[Federal Register Volume 65, Number 249 (Wednesday, December 27, 2000)]
[Proposed Rules]
[Pages 81768-81771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32780]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 65, No. 249 / Wednesday, December 27, 2000 /
Proposed Rules
[[Page 81768]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1701
RIN 2550-AA15
Assessments
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Proposed regulation.
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SUMMARY: The Office of Federal Housing Enterprise Oversight is
proposing a regulation setting forth its policy and procedures with
respect to the annual assessment of the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation as provided
by statute.
DATES: Written comments on the proposed regulation must be received by
January 26, 2001.
ADDRESSES: Send written comments concerning the proposed regulation to
Alfred M. Pollard, General Counsel, Office of Federal Housing
Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC
20552. Written comments may also be sent to Mr. Pollard by electronic
mail at [email protected]. OFHEO requests that written comments
submitted in hard copy also be accompanied by the electronic version in
MS Word or in portable document format (PDF) on 3.5" disk.
FOR FURTHER INFORMATION CONTACT: Isabella W. Sammons, Associate General
Counsel, telephone (202) 414-3790, (not a toll-free number), Office of
Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. The telephone number for the Telecommunications
Device for the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
Comments
OFHEO requests comments from the public and will take all comments
into consideration before issuing the final regulation. Copies of all
comments will be posted on the OFHEO Internet web site at http://www.ofheo.gov. In addition, copies of all comments received will be
available for examination by the public at the Office of Federal
Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552.
Background
Title XIII of the Housing and Community Development Act of 1992,
Pub.L. No. 102-550, entitled the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (Act), established OFHEO as an
independent office within the Department of Housing and Urban
Development to ensure that the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie
Mac) (collectively, the Enterprises) are capitalized adequately and
operate safely and in compliance with applicable laws, rules and
regulations.
Section 1316 of the Act (12 U.S.C. 4516) provides that OFHEO may
establish and collect annual assessments from the Enterprises. OFHEO
has been assessing the Enterprises pursuant to section 1316 and
proposes to set forth its policies and procedures with respect to such
assessments in the proposed regulation.
Section-by-Section Analysis
Section 1701.1 Purpose
This section states that the purpose of the proposed regulation is
to set forth the policy and procedures of OFHEO with respect to the
annual assessments of the Enterprises under section 1316 of the Act.
The Act provides for an initial annual assessment for the startup costs
of OFHEO; however, since the initial annual assessment has been
collected and OFHEO no longer has start up costs, the initial annual
assessment is not addressed in the proposed regulation.
Section 1701.2 Definitions
Section 1701.2 sets forth the definition of terms used in the
proposed regulation.
The term ``Act'' is defined to mean the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, Title XIII of the Housing
and Community Development Act of 1992, Pub.L. No. 102-550, Sec. 1301,
Oct. 28, 1992, 106 Stat. 3672, 3941-4012 (1993).
The term ``adequately capitalized'' is defined to mean the
adequately capitalized capital classification under section 1364 of the
Act (12 U.S.C. 4614). It is used in proposed Sec. 1701.4.
The term ``Director'' is defined to mean the Director of the Office
of Federal Housing Enterprise Oversight or his or her designee. The
Director may delegate his or her authority under section 1316 of the
Act to officers or employees of OFHEO.
The term ``Enterprise'' is defined to mean the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation.
The term ``surplus funds'' is defined to mean funds, which were
collected from an Enterprise in connection with an annual assessment,
that are unobligated as of September 30 of each fiscal year.
Appropriated funds of OFHEO are available for obligation and
expenditure for an indefinite period without fiscal year limitation.
Notably, section 1316(d) of the Act (12 U.S.C. 4516(d)) requires the
crediting of surplus funds that are ``unobligated at the end of the
year for which the assessment was collected.'' Any unobligated funds
remaining as of September 30, regardless when they were collected,
should be treated as surplus funds and credited to the annual
assessment.
The term ``total assets'' is used in Sec. 1701.3(b) of the proposed
regulation in connection with the calculation of the proportional
amount of the annual assessment of each Enterprise. The definition of
the term ``total assets'' is broader than the definition of the term
``total assets'' in section 1316(b)(3) of the Act (12 U.S.C.
4516(b)(3)) in that it lists the types of other off-balance sheet
assets to be used in the calculation of total assets. The assets used
to calculate total assets for purposes of the annual assessment are the
same as the assets used to calculate the minimum capital level of an
Enterprise under 12 CFR part 1750, subpart A. The proposed regulation
defines the term as the sum, as of the June quarterly minimum capital
report of the Enterprise under 12 CFR part 1750, subpart A, of the on-
balance-sheet-assets, as adjusted in the June quarterly minimum capital
report under 12 CFR part 1750, subpart A; the unpaid principal balance
of outstanding
[[Page 81769]]
mortgage-backed securities issued or guaranteed by the Enterprise that
are not included in on-balance-sheet assets; one-half of the average
dollar amount of commitments outstanding each quarter over the
preceding four quarters; the sum of the credit-equivalent amounts for
interest rate contracts; the unpaid principal balance of other
guaranteed obligations, such as multifamily credit enhancements; other
guaranteed amounts, such as sold portfolio remittances pending; and
other off-balance-sheet obligations, as determined by the Director.
The term ``OFHEO'' is defined to mean the Office of Federal Housing
Enterprise Oversight.
Section 1701.3 Annual Assessments
Paragraph (a) of proposed Sec. 1701.3 sets forth the authority of
the Director to establish and collect assessments under section 1316(a)
of the Act (12 U.S.C. 4516(a)). As provided in section 1316(a) and (f)
of the Act (12 U.S.C. 4516(a) and (f)), the proposed regulation
provides that the Director may, to the extent provided in appropriation
acts, establish and collect from the Enterprises an annual assessment
for each fiscal year. It further indicates that the amount of the
annual assessment shall not exceed the estimated amount to be
sufficient to provide for the necessary administrative and non-
administrative expenses to carry out the responsibilities of the
director relating to the Enterprises and to carry out the purposes of
the Act.
Paragraph (b) of proposed Sec. 1701.3 reiterates the statutory
formula in section 1316(b) of the Act (12 U.S.C. 4516(b)) for
determining how the annual assessment is to be allocated between the
Enterprises. The allocation for each Enterprise is the proportion of
the annual assessment that bears the same ratio to the total annual
assessment as the total assets of each Enterprise bears to the total
assets of both Enterprises. The term ``total assets'' is defined in
proposed Sec. 1701.2.
Section 1316(b)(2) of the Act (12 U.S.C. 4516(b)(2)) requires the
Enterprises to pay their proportional share of the annual assessment in
semiannual payments on or before October 1 and April 1 of each fiscal
year. Paragraph (c)(1) of proposed Sec. 1701.3 restates this
requirement and clarifies that one-half of the proportional share of
the annual assessment is to be paid in each semiannual payment.
Paragraph (c)(2) of proposed Sec. 1701.3 also explains how the
semiannual payments are to be handled in the event OFHEO does not have
a regular appropriation as of October 1 of any year. When legislative
action on a regular appropriation bill is not completed before the
beginning of a fiscal year, a continuing appropriation (also called a
continuing resolution) may be enacted to provide funding for the
affected agencies until their regular appropriations are enacted. In
such a situation, each Enterprise is to pay, by such date as determined
by the Director, an amount that is determined by applying the annual
assessment proportion calculated pursuant to paragraph (b) of proposed
Sec. 1701.3 to the amount authorized by the Office of Management and
Budget (OMB). After OFHEO receives a regular appropriation, the amount
of the proportional share of the annual assessment collected from each
Enterprise is to be reduced by the partial payments made by each
Enterprise in connection with any continuing appropriations. In the
event there is no continuing appropriation as of October 1 of any
fiscal year, OFHEO would continue to operate if authorized by OMB to
use funds remaining from the prior fiscal year assessment.
Paragraph (d) of proposed Sec. 1701.3 provides that the annual
assessment is to be credited by the amount of any surplus funds, a
requirement which is set forth in section 1316(d) of the Act (12 U.S.C.
4516(d)). Paragraph (d) also provides that surplus funds are to be
allocated in the same proportion in which they were collected, except
as determined by the Director. The term ``surplus funds'' is defined in
proposed Sec. 1701.2.
Section 1701.4 Increase in Semiannual Payments
Proposed Sec. 1701.4 sets forth the authority of the Director under
section 1316(c) of the Act (12 U.S.C. 4516(c)) to provide for an
increase in the semi-annual payments made by an Enterprise that is not
classified as ``adequately capitalized,'' as that term is defined in
proposed Sec. 1701.2. The funds collected under this provision are to
be deposited in the Federal Housing Enterprise Oversight Fund, but are
not to be considered funds appropriated by Congress.
Section 1701.5 Notice and Review
Paragraph (a) of proposed Sec. 1701.5 codifies the OHFEO practice
of providing the Enterprises with written notice of the annual
assessment, semiannual payments, any partial payments, and any changes
in the assessment procedures.
Paragraph (b) of proposed Sec. 1701.5 provides that, at the written
request of an Enterprise, the Director, in his or her discretion, may
review the calculation of the Enterprise's proportional share of the
assessment, semiannual payments or partial payments. The determination
of the Director is final. Review by the Director does not suspend the
obligation of the Enterprise to make the semiannual payment or partial
payment on or before the date it is due, except as provided by the
Director.
Section 1701.6 Delinquent Payments
This section of the proposed regulation reiterates the statutory
requirements with respect to the assessment of interest and penalties
on delinquent payments. It provides that the Director may assess
interest and penalties on delinquent payments of any assessment under
this part in accordance with 31 U.S.C. 3717 (interest and penalties on
claims) and 12 CFR part 1704 (debt collection). The Director may waive
interest and penalties in his or her discretion. Any interest and
penalties collected under this section are to be transferred to the
general fund of the Treasury of the United States.
Section 1701.7 Enforcement of Payment
Proposed Sec. 1701.7 provides that notwithstanding Sec. 1701.6, the
Director may enforce the payment of assessments pursuant to the
authority of section 1371 (12 U.S.C. 4631) (cease-and-desist
proceedings); section 1372 (12 U.S.C. 4632) (temporary cease-and-desist
orders), and section 1376 (12 U.S.C. 4636) (civil money penalties) of
the Act. These sections authorize the Director to take enforcement
actions for violations of any provisions of the Act.
Section 1701.8 Deposit in Fund
As provided in 1316(f) of the Act (12 U.S.C. 4516(f)), this section
of the proposed regulation would require that OFHEO deposit any
assessments collected under this part in the Federal Housing Enterprise
Oversight Fund established in the Treasury of the United States.
Regulatory Impact
Executive Order 12866, Regulatory Planning and Review
The proposed regulation is not classified as a significant rule
under Executive Order 12866 because it will not result in an annual
effect on the economy of $100 million or more or a major increase in
costs or prices for consumers, individual industries, Federal, State,
or local government agencies, or geographic regions; or have
significant adverse effects on competition, employment, investment,
productivity, innovation, or on the
[[Page 81770]]
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic or foreign markets. Accordingly, no
regulatory impact assessment is required and this proposed regulation
has not been submitted to the Office of Management and Budget for
review.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). OFHEO has considered the impact of the
proposed regulation under the Regulatory Flexibility Act. The General
Counsel of OFHEO certifies that the proposed regulation, if adopted, is
not likely to have a significant economic impact on a substantial
number of small business entities because the regulation is applicable
only to the Enterprises, which are not small entities for purposes of
the Regulatory Flexibility Act.
List of Subjects in 12 CFR Part 1701
Government Sponsored Enterprises, Reporting and recordkeeping
requirements.
Accordingly, for the reasons stated in the preamble, OFHEO proposes
to add 12 CFR part 1701 as follows:
PART 1701--ASSESSMENTS
Sec.
1701.1 Purpose.
1701.2 Definitions.
1701.3 Annual assessments.
1701.4 Increase in semiannual payments.
1701.5 Notice and review.
1701.6 Delinquent payments.
1701.7 Enforcement of payment.
1701.8 Deposit in fund.
Authority: 12 U.S.C. 4516.
Sec. 1701.1 Purpose.
This part sets forth the policy and procedures of OFHEO with
respect to the establishment and collection of the annual assessments
of the Enterprises under section 1316 of the Act.
Sec. 1701.2 Definitions.
For purposes of this part, the term--
(a) Act means the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, Title XIII of the Housing and Community
Development Act of 1992, Pub.L. No. 102-550, Sec. 1301, Oct. 28, 1992,
106 Stat. 3672, 3941-4012 (1993).
(b) Adequately capitalized means the adequately capitalized for
purposes of the capital classification under section 1364 of the Act
(12 U.S.C. 4614).
(c) Director means the Director of the Office of Federal Housing
Enterprise Oversight or his or her delegate.
(d) Enterprise means the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation.
(e) Surplus funds means the funds from any annual assessment
collected from an Enterprise that are not obligated as of September 30
of each fiscal year.
(f)(1) Total assets means the sum, as of the June quarterly minimum
capital report of the Enterprise under 12 CFR part 1750, subpart A, of:
(i) On-balance-sheet assets, as adjusted in the June quarterly
minimum capital report of the Enterprise under 12 CFR part 1750,
subpart A;
(ii) The unpaid principal balance of outstanding mortgage-backed
securities issued or guaranteed by the Enterprise that are not included
in on-balance-sheet assets;
(iii) One-half of the average dollar amount of commitments
outstanding each quarter over the preceding four quarters;
(iv) The sum of the credit-equivalent amounts for interest rate
contracts;
(v) The unpaid principal balance of other guaranteed obligations,
such as multifamily credit enhancements;
(vi) Other guaranteed amounts, such as sold portfolio remittances
pending; and
(vii) Other off-balance-sheet obligations as determined by the
Director.
(g) OFHEO means the Office of Federal Housing Enterprise Oversight.
Sec. 1701.3 Annual assessments.
(a) Establishment of assessment. The Director may, to the extent
provided in appropriation acts, establish and collect from the
Enterprises an annual assessment for each fiscal year, as allocated
under paragraph (b) of this section. The amount of the annual
assessment shall not exceed the estimated amount to be sufficient to
provide for the necessary administrative and non-administrative
expenses to carry out the responsibilities of the Director relating to
the Enterprises and to carry out the purposes of the Act.
(b) Allocation and proportional share. The annual assessment
established under paragraph (a) of this section shall be allocated
between the Enterprises. Each Enterprise shall pay a proportional share
of the annual assessment that bears the same ratio to the total annual
assessment as the total assets of each Enterprise bears to the total
assets of both Enterprises.
(c) Timing of payment. (1) Each Enterprise shall pay one-half of
its proportional share of the annual assessment in semiannual payments
on or before October 1 and April 1 for each fiscal year, except as
provided in paragraph (d) of this section and Sec. 1701.4.
(2) If OFHEO is operating under a continuing appropriation as of
October 1 of any year, each Enterprise shall pay, on such date as
determined by the Director, an amount calculated by applying the annual
assessment proportion calculated under paragraph (b) of this section to
the amount authorized for expenditure. When OFHEO receives a regular
appropriation, the amount of the allocation share of the annual
assessment collected from each Enterprise shall be reduced by any
partial payments made by each Enterprise in connection with any
continuing appropriations.
(d) Surplus funds. Surplus funds shall be credited to the annual
assessment by reducing the amount collected by the amount of the
surplus funds. Surplus funds shall be allocated in the same proportion
as they were collected, except as determined by the Director.
Sec. 1701.4 Increase in semiannual payments.
The Director, in his or her discretion, may increase the semiannual
payment to be collected under Sec. 1701.3 from an Enterprise that is
not classified as adequately capitalized.
Sec. 1701.5 Notice and review.
(a) The Director shall provide each Enterprise with written notice
of the annual assessment, the semiannual payments and any partial
payments to be collected under this part. In addition, the Director
shall provide each Enterprise with written notice of any changes in the
assessment procedures that the Director, in his or her sole discretion,
deems necessary under the circumstances.
(b) At the written request of an Enterprise, the Director, in his
or her discretion, may review the calculation of the proportional share
of the annual assessment, the semiannual payments and any partial
payments to be collected under this part. The determination of the
Director is final. Except as provided by the Director, review by the
Director does not suspend the requirement that the Enterprise make the
semiannual
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payment or partial payment on or before the date it is due.
Sec. 1701.6 Delinquent payments.
(a) The Director may assess interest and penalties on delinquent
semiannual payment or partial payments collected under this part in
accordance with 31 U.S.C. 3717 (Interest and Penalty on Claims) and 12
CFR part 1704 (debt collection). The Director may waive interest and
penalties in his or her discretion.
(b) Any interest and penalties collected under this section shall
be transferred to the general fund of the Treasury of the United
States.
Sec. 1701.7 Enforcement of payment.
Notwithstanding Sec. 1701.6, the Director may enforce the payment
of assessments under this part pursuant to the authorities of sections
1371 (cease-and-desist proceedings) (12 U.S.C. 4631), 1372 (12 U.S.C.
4632) (temporary cease-and-desist orders), and 1376 (12 U.S.C. 4636)
(civil money penalties) of the Act.
Sec. 1701.8 Deposit in fund.
OFHEO shall deposit annual assessments collected under this part in
the Federal Housing Enterprise Oversight Fund established in the
Treasury of the United States.
Dated: December 19, 2000.
Armando Falcon, Jr.,
Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 00-32780 Filed 12-26-00; 8:45 am]
BILLING CODE 4220-01-U