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35724 Federal Register / Vol 35724 Federal Register / Vol. 76, No. 118 / Monday, June 20, 2011 / Rules and Regulations List of Subjects in 12 CFR Part 226 operations for the Federal National regulatory authority over the regulated 2 Advertising, Federal Reserve System, Mortgage Association, the Federal Home entities and over the Office of Finance, Mortgages, Reporting and recordkeeping Loan Mortgage Corporation, and the expressly to ensure that the regulated requirements, Truth in lending. Federal Home Loan Banks, as entities operate in a safe and sound contemplated by the Housing and manner, including maintaining For the reasons set forth in the Economic Recovery Act of 2008 (HERA). adequate capital and internal controls; preamble, the Board amends Regulation HERA amended the Federal Housing foster liquid, efficient, competitive, and Z, 12 CFR part 226, as set forth below: Enterprises Financial Safety and resilient national housing finance PART 226—TRUTH IN LENDING Soundness Act of 1992 (Safety and markets; comply with the Safety and (REGULATION Z) Soundness Act) by adding, among other Soundness Act and rules, regulations, provisions, section 1367, Authority guidelines, and orders issued under the ■ 1. The authority citation for part 226 Over Critically Undercapitalized Safety and Soundness Act and the continues to read as follows: Regulated Entities. The rule will authorizing statutes (i.e., the charter acts Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 implement this provision, and will of the Enterprises and the Bank Act); and 1637(c)(5). ensure that these operations advance and carry out their respective missions FHFA’s critical safety and soundness through activities and operations that ■ 2. In Supplement I to Part 226, under and mission requirements. The rule are authorized and consistent with the Section 226.32—Requirements for seeks to protect the public interest in Safety and Soundness Act, their Certain Closed-End Home Mortgages, the transparency of conservatorship and respective authorizing statutes, and the under Paragraph 32(a)(1)(ii), paragraph receivership operations for the Federal public interest.3 2.xvii. is added to read as follows: National Mortgage Association (Fannie In addition, this law combined the Supplement I to Part 226—Official Staff Mae), the Federal Home Loan Mortgage staffs of the now abolished Office of Interpretations Corporation (Freddie Mac) (collectively, Federal Housing Enterprise Oversight the Enterprises), and the Federal Home (OFHEO), the now abolished Federal * * * * * Loan Banks (Banks) (collectively, the Housing Finance Board (Finance Board), Subpart E—Special Rules for Certain regulated entities). and the Government-Sponsored Home Mortgage Transactions DATES: Effective Date: This rule is Enterprise (GSE) mission office at the effective July 20, 2011. Department of Housing and Urban * * * * * FOR FURTHER INFORMATION CONTACT: Development (HUD). By pooling the Section 226.32—Requirements for Certain Frank Wright, Senior Counsel, Federal expertise of the staffs of OFHEO, the Closed-End Home Mortgages 32(a) Coverage Housing Finance Agency, Fourth Floor, Finance Board, and the GSE mission * * * * * 1700 G Street, NW., Washington, DC staff at HUD, Congress intended to 20552, (202) 414–6439 (not a toll-free strengthen the regulatory and Paragraph 32(a)(1)(ii) number); or Mark D. Laponsky, Deputy supervisory oversight of the 14 housing- * * * * * General Counsel, Federal Housing related GSEs. 2. * * * Finance Agency, Fourth Floor, 1700 G The Enterprises, combined, own or xvii. For 2012, $611, reflecting a 3.2 Street, NW., Washington, DC 20552, guarantee more than $5 trillion of percent increase in the CPI–U from June 2010 (202) 414–3832 (not a toll-free number). residential mortgages in the United to June 2011, rounded to the nearest whole The telephone number for the States (U.S.), and play a key role in dollar. Telecommunications Device for the housing finance and the U.S. economy. * * * * * Hearing Impaired is (800) 877–8339. The Banks, with combined assets of SUPPLEMENTARY INFORMATION: nearly $850 billion, support the housing By order of the Board of Governors of the market by making advances (i.e., loans Federal Reserve System, acting through the I. Background secured by acceptable collateral) to their Director of the Division of Consumer and The Housing and Economic Recovery member commercial banks, thrifts, and Community Affairs under delegated Act of 2008 (HERA), Public Law 110– credit unions, assuring a ready flow of authority, June 13, 2011. 289, 122 Stat. 2654, amended the mortgage funding. Jennifer J. Johnson, Federal Housing Enterprises Financial Because FHFA’s mission is to Secretary of the Board. Safety and Soundness Act of 1992 (12 promote housing and a strong national [FR Doc. 2011–15179 Filed 6–17–11; 8:45 am] U.S.C. 4501 et seq.) (Safety and housing finance system by ensuring the BILLING CODE 6210–01–P Soundness Act), and the Federal Home safety and soundness of the Enterprises Loan Bank Act (12 U.S.C. 1421–1449) and the Banks, HERA amended the (Bank Act) to establish FHFA as an Safety and Soundness Act to make FEDERAL HOUSING FINANCE independent agency of the Federal explicit FHFA’s general regulatory and AGENCY government.1 FHFA was established as supervisory authority. To this end, an independent agency of the Federal section 1311(b)(1) of the Safety and 12 CFR Parts 1229 and 1237 Government with all of the authorities Soundness Act expressly makes each RIN 2590–AA23 necessary to oversee vital components regulated entity ‘‘subject to the of our country’s secondary mortgage supervision and regulation of the Conservatorship and Receivership markets—the regulated entities and the Agency,’’ thus amplifying the broad Office of Finance of the Federal Home supervisory authority of the Director. AGENCY: Federal Housing Finance Loan Bank System. See 12 U.S.C. 4511(b)(1). Moreover, the Agency. The Safety and Soundness Act Safety and Soundness Act underscores ACTION: Final rule. provides that FHFA is headed by a the breadth of this authority by Director with general supervisory and SUMMARY: The Federal Housing Finance 2 See sections 1101 and 1102 of HERA, amending Agency (FHFA) is issuing a final rule to 1 See Division A, titled the ‘‘Federal Housing sections 1311 and 1312 of the Safety and Soundness establish a framework for Finance Regulatory Reform Act of 2008,’’ Title I, Act, codified at 12 U.S.C. 4511and 4512. conservatorship and receivership section 1101 of HERA. 3 See 12 U.S.C. 4513(a)(1)(B). VerDate Mar<15>2010 16:50 Jun 17, 2011 Jkt 223001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\20JNR1.SGM 20JNR1 mstockstill on DSK4VPTVN1PROD with RULES Federal Register / Vol. 76, No. 118 / Monday, June 20, 2011 / Rules and Regulations 35725 expressly conveying ‘‘general regulatory with regard to dividends and the At the time FHFA established the authority’’ over the regulated entities to distribution of assets of the Enterprise in conservatorships, and on several the Director. See 12 U.S.C. 4511(b)(2); liquidation. As Conservator, FHFA has occasions since, FHFA has noted that see also 12 U.S.C. 4513(a)(1)(B).4 In already drawn on the Treasury the conservatorships, combined with addition, the Safety and Soundness Act, Commitments several times to prevent a the Treasury Senior Preferred Stock as amended by HERA, provides that negative net worth position that would Agreements described above, provide an ‘‘[t]he Agency may prescribe such trigger mandatory receivership of each opportunity for Congress to direct the regulations as the Agency determines to Enterprise. ultimate resolution of the Enterprises. be appropriate regarding the conduct of Congress authorized the Treasury II. Final Rule conservatorships or receiverships.’’ 12 Agreements in section 1117 of HERA, This final regulation describes, U.S.C. 4617(b)(1). which amended each of the Enterprises’ codifies, and implements the changes to The Enterprises are currently in authorizing statutes (Fannie Mae, 12 the statutory regime enacted by HERA, conservatorship. FHFA as Conservator U.S.C. 1716 et seq.; Freddie Mac, 12 the authorities granted to FHFA, and has been responsible for the conduct U.S.C. 1451 et seq.) to empower eliminates ambiguities regarding those and administration of all aspects of the Treasury to purchase securities of the changes. The final rule does not, and the operations, business, and affairs of both Enterprises subject to certain proposed rule, published in the Federal Enterprises since September 6, 2008, the conditions. These conditions include date on which the Director placed Register at 75 FR 39462 (July 9, 2010), that Treasury ‘‘protect the taxpayers’’ by did not, recite all provisions of law Fannie Mae and Freddie Mac in taking into consideration, among other conservatorship. As Conservator, FHFA relevant to the regulated entities in things, ‘‘[t]he need for preferences or is authorized to take such action as may conservatorship or receivership. It sets priorities regarding payments to the be ‘‘necessary to put the regulated entity out the basic and general framework for Government’’ and ‘‘[r]estrictions on the in a sound and solvent condition’’ and conservatorships and receiverships, use of corporate resources.’’ Pursuant to ‘‘appropriate to carry on the business of supplementing statutory provisions that this statutory mandate, the Treasury the regulated entity and preserve and FHFA believed needed elaboration or Agreements imposed several such conserve the assets and property of the explanation. The rule cannot be read or preferences, priorities, and restrictions. regulated entity.’’ 12 U.S.C. applied in isolation, but must be read For instance, while the Treasury 4617(b)(2)(D). Similarly, FHFA, as while also consulting the enabling Agreements authorize the Conservator Conservator, may ‘‘transfer or sell any statutes of FHFA and the regulated asset or liability of the regulated entity to draw on the Treasury Commitment entities. The regulation is part of in default, and may do so without any for funds equal to the amount by which FHFA’s implementation of the powers approval, assignment, or consent with an Enterprise’s liabilities exceed its provided by HERA, and does not seek respect to such transfer or sale.’’ Id.
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