[Code of Federal Regulations]

[Title 24, Volume 1]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR81.16]



[Page 447-450]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

PART 81_THE SECRETARY OF HUD'S REGULATION OF THE FEDERAL NATIONAL 

MORTGAGE ASSOCIATION (FANNIE MAE) AND THE FEDERAL HOME LOAN MORTGAGE 

CORPORATION (FREDDIE MAC)--Table of Contents

 

                         Subpart B_Housing Goals

 

Sec.  81.16  Special counting requirements.



    (a) General. HUD shall determine whether a GSE shall receive full, 

partial, or no credit for a transaction toward achievement of any of the 

housing goals. In this determination, HUD will consider whether a 

transaction or activity of the GSE is substantially equivalent to a 

mortgage purchase and either creates a new market or adds liquidity to 

an existing market, provided however that such mortgage purchase 

actually fulfills the GSE's purposes and is in accordance with its 

Charter Act.

    (b) Not counted. The following transactions or activities shall not 

count toward achievement of any of the housing goals and shall not be 

included in the denominator in calculating either GSE's performance 

under the housing goals:

    (1) Equity investments in housing development projects;

    (2) Purchases of State and local government housing bonds except as 

provided in 81.16(c)(8);

    (3) Purchases of non-conventional mortgages except:

    (i) Where such mortgages are acquired under a risk-sharing 

arrangement with a Federal agency;

    (ii) Mortgages insured under HUD's Home Equity Conversion Mortgage 

(``HECM'') insurance program, 12 U.S.C. 1715z-20; mortgages guaranteed 

under the Rural Housing Service's Single Family Housing Guaranteed Loan 

Program, 42 U.S.C. 1472; mortgages on properties on lands insured under 

FHA's Section 248 program, 12 U.S.C. 1715z-13, or HUD's Section 184 

program, 12 U.S.C. 1515z-13a, or Title VI of the Native American Housing 

Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191-4195; and 

mortgages with expiring assistance contracts as defined at 42 U.S.C. 

1737f;

    (iii) Mortgages under other mortgage programs involving Federal 

guarantees, insurance or other Federal obligation where the Department 

determines in writing that the financing needs addressed by the 

particular mortgage program are not well served and that the mortgage 

purchases under such program should count under the housing goals, 

provided the GSE submits documentation to HUD that supports eligibility 

and that HUD makes such a determination, or

    (iv) As provided in Sec.  81.14(e)(3)

    (4) Commitments to buy mortgages at a later date or time;

    (5) Options to acquire mortgages;

    (6) Rights of first refusal to acquire mortgages;

    (7) Any interests in mortgages that the Secretary determines, in 

writing, shall not be treated as interests in mortgages;

    (8) Mortgage purchases to the extent they finance any dwelling units 

that are secondary residences; and

    (9) Single family mortgage refinancings that result from conversion 

of balloon notes to fully amortizing notes, if the GSE already owns or 

has an interest in the balloon note at the time conversion occurs.

    (10) Any combination of factors in paragraphs (b)(1) through (9) of 

this section.

    (c) Other special rules. Subject to HUD's primary determination of 

whether a GSE shall receive full, partial, or no credit for a 

transaction toward achievement of any of the housing goals as provided 

in paragraph (a) of this section, the following supplemental rules 

apply:

    (1) Credit enhancements. (i) Dwelling units financed under a credit 

enhancement entered into by a GSE shall be treated as mortgage purchases 

and count toward achievement of the housing goals when:

    (A) The GSE provides a specific contractual obligation to ensure 

timely payment of amounts due under a mortgage or mortgages financed by 

the issuance of housing bonds (such bonds may be issued by any entity, 

including a State or local housing finance agency);

    (B) The GSE assumes a credit risk in the transaction substantially 

equivalent to the risk that would have been assumed by the GSE if it had 

securitized the mortgages financed by such bonds; and

    (C) Such dwelling units otherwise qualify under this part.



[[Page 448]]



    (ii) When a GSE provides a specific contractual obligation to ensure 

timely payment of amounts due under any mortgage originally insured by a 

public purpose mortgage insurance entity or fund, the GSE may, on a 

case-by-case basis, seek approval from the Secretary for such activities 

to count toward achievement of the housing goals.

    (2) Real estate mortgage investment conduits (``REMICs''). (i) A 

GSE's purchase or guarantee of all or a portion of a REMIC shall be 

treated as a mortgage purchase and receive credit toward the achievement 

of the housing goals provided:

    (A) The underlying mortgages or mortgage-backed securities for the 

REMIC were not:

    (1) Guaranteed by the Government National Mortgage Association; or

    (2) Previously counted toward any housing goal by the GSE; and

    (B) The GSE has the information necessary to support counting the 

dwelling units financed by the REMIC, or that part of the REMIC 

purchased or guaranteed by the GSE, toward the achievement of a 

particular housing goal.

    (ii) For REMICs that meet the requirements in paragraph (c)(2)(i) of 

this section and for which the GSE purchased or guaranteed:

    (A) The whole REMIC, all of the units financed by the REMIC shall be 

treated as a mortgage purchase and count toward achievement of the 

housing goals; or

    (B) A portion of the REMIC, the GSE shall receive partial credit 

toward achievement of the housing goals. This credit shall be equal to 

the percentage of the REMIC purchased or guaranteed by the GSE (the 

dollar amount of the purchase or guarantee divided by the total dollar 

amount of the REMIC) multiplied by the number of dwelling units that 

would have counted toward the goal(s) if the GSE had purchased or 

guaranteed the whole REMIC. In calculating performance under the housing 

goals, the denominator shall include the number of dwelling units 

included in the whole REMIC multiplied by the percentage of the REMIC 

purchased or guaranteed by the GSE.

    (3) Risk-sharing. Mortgage purchases under risk-sharing arrangements 

between the GSEs and any Federal agency where the units would otherwise 

count toward achievement of the housing goal under which the GSE is 

responsible for a substantial amount (50 percent or more) of the risk 

shall be treated as mortgage purchases and count toward achievement of 

the housing goal or goals.

    (4) Participations. Participations purchased by a GSE shall be 

treated as mortgage purchases and count toward the achievement of the 

housing goals, if the GSE's participation in the mortgage is 50 percent 

or more.

    (5) Cooperative housing and condominium projects. (i) The purchase 

of a mortgage on a cooperative housing unit (``a share loan'') or a 

condominium unit is a mortgage purchase. Such a purchase is counted 

toward achievement of a housing goal in the same manner as a mortgage 

purchase of single-family owner-occupied units, i.e., affordability is 

based on the income of the owner(s).

    (ii) The purchase of a mortgage on a cooperative building (``a 

blanket loan'') or a condominium project is a mortgage purchase and 

shall count toward achievement of the housing goals. Where a GSE 

purchases both ``a blanket loan'' and mortgages for units in the same 

building (``share loans''), both the blanket loan and the share loan(s) 

are mortgage purchases and shall count toward achievement of the housing 

goals. Where a GSE purchases both a condominium project mortgage and 

mortgages on condominium dwelling units in the same project, both the 

condominium project mortgages and the mortgages on condominium dwelling 

units are mortgage purchases and shall count toward achievement of the 

housing goals.

    (6) Seasoned mortgages. A GSE's purchase of a seasoned mortgage 

shall be treated as a mortgage purchase for purposes of these goals and 

shall be included in the numerator, as appropriate, and the denominator 

in calculating the GSE's performance under the housing goals, except 

where:

    (i) The GSE has already counted the mortgage under a housing goal 

applicable to 1993 or any subsequent year; or



[[Page 449]]



    (ii) HUD determines, based upon a written request by a GSE, that a 

seasoned mortgage or class of such mortgages should be excluded from the 

numerator and the denominator in order to further the purposes of the 

Special Affordable Housing Goal.

    (7) Purchase of refinanced mortgages. Except as otherwise provided 

in this part, the purchase of a refinanced mortgage by a GSE is a 

mortgage purchase and shall count toward achievement of the housing 

goals to the extent the mortgage qualifies.

    (8) Mortgage revenue bonds. (i) The purchase of a state or local 

mortgage revenue bond shall be treated as a mortgage purchase and units 

financed under such MRB shall count toward achievement of the goals 

where:

    (A) The MRB is to be repaid only from the principal and interest of 

the underlying mortgages originated with funds made available by the 

MRB; and

    (B) The MRB is not a general obligation of a state or local 

government or agency or is not credit enchanced by any government or 

agency, third party guarantor or surety.

    (ii) Dwelling units financed by a mortgage revenue bond meeting the 

requirements of paragraph (c)(8)(i) of this section shall count toward a 

housing goal to the extent such dwelling units otherwise qualify under 

this part.

    (9) Expiring assistance contracts. In accordance with 12 U.S.C. 

4565(a)(5), actions that assist in maintaining the affordability of 

assisted units in eligible multifamily housing projects with expiring 

contracts shall receive credit under the housing goals as provided in 

paragraph (b)(3)(ii) and in accordance with paragraphs (b) and (c)(1) 

through (c)(9) of this section.

    (i) For restructured (modified) multifamily mortgage loans with an 

expiring assistance contract where a GSE holds the loan in portfolio and 

facilitates modification of loan terms that results in lower debt 

service to the project's owner, the GSE shall receive full credit under 

any of the housing goals for which the units covered by the mortgage 

otherwise qualify.

    (ii) Where a GSE undertakes more than one action to assist a single 

project or where a GSE engages in an activity that it believes assists 

in maintaining the affordability of assisted units in eligible 

multifamily housing projects but which is not otherwise covered in 

paragraph (c)(9)(i) of this section, the GSE must submit the transaction 

to HUD for a determination on appropriate goals counting treatment.

    (10)-(11) [Reserved]

    (12) HOEPA mortgages and mortgages with unacceptable terms and 

conditions. HOEPA mortgages and mortgages with unacceptable terms or 

conditions as defined in Sec.  81.2 will not receive credit toward any 

of the three housing goals.

    (13) Mortgages contrary to good lending practices. The Secretary 

will monitor the practices and processes of the GSEs to ensure that they 

are not purchasing loans that are contrary to good lending practices as 

defined in Sec.  81.2. Based on the results of such monitoring, the 

Secretary may determine in accordance with paragraph (d) of this section 

that mortgages or categories of mortgages where a lender has not engaged 

in good lending practices will not receive credit toward the three 

housing goals.

    (14) Seller dissolution option. (i) Mortgages acquired through 

transactions involving seller dissolution options shall be treated as 

mortgage purchases, and receive credit toward the achievement of the 

housing goals, only when:

    (A) The terms of the transaction provide for a lockout period that 

prohibits the exercise of the dissolution option for at least one year 

from the date on which the transaction was entered into by the GSE and 

the seller of the mortgages; and

    (B) The transaction is not dissolved during the one-year minimum 

lockout period.

    (ii) The Secretary may grant an exception to the one-year minimum 

lockout period described in paragraph (c)(14)(i)(A) and (B) of this 

section, in response to a written request from an enterprise, if the 

Secretary determines that the transaction furthers the purposes of 

FHEFSSA and the GSE's charter act;

    (iii) For purposes of this paragraph (c)(14), ``seller dissolution 

option''



[[Page 450]]



means an option for a seller of mortgages to the GSEs to dissolve or 

otherwise cancel a mortgage purchase agreement or loan sale.

    (d) HUD review of transactions. HUD will determine whether a class 

of transactions counts as a mortgage purchase under the housing goals. 

If a GSE seeks to have a class of transactions counted under the housing 

goals that does not otherwise count under the rules in this part, the 

GSE may provide HUD detailed information regarding the transactions for 

evaluation and determination by HUD in accordance with this section. In 

making its determination, HUD may also request and evaluate additional 

information from a GSE with regard to how the GSE believes the 

transactions should be counted. HUD will notify the GSE of its 

determination regarding the extent to which the class of transactions 

may count under the goals.



[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65088, Oct. 31, 2000; 69 

FR 63642, Nov. 2, 2004]