[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Rules and Regulations]
[Pages 2650-2651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1304]
[[Page 2649]]
_______________________________________________________________________
Part VI
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner
_______________________________________________________________________
24 CFR Parts 202 and 203
Streamlining Mortgagee Requirements; Interim Rule
Federal Register / Vol. 61, No. 18 / Friday, January 26, 1996 / Rules
and Regulations
[[Page 2650]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner
24 CFR Parts 202 and 203
[Docket No. FR-3957-I-01]
RIN 2502-AG57
Streamlining Mortgagee Requirements
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Interim rule.
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SUMMARY: This rule revises FHA's mortgagee requirements to streamline
and make the FHA process more flexible for mortgagees and FHA's
customers and clients.
DATES: Effective date: February 26, 1996.
Comment due date: March 26, 1996.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Rules Docket Clerk, Office of General Counsel, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW, Washington, DC 20410-0500. Communications should refer to the above
docket number and title. Facsimile (FAX) comments are not acceptable. A
copy of each communication submitted will be available for public
inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays at the
above address.
FOR FURTHER INFORMATION CONTACT: William M. Heyman, Director, Office of
Lender Activities and Land Sales Registration, Room 9156, Department of
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC
20410, telephone (voice) (202) 708-1515, (TDD) (202) 708-4594. (These
are not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
Background
Earlier this year an FHA Single Family Business Practices Working
Group was established to develop recommendations to streamline the FHA
process, reduce or eliminate unnecessary requirements, promote greater
opportunities for first-time homebuyers and minorities, and maintain a
responsible risk management program. The Working Group was comprised of
representatives of mortgage lenders, State and local governments, trade
associations, realtors, government-sponsored enterprises, and other
interested parties.
The revisions made by this rule result from the efforts and
recommendations made by the Working Group. They will make the FHA
process more flexible for mortgagees, and for State and local
governments and nonprofit associations, and also expand homeownership
opportunities. They will also assist in making the FHA a more effective
organization to serve the needs of our customers and clients. The
revisions should also minimize the differences between FHA and
conventional loan processing and place greater reliance and
accountability on mortgagees.
A number of recommended changes did not require rulemaking and,
therefore, were made effective immediately with the issuance of
Mortgagee Letter 95-36, dated August 2, 1995. However, some of the
recommended changes require either rulemaking or modification of
existing data systems. This rule sets forth the changes that require
rulemaking for implementation. Changes effected as a result of
modifications of existing data systems will be announced later.
This Interim Rule
This interim rule makes the following changes:
--Section 202.11(a)(5) is revised to establish uniform requirements on
the use of authorized agents by supervised and nonsupervised
mortgagees. For conforming reasons, Secs. 202.13(e) and 202.17(d) are
removed.
--Section 202.12(m) is revised to eliminate the requirement that a
branch office of a mortgagee must be approved by FHA to originate FHA
mortgages. A branch registry process is permitted. However, a
nonsupervised loan correspondent will be required to provide evidence
that it complies with the net worth requirements for itself and all of
its branches, as set forth in Sec. 202.12(n)(3).
--Section 202.15(c)(1) is revised to eliminate the requirement that
loans must be closed in the name of the Loan Correspondent, and to
permit such mortgages to be closed in either the name of the Loan
Correspondent or its Sponsor(s).
--Section 202.15(c)(5) is revised to eliminate the compliance report
and the report on internal control from Loan Correspondents' annual
audited financial statements.
--Section 203.3(b)(2) is revised to eliminate the requirement that FHA
individually approve mortgagees' Direct Endorsement underwriters and to
establish a registry process for the underwriter. Also, The requirement
that the technical staff utilized by the mortgagee be approved by the
Secretary is removed. For conforming reasons, Secs. 203.3(b)(3) and (c)
are eliminated.
Other Matters
Justification for Interim Rule
In general, the Department publishes a rule for public comment
before issuing a rule for effect, in accordance with its own
regulations on rulemaking, 24 CFR part 10. However, part 10 does
provide for exceptions from that general rule where the Department
finds good cause to omit advance notice and public participation. The
good cause requirement is satisfied when prior public procedure is
``impracticable, unnecessary, or contrary to the public interest.'' (24
CFR 10.1) The Department finds that good cause exists to publish this
rule for effect without first soliciting public comment, in that public
procedure is contrary to the public interest and unnecessary.
No mortgagees or potential mortgagors will be adversely affected by
the revisions made by this rule without prior public comment. To the
contrary, the revisions will streamline and make the FHA processes more
flexible for mortgagees and FHA's customers and clients.
For these reasons, HUD has concluded that the public interest would
not be served by the delay that issuance of a proposed rule would
involve.
Environmental Finding
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR Part 50,
which implement section 102(2)(C) of the National Environmental Policy
Act of 1969. The Finding of No Significant Impact is available for
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the
Office of the Rules Docket Clerk, Office of the General Counsel,
Department of Housing and Urban Development, Room 10276, 451 Seventh
Street, SW., Washington, DC 20410.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the
[[Page 2651]]
various levels of government. As a result, the rule is not subject to
review under the Order. Specifically, the requirements of this rule are
directed to insuring mortgages and do not impinge upon the relationship
between the Federal government and State and local governments.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the Order
because it revises mortgagee requirements.
The Regulatory Flexibility Act
In accordance with 5 U.S.C. 605(b) (the Regulatory Flexibility
Act), the Secretary by his approval of this rule hereby certifies that
this rule does not have a significant economic impact on a substantial
number of small entities because the changes made by this rule are
primarily procedural and will not have a significant economic impact.
List of Subjects in Part 202
Administrative practice and procedure, Home improvement,
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements.
List of Subjects in Part 203
Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and
recordkeeping requirements, Solar energy.
Accordingly, Subchapter B of Chapter II of title 24 of the Code of
Federal Regulations is amended as follows:
CHAPTER II--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING--FEDERAL
HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Subchapter B--Mortgage and Loan Insurance Programs Under National
Housing Act and Other Authorities
PART 202--APPROVAL OF LENDING INSTITUTIONS AND MORTGAGEES
1. The authority for part 202 continues to read as follows:
Authority: 12 U.S.C. 1703, 1709, and 1715b; 42 U.S.C. 3535(d).
2. Part 202 is amended by revising--
a. In Sec. 202.11, paragraph (a)(5) to read as follows:
Sec. 202.11 Approval, recertification, withdrawal of approval and
termination of approval agreement.
(a) * * *
(5) A mortgagee approved under Secs. 202.13, 202.14, or 202.17 may,
with the approval of the Secretary, designate another mortgagee
approved under Secs. 202.13 or 202.14 as authorized agent for the
purpose of submitting applications for mortgage insurance in its name
and on its behalf.
* * * * *
b. In Sec. 202.12, paragraph (m) to read as follows:
Sec. 202.12 General approval requirements.
* * * * *
(m) Branch offices. A mortgagee approved under Secs. 202.13 or
202.14, or a mortgagee that meets the definition of a supervised
mortgagee under Sec. 202.13 and applies for approval as a loan
correspondent under Sec. 202.15, may maintain branch offices for the
submission of applications for mortgage insurance, provided that
registration of such branches is maintained with the Secretary. A
nonsupervised loan correspondent approved under Sec. 202.15 will be
required to provide evidence that it complies with net worth
requirements for itself and all of its branches, as set forth in
Sec. 202.12(n)(3). The mortgagee shall remain fully responsible to the
Secretary for the actions of its branch offices.
* * * * *
Sec. 202.13 [Removed]
c. In Sec. 202.13, paragraph (e) is removed.
d. In Sec. 202.15, the first sentence of paragraph (c)(1) and
paragraph (c)(5) are revised, to read as follows:
Sec. 202.15 Loan correspondents.
* * * * *
(c) * * *
(1) A loan correspondent shall close all mortgages in its own name
or the name of its sponsor(s). * * *
* * * * *
(5) It shall file an audit report with the Secretary within 90 days
of the close of its fiscal year (or within an extended time if, at the
discretion of the Secretary, an extension is granted), and at such
other times as may be requested, unless it meets the definition of a
supervised mortgagee in Sec. 202.13(a). Audit reports shall be based on
audits performed by a Certified Public Accountant, or by an Independent
Public Accountant licensed by a regulatory authority of a State or
other political subdivision of the United States on or before December
31, 1970. The audit report shall include:
(i) A financial statement in a form acceptable to the Secretary,
including a balance sheet and a statement of operations and retained
earnings and analysis of the loan correspondent's net worth adjusted to
reflect only assets acceptable to the Secretary, and an analysis of
escrow funds; and
(ii) Such other financial information as the Secretary may require.
* * * * *
e. In Sec. 202.17, paragraph (d) is removed.
PART 203--SINGLE FAMILY MORTGAGE INSURANCE
3. The authority for part 203 continues to read as follows:
Authority: 12 U.S.C. 1709, 1715b; 42 U.S.C. 3535(d). Subpart C
also, is issued under 12 U.S.C. 1715u.
4. In Sec. 203.3, paragraph (b)(2) is revised, and paragraphs
(b)(3) and (c) are removed and reserved, to read as follows:
Sec. 203.3 Approval of mortgagees for Direct Endorsement.
* * * * *
(b) * * *
(2) The mortgagee has on its permanent staff an underwriter that is
authorized by the mortgagee to bind the mortgagee on matters involving
the origination of mortgages through the Direct Endorsement procedure
and that is registered with the Secretary and such registration is
maintained with the Secretary. The technical staff may be employees of
the mortgagee or may be hired on a fee basis from a roster maintained
by the Secretary. The mortgagee shall use appraisers permitted by
Sec. 203.5(e).
(3) [Reserved].
* * * * *
(c) [Reserved].
* * * * *
Dated: November 29, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 96-1304 Filed 1-25-96; 8:45 am]
BILLING CODE 4210-27-P
