more
likely than different-sex applicants to be denied for a mortgage.\36\
Mortgage financing opportunities for people living on Native American
trust lands remain limited.\37\ Research has found that the median
single mothers of minor children possess only about $7,000 in family
wealth, by far the lowest median wealth among all singles.\38\ And
relatedly, one study of census data found that only 31 percent of
single mothers are also homeowners, compared to 64 percent of
households overall.\39\ Borrowers with limited credit histories, who
are disproportionately likely to be Black or Hispanic or live in low-
income neighborhoods, have difficulty accessing affordable credit.\40\
Additionally, LEP households, or those who are more comfortable
transacting in a language other than English, may also experience
barriers to housing opportunities and housing sustainability. Often,
LEP borrowers will rely on their English-proficient child, who may not
be familiar with mortgage lending terms, as a translator.\41\ As a
result, this can leave the borrower without a full understanding of
mortgage terms and conditions.
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\36\ See Hua Sun et al., ``Lending practices to same-sex
borrowers,'' (Apr. 16, 2019), available at https://www.pnas.org/doi/10.1073/pnas.1903592116.
\37\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (April 7, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf.
\38\ Federal Reserve Bank of St. Louis, ``Single Mothers Face
Difficulties with Slim Financial Cushions'' (May 9, 2022) (defining
singles as ``those who have never married, are divorced, widowed or
separated''), https://www.stlouisfed.org/on-the-economy/2022/may/single-mothers-slim-financial-cushions.
\39\ Dana Anderson, ``McAllen, Texas, Salt Lake City and Grand
Rapids Have the Highest Homeownership Rates for Single Mothers,''
Redfin News (June 24, 2019), https://www.redfin.com/news/single-
mother-homeownership-rate-us/
#:~:text=McAllen%2C%20Texas%2C%20where%20the%20typical,%25%20and%20Mi
nneapolis%20(40.3%25).
\40\ CFPB, Data Point: Credit Invisibles at 6 (May 2015),
https://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf.
\41\ See Freddie Mac and Fannie Mae, ``Language Access for
Limited English Proficiency Borrowers: Final Report,'' (Apr. 2017),
available at https://www.fhfa.gov/PolicyProgramsResearch/Policy/Documents/Borrower-Language-Access-Final-Report-June-2017.pdf.
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Disparities in Homeownership Rates and Wealth. The national
homeownership rate has ranged from around 45 percent in some eras to
around 65 percent in recent years.\42\ However, there have been
persistent gaps in the homeownership rate by race and ethnicity. In the
fourth quarter of 2023, the White homeownership rate was 73.8 percent,
the Black homeownership rate was 45.9 percent, the Latino homeownership
rate was 49.8 percent, and the Asian, Native Hawaiian and Pacific
Islander homeownership rate was 63.0 percent.\43\ The Black and White
homeownership gap, at 27.9 percentage points as of the fourth quarter
of 2023, has persisted over time, though there have been some modest
reductions in the gap since 2019. Even when the racial homeownership
rate is stratified by household income, there continue to be
significant disparities in homeownership between racial groups, even in
the highest income brackets. For example, for households with an income
over $150,000, there exists a 10-percentage point gap between Black and
White families.\44\
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\42\ See Don Layton, ``The Homeownership Rate and Housing
Finance Policy, Part 1: Learning from the Rate's History,'' August
2021, available at https://www.jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_homeownership_rate_layton_2021.pdf.
\43\ Federal Reserve Economic Data, Federal Reserve Bank of St.
Louis; Housing and Homeownership: Homeownership Rate (retrieved
February 13, 2024) available at https://fred.stlouisfed.org/release/tables?rid=296&eid=784188#snid=784199; https://www.federalreserve.gov/econres/notes/feds-notes/greater-wealth-greater-uncertainty-changes-in-racial-inequality-in-the-survey-of-consumer-finances-accessible-20231018.htm#fig1.
\44\ See Fannie Mae 2022-2024 Equitable Housing Finance Plan
(June 2022), p. 7, available at https://www.fanniemae.com/media/43636/display.
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A household's home is often its largest financial asset and key to
wealth building and intergenerational wealth transfers, which in turn
enable future generations to achieve homeownership. The Federal
Reserve, in a 2022 survey, found that White families have the highest
level of both median and mean family wealth: $285,000 and $1,367,170,
respectively.\45\ In contrast, Black families' median and mean wealth
was $44,890 and $211,450, respectively. In other words, the typical
Black family has about $16 in wealth for every $100 held by the typical
White family. These wealth disparities grew between 2003 and 2018,
though have narrowed slightly since 2018.\46\ One study estimated that
the total racial wealth gap is $10.14 trillion.\47\ Black families are
less likely to receive or expect to receive an inheritance, and, if
they do, it is, on average, less than that of White households.\48\
Black families are also less likely to obtain financial assistance from
their personal networks, with 41 percent of Black families reporting
they could receive $3,000 from family or friends compared to 72 percent
of White families.\49\ Black households are less likely to receive
familial assistance with down payments and the other forms of financial
support that can make homeownership achievable and sustainable.\50\
Moreover, many Black, Latino, and Asian households provide financial
assistance to older generations, which slows their ability to save for
a down payment.\51\
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\45\ See Aditya Aladangady et al., Board of Governors of the
Federal Reserve System, ``Greater Wealth, Greater Uncertainty:
Changes in Racial Inequality in the Survey of Consumer Finances,''
(Oct. 18, 2023), available at https://www.federalreserve.gov/econres/notes/feds-notes/greater-wealth-greater-uncertainty-changes-in-racial-inequality-in-the-survey-of-consumer-finances-20231018.html.
\46\ See Earl Fitzhugh et al., McKinsey Institute for Black
Economic Mobility, ``It's time for a new approach to racial
equity,'' (Dec. 2, 2020), available at https://www.mckinsey.com/bem/our-insights/its-time-for-a-new-approach-to-racial-equity.
\47\ See Fred Dews, ``Charts of the Week: The racial wealth gap;
the middle-class income slump,'' The Brookings Institution (Jan. 8,
2021), available at https://www.brookings.edu/blog/brookings-now/2021/01/08/charts-of-the-week-the-racial-wealth-gap-the-middle-class-income-slump/.
\48\ See Freddie Mac 2022-2024 Equitable Housing Finance Plan
(June 2022), available at Freddie Mac Equitable Housing Finance
Plan.
\49\ Neil Bhutta et al., Disparities in Wealth by Race and
Ethnicity in the 2019 Survey of Consumer Finances, Bd. of Governors
of the Fed. Res. Sys.: FEDS Notes (Sept. 28, 2020), https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.html.
\50\ Michael Stegman and Mike Loftin. 2021. ``An Essential Role
for Down Payment Assistance in Closing America's Racial
Homeownership and Wealth Gaps.'' Washington, DC: Urban Institute.
\51\ See Mike Dang, ``Their Children Are Their Retirement
Plans,'' New York Times (Feb. 24, 2023), available at https://www.nytimes.com/2023/01/21/business/retirement-immigrant-families.html.
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Disparities Based on Disaggregated Data. For many underserved
communities, it is critical to examine disaggregated data and data at
the community level.\52\ Failing to disaggregate may result in failure
to identify significant disparities facing unique subgroups for the
purpose of identifying barriers and improving housing policy. For
example, although Asians and Pacific Islanders as a whole have
homeownership rates above 60 percent, Korean Americans' homeownership
rate is 54 percent and
[[Page 42772]]
Nepalese Americans' homeownership rate is 33 percent.\53\ There can be
geographic differences, as well: while the overall homeownership gap
between Black and White homeowners is 29.6 percentage points, in
Minneapolis, the gap rises to 50 percentage points.\54\
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\52\ See Leda Bloomfield et al., FHFA Insights Blog, ``Latino
Diversity and Complexity: The Importance of Data Disaggregation,''
(Sept. 23, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Latino-Diversity-and-Complexity-The-Importance-of-Data-Disaggregation.aspx.
\53\ See Asian Real Estate Association, 2023-2024 State of Asia
America Report, available at https://areaa.org/resource-asia-america-report.
\54\ See Alanna McCargo et al., ``Mapping the black
homeownership gap,'' (Feb. 26, 2018), available at https://www.urban.org/urban-wire/mapping-black-homeownership-gap.
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There are also disparities in mortgage underwriting that may be
obscured by looking at aggregated data.\55\ For Latino communities,
Mexican applicants have slightly higher approval rates than Latino
applicants as a whole, but Puerto Rican and ``Other Hispanic''
applicants have lower approval rates. Among Asian applicants, the
Vietnamese, Filipino, and ``Other Asian'' communities experience lower
approval rates than White applicants, despite Asian applicants, as a
whole, having similar approval rates to White applicants. Similarly,
when the Pacific Islander group is disaggregated, it becomes clear that
Samoan and ``Other Pacific Islander'' applicants have significantly
lower approval rates than Native Hawaiian and Chamorro applicants.
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\55\ See Leda Bloomfield et al., FHFA Insights Blog, ``Asian
Americans, Native Hawaiians, and Pacific Islanders: Visible
Together,'' (May 30, 2023), available at https://www.fhfa.gov/Media/Blog/Pages/Asian-Americans-Native-Hawaiians-and-Pacific-Islanders-Visible-Together.aspx.
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Mortgage Market Disparities. Disparities are present in the
mortgage market for several underserved communities. For example, in
2022, Black families comprised about 14 percent of the total U.S.
population, but only about 7 percent of the loans that Fannie Mae and
Freddie Mac purchased. American Indian and Alaska Native families
comprised about 3 percent of the total U.S. population, but only about
1 percent of the loans that Fannie Mae and Freddie Mac purchased. In
contrast, White families comprised about 62 percent of the U.S.
population, but comprised about 68 percent of Fannie Mae and Freddie
Mac acquisitions.\56\
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\56\ Loan purchase data sourced from Enterprise data released by
FHFA at https://www.fhfa.gov/DataTools/Downloads/Pages/Fair-Lending-Data.aspx. Total population statistics are drawn from 2020 Census
data summarized at https://www.census.gov/library/stories/2021/08/improved-race-ethnicity-measures-reveal-united-states-population-much-more-multiracial.html. Total population statistics for White
are provided as White alone. Total population statistics for Black
and American Indian and Alaska Native are provided as alone or in
combination with another race or ethnicity category.
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FHFA has released data on Fannie Mae's and Freddie Mac's automated
underwriting systems, presenting gaps in approval rates for applicants
from certain groups over time compared to other groups. These
underwriting tools complete credit risk assessments on loan applicants
to determine whether a loan is eligible for sale to the Enterprises.
Although the move to a more automated, less subjective system to assess
creditworthiness in mortgage market underwriting was an important step
in eliminating bias in subjective underwriting decisions, further
improvements in automated underwriting to reduce gaps would promote
better access to sustainable housing opportunities. In the fourth
quarter of 2023, White applicants' automated underwriting system
applications had approval rates of about 83 percent and 89 percent for
the automated underwriting systems of Fannie Mae and Freddie Mac,
respectively; Black applicants had approval rates of about 65 percent
and 73 percent; Latino applicants had approval rates of about 75
percent and 80 percent; Asian applicants had approval rates of about 86
percent and 90 percent; American Indian and Alaska Native applicants
had approval rates of about 76 percent and 78 percent; and Native
Hawaiian and Pacific Islander applicants had approval rates of about 77
percent and 82 percent.\57\
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\57\ 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.\58\ The
trend in higher denial rates has persisted in HMDA data for many
years.\59\ A 2019 study of mortgage pricing found that Latino and Black
borrowers pay 7.9 and 3.6 basis points more in interest for mortgages,
respectively, even when controlling for several factors.\60\ Pursuant
to the Safety and Soundness Act, FHFA conducts an annual screening,
preliminary findings, and referral process for lenders that demonstrate
patterns of interest rate disparities for minority borrowers when
compared with borrowers who are not minorities and describes the
results in its Annual Report to Congress.\61\ Based on the results of
FHFA's 2019 and 2020 analyses, more than 36 percent of FHFA's
preliminary findings were based on an annual percentage rate disparity
of 10 basis points or more, with the most common preliminary findings
and referrals for Latino and Black borrowers.\62\
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\58\ See Jung H. Choi et al., ``What Different Denial Rates Can
Tell Us About Racial Disparities in the Mortgage Market,'' (Jan. 13,
2022), available at https://www.urban.org/urban-wire/what-different-denial-rates-can-tell-us-about-racial-disparities-mortgage-market.
\59\ See Laurie Goodman et al., ``Traditional Mortgage Denial
Metrics May Misrepresent Racial and Ethnic Discrimination,'' (Aug.
23, 2018), p. 5, available at https://www.urban.org/urban-wire/traditional-mortgage-denial-metrics-may-misrepresent-racial-and-ethnic-discrimination.
\60\ See Robert Bartlett et al., Haas School of Business UC
Berkeley, ``Consumer-Lending Discrimination in the FinTech Era,''
(Nov. 2019), available at https://faculty.haas.berkeley.edu/morse/research/papers/discrim.pdf.
\61\ 12 U.S.C. 4561(d).
\62\ See Federal Housing Finance Agency, 2021 Report to
Congress, p. 67, available at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2021-Annual-Report-to-Congress.pdf.
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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.\63\ A study
resulting from this partnership noted that the heavy reliance on
certain credit attributes in the current mortgage underwriting process
to the exclusion of other attributes limits opportunities for people of
color.\64\
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\63\ See https://fhlbsf.com/about/newsroom/urban-institute-and-fhlbank-san-francisco-announce-new-efforts-close-racial?f%5B0%5D=authored_on%3A2021.
\64\ See Jung H. Choi et al., Urban Institute and Federal Home
Loan Bank of San Francisco, ``Reducing the Black-White Homeownership
Gap through Underwriting Innovations: The Potential Impact of
Alternative Data in Mortgage Underwriting,'' available at https://www.urban.org/sites/default/files/2022-10/Reducing%20the%20Black-White%20Homeownership%20Gap%20through%20Underwriting%20Innovations.pdf.
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Additional mortgage market disparities and challenges remain with
respect to rural areas, manufactured housing, and other market
segments. For example, rural areas suffer from a lack of affordable
multifamily and single-family capital, and borrowers typically have
lower credit scores and higher mortgage denial rates than the overall
population of borrowers.\65\ Manufactured housing represents 13 percent
of housing stock in rural areas, compared to 6.1 percent of the housing
stock nationally.\66\ Residents of owner-
[[Page 42773]]
occupied manufactured housing have lower incomes and lower net worth
than residents of site-built homes, and lack adequate mortgage
financing options.\67\ FHFA's Duty to Serve program works to address
many of these disparities.\68\
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\65\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
\66\ Fannie Mae 2022-2024 Duty to Serve Underserved Markets Plan
(April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
\67\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
\68\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
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Appraisal and Valuation Disparities. FHFA's Uniform Appraisal
Dataset (UAD) Aggregate Statistics highlight that properties located in
minority tracts have a higher proportion of appraised values less than
the contract price. According to the 2021 appraisal statistics, 23.3
percent of homes in high minority tracts (80.1-100 percent) experienced
an appraised value less than the contract price.\69\ This is compared
to 13.4 percent of homes in White tracts (0-50 percent) and 19.2
percent of homes in minority tracts (50.1-80 percent).\70\
Additionally, FHFA identified examples of appraisal reports with direct
references to the racial and ethnic composition of the
neighborhood.\71\ FHFA also identified time adjustments as a factor in
appraisals that contributes to appraised values less than contract
price, and racial disparities in appraisal outcomes.\72\ Freddie Mac's
research showed that properties in minority tracts are more likely than
properties in White tracts to receive an appraisal lower than the
contract price.\73\ A Fannie Mae publication concluded that White
borrowers' homes were overvalued at higher rates across all
neighborhoods, but stronger effects were present for White borrowers in
Black neighborhoods.\74\ Additional research has also highlighted and
analyzed disparities in property valuation.\75\ Consumer groups have
begun to conduct fair housing paired testing of appraisers, resulting
in the filing of complaints.\76\ Rural markets also experience
challenges related to appraiser availability and appraisal cost.\77\
Similarly, the availability of appraisals for manufactured housing is
limited due in part to the lack of comparable property data and the
lack of familiarity with appraising techniques surrounding manufactured
housing.\78\
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\69\ See Jonathan Liles, ``Exploring Appraisal Bias Using UAD
Aggregate Statistics,'' FHFA Insights Blog (Nov. 2, 2022), available
at https://www.fhfa.gov/Media/Blog/Pages/Exploring-Appraisal-Bias-Using-UAD-Aggregate-Statistics.aspx.
\70\ For 2022, 17.15 percent of home purchase appraisals were
below contract price in high minority tracts, compared to 14.3
percent in minority tracts and 11.2 percent in White tracts. Uniform
Appraisal Dataset Aggregate Statistics, available at https://www.fhfa.gov/DataTools/Pages/UAD-Dashboards.aspx.
\71\ See Chandra Broadnax, ``Reducing Valuation Bias by
Addressing Appraiser and Property Valuation Commentary,'' FHFA
Insights Blog (Dec. 14, 2021), available at https://www.fhfa.gov/Media/Blog/Pages/Reducing-Valuation-Bias-by-Addressing-Appraiser-and-Property-Valuation-Commentary.aspx.
\72\ See Scott Susin, ``Underutilization of Appraisal Time
Adjustments,'' (Jan. 2024), available at https://www.fhfa.gov/Media/Blog/Pages/Underutilization-of-Appraisal-Time-Adjustments.aspx;
Scott Susin, ``Underappraisal Disparities and Time Adjustments,''
(Jan. 2024), available at https://www.fhfa.gov/Media/Blog/Pages/Underappraisal-Disparities-and-Time-Adjustments.aspx.
\73\ See Melissa Narragon et al., ``Racial & Ethnic Valuation
Gaps in Home Purchase Appraisals--A Modeling Approach,'' (May 2022),
available at https://www.freddiemac.com/research/insight/20220510-racial-ethnic-valuation-gaps-home-purchase-appraisals-modeling-approach; Freddie Mac, ``Racial and Ethnic Valuation Gaps in Home
Purchase Appraisals-A Modeling Approach,'' (Sept. 20, 2021),
available at https://www.freddiemac.com/research/insight/20210920-home-appraisals.
\74\ See Jake Williamson et al., ``Appraising the Appraisal,''
(Feb. 2022) available at https://www.fanniemae.com/media/42541/display.
\75\ See, e.g., Andre Perry et al., The Brookings Institution,
``The Devaluation of Assets in Black Neighborhoods: The Case of
Residential Property (Nov. 27, 2018), available at https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/; Junia Howell et al., ``Appraised: The Persistent
Evaluation of White Neighborhoods as More Valuable Than Communities
of Color,'' (Nov. 2022), available at https://www.eruka.org/appraised; Edward Pinto et al., American Enterprise Institute, ``How
Common is Appraiser Racial Bias--An Update,'' (May 2022), available
at https://www.aei.org/wp-content/uploads/2022/06/How-Common-is-Appraiser-Racial-Bias-An-Update-May-2022-FINAL-corrected-1.pdf?x91208.
\76\ Jake Lilien, National Community Reinvestment Coalition,
``Faulty Foundations: Mystery-Shopper Testing in Home Appraisals
Exposes Racial Bias Undermining Black Wealth,'' (Oct. 2022),
available at https://ncrc.org/faulty-foundations-mystery-shopper-testing-in-home-appraisals-exposes-racial-bias-undermining-black-wealth/.
\77\ See FHFA, Request for Information on Appraisal-Related
Policies, Practices, and Processes (Dec. 28, 2020), p. 4, available
at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/RFI-Appraisal-Related-Policies.pdf; Freddie Mac 2022-2024 Duty to
Serve Underserved Markets Plan (April, 2022), p. 49, available at
https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
\78\ See Fannie Mae 2022-2024 Duty to Serve Underserved Markets
Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FannieMae2022-24DTSPlan-April2022.pdf; Freddie Mac 2022-2024 Duty to Serve Underserved
Markets Plan (April, 2022), available at https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/FreddieMac2022-24DTSPlan-April2022.pdf.
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Enterprise Contributions Pursuant to the Equitable Housing Finance
Planning Framework and FHFA Oversight. In accordance with the
authorizing statutes, each Enterprise's mission includes promoting
access to mortgage credit throughout the Nation,\79\ and, as discussed
above, a number of statutory authorities speak to the Enterprises'
statutory purposes and FHFA's statutory duties to ensure the
Enterprises meet those purposes. FHFA's experience in overseeing the
Equitable Housing Finance Plan program since it was originally
established in 2021 has informed the rule. In addition, FHFA finds that
the programs undertaken by the Enterprises under their 2022-2024
Equitable Housing Finance Plans have helped the Enterprises comply with
the authorizing statutes, and that the program and oversight framework
has helped FHFA fulfill its statutory duties.
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\79\ 12 U.S.C. 1716(4) (Fannie Mae charter); 1451 note (b)(4)
(Freddie Mac charter).
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For the first Equitable Housing Finance Plan cycle, the Enterprises
focused on addressing inequities and removing barriers to housing
opportunities in a manner consistent with safety and soundness, and
borrower sustainability for Black and Latino borrowers, as these
borrower populations have been historically denied consistent and
systemic fair, just, and impartial treatment and face persistent
disparities in accessing housing. Although the Enterprises focused
their 2022-2024 Equitable Housing Finance Plans on addressing barriers
faced by Black and Latino borrowers, all implemented actions were
beneficial to numerous underserved communities.
Freddie Mac pursued a variety of activities under its 2022-2024
Equitable Housing Finance Plan to achieve its objectives. To help
eliminate disparities for Black and Latino communities in the
Multifamily sector, Freddie Mac expanded financing for affordable
housing developers and improved access to education and financing
opportunities for diverse and emerging multifamily developers through
its Develop the Developer program. Freddie Mac also established a fair
servicing process to help identify gaps in loss mitigation outcomes,
promoted Borrower Help Centers, and expanded use of its own renovation
products to preserve affordable single-family homes. It financed
rehabilitation loans to
[[Page 42774]]
maintain and improve the quality of existing affordable housing stock
and used its preservation loan agreements to preserve affordable rents
at affordable housing properties that do not receive government
subsidies. To promote renter empowerment at multifamily properties,
Freddie Mac established a Renter Resource Organization program and
expanded CreditSmart, a free financial and homeownership education
curriculum for renters and borrowers.
Freddie Mac employed affirmative outreach methods to ensure housing
professionals were equipped with equity-related information, education,
and resources to ensure its servicing and oversight policies promote
positive borrower-home retention outcomes. Freddie Mac followed up with
its Mission Servicing Oversight Framework that allows the Enterprise to
work with servicers that provide high-touch engagement with at-risk
borrowers to offer early delinquency counseling and help mitigate
mortgage defaults. To combat appraisal bias, a text detection method
was added to Freddie Mac's Loan Collateral Advisor tool to flag
subjective words and phrases that could indicate bias to better educate
appraisers and correct the use of potentially biased language in
appraisal reports with real-time feedback. Finally, both Freddie Mac
and Fannie Mae continued the Appraiser Diversity Initiative to provide
scholarships and promote the diversity of new entrants to the
residential appraisal profession by reducing the barriers to entry,
including education, training, and experience requirements.
Fannie Mae also pursued a variety of activities under its 2022-2024
Equitable Housing Finance Plan to achieve its objectives. Fannie Mae
introduced HomeView, a free online homeownership education course
designed to address misconceptions and knowledge gaps about the home
purchase and mortgage qualification process. Fannie Mae also made the
HomeView course available in Spanish. Fannie Mae used its Here2Help
program to provide counseling services for renters and homeowners
facing financial hardships and offered its Future Housing Leaders
program to connect college students from diverse institutions to career
opportunities in the housing industry. In its efforts to assist Black
and Latino renters and support affordable housing in the Multifamily
sector, Fannie Mae offered pricing and underwriting incentives for
multifamily borrowers that set aside at minimum 20 percent of a
property's units as affordable units for renters earning up to 120
percent of the area median income (AMI) in very low-income markets
through their Sponsor-Dedicated Workforce and Sponsor-Initiated
Affordability programs. Fannie Mae also introduced the Multifamily
Positive Rental Payment History program to help renters establish and
improve credit scores using bank transaction data and is currently
exploring ways to decrease renters' upfront security deposits, which
can then be saved as cash reserves and later used towards down payment
and/or closing costs. Fannie Mae also agreed to partner with local
housing organizations to support the revitalization and expansion of
housing opportunities in historically Black neighborhoods.
In their efforts to advance equity as part of their Equitable
Housing Finance Plans, both Enterprises provided liquidity for eligible
lender-developed Special Purpose Credit Programs (SPCPs) and developed
their own SPCPs to expand access to mortgage funding for historically
underserved communities.\80\
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\80\ 15 U.S.C. 1691(c)(3); 12 CFR 1002.8(a); Federal Housing
Finance Agency et. al., Interagency Statement on Special Purpose
Credit Programs Under the Equal Credit Opportunity Act and
Regulation B (Feb. 22, 2022), https://www.fhfa.gov/PolicyProgramsResearch/Programs/Documents/SPCP_Interagency_Statement_2022_02_22.pdf; see also Susan M. Bernard
and Patrice Alexander Ficklin, CFPB, ``Expanding access to credit to
underserved communities'' (July 31, 2020), https://www.consumerfinance.gov/about-us/blog/expanding-access-credit-underserved-communities/ communities/. See OCC, ``OCC Announces Project REACh to
Promote Greater Access to Capital and Credit for Underserved
Populations'' (July 10, 2020), https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-89.html..
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Fannie Mae initiated several appraisal modernization efforts,
including appraisal text scanning reviews and introduction of the Value
Acceptance/Property Data option that permits lenders to bypass an
appraisal if interior and exterior property data collection is provided
to verify the property's eligibility prior to the note date. In order
to extend credit access to underserved communities that have a low
credit score or no credit score established, Freddie Mac improved its
automated underwriting system, Loan Product Advisor (LPA), to increase
accuracy and fairness by removing reliance on third-party credit scores
and using a proprietary, enhanced credit view that focuses specifically
on mortgage credit risk. LPA was also improved to consider bank
transaction data, allowing positive cash flow and on-time rent payments
to be factored into loan purchase decisions. Fannie Mae also improved
its automated underwriting system, Desktop Underwriter (DU), to
consider a borrower's positive rent payment history as part of the
credit risk assessment and allow for cash-flow assessments using a
borrower's bank transaction data in cases when the borrower has no
established credit score.
The Enterprises' respective performance reports demonstrate their
efforts to ensure all communities have greater access to sustainable
rental and homeownership opportunities and better preparedness for
obtaining a mortgage loan, all while fulfilling their statutory
missions to promote affordable housing, serve the public interest, and
ensure safety and soundness. Ultimately, FHFA expects that Enterprise
changes implemented as part of the inaugural Equitable Housing Finance
Plans will have long-standing impacts, even as the Enterprises proceed
to devise new objectives to advance sustainable housing opportunities
and address a new set of barriers impacting the spectrum of underserved
communities for the 2025-2027 Equitable Housing Finance Plans.
Based on FHFA's experience in overseeing the activities undertaken
by the Enterprises pursuant to their 2022-2024 Equitable Housing
Finance Plans and the public reporting provided by the Enterprises,
FHFA finds that the Enterprises' activities and the EHFP program have
helped the Enterprises meet their statutory purposes under the
authorizing statutes and helped FHFA fulfill its statutory duties. FHFA
finds these activities have assisted the Enterprises in fulfilling
their mission to provide stability to the secondary market for
residential mortgages; provide ongoing assistance to the secondary
market for residential mortgages (including activities related to
mortgages on housing for low- and moderate-income families) by
increasing the liquidity of mortgage investments and improving
distribution of investment capital available for residential mortgage
financing; and promote access to mortgage credit throughout the United
States.\81\ FHFA finds that establishing the Equitable Housing Finance
Plan program and overseeing the Enterprises' performance has assisted
FHFA in fulfilling its duties to ensure the purposes of the Safety and
Soundness Act, the authorizing statutes, and other applicable laws
(including the Fair Housing Act, the Equal Credit Opportunity Act, and
Section 5 of the Federal Trade Commission Act (FTC Act)) are carried
out.\82\
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\81\ 12 U.S.C. 1451 (note) and 1716.
\82\ 12 U.S.C. 4511(b) and 4513(a)(1)(B)(v).
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[[Page 42775]]
B. Overview of the Proposed Rule
FHFA Fair Lending Oversight of the Regulated Entities. The proposed
rule included regulatory codification of many of FHFA's existing fair
lending oversight functions with respect to the regulated entities,
including conducting supervisory examinations, issuing examination
findings, requiring regular and special reporting and data ,\83\ and
taking enforcement actions. The proposed rule also included
codification of FHFA's oversight of potential unfair or deceptive acts
or practices (UDAP) by the regulated entities and requirements for the
regulated entities to file certifications of compliance with fair
lending, fair housing, and UDAP laws with regular reports. The proposed
rule also articulated more precise standards related to fair housing,
fair lending, and UDAP and principles of equitable housing for
regulated entity boards of directors.
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\83\ See https://www.fhfa.gov/SupervisionRegulation/LegalDocuments/Pages/Orders.aspx.
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Enterprise Equitable Housing Finance Plans. The proposed rule
included regulatory codification of FHFA's current requirements for the
Enterprises' Equitable Housing Finance Plans along with establishment
of additional public disclosure and reporting requirements and expanded
program requirements. The proposed rule did not propose to codify these
standards for the Banks but asked commenters how equitable housing
finance should be addressed for the Banks.
Enterprise Data Collection and Reporting to FHFA. The proposed rule
included regulatory codification for the Enterprises to collect,
maintain, and report data on language preference, homeownership
education, and housing counseling for applicants and borrowers. This
regulatory codification is consistent with FHFA policy announced in May
2022 for mandatory use of the Supplemental Consumer Information
Form.\84\
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\84\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
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II. Discussion of Comments and Agency Response
A. Overview of Comments Received
A total of 121 public comments were posted to the public docket for
the proposed rule. The comments submitted include comments from members
of the public, trade associations, industry participants, FHFA
regulated entities, consumer advocacy organizations, research
organizations, think tanks, and others. Several comment letters were
signed by coalitions of organizations. Several comments primarily
pertained to matters outside the scope of the rulemaking, such as
complaints about conditions at particular multifamily properties,
comments regarding Enterprise guarantee fees, or proposals for future
language access policies. Four of the posted comments are meeting
summaries from FHFA meetings with Fannie Mae, Freddie Mac, Ceres, and
the National Fair Housing Alliance that were documented and posted in
accordance with FHFA's Policy on Communications with Outside Parties in
Connection with FHFA Rulemakings.\85\ Members of Congress submitted a
letter to FHFA that FHFA posted to the public docket and treated as a
comment letter on the rule in accordance with the Members' wishes.
Comments received and FHFA's responses are summarized by topic below.
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\85\ Policy on Communications with Outside Parties in Connection
with FHFA Rulemakings (March 5, 2019), available at https://www.fhfa.gov/AboutUs/Policies/Documents/Ex-Parte-Communications-Public-Policy_3-5-19.pdf.
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B. Unfair or Deceptive Acts or Practices
FHFA proposed to codify in regulation the regulated entities'
existing obligations to comply with the FTC Act's prohibition on
UDAP.\86\ FHFA received ten comments on this proposed section from the
regulated entities, consumer and civil rights advocates, and industry
participants.
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\86\ 15 U.S.C. 45(a)(1).
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Comments from regulated entities requested additional guidance from
FHFA on UDAP compliance. FHFA expects to address these requests by
issuing additional advisory guidance that will provide further clarity
on FHFA's supervisory expectations, as other agencies have done for the
entities they regulate.\87\ Consumer advocate commenters supported the
proposed requirement to codify UDAP compliance and asserted it was
consistent with FHFA's authority and the oversight of financial
institutions by other Federal financial regulators.
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\87\ See Federal Reserve et. al., Interagency Guidance Regarding
Unfair or Deceptive Credit Practices (Aug. 22, 2014), available at
https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices/interagency-guidance-regarding-unfair-deceptive-credit-practices; Consumer Financial
Protection Bureau, Unfair, Deceptive, or Abusive Acts or Practices
(UDAAPs) examination procedures (Oct. 1, 2012), available at https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Board of Governors of the Federal Reserve System &
Federal Deposit Insurance Corporation, Unfair or Deceptive Acts or
Practices by State-Chartered Banks (March 11, 2004), available at
https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf; see also Federal Deposit Insurance Corporation,
Inactive Financial Institution Letters: Guidance on Unfair or
Deceptive Acts or Practices (May 30, 2002), available at https://www.fdic.gov/news/inactive-financial-institution-letters/2002/fil0257.html.
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Industry commenters challenged codification of FHFA's oversight of
the regulated entities' compliance with UDAP, arguing that UDAP is
distinct from fair lending and fair housing, and exceeds congressional
intent for FHFA's authority. Commenters also raised concerns that
codification of UDAP compliance oversight may result in unintentional
consequences for primary mortgage market lenders and asserted that
codifying UDAP compliance in regulation was legally unnecessary. One
commenter similarly contended that because the regulated entities do
not interact with consumers in the same way as other lenders subject to
UDAP, UDAP compliance requirements for the regulated entities were
inappropriate.
FHFA considered these comments and determined that the proposed
provisions are necessary to carry out its statutory duties and purposes
and the benefits of codifying FHFA's oversight of regulated entity UDAP
compliance in regulation otherwise outweigh commenters' concerns. The
broad language of Section 5 of the FTC Act prohibits ``unfair or
deceptive acts or practices in or affecting commerce,'' which would
encompass activities of FHFA's regulated entities.\88\ The Safety and
Soundness Act charges FHFA with overseeing its regulated entities'
compliance not only with the purposes of the Safety and Soundness Act
and the authorizing statutes, but also with ``any other applicable
law,'' \89\ and to engage in enforcement for noncompliance with
law.\90\
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\88\ 15 U.S.C. 45(a)(1).
\89\ 12 U.S.C. 4511(b)(2).
\90\ 12 U.S.C. 4511(b)(2), 4526(a), 4513(a)(1)(B)(v), and 4631.
FHFA's cease-and-desist authority is similar to Section 8 of the
Federal Deposit Insurance Act under which the FDIC (for example)
enforces unfair or deceptive acts or practices. See also Faiella v.
Green Tree Servicing, LLC, No. 16-cv-088-JD, 2017 WL 589096, *7
(D.N.H. Sept. 14, 2017) (``These statutory grants of power can
reasonably be construed to grant FHFA regulatory authority over
Fannie Mae's mortgage and foreclosure practices and any unfair or
deceptive practices arising from them.'').
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FHFA acknowledges that UDAP is distinct from fair lending and fair
housing. In the proposed rule, FHFA distinguished between the two by
separating UDAP specific language from fair lending specific language
to clarify that FHFA does not view UDAP compliance and fair lending
compliance as identical.\91\ Furthermore, FHFA
[[Page 42776]]
believes that both frameworks have related goals of consumer protection
and fair dealing in the mortgage market, and notes that other financial
regulators treat both as related consumer protection standards. Thus,
FHFA believes this final rule is an appropriate vehicle for affirming
UDAP compliance obligations \92\ for the regulated entities.\93\
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\91\ See 88 FR 25293, 25307-08 (Apr. 26, 2023).
\92\ FHFA is codifying its authority as a primary regulator to
oversee the regulated entities compliance with existing obligations,
including UDAP. See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601 (FHA); 15
U.S.C. 1691 (ECOA); 12 U.S.C. 4517 (stating that ``[FHFA] examiners
shall have the same authority . . . applicable to examiners employed
by the Federal Reserve banks'').
\93\ See 15 U.S.C. 45(n) (UDAP); 42 U.S.C. 3601 (FHA); 15 U.S.C.
1691 (ECOA); 12 U.S.C. 4513(a)(1)(B)(v) (stating that a principal
duty of the FHFA Director is to ensure that ``the activities of each
regulated entity and the manner in which such regulated entity is
operated are consistent with the public interest.'').
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FHFA does not expect the final rule will impact primary market
lenders, as they are already subject to UDAP compliance requirements
from the other Federal financial regulators, including the Consumer
Financial Protection Bureau, and the Federal Trade Commission.\94\ This
final rule does not apply to primary market lenders and FHFA's
enforcement and supervision would be limited to its own regulated
entities.
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\94\ See, e.g., Consumer Financial Protection Bureau, Unfair,
Deceptive, or Abusive Acts or Practices (UDAAPs) examination
procedures (Oct. 1, 2012), available at https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Federal Trade Commission, Policy Statement on
Unfairness (Dec. 17, 1980), available at: https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness; Federal Trade
Commission, Policy Statement on Deception (Oct. 14, 1983), available
at https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf; Office of the Comptroller of the
Currency, Unfair or Deceptive Acts or Practices and Unfair,
Deceptive, or Abusive Acts or Practices (June 2020), available at
https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/unfair-deceptive-act/pub-ch-udap-udaap.pdf; National Credit Union Administration, Unfair or Deceptive
Credit Practices (August 2014), available at https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices; Board of Governors of the Federal
Reserve System & Federal Deposit Insurance Corporation, Unfair or
Deceptive Acts or Practices by State-Chartered Banks (March 11,
2004), available at https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf.
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Codification of the Enterprises' and the Banks' existing UDAP
compliance obligations would be consistent with the broad nature of
Section 5 of the FTC Act, the actions of the prudential regulators for
their regulated entities, and FHFA's supervisory responsibilities.\95\
For example, such compliance would support FHFA's principal duty to
ensure that the regulated entities manage risks and foster fair,
efficient, and competitive housing finance markets. Indeed, one of the
core purposes served by UDAP prohibitions is to correct actions that
impede efficient and competitive marketplaces, such as those that
``unreasonably create[ ] or take[ ] advantage of an obstacle to the
free exercise of consumer decision-making.'' \96\ Given the strong
statutory support for fair lending oversight, FHFA's concurrent
oversight of UDAPs in connection with fair lending oversight would
further the efficient supervision and examination of the regulated
entities. Ensuring UDAP compliance can also reasonably be understood to
be part of FHFA's duty to ensure that the regulated entities'
activities and operations are consistent with the ``public interest.''
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\95\ See, e.g., Consumer Financial Protection Bureau, Unfair,
Deceptive, or Abusive Acts or Practices (UDAAPs) examination
procedures (Oct. 1, 2012), available at: https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/; Federal Trade Commission, Policy Statement on
Unfairness (Dec. 17, 1980), available at https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness; Federal Trade
Commission, Policy Statement on Deception (Oct. 14, 1983), available
at: https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf; Office of the Comptroller of the
Currency, Unfair or Deceptive Acts or Practices and Unfair,
Deceptive, or Abusive Acts or Practices (June 2020), available at
https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/unfair-deceptive-act/pub-ch-udap-udaap.pdf; National Credit Union Administration, Unfair or Deceptive
Credit Practices (August 2014), available at https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/unfair-or-deceptive-credit-practices; Board of Governors of the Federal
Reserve System & Federal Deposit Insurance Corporation, Unfair or
Deceptive Acts or Practices by State-Chartered Banks (March 11,
2004), available at https://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040311/attachment.pdf.
\96\ Federal Trade Commission, ``Policy Statement on
Unfairness'' (Dec. 17, 1980), available at https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness.
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Furthermore, FHFA's regulated entities have significant impacts on
consumers. The Enterprises maintain underwriting models and other
automated systems and lending and servicing standards that have
substantial potential to affect consumers and the housing market. There
are certain circumstances involving mortgage servicing and disposition
of Real Estate Owned (REO) properties where FHFA's regulated entities
or their agents interact with consumers. The regulated entities also
provide consumer education and outreach activities to borrowers and
applicants. Additionally, UDAP is not limited to consumers \97\ and the
Enterprises and Banks have a duty to ensure that their dealings with
other parties protected by UDAP standards are compliant and that their
standards that affect primary market lenders are consistent with UDAP.
FHFA plans to give due consideration to any effects on primary market
participants in the supervision and regulation of regulated entity UDAP
compliance, just as it does in all aspects of its work, and to
coordinate with other regulators as appropriate. FHFA agrees that it is
not necessary for FHFA to issue a rule to supervise the regulated
entities for UDAP compliance.\98\ However, given that FHFA had not
previously supervised and enforced UDAP standards, FHFA believes that
it was valuable to provide notice and opportunity for comment to both
the regulated entities and the public. Accordingly, FHFA is adopting
Sec. 1293.11(b) of the final rule on regulated entity UDAP compliance
with no changes from the proposed rule.
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\97\ See Federal Trade Commission v. IFC Credit Corp., 543 F.
Supp. 2d 925, 941 (N.D. Ill. 2008).
\98\ See Faiella v. Green Tree Servicing, LLC, No. 16-cv-088-JD,
2017 WL 589096, *7 (D.N.H. Sept. 14, 2017) (``These statutory grants
of power can reasonably be construed to grant FHFA regulatory
authority over Fannie Mae's mortgage and foreclosure practices and
any unfair or deceptive practices arising from them.'').
---------------------------------------------------------------------------
C. Board Standards and Responsibilities
FHFA proposed to require the board of directors of a regulated
entity to direct the entity's operations in conformity with fair
lending, fair housing, and UDAP laws. FHFA received two comments from
the Enterprises regarding the responsibilities of boards of directors.
One comment raised concerns that requiring boards of directors to
direct the operations of a regulated entity consistent with fair
housing, fair lending, and UDAP authorities is duplicative of existing
compliance duties and places fair lending above other compliance
obligations.
FHFA believes that the proposed language clarifies rather than
duplicates existing compliance duties. The regulated entities are
currently required to comply with fair housing, fair lending, and UDAP
laws,\99\ and the regulated entities' boards of directors are required
to oversee compliance
[[Page 42777]]
risks.\100\ The proposed language clarified that the board of directors
must consider fair lending, fair housing, and UDAP compliance in its
oversight of the regulated entity. The proposed section referenced 12
CFR 1239.4(b)(4), which sets out the duties of the regulated entities'
boards of directors. Section 1239.4(b)(4) states that each director on
the board of a regulated entity has a duty to ``[d]irect the operations
of the regulated entity in conformity with the requirements set forth
in the authorizing statutes, the Safety and Soundness Act, and this
chapter[.]'' The proposed language referenced the general board
responsibilities laid out in Sec. 1239.4(b)(4) and makes clear that
that responsibility includes directing the regulated entity's behavior
in compliance with fair lending, fair housing, and UDAP laws in
addition to compliance with the Safety and Soundness Act and other
authorizing statutes such as the Enterprises' charter acts, not in lieu
of compliance with other authorities.\101\
---------------------------------------------------------------------------
\99\ See FHFA Advisory Bulletin AB 2021-04: Enterprise Fair
Lending and Fair Housing Compliance (Dec. 20, 2021), available at
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/Enterprise-Fair-Lending-and-Fair-Housing-Compliance.aspx.
\100\ See 12 CFR part 1236, Appendix: Prudential Management
Standards & Operations Standards 8, Overall Risk Management
Processes; see also 12 CFR 1239.4, Duties and responsibilities of
directors; and 12 CFR 1239.12, Compliance Program.
\101\ See 12 CFR 1239.4.(b)(4).
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Furthermore, supervisory rating systems routinely consider board
engagement in entities' compliance management programs and dedication
to compliance management in rating an entity. For example, the Federal
Financial Institutions Examination Council (FFIEC) Uniform Interagency
Consumer Compliance Rating System measures entities based on their
board oversight of and commitment to the compliance management
system.\102\
---------------------------------------------------------------------------
\102\ FFIEC Uniform Interagency Consumer Compliance Rating
System, at 21, available at https://www.ffiec.gov/press/PDF/FFIEC_CCR_SystemFR_Notice.pdf.
---------------------------------------------------------------------------
One commenter objected to the use of ``directs'' as the board of
directors' responsibility, arguing that a board of directors actually
``oversees'' the operations of an entity. Section 1239.4(b)(4) uses the
term ``direct'' in regard to the board of directors' oversight
responsibility.\103\ In the preamble of the final rule promulgating
Sec. 1239.4(b)(4), FHFA responded to a comment asking whether
``directs'' was the appropriate language for a board's
responsibilities.\104\ FHFA explained that the language had originated
in regulations promulgated by FHFA's predecessor agencies, the Federal
Housing Finance Board and the Office of Federal Housing Enterprise
Oversight.\105\ After analysis of state laws governing the Enterprises'
corporate responsibility duties, FHFA revised the proposed language to
read that management of the entity should be ``by or under the
direction of'' of the board.\106\ FHFA expects boards of directors to
direct management consideration of whether and how much potential
decisions heighten or mitigate fair lending, fair housing, and UDAP
risk, as appropriate, prior to making decisions. After consideration,
FHFA believes that the use of ``direct'' in the proposed rule is
consistent with the language in Sec. 1239.4(b)(4) of this chapter as
it appropriately reflects a board's responsibilities and has retained
it in this final rule.
---------------------------------------------------------------------------
\103\ See 12 CFR 1239.4(b)(4).
\104\ 80 FR 72327, 723330 (Nov. 19, 2015).
\105\ Id.
\106\ Id. at 723331.
---------------------------------------------------------------------------
Finally, while not raised by any commenters, FHFA is aware of the
holding in Meyer v. Holley that directors of a board are generally not
vicariously liable for the conduct of their employees or agents under
the Fair Housing Act, even if the corporation itself is held
vicariously liable.\107\ FHFA believes that this final rule is
consistent with that holding.
---------------------------------------------------------------------------
\107\ Meyer v. Holley, 537 U.S. 280, 290-91 (2003).
---------------------------------------------------------------------------
Accordingly, FHFA is adopting Sec. 1293.11 of the final rule with
no changes from the proposed rule.
D. Certification of Compliance
FHFA proposed to require the regulated entities to certify
compliance with fair lending, fair housing, and UDAP laws with each
regular report concerning fair housing and fair lending submitted. FHFA
received five comments regarding the proposal to require certifications
of compliance.
Comments from the regulated entities uniformly opposed the proposed
requirement for certifications of compliance with fair housing, fair
lending, and UDAP laws, stating it would be too burdensome and could
create liability. One commenter suggested that such a certification
would place fair lending and fair housing above other compliance
concerns. A second commenter suggested that such a certification would
require ``absolute compliance'' and suggested instead that FHFA require
a certification of accuracy or certification of a ``system reasonably
assured to ensure compliance.'' A third commenter opposed the proposed
requirement on the basis that it was too broad and recommended altering
the language to certify compliance ``to the best of one's knowledge and
belief following reasonable or due inquiry of the certifying
official.''
One civil rights advocate commenter observed that FHFA has
authority for requiring certifications and proposed expanding the
language to apply to special reports and regular reports, and to cite
Section 5 of the FTC Act directly. One industry commenter opposed
requiring certification of compliance with UDAP, stating that inclusion
of UDAP was inappropriate and could have unintended consequences for
primary market participants. FHFA understood this comment to be more
directly related to proposed Sec. 1293.11(b) and responded to it in
Section II.B. above.
FHFA does not intend to create liability with this certification,
but instead to incentivize consideration of fair lending compliance
throughout decision-making processes. FHFA's stated intention not to
create liability is consistent with proposed Sec. 1293.1(c), which
further states that ``[n]othing in this part creates a private right of
action.'' FHFA also believes that a requirement to certify compliance
would be consistent with the Enterprises' own practices in
certifications required of seller/servicers \108\ and HUD's practices
in certifications required for grantees.\109\ After consideration of
the various alternatives proposed by the commenters, FHFA believes that
qualifying the certification ``to the best of the certifier's knowledge
and belief following reasonable or due inquiry of the certifying
official'' adequately incentivizes compliance management efforts
without creating an undue burden of certifying absolute compliance.
---------------------------------------------------------------------------
\108\ See Fannie Mae, Mortgage Selling and Servicer Contract:
Instructions to the Lender, at 6 (July 2005), available at https://singlefamily.fanniemae.com/media/35796/display; Freddie Mac, Seller/
Service Guide Section 1301.2: Compliance with applicable law,
available at https://guide.freddiemac.com/app/guide/section/1301.2.
\109\ See U.S. Department of Housing and Urban Development, Form
424-B: Applicant and Recipient Assurances and Certifications (Jan.
27, 2023), available at https://www.hud.gov/sites/dfiles/OCHCO/documents/424-B.pdf.
---------------------------------------------------------------------------
Accordingly, FHFA has revised Sec. 1293.12(b) of the final rule by
adding ``to the best of the certifier's knowledge and belief following
reasonable or due inquiry of the certifying official'' to the
certification of compliance. FHFA intends this revision to make clear
that identification of a fair lending compliance risk following the
completion of the certification does not on its own create liability
for the regulated entity.
[[Page 42778]]
E. Mission-Specific Board Standards and Responsibilities
FHFA proposed to require an Enterprise's board of directors to
consider mission goals, including the Equitable Housing Finance Plans,
Duty to Serve Plans, and affordable housing goals, alongside other
mission-related obligations in the board's oversight of the Enterprise
and its business activities. FHFA received no comments on this proposal
except for a comment requesting that an effective date for this section
be ``in accordance with the APA.'' The effective date of this rule is
60 days from the date of its publication in the Federal Register, which
is in accordance with the Administrative Procedure Act (APA).
Accordingly, FHFA is adopting Sec. 1293.26 of the final rule with no
changes from the proposed rule.
F. Determination Not To Designate Enterprise Equitable Housing Finance
Planning as a Prudential Management and Operations Standard
FHFA proposed the designation of the Equitable Housing Finance
Planning subpart (proposed subpart C) as a Prudential Management and
Operations Standard (``PMOS'' or ``prudential standard''). While some
commenters supported a PMOS designation, most commenters did not
support it, and suggesting it was an inappropriate use of PMOS
authority. As discussed in the proposed rule preamble, FHFA proposed
the PMOS designation because the Enterprise equitable housing finance
planning framework is consistent with the Enterprises' authorizing
statute obligations and FHFA's statutory charges related to ensuring
the regulated entities operate consistent with the public interest and
that FHFA furthers fair housing in its oversight of the regulated
entities.\110\ FHFA noted that the PMOS designation would provide FHFA
access to section 4513b corrective measures, if necessary, to address
deficiencies in equitable housing finance planning or implementation by
an Enterprise.\111\ FHFA has previously designated discretionary rules
undertaken as part of its general rulemaking authority that are
consistent with its authority and the mission of the Enterprises as
PMOS.\112\
---------------------------------------------------------------------------
\110\ 88 FR 25293, 25299 (Apr. 26, 2023).
\111\ Id.
\112\ See, e.g., 12 CFR 1242.1(b).
---------------------------------------------------------------------------
In response to comments and after reviewing existing PMOS
guidelines and other FHFA supervisory and enforcement authorities, FHFA
has determined not to designate this final rule as a Prudential
Management and Operations Standard at this time. FHFA believes that
this decision is responsive to concerns expressed by commenters, and
that other existing supervisory and enforcement authorities should
provide appropriate means to address any deficiencies by the
Enterprises.
FHFA does disagree with the limited view of PMOS authority
expressed by certain commenters, and notes that the Safety and
Soundness Act is not limited to prudential safety and soundness
standards.\113\ The existing Prudential Management and Operations
Standards established for the Enterprises cover a broad range of
situations and acknowledge the Enterprises' mission to promote access
to mortgage credit throughout the Nation.\114\
---------------------------------------------------------------------------
\113\ See 12 U.S.C. 4513b(a).
\114\ See, e.g., 12 CFR part 1236, Appendix--Prudential
Management and Operations Standards, Responsibilities of the Board
of Directors and Senior Management, paragraph 10; Standard 4,
paragraph 4; Standard 6, paragraph 4; Standard 7 (references to
mission in paragraphs 2, 3, 4); Standard 8, paragraph 2.
---------------------------------------------------------------------------
Moreover, the existing Prudential Management and Operations
Standards contain several elements that could be relevant to components
of equitable housing finance planning. For example, the prudential
standards regarding adopting and implementing business strategies,
policies, and procedures for boards and senior management may be
relevant if FHFA determines the Enterprise failed to provide adequate
resources or to establish appropriate controls to effectively execute
business strategies, policies, or procedures related to the equitable
housing finance planning requirements.\115\ The prudential standards
regarding internal controls and information systems may be relevant if
FHFA determines an Enterprise failed to monitor the overall
effectiveness of its internal controls and key risks on an ongoing
basis and ensure that business units and internal and external audit
teams conduct periodic evaluations related to the equitable housing
finance planning requirements.\116\ The prudential standards for
independence and adequacy of internal audit systems may also be
relevant if FHFA determines an Enterprise failed to conduct risk-based
audits related to equitable housing finance planning, or an
Enterprise's internal audit department failed to determine whether
violations, findings, weaknesses, and other issues reported by FHFA
with regard to the equitable housing finance planning have been
promptly addressed.\117\ Lastly, the prudential standard for the board
and senior management to ensure an Enterprise's risk profile is aligned
with its mission objectives and the prudential standard related to
overall risk management and compliance with laws, regulations and
supervisory guidance may be relevant if FHFA determined an Enterprise's
equitable housing finance planning efforts did not reflect adherence to
the authorizing statutes, the Fair Housing Act, the Equal Credit
Opportunity Act, the requirements of the final rule, and other relevant
guidance and regulations, and posed reputational or other material
risks to the Enterprise.\118\ Although FHFA is not designating any part
of the final rule as a new PMOS, an Enterprise's failure to properly
engage in equitable housing finance planning could result in a
determination that it has failed to meet one or more of the existing
PMOS, and must take corrective action.
---------------------------------------------------------------------------
\115\ See, e.g., 12 CFR part 1236, Appendix--Prudential
Management and Operations Standards, Responsibilities of the Board
of Directors and Senior Management, paragraphs 1, 5, and 6.
\116\ See, e.g., 12 U.S.C. 4513b(a)(1), 12 CFR part 1236,
Appendix--Prudential Management and Operations Standards, Standard
1--Internal Controls and Information Systems, paragraph 14.
\117\ See 12 U.S.C. 4513b(a)(2), 12 CFR part 1236, Appendix--
Prudential Management and Operations Standards, Standard 2--
Independence and Adequacy of Internal Audit Systems.
\118\ See 12 U.S.C. 4513b(a)(8), 12 CFR part 1236, Appendix--
Prudential Management and Operations Standards, Responsibilities of
the Board of Directors and Senior Management, paragraph 10, and
Standard 8--Overall Risk Management Processes, paragraph 12.
---------------------------------------------------------------------------
FHFA continues to recognize the Enterprises' duty to overcome
barriers to sustainable housing opportunities faced by one or more
underserved communities through objectives, meaningful actions, and
measurable goals, as outlined in the final rule, as an important
component of their public interest mission and Charter Act obligation
to promote access to mortgage credit throughout the Nation. In addition
to the existing PMOS discussed above which may be relevant to ensure
compliance by the Enterprises, the final rule provides that FHFA may
enforce compliance in any manner and through any means within its
authority, including but not limited to adverse examination findings or
through supervision or enforcement under 12 U.S.C. 4511(b), 4513b,
4631, or 4636. Designation of the equitable housing finance planning
requirements as a PMOS remains an option for future rulemaking based on
experience FHFA gains in supervising and enforcing compliance with the
final rule.
G. Determination Not To Define ``Equity''
FHFA asked commenters on the proposed rule whether ``equity''
should
[[Page 42779]]
be defined in the rule. Most commenters supported FHFA defining
``equity'' in the regulatory text to prevent confusion and ensure the
Enterprises take actions that promote the Agency's definition of
``equity.'' Two commenters argued that imposing an ``equity''
definition and requirements on the regulated entities is outside FHFA's
statutory mission.
FHFA recognizes that a definition of ``equity'' has been explicitly
provided in HUD's most recent proposed Affirmatively Furthering Fair
Housing (AFFH) rule,\119\ which would require equity plans from HUD
program participants and which FHFA reviewed in developing the proposed
and final rules given that both equity plans are grounded in the
statutory requirement to affirmatively further fair housing.\120\
According to a 2021 Presidential Memorandum, the AFFH mandate ``. . .
is not only a mandate to refrain from discrimination but a mandate to
take actions that undo historic patterns of segregation and other types
of discrimination and that afford access to long-denied
opportunities.'' \121\ Executive Order 13985 defined ``equity'' for
purposes of that order as ``the consistent and systematic fair, just,
and impartial treatment of all individuals, including individuals who
belong to underserved communities that have been denied such
treatment.'' \122\ The definition provided in HUD's proposed rule
shares many similarities with the Executive Order 13985, but is not
identical.
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\119\ 88 FR 8516, 8558 (Feb. 9, 2023).
\120\ See 42 U.S.C. 3608(d), 3608(e)(5). See also Executive
Order 12892, Leadership and Coordination of Fair Housing in Federal
Programs: Affirmatively Furthering Fair Housing, 59 FR 2939 (Jan.
20, 1994).
\121\ See Memorandum on Redressing Our Nation's and the Federal
Government's History of Discriminatory Housing Practices and
Policies (Jan. 26, 2021), available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/26/memorandum-on-redressing-our-nations-and-the-federal-governments-history-of-discriminatory-housing-practices-and-policies/. As acknowledged by
the memorandum: ``[t]hroughout much of the 20th century, the Federal
Government systematically supported discrimination and exclusion in
housing and mortgage lending. While many of the Federal Government's
housing policies and programs expanded homeownership across the
country, many knowingly excluded Black people and other persons of
color, and promoted and reinforced housing segregation. Federal
policies contributed to mortgage redlining and lending
discrimination against persons of color.''
\122\ See Executive Order 13985, Advancing Racial Equity and
Support for Underserved Communities Through the Federal Government,
86 FR 7009 (Jan. 25, 2021).
---------------------------------------------------------------------------
The proposed rule did not specifically define ``equity,'' but did
include defined terms that would form the basis of the rule's
requirements, informed by the concept of equity as it has been
interpreted under the Fair Housing Act's affirmatively furthering
statutory provision, the proposed AFFH rule, Presidential Memoranda,
and Executive Orders noted above, as well as incorporating concepts to
ensure consistency with FHFA's public interest duty and the
Enterprises' Charter Act obligation to promote access to mortgage
credit throughout the Nation. The proposed rule provides a concrete
framework through which the Enterprises may work to promote sustainable
housing opportunities for all homebuyers, homeowners, and tenants by
taking meaningful actions under an ``equitable housing finance plan''
to overcome ``barriers'' faced by ``underserved communities''
throughout the country.\123\ For example, the proposed rule's
``underserved community'' definition includes groups with a shared
characteristic or geographic area that previously had or currently have
difficulty accessing housing opportunities compared with groups of
people without the shared characteristic or other areas.\124\ The
proposed rule defined ``barrier'' to refer to Enterprise actions,
products, or policies, or aspects of the housing market that can
reasonably be influenced by the Enterprise's actions, products, or
policies, that contribute to inequitable housing opportunities and
outcomes for underserved communities.\125\ The ``equitable housing
finance plan'' requires an Enterprise to identify barriers to
sustainable housing opportunities faced by one or more underserved
communities, and subsequently, establish objectives that demonstrate a
focus to combat those identified barriers through the EHFP plan and the
outcomes sought.\126\
---------------------------------------------------------------------------
\123\ See 12 CFR 1293.2.
\124\ Id.
\125\ Id.
\126\ See 12 CFR 1293.2, 1293.22.
---------------------------------------------------------------------------
FHFA believes the Equitable Housing Finance Planning program
standards and provided definitions of ``underserved community,''
``barrier,'' and ``equitable housing finance plan'' provide a clear
framework for the Enterprises' work to advance the availability of
mortgage credit and housing for all individuals. FHFA believes it is
important to recognize there are many underserved communities
throughout the nation, and it is important to understand each
community's unique barriers, starting points, and access to
opportunities that have been shaped by history and the present day.
FHFA believes the proposed rule's approach provides a flexible and
adaptable framework for addressing the needs of underserved communities
that exist today, or that may arise in the future. Accordingly,
consistent with the proposed rule, the final rule does not include a
definition of ``equity.'' FHFA may consider issuing additional guidance
or engaging in future rulemaking on this topic based on additional
experience with the program and engagement with stakeholders.
H. Resource Disclosures
FHFA proposed a requirement in Sec. 1293.23(b)(4) for the
Enterprises to submit disclosures of resources dedicated to the
Equitable Housing Finance Plans as part of their performance reports.
Commenters who specifically addressed this issue opposed the proposed
requirement. Some commenters expressed concerns about reputational
risks, due to the high potential for subjectivity when different
parties examine the same value. For example, consumer advocates may
posit that the Enterprises' financial expenditures for meaningful
actions are inadequate, while industry commenters may view the same
value as an excessive and unnecessary expenditure. Other commenters
suggested a financial disclosure requirement would be burdensome for
the Enterprises and difficult to calculate accurately, as ``resources''
could be interpreted to include anything from closing cost credits to
administrative costs.
Based on the comments, FHFA considered the requirement in the
proposed rule as well as an alternative limited resource disclosure
requirement and removing the requirement. The limited disclosure
requirement would mandate the Enterprises to publish a summary of cost
savings and benefits delivered to consumers for homeownership programs
or products created pursuant to an Equitable Housing Finance Plan to
support Enterprise accountability and transparency. However, concerns
of subjectivity when interpreting any financial disclosures and whether
financial disclosures are sufficient or excessive would still remain.
Further, it could be difficult for the Enterprises to determine what
monetary threshold constitutes sufficient resource dedication, and what
constitutes a resource for Plan purposes, as some resources are not
easily quantifiable or may be issued by a third party because of
Enterprise efforts. Accordingly, for these reasons, FHFA has not
included this alternative more limited financial disclosure requirement
in the final rule.
FHFA finds the comments on the proposed financial disclosures
requirement persuasive and has
[[Page 42780]]
determined not to include that requirement in the final rule at this
time. FHFA agrees with commenters that it can be difficult to fully and
uniformly account for resource expenditures. In contrast to federal
grant-making, the Enterprises provide support to underserved
communities through the Equitable Housing Finance Plans through a
variety of mechanisms. These mechanisms include both direct spending
and indirect support, including but not limited to closing cost
credits, special pricing, and policy enhancements. The Enterprises'
indirect support can be difficult to quantify and compare across
projects. Further, ``typical'' or customary costs may differ
significantly across markets, resulting in aggregated data that does
not provide meaningful insights and transparency. For these reasons,
FHFA does not believe at this time that the potential burdens of the
proposed rule provision or the alternative more limited disclosure
requirement discussed above would be outweighed by the usefulness of
information provided.
FHFA recognizes that although financial disclosures are one way to
monitor program effectiveness and prioritization of housing equity,
other performance metrics may better illustrate the impact of the
Plans, including accept rate gaps, home loan acquisitions, and other
performance metrics that are included in the Enterprises' performance
reports.\127\ Enterprise accountability can also be achieved through
FHFA's Enterprise Fair Lending and Fair Housing Rating System (Rating
System).\128\ This Rating System will directly evaluate Enterprise
impact, performance, public engagement, and overall commitment to
addressing barriers to sustainable housing opportunities for
underserved communities as part of FHFA's confidential supervisory
ratings. Additionally, as discussed below, FHFA is also adopting a
requirement in Sec. 1293.27 of the final rule for a public narrative
assessment of the Plans that will also contribute to Enterprise
accountability and public transparency. FHFA may consider implementing
a financial disclosure requirement in the future based on additional
experience with the program and engagement with stakeholders.
---------------------------------------------------------------------------
\127\ See 12 CFR 1293.23.
\128\ See Advisory Bulletin AB 2023-05: Enterprise Fair Lending
and Fair Housing Rating System (September 27, 2023), available at
https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB_2023-05_Enterprise-Fair-Lending-and-Fair-Housing-Rating-System.aspx.
---------------------------------------------------------------------------
I. Public Engagement
Proposed Sec. 1293.24 included an annual public engagement
requirement for FHFA, and a requirement for the Enterprises to consult
with the public, including members of underserved communities and
housing market participants, in the development and implementation of
their Equitable Housing Finance Plans and updates, and describe such
consultation in their Plans. The Enterprises' comments on the proposal
requested additional instructions and flexibility for public engagement
and input. Some other commenters were concerned that the absence of
detailed public engagement requirements in the proposed rule could lead
to inadequate public outreach and requested more rigorous requirements.
One commenter recommended mandating the Enterprises provide several
opportunities for input during the year via public meetings in each of
the nine census divisions.
Although FHFA agrees that the Enterprises should provide ongoing
opportunities for public engagement, FHFA does not believe the rule
should state specific requirements for the Enterprises' public
engagement because it may cause the Enterprises to limit public
engagement efforts only to those specified in the rule and may
otherwise inhibit flexibility in how public engagement is achieved.
FHFA also believes mandating Enterprise engagement by census division
is inappropriate at this time, as the census divisions are not
prominently known to the public and may be unduly burdensome for the
Enterprises, due to the additional resources necessary to employ
multiple meetings in the various census divisions across the country,
and subsequently, incorporate the public input in their EHFP reports
each year before the September 30 due date.
Making this provision too prescriptive could have the unintended
consequence of hindering an Enterprise's innovative and flexible ways
of engaging with the public. Due to the specifics of the final rule,
the underserved communities and barriers addressed with meaningful
actions will continuously change, and the program standards must be
flexible enough to allow for that. FHFA expects that the Enterprises
would seek feedback from stakeholder groups about how best to design
their Plans. Affording flexibility regarding public engagement will
allow for more focused and targeted Plans based on specific Enterprise
public outreach efforts, which must be described in the Plan as part of
the public engagement requirement. Accordingly, FHFA has not
implemented any changes to the public engagement requirements in this
final rule. FHFA may provide further guidance on the adequacy of public
engagement in the future based on additional experience with the
program and engagement with stakeholders.
J. Program Evaluation
FHFA asked commenters on the proposed rule whether an evaluation of
the Enterprises' equitable housing performance should be publicly
issued, or whether evaluation metrics should be included in the
Enterprises' public performance reports. Commenters generally supported
FHFA publishing an evaluative narrative to facilitate constructive
public input and increase Enterprise transparency and accountability.
Two commenters suggested the Enterprises should granularly disclose the
success or failure of reports, and provide full reporting on all
Enterprise pilot programs at the local level.
FHFA's Rating System assesses the Enterprises' compliance with fair
lending and fair housing standards and their planning and execution
with respect to Equitable Housing Finance Plans.\129\ One of the four
rating components is equitable housing finance, which measures the
performance of each Enterprise under its Equitable Housing Finance Plan
activities. The Rating System complements other existing FHFA
supervisory rating systems used by FHFA's Division of Bank Regulation,
Division of Enterprise Regulation, and Office of Minority and Women
Inclusion.\130\ FHFA generally prohibits disclosure of non-public
Agency information.\131\ Supervisory ratings are generally confidential
supervisory information and have not historically been publicly
disclosed in order to encourage greater candor, cooperation, and
compliance by the regulated entity. One exception to this general
policy in financial regulation is the disclosure of Community
Reinvestment Act (CRA) ratings.\132\
---------------------------------------------------------------------------
\129\ Id.
\130\ See Advisory Bulletin AB 2012-03: FHFA Examination Rating
System (December 19, 2012), available at https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/AB-2012-03-FHFA-EXAMINATION-RATING-SYSTEM.aspx.
\131\ See 12 CFR part 1214, from 78 FR 39957, 39958 (July 3,
2013).
\132\ See https://www.ffiec.gov/craratings/.
---------------------------------------------------------------------------
As part of evaluating comments on this issue, FHFA considered
disclosing the supervisory ratings, disclosing a narrative assessment
of the equitable housing finance component, and
[[Page 42781]]
developing separate public evaluation metrics. FHFA believes that
maintaining the confidential supervisory nature of the ratings under
the Rating System, including the equitable housing finance component,
is most consistent with agency policy of maintaining confidentiality of
supervisory information. While FHFA considered public evaluation
metrics similar to those provided under the Duty to Serve program,\133\
FHFA believes that implementation of two separate evaluation systems--
one internal to FHFA and one public-facing--to assess the equitable
housing finance program metrics would likely create implementation
challenges for FHFA and the Enterprises. However, FHFA does agree with
the commenters that favored some form of public evaluation and has
added a provision in Sec. 1293.27 of the final rule requiring FHFA to
publish a narrative evaluative assessment of each Enterprise's program
performance. FHFA believes this change will foster greater public
transparency and Enterprise accountability, while reducing the burden
associated with developing separate public evaluation metrics. This
provision requires FHFA, by May 15 of each year, to publish on its
website a narrative assessment evaluating each Enterprise's performance
under its respective Equitable Housing Finance Plans. This requirement
will also provide greater alignment of the Equitable Housing Finance
Program with the CRA, though FHFA acknowledges the CRA examinations
ratings disclosures are more extensive.
---------------------------------------------------------------------------
\133\ See 12 CFR part 1282, subpart C (Duty to Serve).
---------------------------------------------------------------------------
K. Reporting on Bank Voluntary Actions To Address Barriers to
Sustainable Housing Opportunities
FHFA asked commenters on the proposed rule whether the Banks should
be required to comply with the same Equitable Housing Finance Planning
requirements as the Enterprises, including submission of Equitable
Housing Finance Plans. Some commenters suggested that imposing such
requirements on the Banks would be too burdensome and unnecessary,
stating that the Banks' Affordable Housing Programs and Community
Investment Programs already address the needs of underserved
communities.\134\ Several other commenters requested that FHFA ensure
the Banks do more to promote fair and affordable housing by determining
appropriate mechanisms and structures to assess the Banks' equity
efforts. The regulated entities' comments emphasized the differences
between the Enterprises and the Banks, including contrasts in
acquisition volume, market share, and the Banks' issuance of advances
to their members.
---------------------------------------------------------------------------
\134\ See 12 CFR parts 1291, 1292.
---------------------------------------------------------------------------
FHFA believes addressing barriers to sustainable housing
opportunities for underserved communities should be a priority for all
its regulated entities and, after considering comments requesting
appropriate mechanisms for the Banks, FHFA is adopting a requirement in
the final rule for the Banks to report any voluntary meaningful actions
taken to further equity in the past year. FHFA expects to engage in
future guidance and rulemaking specific to the Banks, in response to
and consistent with ``The Federal Home Loan Bank System at 100:
Focusing on the Future'' Report. Although FHFA recognizes the Banks'
activities have less influence on aspects of the housing market in
comparison to the Enterprises' activities, FHFA believes addressing
barriers to sustainable housing opportunities should be a priority for
all regulated entities and is consistent with the public interest and
acknowledges commenters' requests for FHFA to develop appropriate
mechanisms for the Banks. FHFA recognizes that equitable housing
finance planning requires time, effort, and financial and
administrative resources from the Enterprises, which may not be
feasible for the Banks to provide at the same level, considering the
difference in their resources. Therefore, consistent with the proposed
rule, the final rule does not adopt the equitable housing finance
planning requirements for the Banks, but requires instead the reporting
of voluntary meaningful Bank efforts for addressing barriers to
sustainable housing opportunities in new subpart D.
This addition recognizes the importance of equitable housing
finance planning for all regulated entities, while also recognizing the
differences between the Banks and the Enterprises and providing FHFA
and stakeholders additional time and information to further refine any
potential future requirements for the Banks. FHFA has determined that a
delayed effective date for this subpart is appropriate, considering the
differences between the Banks and the Enterprises and that the
Enterprises are conforming to similar requirements already. Subpart D
will be effective on February 15, 2026.
L. Data Collection
The proposed rule included codification, in substantially similar
form, of the existing FHFA policy under which the Enterprises collect
data on (a) housing counseling and homeownership education, and (b) the
language preference of mortgage applicants and borrowers. An Enterprise
requested clarification of the proposed housing counseling data
collection requirement. Commenters on the proposed rule generally
supported codifying the data collection requirements for collecting
language preference and data regarding completion of housing counseling
and homeownership courses, though some commenters did not support the
requirement. Some commenters provided suggestions for future policies
that would support limited English proficient (LEP) communities.
Additionally, the proposed requirement is substantially the same as the
policy announced by FHFA in May 2022 mandating lender use of the
Supplemental Consumer Information Form (SCIF) as part of the
application process for loans that will be sold to the
Enterprises.\135\
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\135\ See FHFA Announces Mandatory Use of the Supplemental
Consumer Information Form (May 3, 2022), available at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Mandatory-Use-of-the-Supplemental-Consumer-Information-Form.aspx.
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FHFA believes that the data collected on language preference,
homeownership education, and housing counseling for applicants and
borrowers will support efforts to promote sustainable housing
opportunities for underserved communities and could underlie elements
of future Equitable Housing Finance Plans. FHFA is adopting the
proposed rule text without change in the final rule and believes that
it should not require any additional resources from the regulated
entities or market participants given the existing policy.
As noted above, an Enterprise requested clarification of the
proposed housing counseling data collection requirement. At this time,
the Enterprises' SCIF instructions require lenders to provide an
opportunity for the borrower to indicate a language preference or that
they would prefer not to respond.\136\ The instructions require
completion of the housing counseling and homeownership education
section if housing counseling or homeownership education is required by
an Enterprise's loan program.\137\ The housing counseling and
homeownership section may also be voluntarily completed by the borrower
even if housing counseling or homeownership
[[Page 42782]]
education was not required by a loan program, and analysis of current
data indicates that voluntary data is being provided in some
circumstances.\138\ FHFA did not intend to change the existing policy
or instructions as part of the proposed rule, which was intended to
codify the existing policy and practice. FHFA believes that the
instructions and current practice comply with the proposed and final
rule text. FHFA appreciates the comments provided on future LEP policy,
but based on the scope of the final rule, is not addressing them in the
final rule.
---------------------------------------------------------------------------
\136\ See Fannie Mae and Freddie Mac, Instructions for
Completing the Supplemental Consumer Information Form (SCIF),
available at https://sf.freddiemac.com/docs/pdf/press-release/july-6-2022-gse-scif-announcement.pdf.
\137\ Id.
\138\ Id.
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M. Authority and Consistency With Law
Some commenters on the proposed rule questioned FHFA's authority to
codify the equitable housing finance plan program in regulation and the
consistency of the proposed rule with the U.S. Constitution and law.
FHFA's rulemaking authority is discussed and set forth throughout both
the proposed rule preamble and the final rule preamble but is
summarized below in response to the concerns raised by these
commenters.
FHFA's Rulemaking Authority. FHFA's authority under the Safety and
Soundness Act includes exercising general regulatory authority to
ensure the purposes of the Safety and Soundness Act, the authorizing
statutes, and other applicable laws are carried out.\139\ FHFA's
authority also includes the authority to exercise incidental powers
that may be necessary or appropriate to fulfill the duties and
responsibilities of the Agency.\140\ In addition, FHFA's authority
includes issuing regulations necessary to carry out the duties of the
Agency and ensure the purposes of the Safety and Soundness Act and the
authorizing statutes are accomplished.\141\
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\139\ 12 U.S.C. 4511(b).
\140\ 12 U.S.C. 4513(a)(2)(B).
\141\ 12 U.S.C. 4526. FHFA also has explicit authority to
require the regulated entities to submit regular and special reports
on a range of topics, 12 U.S.C. 4514.
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This final rule's subject matter is well supported by the core
purposes and duties of the Agency found in the Safety and Soundness
Act, including Congress's finding that the regulated entities have
important public missions,\142\ the duty of the Agency to ensure the
regulated entities operate in the public interest,\143\ and the duty to
ensure the purposes of applicable law (including the Fair Housing Act,
the Equal Credit Opportunity Act, and the FTC Act's prohibition on
unfair or deceptive acts or practices) are carried out,\144\ as well as
the Enterprises' chartered purposes (including promoting access to
mortgage credit throughout the Nation).\145\ FHFA also has an
overarching obligation to affirmatively further fair housing in
exercising these authorities and understanding the public missions set
forth in relevant statutes.\146\ Other parts of the relevant statutes
also make clear the connection that equitable housing finance, fair
housing, and fair lending have to FHFA's statutory authority and duties
and responsibilities. These include the requirement for the Enterprises
to assess and report on aspects of their operations that cause
disparities and actions taken to promote fair lending,\147\ the
requirement for FHFA to obtain data on pricing disparities from the
Enterprises and refer lenders for fair lending purposes,\148\ and the
requirement for the Enterprises to take affirmative steps to assist the
primary market in making housing credit available in areas with
concentrations of low-income and minority families.\149\ Finally, data
collection and reporting requirements \150\ and other mission-related
obligations of FHFA and the Enterprises speak more generally about the
need to promote sustainable housing opportunities.\151\
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\142\ 12 U.S.C. 4501.
\143\ 12 U.S.C. 4513.
\144\ 12 U.S.C. 4511(b).
\145\ 12 U.S.C. 1716(4) and 12 U.S.C. 1451 note (b)(4); see also
12 U.S.C. 1716(3) and 12 U.S.C. 1451 note (b)(3).
\146\ 42 U.S.C. 3608(d); see also 12 U.S.C. 4513(a).
\147\ 12 U.S.C. 1723a(n)(2)(G) and 12 U.S.C. 1456(f)(2)(G).
\148\ 12 U.S.C. 4561(d)(1).
\149\ 12 U.S.C. 4565(b)(3)(A). Some commenters asserted this
language should be interpreted only to authorize actions that target
areas that are both low-income concentrated and minority
concentrated. FHFA does not believe this is a reasonable
interpretation of the statute. Applying the commenters' reading to
the section 4565 as a whole makes clear that it is not a reasonable
reading, as there are numerous categories which are joined by
``and'' which are mutually exclusive or clear from the context that
they are not intended to be joined requirements which must all be
satisfied simultaneously by individual actions. Regardless, the
final rule does not rest solely on this provision.
\150\ 12 U.S.C. 1723a(m)(1) and 12 U.S.C. 1456(e)(1); 12 U.S.C.
4544(b).
\151\ See 12 U.S.C. 4561(a), 4562, and 4563 (Enterprise
affordable housing goals); 12 CFR part 1282, subpart B (housing
goals); 12 U.S.C. 4565 (Enterprise Duty to Serve affordable housing
needs of certain underserved markets); 12 CFR part 1282, subpart C
(Duty to Serve).
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HUD and FHFA's Fair Housing Responsibility. Some commenters
asserted that fair housing and fair lending with respect to the
Enterprises are solely HUD's responsibility, because 12 U.S.C. 4545
directs the Secretary of HUD to take certain actions related to fair
housing and the Enterprises.\152\ This provision does not mean that
FHFA is not responsible for overseeing fair housing and fair lending
compliance at the Enterprises. In addition to HUD's authority and
FHFA's supervisory authority, FHFA is empowered to initiate enforcement
actions for Enterprise violations of 12 U.S.C. 4545 and HUD's
implementing regulations under the Safety and Soundness Act.\153\ FHFA
has a responsibility to use its authority to further fair housing, and
FHFA's oversight of its regulated entities for fair lending and fair
housing is consistent with that of other Federal financial
regulators.\154\
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\152\ See 12 U.S.C. 4545.
\153\ See 59 FR 18266 (Apr. 15, 1994); 86 FR 36199 (July 9,
2021); HUD-FHFA Memorandum of Understanding Regarding Fair Housing
and Fair Lending Coordination (Aug. 12, 2021), available at https://www.hud.gov/sites/dfiles/PA/documents/FHFA-HUD-MOU_8122021.pdf.
\154\ See 42 U.S.C. 3608(d).
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Equal Protection and Strict Scrutiny. Some commenters asserted that
the rule would be illegal under the Equal Protection Clause. FHFA
disagrees. The final rule sets forth a strategic planning, public
input, and public reporting process for addressing the needs of
underserved communities, which will necessarily vary over time. The
term ``underserved community'' is defined broadly to encompass many
different types of communities, including communities that do not share
any particular race or ethnicity, and the rule does not impose any
requirement to take actions that are racially restricted. Further, the
Plans merely provide public transparency into the Enterprise's
analyses, the barriers experienced by that underserved community, and
actions the Enterprises intends to take to attempt to overcome those
barriers. Any such actions are subject to fair lending and fair housing
laws, including the Equal Credit Opportunity Act and the Fair Housing
Act, which generally prohibit discrimination based on prohibited
characteristics with limited exceptions (which include special purpose
credit programs). This final rule specifies that unlawful actions are
not permitted in several provisions, including Sec. Sec. 1293.1(b),
1293.11(a), (b), 1293.12(b), 1293.22(f)(2), (g), 1293.23(d)(2), and
1293.32(d)(2). Current Equitable Housing Finance Plan reports
demonstrate that actions taken under the current Plans, which identify
Black and Latino communities as underserved communities, benefit
applicants, borrowers, and renters of all races.\155\ To
[[Page 42783]]
the extent that any specific activity undertaken or proposed to be
undertaken by the Enterprises raised concerns of Constitutional or
other legal compliance, FHFA's supervisory and enforcement authority
described in the final rule, combined with the public input and public
reporting processes in the final rule, provide means to address
concerns with specific activities.
---------------------------------------------------------------------------
\155\ See Freddie Mac, 2022 Equitable Housing Finance Plan
Performance Report, available at https://www.freddiemac.com/about/pdf/Freddie-Mac-Equitable-Housing-Finance-Plan-2022-Performance-Report.pdf; Fannie Mae, 2022 Equitable Housing Finance Plan
Performance Report, available at https://www.fanniemae.com/media/46616/display.
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The Major Questions Doctrine. Some commenters asserted that the
rule would not be consistent with the U.S. Supreme Court's ``major
questions'' doctrine.\156\ FHFA disagrees. The final rule is not a
sweeping change either with respect to oversight of the regulated
entities or with respect to the equitable housing finance plan program.
Much of the content of the final rule codifies existing policy.
Further, the final rule is consistent with FHFA's core statutory
purposes as discussed above. With respect to equitable housing finance
as well as other aspects, the final rule does not impose changes of
vast economic or political significance. It requires a strategic
planning process supported by broad stakeholder input and program
standards to more effectively achieve FHFA's and the Enterprises'
public mission, in concert with other FHFA programs and requirements.
It also includes guardrails and processes for self-correction to ensure
activities remain consistent with the law and the Enterprises'
Congressionally chartered purposes and that FHFA's oversight remains
within the bounds of the law and the Constitution.
---------------------------------------------------------------------------
\156\ See, e.g., West Virginia v. EPA, 142 S. Ct. 2587 (June 30,
2022).
---------------------------------------------------------------------------
III. Summary of Changes in the Final Rule
A. Section 1293.1(d), Severability Clause
FHFA has added a severability clause in Sec. 1293.1(d) of the
final rule. FHFA believes that it is appropriate to make clear its
intention in the final rule that all provisions of the final rule be
severable given that the final rule contains many thematically related
but ultimately independent regulatory requirements, each of which FHFA
believes is independently important to pursue through rulemaking and
can function independently.
B. Section 1293.12(a), Reports, Data, and Certification
FHFA has added a reference to Sec. 1293.11(b) in Sec. 1293.12(a)
of the final rule to make clear that reports to FHFA may be required to
include matters related to UDAP compliance, consistent with the
certification attached to the report required in Sec. 1293.12(b). FHFA
has also changed the title of subpart B to include UDAP.
C. Section 1293.12, Certification of Compliance
FHFA has revised Sec. 1293.12(b) in the final rule by qualifying
the required certification of compliance with fair lending, fair
housing, and UDAP laws ``to the best of the certifier's knowledge and
belief following reasonable or due inquiry of the certifying
official.'' FHFA determined that certifying compliance to the best of
the certifier's knowledge and belief will adequately incentivize
identification of risk without imposing additional liability for
certifying to absolute compliance.
D. Section 1293.21, General
FHFA has not included in the final rule the proposed rule provision
that would have identified Enterprise Equitable Housing Finance
Planning as a prudential standard by regulation pursuant to section
4513(b) of the Safety and Soundness Act. Accordingly, the title of
Sec. 1293.21 has changed to remove ``Identification of subpart as a
prudential standard,'' and now states ``General'' only. Based on
comments received, FHFA determined it is not necessary to designate
this rule as a prudential standard at this time. FHFA acknowledges that
Enterprise failure to adhere to EHFP program standards can be addressed
by other enforcement and supervision methods, and certain deficiencies
may also be failures to meet existing PMOS standards that may trigger
corrective action pursuant to section 4513(b) of the Safety and
Soundness Act and 12 CFR part 1236.
E. Section 1293.23, Resource Disclosures, Additions, and Clarifying
Edits
In response to comments, FHFA has not included in the final rule
proposed Sec. 1293.23(b)(4), which would have required the Enterprises
to submit a summary of the value of resources dedicated to supporting
the outcomes categorized by type of activity and a summary of
additional value of resources contributed from third parties because of
the Enterprise's support of the outcomes. Instead, Enterprise
accountability will be evaluated by FHFA's Rating System and
performance metrics, including but not limited to accept rate gaps and
home loan acquisitions. The Rating System will assess Enterprise
reports, performance, and overall commitment to equity. FHFA also may
consider implementing a financial disclosure requirement in a future
rule and will examine the Enterprises' equitable housing finance
planning under the rule.
FHFA has made additions and clarifying edits to Sec. 1293.23 in
the final rule, including distinguishing between multifamily and
single-family acquisition reporting, adding neighborhood race and
ethnicity reporting where appropriate, adding narrative description
requirements for the underwriting sections of the performance reports,
adding a separate reporting requirement for all homeownership programs
to facilitate better comparison between the Enterprises, and clarifying
that FHFA may use its order authority under 12 U.S.C. 4514 to establish
requirements for reporting.
F. Section 1293.27, Program Evaluation
In response to comments, FHFA has added Sec. 1293.27 ``Program
Evaluation'' in the final rule, which provides that FHFA will publish
on its website a narrative assessment evaluating each Enterprise's
performance under its respective Equitable Housing Finance Planning
program standards by May 15 of each year. FHFA believes this change
will foster greater public transparency and Enterprise accountability,
while reducing burden and complexity associated with developing
separate evaluation metrics for public consumption. It will also
further align the Equitable Housing Finance Program with the Community
Reinvestment Act, in that both programs require review and public
disclosure by their respective agencies of the performance of the
entities they regulate.
G. Section 1293.31, Federal Home Loan Bank Equitable Housing Finance
Planning
In response to comments, FHFA has added a new Subpart D--Federal
Home Loan Bank Equitable Housing Finance Planning in the final rule,
requiring the Banks to report on any meaningful actions voluntarily
taken to support underserved communities and such actions currently
planned for the coming year, or to provide a public notice that it has
not taken any voluntary actions and does not currently have any such
voluntary meaningful actions planned for the coming year. This
requirement recognizes the importance of addressing barriers to
[[Page 42784]]
sustainable housing for all regulated entities, while also recognizing
and considering the differences between the Banks and Enterprises. FHFA
may engage in future rulemaking and guidance specific to the Banks
regarding equitable housing finance planning.
IV. Consideration of Differences Between the Banks and the Enterprises
Under the final rule, both the Enterprises and the Banks would be
subject to subpart A (Sec. Sec. 1293.1 through 1293.3) and subpart B
(Sec. Sec. 1293.11 through 1293.12), including general provisions
related to fair housing and fair lending laws, compliance,
examinations, oversight, and enforcement. Additionally, both the Banks
and the Enterprises would be covered by FHFA's authority to require
regular and special reports and the requirement to certify compliance
in regular reports. However, FHFA has not currently issued any
reporting orders requiring regular or special fair housing and fair
lending reports from the Banks. The Equitable Housing Finance Plan and
broader equitable housing finance planning requirements described
specifically in subpart C (Sec. Sec. 1293.21 through 1293.26) would
apply only to the Enterprises and would codify in regulation, and
expand on, the existing equitable housing framework for the Enterprises
that FHFA previously established. In response to comments, FHFA has
added subpart D in the final rule which requires the Banks to report on
any voluntary equitable housing finance actions taken or planned but
does not require any actions by the Banks other than the reports or
notices that there are no actions to report. Subpart E (Sec. 1293.41)
could include data collection and reporting requirements that would
apply to both the Enterprises and the Banks, but currently the
requirements would apply only to the Enterprises.
When promulgating any regulation that may have future effect
relating to the Banks, the Director is required by section 1313(f) of
the Safety and Soundness Act to consider the differences between the
Banks and the Enterprises with respect to the Banks' cooperative
ownership structure, mission of providing liquidity to members,
affordable housing and community development mission, capital
structure, and joint and several liability.\157\ FHFA requested
comments from the public about whether differences related to these
factors should result in a revision of the proposed rule as it relates
to the Banks. FHFA's adoption of new subpart D in the final rule
reflects its consideration of the comments and appropriate
consideration of the differences between the Banks and the Enterprises.
The Director considered the differences between the Banks and the
Enterprises, as they relate to the above factors, and determined that
this final rule is appropriate.
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\157\ 12 U.S.C. 4513(f).
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V. Regulatory Analyses
A. Paperwork Reduction Act
The final rule does not contain any information collection
requirement that would require the approval of the Office of Management
and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.). Therefore, FHFA has not submitted any information to OMB for
review.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities must include an analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the final
rule under the Regulatory Flexibility Act. FHFA certifies that the
final rule will not have a significant economic impact on a substantial
number of small entities because the regulation applies only to the
Enterprises and the Banks, which are not small entities for purposes of
the Regulatory Flexibility Act.
C. Congressional Review Act
In accordance with the Congressional Review Act (5 U.S.C. 801 et
seq.), FHFA has determined that this final rule is a major rule and has
verified this determination with the Office of Information and
Regulatory Affairs of OMB.
List of Subjects for 12 CFR Part 1293
Fair housing, Federal home loan banks, Government-sponsored
enterprises, Mortgages, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Federal Housing Finance
Agency amends chapter XII in title 12 of the Code of Federal
Regulations, as follows:
0
1. Add part 1293 to read as follows:
PART 1293--FAIR LENDING OVERSIGHT AND EQUITABLE HOUSING FINANCE
Subpart A--General
Sec.
1293.1 General.
1293.2 Definitions.
1293.3 Compliance and enforcement.
1293.4 Preservation of authority.
1293.5-1293.10 [Reserved]
Subpart B--Fair Housing, Fair Lending, and Unfair or Deceptive Acts or
Practices Compliance
1293.11 Regulated entity compliance.
1293.12 Reports, data, and certifications.
1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
1293.21 General.
1293.22 Equitable housing finance plans and updates.
1293.23 Performance reports.
1293.24 Public engagement.
1293.25 Program requirements.
1293.26 Enterprise board equitable housing and mission
responsibilities.
1293.27 Program evaluation.
1293.28-1293.30 [Reserved]
Subpart D--[Reserved]
Subpart E--Data Collection
1293.41 Required Enterprise data collection and reporting.
Authority: 12 U.S.C. 1456(c)(1); 12 U.S.C. 1723a(m)(1); 12
U.S.C. 4511; 12 U.S.C. 4513; 12 U.S.C. 4514; 12 U.S.C. 4517; 12
U.S.C. 4526; 42 U.S.C. 3608(d).
Subpart A--General
Sec. 1293.1 General.
(a) This part sets forth requirements related to fair lending
oversight of regulated entities, equitable housing finance planning by
the Enterprises, and certain data collection and reporting by the
regulated entities.
(b) Nothing in this part permits or requires a regulated entity to
engage in any activity that would otherwise be inconsistent with the
Safety and Soundness Act, the authorizing statutes, or other applicable
law.
(c) Nothing in this part creates a private right of action.
(d) If any provision of this part, or any application of a
provision, is stayed or determined to be invalid, the remaining
provisions or applications are severable and shall continue in effect.
Sec. 1293.2 Definitions.
For purposes of this part:
Annual plan update (update) means a public update to an Equitable
Housing Finance Plan for the second or third year of a planning cycle.
Barrier means an element of an Enterprise's actions, products, or
[[Page 42785]]
policies, or an aspect of the housing market that can reasonably be
influenced by the Enterprise's actions, products, or policies, that
contributes to an underserved community's limited share of sustainable
housing opportunities, difficulties in accessing those sustainable
housing opportunities, or the continuing adverse effects of
discrimination affecting their participation in the housing market.
Equitable Housing Finance Plan (plan) means a three-year public
plan developed with public engagement and adopted by each Enterprise
describing how each Enterprise will overcome barriers to sustainable
housing opportunities faced by one or more underserved communities
through objectives, meaningful actions, and measurable goals.
Fair housing and fair lending laws means the Fair Housing Act, the
Equal Credit Opportunity Act, and implementing regulations.
Additionally, with respect to an Enterprise, it means 12 U.S.C. 4545
and implementing regulations.
Performance report (report) means an annual public report by an
Enterprise on its performance under its Equitable Housing Finance Plan
and other information on equitable housing and fair lending that meets
the requirements of Sec. 1293.23 and any other FHFA requirements.
Sustainable housing opportunity means a rental or homeownership
opportunity that includes one or more characteristics important to the
needs of a tenant or homeowner. These characteristics include but are
not limited to: being affordable to obtain and sustain; relating to a
dwelling that meets basic habitability requirements and is reasonably
able to withstand natural disasters or other climate-related impact
events; relating to a dwelling that is improving the quality of housing
stock in an area; being located in an area with access to educational,
transportation, economic, and other important opportunities, including
community assets; being accessible for persons with disabilities and
available in the most integrated setting appropriate to the needs of an
individual with a disability; not placing the tenant or homeowner in a
position where they are unlikely to succeed in sustaining the housing
opportunity over the long term; and providing reasonable opportunities
to accommodate hardships by the renter or homeowner to allow
continuation of the housing opportunity.
Underserved community is a group of people with shared
characteristics or an area that is subject to current discrimination or
has been subjected to past discrimination that has or has had
continuing adverse effects on the group or area's participation in the
housing market, historically has received or currently receives a lower
share of the benefits of Enterprise programs and activities providing
sustainable housing opportunities, or that otherwise has had difficulty
accessing these benefits compared with groups of people without the
shared characteristic or other areas. Shared characteristics include
but are not limited to characteristics protected by fair housing and
fair lending laws applicable to the Enterprises including race, color,
religion, sex (including actual or perceived sexual orientation or
gender identity), familial status, national origin, disability, marital
status, age, receipt of public assistance income, exercise of rights
protected by the Consumer Credit Protection Act, exercise of rights
protected by the Fair Housing Act, dwelling age, dwelling location, and
neighborhood age. Examples of underserved communities, if supported by
adequate information in a plan pursuant to Sec. 1293.25, include: the
Commonwealth of Puerto Rico, single parents, persons with disabilities,
women of color, seniors with fixed income, self-employed individuals,
individuals with limited mainstream credit and banking history,
counties which have historically received a lower share of the benefits
of Enterprise programs and activities, individuals with income variance
such as skilled tradespeople or those that receive income through
commission, persons with limited English proficiency, and
multigenerational households.
Sec. 1293.3 Compliance and enforcement.
FHFA may enforce compliance with this part in any manner and
through any means within its authority, including but not limited to
adverse examination findings or through supervision or enforcement
under 12 U.S.C. 4511(b), 4513b, 4631, or 4636. The agency may conduct
examinations of a regulated entity's activities related to this part
pursuant to 12 U.S.C. 4517.
Sec. 1293.4 Preservation of authority.
Nothing in this part in any way limits the authority of the Federal
Housing Finance Agency under other provisions of applicable law and
regulations.
Sec. Sec. 1293.5-1293.10 [Reserved]
Subpart B--Fair Housing, Fair Lending, and Unfair or Deceptive Acts
or Practices Compliance
Sec. 1293.11 Regulated entity compliance.
(a) Compliance with fair housing and fair lending laws. Regulated
entities must comply with fair housing and fair lending laws.
(b) Compliance with prohibition on unfair or deceptive acts or
practices. Regulated entities must comply with the prohibition on
unfair or deceptive acts or practices under 15 U.S.C. 45.
(c) Responsibilities of boards of directors. In accordance with
Sec. 1239.4(b)(4) of this chapter, directors of a regulated entity
shall direct the operations of the regulated entity in conformity with
fair housing and fair lending laws and the prohibition on unfair or
deceptive acts or practices under 15 U.S.C. 45, including by
appropriately considering compliance with fair housing and fair lending
laws and the prohibition on unfair or deceptive acts or practices under
15 U.S.C. 45 in the oversight of the regulated entity and its business
activities.
Sec. 1293.12 Reports, data, and certifications.
(a) Reports. FHFA may require the regulated entities to submit to
FHFA regular and special reports concerning fair housing, fair lending,
and compliance with Sec. 1293.11(b) including the provision of data
pursuant to FHFA instructions.
(b) Certifications. Each regular report concerning fair housing and
fair lending shall include a certification of the regulated entity's
compliance with fair housing and fair lending laws and with Sec.
1293.11(b) to the best of the certifier's knowledge and belief
following reasonable or due inquiry of the certifying official in
addition to any other required certification or declaration (such as a
declaration under 12 U.S.C. 4514(a)(4)).
Sec. Sec. 1293.13-1293.20 [Reserved]
Subpart C--Enterprise Equitable Housing Finance Planning
Sec. 1293.21 General.
(a) This subpart sets forth the Enterprise duty to engage in
equitable housing finance planning and to take meaningful actions to
support underserved communities, and establishes standards and
procedures related to public engagement and FHFA's oversight of the
Enterprises' planning and actions.
[[Page 42786]]
(b) If a date provided in this subpart falls on a day that is not a
business day, the date required shall be the next business day.
(c) Submission and publication dates provided in this subpart may
be changed by the Director, as determined appropriate, by public order
for a particular required submission or publication.
(d) Plans and reports under this subpart are reports required under
12 U.S.C. 4514(a) and therefore must include a notice and declaration
in compliance with 12 U.S.C. 4514(a)(4).
Sec. 1293.22 Equitable housing finance plans and updates.
(a) General. Every three years each Enterprise shall adopt an
Equitable Housing Finance Plan covering a three-year period. Each
Enterprise may adopt a public annual plan update to that plan for the
second and third years of the plan.
(b) Contents of plan. The plan shall include:
(1) Identification of barriers to sustainable housing opportunities
faced by one or more underserved communities;
(2) Objectives that establish the overall direction and focus for
the plan by defining the outcomes the plan seeks to accomplish, and
that are logically tied to one or more identified barriers;
(3) Meaningful actions (actions) describing the high-impact
activities the Enterprise intends to undertake to further the
identified objectives that span one or more years (including extending
beyond the period covered by the plan);
(4) Specific, measurable, and time-bound goals (goals) for each
action; and
(5) Summaries of the Enterprise's public engagement in developing
the plan.
(c) Plan submission. Each Enterprise shall submit its Plan to FHFA
for review on or before September 30 of the year prior to the first
year covered by the Plan.
(d) Contents of annual plan update. If an Enterprise chooses to
submit an update, it shall include all changes the Enterprise is making
to its plan, including any changes in identified barriers, objectives,
meaningful actions, specific, measurable, and time-bound goals, and a
summary of any additional public engagement. The update shall clearly
describe the specific reason(s) for each significant change to the
plan.
(e) Annual update submission. If an Enterprise chooses to submit an
update, it shall submit its update for FHFA review on or before
February 15 of the year covered by the update.
(f) FHFA review. FHFA shall review each plan and update and, prior
to publication, may:
(1) Require removal of any confidential or proprietary information;
(2) Require removal of any content that is not consistent with this
part, the Safety and Soundness Act, the authorizing statutes, or other
applicable law; and
(3) Provide any feedback for consideration.
(g) No prior approval of activities. FHFA's review does not
constitute a prior approval of a plan or update or any action described
therein. All actions included in a plan are subject to all applicable
FHFA and other requirements and authorities.
(h) Disclaimer included in plan and annual update. The plan and the
annual update must include disclaimer language indicating the
implementation of actions may be subject to change based on certain
factors.
(i) Plan and update publication. Each Enterprise shall publish its
plan on its website on January 15 of the first year covered by the plan
and maintain it thereafter. Each Enterprise shall publish any update on
its website on April 15 of the second and third year covered by the
plan and maintain it thereafter. Each Enterprise shall ensure that
plans and updates are accessible to persons with disabilities.
(j) Additional guidance. From time to time, FHFA may issue public
guidance on plans and updates.
Sec. 1293.23 Performance reports.
(a) General. Annually, each Enterprise shall publicly report on its
plan progress and provide other information related to equitable
housing and fair housing and fair lending for the prior year in a
performance report.
(b) Contents of the report. The report shall contain, at a minimum:
(1) A narrative assessment consisting of a review of major
successes and key accomplishments, as well as lessons learned and
challenges experienced;
(2) Plan performance details for each objective, meaningful action,
measurable goal, including outcome-based metrics;
(3) A summary of outcomes for the year categorized by type of
activity and by race and ethnicity group and underserved community
group (if available);
(4) A summary of outcomes for the year for homeownership programs
or products created pursuant to the Plan by race and ethnicity group
and underserved community group (if available);
(5) An assessment of the Enterprise's underwriting that includes:
(i) For the applicable year and the preceding three years, the
accept rates for the Enterprise's automated underwriting system
categorized by home purchase, rate-term refinancing, cash-out
refinancing and by race and ethnicity group and by underserved
community group (if available);
(ii) For the applicable year and the preceding three years, the
Enterprise's single-family loan acquisitions categorized by home
purchase, rate-term refinancing, cash-out refinancing, and by race and
ethnicity group, neighborhood race and ethnicity, and underserved
community group (if available);
(iii) For the applicable year and the preceding three years, the
Enterprise's multifamily loan acquisitions categorized by neighborhood
race and ethnicity;
(iv) A narrative description of paragraphs (b)(5)(i)through (iii)
of this section; and
(v) A narrative assessment of any innovations in automated
underwriting or other policy taken during the applicable year and any
future planned work intended to address identified disparities.
(c) Report submission. Each Enterprise shall submit its report to
FHFA for review on or before February 15 annually.
(d) FHFA review. FHFA shall review each report and, prior to
publication, may:
(1) Require removal of any confidential or proprietary information;
(2) Require removal of any content that is not consistent with this
part, the Safety and Soundness Act, the authorizing statutes, or other
applicable law; and
(3) Provide any feedback for consideration.
(e) Report publication. Each Enterprise shall publish its report on
its website on April 15 annually and maintain it thereafter. Each
Enterprise shall ensure that reports are accessible to persons with
disabilities.
(f) Additional requirements and guidance. FHFA may require
additional information to be included in reports through other FHFA
authorities, such as an order under 12 U.S.C. 4514. From time to time,
FHFA may issue public guidance on reports.
Sec. 1293.24 Public engagement.
(a) FHFA public engagement. On or before June 15 annually, FHFA
will conduct public engagement to allow the public to provide input for
the Enterprises to consider in developing and implementing their plans
and for FHFA to consider in its oversight.
[[Page 42787]]
(b) Enterprise consultation. The Enterprises shall consult with
stakeholders, including members of underserved communities and housing
market participants, in the development and implementation of their
plans and updates.
Sec. 1293.25 Program requirements.
(a) Requirements for underserved communities. An Enterprise shall
ensure that a plan relies on adequate information in identifying the
underserved community or communities addressed by that plan and shall
document that information as part of the plan. In selecting one or more
underserved communities to be the focus of a plan, an Enterprise shall
consider, among other factors:
(1) Input from public engagement;
(2) Whether the underserved community has previously been the focus
of a plan;
(3) The extent of the needs identified for the underserved
community, including such needs that may remain despite prior efforts
under a plan; and
(4) Whether the underserved community is covered by a different
initiative or program of the Enterprise.
(b) Requirements for objectives. Objectives identified in a plan
shall be logically tied to one or more identified barriers and
facilitate establishing meaningful actions and measurable goals.
(c) Requirements for meaningful actions--(1) Relation to objectives
and goals. Meaningful actions shall be logically tied to one or more
measurable goals and one or more objectives and support sustainable
housing opportunities for an identified underserved community.
(2) Other Enterprise goals and incremental action. Meaningful
actions may also serve other Enterprise objectives and goals; however,
a plan shall reflect significant additional action above and beyond
actions that are also serving other Enterprise objectives and goals and
shall reflect more than de minimis action.
(3) Significant dedication of resources. Meaningful actions shall
reflect a commitment commensurate with an Enterprise's prominence in
the housing market, its available resources, its dedication of
resources to other important efforts, the needs of underserved
communities, market conditions, and safety and soundness.
(4) Compliance with law. Actions that are not compliant with the
Safety and Soundness Act, the authorizing statutes, or other applicable
law do not qualify as meaningful actions.
(5) Required remedial actions. Actions that are required to
remediate supervisory findings or required as a result of enforcement
actions do not qualify as meaningful actions.
(d) Requirements for measurable goals. Measurable goals shall be:
(1) Logically tied to one or more meaningful actions identified in
a plan;
(2) Specific;
(3) Time-bound;
(4) Focused on outcomes; and
(5) Facilitative of measuring Enterprise progress, comparing
Enterprise performance, and ensuring public accountability.
Sec. 1293.26 Enterprise board equitable housing and mission
responsibilities.
An Enterprise's board of directors shall appropriately consider the
objectives, actions, and goals of the Enterprise's Equitable Housing
Finance Plan, while also appropriately considering its affordable
housing goals, Duty to Serve plans and targets, and other mission-
related obligations, in the board's oversight of the Enterprise and the
Enterprise's business activities.
Sec. 1293.27 Program evaluation.
FHFA shall publish on its website a narrative assessment evaluating
each Enterprise's performance under their respective Equitable Housing
Finance Plans by May 15 of each year.
Sec. Sec. 1293.28-1293.30 [Reserved]
Subpart D--[Reserved]
Subpart E--Data Collection
Sec. 1293.41 Required Enterprise data collection and reporting.
Each Enterprise shall collect, maintain, and provide to FHFA the
following data relating to single-family mortgages:
(a) The language preference of applicants and borrowers; and
(b) Whether applicants and borrowers have completed homeownership
education or housing counseling and information about the homeownership
education or housing counseling.
0
2. Effective February 15, 2026, add subpart D to part 1293 to read as
follows:
Subpart D--Federal Home Loan Bank Equitable Housing Finance Planning
Sec.
1293.31 General.
1293.32 Equitable housing reports.
1293.33-1293.40 [Reserved]
Subpart D--Federal Home Loan Bank Equitable Housing Finance
Planning
Sec. 1293.31 General.
(a) This subpart sets forth the Federal Home Loan Banks' (Banks)
duty to report on actions voluntarily taken to support underserved
communities.
(b) If a date provided in this subpart falls on a day that is not a
business day, the date required shall be the next business day.
(c) Submission and publication dates provided in this subpart may
be changed by the Director, as determined appropriate, by public order
for a particular required submission or publication.
(d) Reports under this subpart are reports required under 12 U.S.C.
4514(a) and therefore must include a notice and declaration in
compliance with 12 U.S.C. 4514(a)(4).
Sec. 1293.32 Equitable housing reports.
(a) General. Annually, each Bank shall publicly provide information
related to actions voluntarily to taken to overcome barriers to
sustainable housing opportunities faced by one or more underserved
communities for the prior year and such actions currently planned for
the coming year or shall provide a notice that it has not taken any
voluntary actions and does not currently have any such voluntary
meaningful actions planned for the coming year.
(b) Contents of the report. The report shall contain, at a minimum,
a narrative assessment consisting of:
(1) A review of voluntary actions taken, including, as applicable
major successes, key accomplishments, lessons learned, and challenges
experienced; and
(2) A description of any future planned voluntary actions.
(c) Report or notice submission. Each Bank shall submit its report
to FHFA for review on or before February 15 annually or shall submit a
notice to FHFA that it has not taken any voluntary actions and does not
currently have such voluntary meaningful actions planned for the coming
year.
(d) FHFA review. FHFA shall review each report and, prior to
publication, may:
(1) Require removal of any confidential or proprietary information;
(2) Require removal of any content that is not consistent with this
part, the Safety and Soundness Act, the authorizing statutes, or other
applicable law; and
(3) Provide any feedback for consideration.
(e) Report or notice publication. Each Bank shall publish its
report or notice
[[Page 42788]]
that it has not taken voluntary actions and does not currently have
such voluntary actions planned for the future on its website on April
15 annually and maintain it thereafter. Each Bank shall ensure that
reports are accessible to persons with disabilities.
(f) Additional requirements and guidance. FHFA may require
additional information to be included in reports through other FHFA
authorities, such as an order under 12 U.S.C. 4514. From time to time,
FHFA may issue public guidance on reports.
Sec. Sec. 1293.33-1293.40 [Reserved]
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2024-09559 Filed 5-15-24; 8:45 am]
BILLING CODE 8070-01-P
