---
kind: "section"
citation: "12 U.S.C. § 4502"
title: "12"
title_heading: "Banks and Banking"
number: "4502"
heading: "Definitions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/4502"
units:
  - "Chapter 46 — Government Sponsored Enterprises"
---

# §4502. Definitions


For purposes of this chapter:

- (1) **Affiliate—** Except as provided by the [Director](#9), the term “affiliate” means any entity that controls, is controlled by, or is under common control with, an [enterprise](#10).
- (2) **Agency—** The term “Agency” means the Federal Housing Finance Agency established under [section 4511 of this title](/usc/12/4511.md).
- (3) **Authorizing statutes—** The term “authorizing statutes” means—
  - (A) the Federal National [Mortgage](/usc/12/1707.md?p=a) Association Charter Act;
  - (B) the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation Act; and
  - (C) the Federal Home Loan Bank Act.
- (4) **Board—** The term “Board” means the Federal Housing Finance Oversight Board established under [section 4513a of this title](/usc/12/4513a.md).
- (5) **Capital distribution—**
  - (A) **In general—** 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](#10), except a dividend consisting only of shares of the [enterprise](#10);
    - (ii) any payment made by an [enterprise](#10) to repurchase, redeem, retire, or otherwise acquire any of its shares, including any extension of [credit](/usc/12/5481.md?p=7) made to finance an acquisition by the [enterprise](#10) of such shares; and
    - (iii) any transaction that the [Director](#9) determines by regulation to be, in substance, the distribution of capital.
  - (B) **Exception—** Any payment made by an [enterprise](#10) to repurchase its shares for the purpose of fulfilling an obligation of the [enterprise](#10) under an employee stock ownership plan that is qualified under [section 401 of title 26](/usc/26/401.md) or any substantially equivalent plan, as determined by the [Director](#9), shall not be considered a [capital distribution](#5-A).
- (6) **Compensation—** 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) **Core capital—** The term “core capital” means, with respect to an [enterprise](#10), 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.

  The core capital of an [enterprise](#10) shall not include any amounts that the [enterprise](#10) could be required to pay, at the option of investors, to retire capital instruments.

- (8) **Default; in danger of default—**
  - (A) **Default—** The term “default” means, with respect to a [regulated entity](#20), any adjudication or other official determination by any court of competent jurisdiction, or the [Agency](#2), pursuant to which a conservator, receiver, [limited-life regulated entity](#13), or legal custodian is appointed for a [regulated entity](#20).
  - (B) **In danger of default—** The term “in danger of default” means a [regulated entity](#20) with respect to which, in the opinion of the [Agency](#2)—
    - (i) the [regulated entity](#20) is not likely to be able to pay the obligations of the [regulated entity](#20) in the normal course of business; or
    - (ii) the [regulated entity](#20)—
      - (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](#20) will be replenished.
- (9) **Director—** The term “Director” means the Director of the Federal Housing Finance [Agency](#2).
- (10) **Enterprise—** The term “enterprise” means—
  - (A) the Federal National [Mortgage](/usc/12/1707.md?p=a) Association and any [affiliate](#1) thereof; and
  - (B) the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation and any [affiliate](#1) thereof.
- (11) **Entity-affiliated party—** The term “entity-affiliated party” means—
  - (A) any [director](#9), officer, employee, or controlling stockholder of, or agent for, a [regulated entity](#20);
  - (B) any shareholder, [affiliate](#1), consultant, or joint venture partner of a [regulated entity](#20), and any other [person](/usc/12/5481.md?p=19), as determined by the [Director](#9) (by regulation or on a case-by-case basis) that participates in the conduct of the affairs of a [regulated entity](#20), 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](#20) (including any attorney, appraiser, or accountant), if—
    - (i) the independent contractor knowingly or recklessly participates in—
      - (I) any [violation](#25) of any law or regulation;
      - (II) any breach of fiduciary duty; or
      - (III) any unsafe or unsound practice; and
    - (ii) such [violation](#25), 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](#20);
  - (D) any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any [regulated entity](#20); and
  - (E) the [Office of Finance](#19).
- (12) **Executive officer—** The term “executive officer” means, with respect to an [enterprise](#10), the chairman of the [board](#4) of [directors](#9), 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) **Limited-life regulated entity—** The term “limited-life regulated entity” means an entity established by the [Agency](#2) under [section 4617(i) of this title](/usc/12/4617.md?p=i) with respect to a Federal Home Loan Bank in [default](#8-A) or [in danger of default](#8-B) or with respect to an [enterprise](#10) in [default](#8-A) or [in danger of default](#8-B).
- (14) **Low-income—** The term “low-income” means—
  - (A) in the case of owner-occupied units, income not in excess of 80 percent of area [median income](#15); and
  - (B) in the case of rental units, income not in excess of 80 percent of area [median income](#15), with adjustments for smaller and larger families, as determined by the [Director](#9).
- (15) **Median income—** 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](#9).
- (16) **Moderate-income—** The term “moderate-income” means—
  - (A) in the case of owner-occupied units, income not in excess of area [median income](#15); and
  - (B) in the case of rental units, income not in excess of area [median income](#15), with adjustments for smaller and larger families, as determined by the [Director](#9).
- (17) **Mortgage purchases—** The term “mortgage purchases” includes [mortgages](/usc/12/1707.md?p=a) purchased for portfolio or securitization.
- (18) **Multifamily housing—** The term “multifamily housing” means a residence consisting of more than 4 dwelling units.
- (19) **Office of Finance—** The term “Office of Finance” means the Office of Finance of the Federal Home Loan Bank System (or any successor thereto).
- (20) **Regulated entity—** The term “regulated entity” means—
  - (A) the Federal National [Mortgage](/usc/12/1707.md?p=a) Association and any [affiliate](#1) thereof;
  - (B) the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation and any [affiliate](#1) thereof; and
  - (C) any Federal Home Loan Bank.
- (21) **Single family housing—** The term “single family housing” means a residence consisting of 1 to 4 dwelling units.
- (22) **State—** 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) **Total capital—** The term “total capital” means, with respect to an [enterprise](#10), the sum of the following:
  - (A) The [core capital](#7) of the [enterprise](#10);[^1]
  - (B) A general allowance for foreclosure losses, which—
    - (i) shall include an allowance for portfolio [mortgage](/usc/12/1707.md?p=a) losses, an allowance for nonreimbursable foreclosure costs on government claims, and an allowance for liabilities reflected on the balance sheet for the [enterprise](#10) for estimated foreclosure losses on [mortgage](/usc/12/1707.md?p=a)-backed securities; and
    - (ii) shall not include any reserves of the [enterprise](#10) made or held against specific assets.
  - (C) Any other amounts from sources of funds available to absorb losses incurred by the [enterprise](#10), that the [Director](#9) by regulation determines are appropriate to include in determining [total capital](#23).
- (24) **Very low-income—**
  - (A) **In general—** 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](#15); and
    - (ii) in the case of rental units, families having incomes not greater than 50 percent of the area [median income](#15), with adjustments for smaller and larger families, as determined by the [Director](#9).
  - (B) **Rule of construction—** For purposes of section[^2] 4568 and [4569](/usc/12/4569.md) of this title, the term “[very low-income](#24-A)” 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](#15); 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](#15), with adjustments for smaller and larger families, as determined by the [Director](#9).
- (25) **Violation—** 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) **Conforming mortgage—** The term “conforming mortgage” means, with respect to an [enterprise](#10), a conventional [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a), under, as applicable—
  - (A) section 302(b)(2) of the Federal National [Mortgage](/usc/12/1707.md?p=a) Association Charter Act [[12 U.S.C. 1717(b)(2)](/usc/12/1717.md?p=b-2)]; or
  - (B) section 305(a)(2) of the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation Act [[12 U.S.C. 1454(a)(2)](/usc/12/1454.md?p=a-2)].
- (27) **Extremely low-income—** 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](#15); and
  - (B) in the case of rental units, income not in excess of 30 percent of the area [median income](#15), with adjustments for smaller and larger families, as determined by the [Director](#9).
- (28) **Low-income area—** The term “low-income area” means a census tract or block numbering area in which the [median income](#15) does not exceed 80 percent of the [median income](#15) 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](/usc/12/4562.md?p=a-1-B), shall include families having incomes not greater than 100 percent of the area [median income](#15) who reside in [minority census tracts](#29) and shall include families having incomes not greater than 100 percent of the area [median income](#15) who reside in designated disaster areas.
- (29) **Minority census tract—** 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](#15).
- (30) **Shortage of standard rental units both affordable and available to extremely low-income renter households—**
  - (A) **In general—** 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](#15) as determined by the [Director](#9) that are occupied by [extremely low-income](#27) renter households or are vacant for rent; and
    - (ii) the number of [extremely low-income](#27) renter households.
  - (B) **Rule of construction—** If the number of units described in [subparagraph (A)(i)](#30-A-i) exceeds the number of [extremely low-income](#27) households as described in [subparagraph (A)(ii)](#30-A-ii), there is no shortage.
- (31) **Shortage of standard rental units both affordable and available to very low-income renter households—**
  - (A) **In general—** 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](#15) as determined by the [Director](#9) that are occupied by either extremely low- or [very low-income](#24-A) renter households or are vacant for rent; and
    - (ii) the number of extremely low- and [very low-income](#24-A) renter households.
  - (B) **Rule of construction—** If the number of units described in [subparagraph (A)(i)](#31-A-i) exceeds the number of extremely low- and [very low-income](#24-A) households as described in [subparagraph (A)(ii)](#31-A-ii), there is no shortage.

## Footnotes

[^1]: So in original. The semicolon probably should be a period.
[^2]: So in original. Probably should be “sections”.

## Source credit

(Pub. L. 102–550, title XIII, § 1303, Oct. 28, 1992, 106 Stat. 3942; Pub. L. 110–289, div. A, § 1002(a), title I, § 1128(d), July 30, 2008, 122 Stat. 2659, 2702.)

## Notes

### 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 Short Title 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 Short Title 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 Short Title 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.