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Federal Register / Vol. 86, No. 241 / Monday, December 20, 2021 / Rules and Regulations private-label securitization market between securitizations of prime/
jumbo loans 16 which typically meet the characteristics of QM and are, therefore, exempt from risk retention as QRM, and securitizations of non-QM
loans that are not QRM and, therefore, generally not exempt from risk retention. However, according to industry sources, the market for securitizations of non-QM loans was quite competitive through the end of 2019, which suggests that risk retention did not materially affect the ability of issuers in this market to obtain capital needed for mortgage originations.17
In light of the foregoing, the agencies are not proposing to amend the definition of QRM at this time.
Community-Focused Residential Mortgages
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Community-focused residential mortgages are mortgages made by community development financial institutions CDFIs, community housing development organizations, certain non-profits, or certain secondary financing providers, or through a state housing finance agency HFA program.
These entities frequently make mortgage loans using flexible underwriting criteria that are not compatible with the TILA ability-to-repay requirements. To ensure continued borrower access to these loan programs, the CFPB
exempted these loans from the TILA
ability-to-repay requirement and, as a result, such loans are unable to be made as QMs. Similarly, the agencies provided a separate exemption for these loans from the risk retention requirement. The agencies justified this exemption by citing the strong underwriting procedures to maximize affordability and borrower success in keeping their homes and noted that the exemption serves the public interest because these entities have stated public mission purposes to make safe, sustainable loans available primarily to low-to moderate-income communities. 18 In the years since adoption of the Credit Risk Retention Regulations, only a few CDFIs have used this exemption.19 While HFAs have not 16 These securitizations are typically collateralized by jumbo mortgages that are ineligible for purchase by the Enterprises because they exceed the conventional loan limits set by the FHFA and by prime loans that are offered to highly qualified borrowers. These mortgages typically meet the QRM
standards.
17 See, e.g., On the Rise: Trading Desks Focusing on Non-QM Paper. Inside MBS & ABS, Inside Mortgage Finance Publications, 2019.30, 6.
18 79 FR 77602, 77694 December 24, 2014.
19 The agencies identified seven securitizations that relied upon this exemption since 2019; these
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used this exemption, discussions with market participants revealed that private securitization could become a more attractive option if a state HFA needed to issue bonds in excess of its taxexempt allotment. Therefore, the agencies, at this time, are not proposing to amend the exemption for communityfocused residential mortgages.
Three-to-Four Unit Residential Mortgages Mortgages that are collateralized by three-to-four-unit properties are defined as business purpose loans rather than consumer credit transactions under TILA, and as such are not subject to the ability-to-repay requirement, and are unable to qualify as QMs. The agencies recognized that securitization markets typically pool mortgages collateralizing three-to-four-unit residential mortgages with other residential mortgage loans.
The agencies also provided an exemption for three-to-four-unit residential mortgages that otherwise would qualify as QMs to ensure that credit did not contract to this part of the market. The number of mortgages collateralized by three-to-four-unit properties, and the percentage of such mortgages funded through private-label securitizations, is small.20 The exemption also does not appear to be spurring any significant speculative activity in the securitization market and, at the same time, these properties are a source of affordable housing. Therefore, the agencies are not proposing to amend this exemption at this time.
Michael J. Hsu, Acting Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve System.
Ann E. Misback, Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on December 14, 2021.
James P. Sheesley, Assistant Executive Secretary.
Dated: December 14, 2021.

securitizations funded approximately $610 million in community-focused residential mortgages.
20 Based on data reported under the Home Mortgage Disclosure Act HMDA, there were about 35,000 such purchase originations in 2018 and 2019
combined, and of these, less than 2 percent appear to have been funded through private-label securitizations.

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By the Securities and Exchange Commission.
Vanessa A. Countryman, Secretary.
Sandra L. Thompson, Acting Director, Federal Housing Finance Agency.
By the Department of Housing and Urban Development.
Lopa P. Kolluri, Principal Deputy Assistant Secretary for Housing, Federal Housing Commissioner.
FR Doc. 202127561 Filed 121721; 8:45 am BILLING CODE 421067;481033; 621001; 6714
01;201101807001P

FEDERAL RESERVE SYSTEM
12 CFR Part 228
Regulation BB; Docket No. R1763
RIN 7100AG 25

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 345
RIN 3064AF79

Community Reinvestment Act Regulations Board of Governors of the Federal Reserve System Board; Federal Deposit Insurance Corporation FDIC.
ACTION: Joint final rule; technical amendment.
AGENCY:

The Board and the FDIC
collectively, the Agencies are amending their Community Reinvestment Act CRA regulations to adjust the asset-size thresholds used to define small bank and intermediate small bank. As required by the CRA
regulations, the adjustment to the threshold amount is based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers CPIW.
DATES: Effective January 1, 2022.
FOR FURTHER INFORMATION CONTACT:
Board: Amal S. Patel, Counsel, 202
9127879, or Cathy Gates, Senior Project Manager, 202 4522099, Division of Consumer and Community Affairs; or Gavin L. Smith, Senior Counsel, 202
4523474, or Cody M. Gaffney, Attorney, 202 4522674, Legal Division, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551.
FDIC: Patience R. Singleton, Senior Policy Analyst, Supervisory Policy Branch, Division of Depositor and Consumer Protection, 202 8986859;
or Richard M. Schwartz, Counsel, Legal SUMMARY:

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