SUMMARY: Section 1218 of the Housing and Economic Recovery Act of 2008 (HERA) requires the Federal Housing Finance Agency (FHFA) to permit the Federal Home Loan Banks (Banks) until July 30, 2010, to use Affordable Housing Program (AHP) homeownership set-aside funds to refinance low- or moderate-income households’ mortgage loans. On August 4, 2009, FHFA adopted an interim final rule that amended its AHP regulation to authorize the Banks to provide AHP direct subsidies through their members under their homeownership set-aside programs to assist low- or moderate-income households who qualify for refinancing assistance under eligible federal, state and local targeted refinancing programs, including the Hope for Homeowners Program and the Administration’s Making Home Affordable Refinancing Program. The interim final rule also enhanced the ability of the Banks to respond to the mortgage crisis by providing greater flexibility to accelerate their future annual statutory AHP contributions for use in their AHP homeownership set-aside programs in the current year, and by permitting the Banks to adopt multiple housing needs under their Second District Priority scoring criterion under the AHP competitive application program.

FHFA invited comments on the interim final rule and has taken all comments into consideration. Based on the comments received and the considerations discussed in the 2009 interim final rule, FHFA is adopting the interim final rule as a final rule, with the following changes. The final rule provides the Banks with greater flexibility to manage the timing of the counseling required for households, and gives the Banks discretion to permit members to determine, prior to counseling, whether a household could qualify, in conjunction with AHP subsidy, for refinancing under an eligible targeted refinancing program, or to refer households directly to eligible targeted refinancing programs for such determinations. The final rule also permits a Bank, in its discretion, to allow members to enroll households in the AHP refinancing set-aside program prior to counseling. In all cases, the household must obtain the counseling prior to disbursement of the AHP subsidy on behalf of the household. The final rule also permits a Bank to commit AHP subsidies under its set-aside refinancing program to members by the sunset date of July 30, 2010, where a Bank’s set-aside operating procedure is to commit subsidies to members rather than directly to households. In order to accommodate this change as well as the earlier enrollment of, and commitment of AHP subsidy to, households, and determinations of whether households could qualify for an eligible targeted refinancing program, the final rule extends the date by which households must have submitted applications for refinancing to an eligible targeted refinancing program from July 30, 2010 to December 31, 2010, which are subsequently approved by the eligible targeted refinancing program. In addition, the final rule makes the payment of counseling costs for assisted households an eligible use of AHP subsidy under the set-aside refinancing program where the costs have not been covered by another source, including the counseling organization, a funding source, or the member.

DATES: The final rule is effective on May 28, 2010.​