§4502 — Title 12 Banks and Banking | U.S. Code

Summary

Defines the main words used in this chapter and what they mean. Affiliate means a company that controls, is controlled by, or shares common control with an enterprise. Agency means the Federal Housing Finance Agency. Authorizing statutes are the Federal National Mortgage Association Charter Act; the Federal Home Loan Mortgage Corporation Act; and the Federal Home Loan Bank Act. Board means the Federal Housing Finance Oversight Board. Capital distribution means dividends or other cash or property payments (not stock-only dividends), share buybacks or redemptions (including financed buys), and other transactions the Director treats as capital distributions; payments to buy back shares to satisfy a qualified employee stock ownership plan under section 401 of title 26 are not capital distributions. Compensation means pay or other things of current or potential value tied to employment. Core capital is the sum of common stock value, perpetual noncumulative preferred stock value, paid-in capital, and retained earnings. Default means a court or the Agency has appointed a conservator, receiver, limited-life regulated entity, or legal custodian for a regulated entity; in danger of default means the Agency believes the entity is unlikely to meet obligations in the normal course or has losses that will wipe out most or all capital with no reasonable prospect of replenishment. Director means the Director of the Federal Housing Finance Agency. Enterprise means the Federal National Mortgage Association (and its affiliates) and the Federal Home Loan Mortgage Corporation (and its affiliates). Entity-affiliated party includes directors, officers, employees, controlling stockholders, agents, shareholders, affiliates, consultants, joint venture partners, certain independent contractors who knowingly or recklessly help cause violations or unsafe practices that cause more than minimal financial loss, not-for-profit corporations funded mainly by a regulated entity, and the Office of Finance. Executive officer lists top corporate officers like the chair, CEO, CFO, president, vice chair, executive VPs, and senior VPs in charge of major units. Limited-life regulated entity is an entity the Agency creates for a Federal Home Loan Bank or an enterprise that is in default or in danger of default. Low-income means household income up to 80% of area median income (AMI) for owner-occupied or rental units, with household-size adjustments for rentals as set by the Director. Median income means the unadjusted median family income for an area as published yearly by the Director. Moderate-income means income up to area median income, with rental adjustments as set by the Director. Mortgage purchases include mortgages bought for the portfolio or for securitization. Multifamily housing means buildings with more than 4 units. Office of Finance means the Office of Finance of the Federal Home Loan Bank System or its successor. Regulated entity means Fannie Mae, Freddie Mac, their affiliates, and any Federal Home Loan Bank. Single family housing means homes with 1 to 4 units. State includes all U.S. States, D.C., Puerto Rico, the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and other U.S. territories or possessions. Total capital equals core capital plus a general allowance for foreclosure losses (which must include allowances for portfolio mortgage losses, nonreimbursable foreclosure costs on government claims, and estimated foreclosure losses on mortgage-backed securities but not reserves against specific assets) and any other loss-absorbing amounts the Director allows. Very low-income generally means income up to 50% of AMI; for sections 4568 and 4569 it means income greater than 30% but not more than 50% of AMI (with rental adjustments as set by the Director). Violation includes actions to cause, help, advise, or take part in a breach. Conforming mortgage means a conventional mortgage whose original principal does not exceed the dollar limit in effect under the relevant statute for that enterprise. Extremely low-income means income up to 30% of AMI (with rental adjustments as set by the Director). Low-income area means a census tract or block where median income is 80% or less of the larger area’s median, and for certain rules includes families up to 100% of AMI in minority tracts or designated disaster areas. Minority census tract means a tract with at least 30% minority population and median family income below 100% of the area median. Shortage of standard rental units for extremely low-income renters means the gap between the number of units with full plumbing and kitchens renting at 30% or less of 30% of the adjusted AMI (occupied by or vacant for extremely low-income renters) and the number of extremely low-income renter households; if the supply exceeds the number of such households, there is no shortage. The similar shortage for very low-income renters uses units renting at 30% or less of 50% of adjusted AMI and compares those units to the combined number of extremely low- and very low-income renter households; if supply exceeds demand, there is no shortage.

Title 12, §4502

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For purposes of this chapter:

(1)Except as provided by the Director, the term “affiliate” means any entity that controls, is controlled by, or is under common control with, an enterprise.

(2)The term “Agency” means the Federal Housing Finance Agency established under section 4511 of this title.

(3)The term “authorizing statutes” means—

(A)the Federal National Mortgage Association Charter Act;

(B)the Federal Home Loan Mortgage Corporation Act; and

(C)the Federal Home Loan Bank Act.

(4)The term “Board” means the Federal Housing Finance Oversight Board established under section 4513a of this title.

(5)(A)The term “capital distribution” means—

(i)any dividend or other distribution in cash or in kind made with respect to any shares of, or other ownership interest in, an enterprise, except a dividend consisting only of shares of the enterprise;

(ii)any payment made by an enterprise to repurchase, redeem, retire, or otherwise acquire any of its shares, including any extension of credit made to finance an acquisition by the enterprise of such shares; and

(iii)any transaction that the Director determines by regulation to be, in substance, the distribution of capital.

(B)Any payment made by an enterprise to repurchase its shares for the purpose of fulfilling an obligation of the enterprise under an employee stock ownership plan that is qualified under section 401 of title 26 or any substantially equivalent plan, as determined by the Director, shall not be considered a capital distribution.

(6)The term “compensation” means any payment of money or the provision of any other thing of current or potential value in connection with employment.

(7)The term “core capital” means, with respect to an enterprise, the sum of the following (as determined in accordance with generally accepted accounting principles):

(A)The par or stated value of outstanding common stock.

(B)The par or stated value of outstanding perpetual, noncumulative preferred stock.

(C)Paid-in capital.

(D)Retained earnings.

(8)(A)The term “default” means, with respect to a regulated entity, any adjudication or other official determination by any court of competent jurisdiction, or the Agency, pursuant to which a conservator, receiver, limited-life regulated entity, or legal custodian is appointed for a regulated entity.

(B)The term “in danger of default” means a regulated entity with respect to which, in the opinion of the Agency—

(i)the regulated entity is not likely to be able to pay the obligations of the regulated entity in the normal course of business; or

(ii)the regulated entity—

(I)has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and

(II)there is no reasonable prospect that the capital of the regulated entity will be replenished.

(9)The term “Director” means the Director of the Federal Housing Finance Agency.

(10)The term “enterprise” means—

(A)the Federal National Mortgage Association and any affiliate thereof; and

(B)the Federal Home Loan Mortgage Corporation and any affiliate thereof.

(11)The term “entity-affiliated party” means—

(A)any director, officer, employee, or controlling stockholder of, or agent for, a regulated entity;

(B)any shareholder, affiliate, consultant, or joint venture partner of a regulated entity, and any other person, as determined by the Director (by regulation or on a case-by-case basis) that participates in the conduct of the affairs of a regulated entity, provided that a member of a Federal Home Loan Bank shall not be deemed to have participated in the affairs of that Bank solely by virtue of being a shareholder of, and obtaining advances from, that Bank;

(C)any independent contractor for a regulated entity (including any attorney, appraiser, or accountant), if—

(i)the independent contractor knowingly or recklessly participates in—

(I)any violation of any law or regulation;

(II)any breach of fiduciary duty; or

(III)any unsafe or unsound practice; and

(ii)such violation, breach, or practice caused, or is likely to cause, more than a minimal financial loss to, or a significant adverse effect on, the regulated entity;

(D)any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any regulated entity; and

(E)the Office of Finance.

(12)The term “executive officer” means, with respect to an enterprise, the chairman of the board of directors, chief executive officer, chief financial officer, president, vice chairman, any executive vice president, and any senior vice president in charge of a principal business unit, division, or function.

(13)The term “limited-life regulated entity” means an entity established by the Agency under section 4617(i) of this title with respect to a Federal Home Loan Bank in default or in danger of default or with respect to an enterprise in default or in danger of default.

(14)The term “low-income” means—

(A)in the case of owner-occupied units, income not in excess of 80 percent of area median income; and

(B)in the case of rental units, income not in excess of 80 percent of area median income, with adjustments for smaller and larger families, as determined by the Director.

(15)The term “median income” means, with respect to an area, the unadjusted median family income for the area, as determined and published annually by the Director.

(16)The term “moderate-income” means—

(A)in the case of owner-occupied units, income not in excess of area median income; and

(B)in the case of rental units, income not in excess of area median income, with adjustments for smaller and larger families, as determined by the Director.

(17)The term “mortgage purchases” includes mortgages purchased for portfolio or securitization.

(18)The term “multifamily housing” means a residence consisting of more than 4 dwelling units.

(19)The term “Office of Finance” means the Office of Finance of the Federal Home Loan Bank System (or any successor thereto).

(20)The term “regulated entity” means—

(A)the Federal National Mortgage Association and any affiliate thereof;

(B)the Federal Home Loan Mortgage Corporation and any affiliate thereof; and

(C)any Federal Home Loan Bank.

(21)The term “single family housing” means a residence consisting of 1 to 4 dwelling units.

(22)The term “State” means the States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States.

(23)The term “total capital” means, with respect to an enterprise, the sum of the following:

(A)The core capital of the enterprise; 11 So in original. The semicolon probably should be a period.

(B)A general allowance for foreclosure losses, which—

(i)shall include an allowance for portfolio mortgage losses, an allowance for nonreimbursable foreclosure costs on government claims, and an allowance for liabilities reflected on the balance sheet for the enterprise for estimated foreclosure losses on mortgage-backed securities; and

(ii)shall not include any reserves of the enterprise made or held against specific assets.

(C)Any other amounts from sources of funds available to absorb losses incurred by the enterprise, that the Director by regulation determines are appropriate to include in determining total capital.

(24)(A)The term “very low-income” means—

(i)in the case of owner-occupied units, families having incomes not greater than 50 percent of the area median income; and

(ii)in the case of rental units, families having incomes not greater than 50 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director.

(B)For purposes of section 22 So in original. Probably should be “sections”. 4568 and 4569 of this title, the term “very low-income” means—

(i)in the case of owner-occupied units, income in excess of 30 percent but not greater than 50 percent of the area median income; and

(ii)in the case of rental units, income in excess of 30 percent but not greater than 50 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director.

(25)The term “violation” includes any action (alone or in combination with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.

(26)The term “conforming mortgage” means, with respect to an enterprise, a conventional mortgage having an original principal obligation that does not exceed the dollar amount limitation in effect at the time of such origination and applicable to such mortgage, under, as applicable—

(A)section 302(b)(2) of the Federal National Mortgage Association Charter Act [12 U.S.C. 1717(b)(2)]; or

(B)section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1454(a)(2)].

(27)The term “extremely low-income” means—

(A)in the case of owner-occupied units, income not in excess of 30 percent of the area median income; and

(B)in the case of rental units, income not in excess of 30 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director.

(28)The term “low-income area” means a census tract or block numbering area in which the median income does not exceed 80 percent of the median income for the area in which such census tract or block numbering area is located, and, for the purposes of section 4562(a)(1)(B) of this title, shall include families having incomes not greater than 100 percent of the area median income who reside in minority census tracts and shall include families having incomes not greater than 100 percent of the area median income who reside in designated disaster areas.

(29)The term “minority census tract” means a census tract that has a minority population of at least 30 percent and a median family income of less than 100 percent of the area family median income.

(30)(A)The term “shortage of standard rental units both affordable and available to extremely low-income renter households” means the gap between—

(i)the number of units with complete plumbing and kitchen facilities with a rent that is 30 percent or less of 30 percent of the adjusted area median income as determined by the Director that are occupied by extremely low-income renter households or are vacant for rent; and

(ii)the number of extremely low-income renter households.

(B)If the number of units described in subparagraph (A)(i) exceeds the number of extremely low-income households as described in subparagraph (A)(ii), there is no shortage.

(31)(A)The term “shortage of standard rental units both affordable and available to very low-income renter households” means the gap between—

(i)the number of units with complete plumbing and kitchen facilities with a rent that is 30 percent or less of 50 percent of the adjusted area median income as determined by the Director that are occupied by either extremely low- or very low-income renter households or are vacant for rent; and

(ii)the number of extremely low- and very low-income renter households.

(B)If the number of units described in subparagraph (A)(i) exceeds the number of extremely low- and very low-income households as described in subparagraph (A)(ii), there is no shortage.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in text, was in the original “this title”, meaning title XIII of Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see

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note set out under section 4501 of this title and Tables. The Federal National Mortgage Association Charter Act, referred to in par. (3)(A), is title III of act June 27, 1934, ch. 847, 48 Stat. 1252, which is classified generally to subchapter III (§ 1716 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see

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note set out under section 1716 of this title and Tables. The Federal Home Loan Mortgage Corporation Act, referred to in par. (3)(B), is title III of Pub. L. 91–351, July 24, 1970, 84 Stat. 451, which is classified generally to chapter 11A (§ 1451 et seq.) of this title. For complete classification of this Act to the Code, see

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and Statement of Purpose note set out under section 1451 of this title and Tables. The Federal Home Loan Bank Act, referred to in par. (3)(C), is act July 22, 1932, ch. 522, 47 Stat. 725, which is classified generally to chapter 11 (§ 1421 et seq.) of this title. For complete classification of this Act to the Code, see section 1421 of this title and Tables.

Amendments

2008—Pub. L. 110–289, § 1002(a)(2)–(14), added pars. (2) to (4), (8), (11), (13), (19), (20), and (25), redesignated former pars. (2) to (12) and (16) to (19) as (5) to (7), (9), (10), (12), (14) to (18), and (21) to (24), respectively, substituted “Federal Housing Finance Agency” for “Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development” in par. (9), and struck out former pars. (13) to (15) which defined the terms “new program”, “Office”, and “Secretary”, respectively. Pars. (8)(B), (9), (10)(B), (19)(B). Pub. L. 110–289, § 1002(a)(1), substituted “Director” for “Secretary”. Par. (24). Pub. L. 110–289, § 1128(d)(1), added par. (24) and struck out former par. (24) which defined the term “very low-income”. Pars. (26) to (31). Pub. L. 110–289, § 1128(d)(2), added pars. (26) to (31).

Executive Documents

Termination of Trust Territory of the Pacific Islands For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions.

§4502 Definitions

Summary

Title 12, §4502

Notes & Related Subsidiaries

Editorial Notes

References in Text

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Amendments

Executive Documents

Citations & Metadata