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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Proposed Rules Hand Delivered/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/
RIN 2590AB13, Federal Housing Finance Agency, Eighth Floor, 400
Seventh Street SW, Washington, DC
20219. Deliver the package at the Seventh Street entrance Guard Desk, First Floor, on business days between 9
a.m. and 5 p.m.
U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service:
The mailing address for comments is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590AB13, Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW, Washington, DC 20219. Please note that all mail sent to FHFA via U.S. Mail is routed through a national irradiation facility, a process that may delay delivery by approximately two weeks.
For any time-sensitive correspondence, please plan accordingly.
FOR FURTHER INFORMATION CONTACT:
Ellen S. Bailey, Managing Associate General Counsel, 202 6493056, Ellen.Bailey@fhfa.gov; Francisco Medina, Assistant General Counsel, 202 6493076, Francisco.Medina@
fhfa.gov; Jason Cave, Deputy Director, Division of Resolutions, 202 6493027, Jason.Cave@fhfa.gov; or Sam Valverde, Principal Advisor, Division of Resolutions, 202 6493732, Sam.Valverde@fhfa.gov. These are not toll-free numbers. The mailing address is: Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC
20219. The telephone number for the Telecommunications Device for the Deaf is 800 8778339.
SUPPLEMENTARY INFORMATION:

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Comments FHFA invites comments on all aspects of the proposed rule and will take all comments into consideration before issuing a final rule. Copies of all comments will be posted without change, and will include any personal information you provide such as your name, address, email address, and telephone number, on the FHFA website at http www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public through the electronic rulemaking docket for this proposed rule also located on the FHFA website.
Table of Contents I. Background; Purpose of and Need for the Rule A. Business and Supervision of the Enterprises B. FHFA Appointment as Conservator for the Enterprises; Actions Necessary to End the Conservatorships
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C. Purpose of and Need for Resolution Planning II. The Proposed Rule A. Overview of the Resolution Planning Framework B. Identification of Core Business Lines and Associated Operations and Services C. Content and Form of an Enterprise Resolution Plan D. FHFA Review and Feedback, Plan Deficiencies, and the Credible Standard E. Corrective Processes; Significance as a Prudential Standard F. Corporate Governance Related to Resolution Planning G. Timing of Plan Submission; Interim Updates H. Effect of a Resolution Plan on Rights of Other Parties III. Section-by-Section Summary A. Section 1242.1 Purpose; Identification as a Prudential Standard B. Section 1242.2 Definitions C. Section 1242.3 Identification of Core Business Lines D. Section 1242.4 Credible Resolution Plan Required; Other Notices to FHFA
E. Section 1242.5 Informational Content of a Resolution Plan; Required and Prohibited Assumptions F. Section 1242.6 Form of Resolution Plan; Confidentiality G. Section 1242.7 Review of Resolution Plans; Resubmission of Deficient Resolution Plans H. Section 1242.8 No Limiting Effect or Private Right of Action IV. Comments Specifically Requested V. Paperwork Reduction Act VI. Regulatory Flexibility Act
I. Background; Purpose of and Need for the Rule A. Business and Supervision of the Enterprises Enterprise Purpose and Business.
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 on housing for lowand 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.1 To meet these purposes, the Enterprises are
statutorily authorized to engage in limited activitiesprimarily, the purchase and securitization of eligible mortgage loansand are directed to use their authority in some ways, such as meeting FHFA-established goals related to housing loans for lowand very lowincome families and serving underserved housing markets.2 Loans eligible for purchase or securitization by the Enterprises must meet statutory, regulatory, and business eligibility requirements.
Each Enterprise generally organizes its business activity into a single-family business and a multifamily business.
The Enterprise business models for supporting single-family and multifamily housing consist primarily of a guarantee business. Mortgage lenders participate in the mortgage-backed securities MBS swap and cash window programs, originating loans in accordance with Enterprise standards and either providing those loans to an Enterprise in exchange for securities guaranteed by the Enterprise or selling loans directly to the Enterprise for cash.
Among other things, the cash window enables smaller lenders to access the secondary market at competitive rates.
In the portfolio business, the Enterprises issue debt and invest the proceeds in whole loans that they hold on their balance sheets rather than securitizing, and in MBS. In the past, the Enterprises have had substantial portfolio businesses. The Enterprises ability to hold loans on their balance sheets continues to be important to support the cash window acquisition channel and to hold delinquent loans that have been bought out of pools of loans collateralizing MBS.
In both their portfolio and guarantee businesses, the Enterprises assume credit risk on purchased or securitized loans in the MBS swap and cash programs, the Enterprise assumes the credit risk in exchange for a guarantee fee. Statutory requirements for loan purchase eligibility reduce credit risk somewhat. For example, the Enterprises may not acquire single-family loans with loan-to-value ratios LTVs at the time of purchase in excess of 80 percent without additional credit enhancement, the most common form of which is private mortgage insurance.3 In both their multifamily and single-family businesses, the Enterprises may further reduce the credit risk they assume by engaging in risk management activities such as credit risk transfer CRT
transactions, where the Enterprises pay a fee to transfer some credit risk to 2 See,
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U.S.C. 1451 note and 1716.

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e.g., id. 1454, 1723a, 4561, and 4565.
U.S.C. 1454a2 and 1717b2.

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