[Federal Register: April 19, 2006 (Volume 71, Number 75)]
[Rules and Regulations]
[Page 19985-19986]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ap06-1]
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Rules and Regulations
Federal Register
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[[Page 19985]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
12 CFR Chapter XVII
Office of Federal Housing Enterprise Oversight; Notice of
Regulatory Review
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Response to comments.
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SUMMARY: On September 7, 2005, the Office of Federal Housing Enterprise
Oversight (OFHEO) issued a notice of regulatory review (Notice), and
request for comments under OFHEO Policy Guidance 01-001 (April 2,
2001).\1\ OFHEO requested public comment as to whether existing
regulations have become inefficient or create unwarranted burden. This
document summarizes the comments that were received.
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\1\ 70 FR 53105 (September 7, 2005).
DATES: Written comments on the Notice were required to be received no
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later than November 7, 2005.
FOR FURTHER INFORMATION CONTACT: David A. Felt, Acting General Counsel,
telephone (202) 414-3750 (not a toll-free number); or Tina Dion,
Associate General Counsel, telephone (202) 414-3838 (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:
Background
The Federal Housing Enterprises Safety and Soundness Act of 1992,
Title XIII of Pub. L. 102-550, empowers the Director of OFHEO to
undertake rulemaking and such other actions as the Director determines
to be appropriate to oversee the activities and operations of Freddie
Mac and Fannie Mae (the Enterprises). In the course of exercising such
authority, the Director has promulgated regulations and issued
guidelines and supervisory policies.
OFHEO Policy Guidance 01-001 for regulatory review creates a
process for routine review and, where appropriate, revision of
regulations by OFHEO. Such a process provides for planned reviews of
the regulatory infrastructure and consideration of information under
uniform criteria to assist in determinations of whether an unnecessary
regulatory burden exists. Once a review is completed, the Director
determines what steps may be necessary to relieve any unnecessary
burden, including amendment to or repeal of existing regulations or
issuance of less formal guidance.
The review process is conducted by the Office of General Counsel,
under the direction of the General Counsel, and includes internal
consultation with other OFHEO offices and staff, guidance provided by
the Director, as well as consideration of public comments. A review and
report of findings and recommendations are provided to the Director.
The report of findings and recommendations is privileged and
confidential.
The regulatory review conducted under the Policy Guidance is not a
formal or informal rulemaking proceeding under the Administrative
Procedure Act and creates no right of action against OFHEO. Moreover,
the determination of OFHEO to conduct or not to conduct a review of a
regulation and any determination, finding, or recommendation resulting
from any review under the Policy Guidance are not final agency actions
and, as such, are not subject to judicial review.
Regulations Under Review
The regulations of OFHEO that were subject to the regulatory review
described in the Notice are codified in Title 12, Chapter XVII,
Subchapters A, C, and D, Parts 1700-1780 of the Code of Federal
Regulations (CFR). In addition to being found in the CFR, the
regulations (as well as the Policy Guidance referenced in this Notice)
are available on the OFHEO Web site, http://www.ofheo.gov, by clicking
on the ``Regulations and Policy Guidance'' category on the left side of
the webpage.
Request for Comments
The Office of the General Counsel invited comments on all aspects
of the proposed regulatory review, including legal and policy
considerations, and took all comments into consideration before issuing
its report of findings to the Director. The comment period was set at
60 days to afford ample opportunity for comment. All comments received
were made available to the public in the OFHEO Public Reading Room and
were posted on the OFHEO Web site at http://www.ofheo.gov.
Comments Received
Comments were received from Freddie Mac; the Mortgage Insurance
Companies of America (MICA); and the Consumer Mortgage Coalition (CMC),
a trade association of national mortgage lenders, servicers, and
service providers. A discussion of significant comments follows.
Freddie Mac commented that the Minimum Capital regulation (12 CFR
part 1750 subpart A) should be updated. OFHEO concurs that revisions to
the regulation are in order and currently is considering whether to
propose an amended regulation that would address FAS 133 and other
mark-to-market accounting pronouncements. Any proposed amendments would
be issued for public comment.
Also addressing capital regulation, MICA commented that OFHEO
should change the categorization of loan-to-value ratios (LTVs) for
risk-based capital purposes from the current approach, which does not
distinguish a first mortgage made concurrently with a second lien and
one without, to an approach based on the combined LTV of all loans
outstanding on a property, to the extent known (RBC Rule) (12 CFR part
1250 subpart B).
Freddie Mac commented that OFHEO should amend the Prompt
Supervisory Response and Corrective Action regulation (12 CFR part
1777) to eliminate provisions relating to the one-year transition
period that followed the effective date of the RBC rule. OFHEO is aware
that Subpart B of the regulation contains an out-of-date section and
would propose appropriate updates under a proposal for notice and
comment.
Commenting on the OFHEO Safety and Soundness regulation (12 CFR
part 1720), MICA stated that OFHEO should,
[[Page 19986]]
by regulation, bar the Enterprises from purchase of mortgages or
mortgage-backed securities that exceed the 80% LTV. However, the
Enterprises are already limited to the purchase of mortgages and
mortgage-backed securities that are similar in risk to those with an
80% LTV. Further, this proposal would not reduce regulatory burden,
which was the subject of this document.
CMC also commented on the Safety and Soundness regulation, stating
that OFHEO should augment the policy guidance on internal controls to
clarify that ultra vires acts also represent a failure of internal
controls. OFHEO would consider addressing this comment within the
context of corporate governance oversight as either a rule or guidance.
CMC further commented that OFHEO should augment the Safety and
Soundness regulation to include prohibitions on anticompetitive,
deceptive or unfair practices. OFHEO, as a matter or practice, would
refer such behavior if detected for review and determination by the
appropriate regulatory agency.
CMC commented that OFHEO should use two rating agencies to review
the Enterprises on a biennial basis, and a stand-alone basis. OFHEO
notes that it has such statutory authority under 12 U.S.C. 4519 to
employ such agencies and that this is a regulatory decision in the
discretion of the Director.
Consideration of Comments
All comments were taken into consideration, and where appropriate,
may be considered within the context of changes to OFHEO regulations or
new guidance. Some comments received, but not discussed here, would
require legislative changes and may not be acted upon under OFHEO's
current authority. OFHEO, nevertheless, appreciated comment on all
aspects of its regulatory program that may pose a burden.
Dated: April 14, 2006.
Stephen A. Blumenthal,
Acting Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 06-3762 Filed 4-18-06; 8:45 am]
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