Fair Lending, Fair Housing, and Equitable Housing Finance Plans

<RULE> FEDERAL HOUSING FINANCE AGENCY <CFR>12 CFR Part 1293</CFR> <RIN>RIN 2590-AB29</RIN> <SUBJECT>Fair Lending, Fair Housing, and Equitable Housing Finance Plans</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Housing Finance Agency. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> 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. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> 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. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Renita Roberts, Policy Analyst, Office of Fair Lending Oversight, (202) 809-2610, <E T="03">Renita.Roberts@fhfa.gov,</E> 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, <E T="03">Lindsey.Cope@fhfa.gov.</E> 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. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Overview of the Proposed Rule</FP> <FP SOURCE="FP-2">II. Discussion of Comments and Agency Response</FP> <FP SOURCE="FP1-2">A. Overview of Comments Received</FP> <FP SOURCE="FP1-2">B. Unfair or Deceptive Acts or Practices</FP> <FP SOURCE="FP1-2">C. Board Standards and Responsibilities</FP> <FP SOURCE="FP1-2">D. Certification of Compliance</FP> <FP SOURCE="FP1-2">E. Mission-Specific Board Standards and Responsibilities</FP> <FP SOURCE="FP1-2">F. Determination Not To Designate Enterprise Equitable Housing Finance Planning as a Prudential Management and Operations Standard</FP> <FP SOURCE="FP1-2">G. Determination Not To Define “Equity”</FP> <FP SOURCE="FP1-2">H. Resource Disclosures</FP> <FP SOURCE="FP1-2">I. Public Engagement</FP> <FP SOURCE="FP1-2">J. Program Evaluation</FP> <FP SOURCE="FP1-2">K. Reporting on Bank Voluntary Actions To Address Barriers to Sustainable Housing Opportunities</FP> <FP SOURCE="FP1-2">L. Data Collection</FP> <FP SOURCE="FP1-2">M. Authority and Consistency With Law</FP> <FP SOURCE="FP-2">III. Summary of Changes in the Final Rule</FP> <FP SOURCE="FP1-2">A. Section 1293.1(d), Severability Clause</FP> <FP SOURCE="FP1-2">B. Section 1293.12(a), Reports, Data, and Certification</FP> <FP SOURCE="FP1-2">C. Section 1293.12(b), Certification of Compliance</FP> <FP SOURCE="FP1-2">D. Section 1293.21, General</FP> <FP SOURCE="FP1-2">E. Section 1293.23, Resource Disclosures, Additions, and Clarifying Edits</FP> <FP SOURCE="FP1-2">F. Section 1293.27, Program Evaluation</FP> <FP SOURCE="FP1-2">G. Section 1293.31, Federal Home Loan Bank Equitable Housing Finance Planning</FP> <FP SOURCE="FP-2">IV. Consideration of Differences Between the Banks and the Enterprises</FP> <FP SOURCE="FP-2">V. Regulatory Analyses</FP> <FP SOURCE="FP1-2">A. Paperwork Reduction Act</FP> <FP SOURCE="FP1-2">B. Regulatory Flexibility Act</FP> <FP SOURCE="FP1-2">C. Congressional Review Act</FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> 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  <SU>1</SU> <FTREF/> for underserved communities. <SU>2</SU> <FTREF/> 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. <FTNT> <SU>1</SU>  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. </FTNT> <FTNT> <SU>2</SU>  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. </FTNT> 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 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. <HD SOURCE="HD2">A. Background</HD> <E T="03">FHFA, the Regulated Entities, and their Public Purposes.</E> 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. <SU>3</SU> <FTREF/> <FTNT> <SU>3</SU>   <E T="03">See</E> 12 U.S.C. 1451 (note) and 1716. </FTNT> 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), <SU>4</SU> <FTREF/> 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. <FTNT> <SU>4</SU>   <E T="03">See</E> 12 U.S.C. 1421 <E T="03">et seq.</E> </FTNT> 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. <SU>5</SU> <FTREF/> 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. <SU>6</SU> <FTREF/> <FTNT> <SU>5</SU>   <E T="03">See</E> 12 U.S.C. 4511(b). </FTNT> <FTNT> <SU>6</SU>   <E T="03">See</E> 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). </FTNT> 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 homeb ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 171k characters. 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