[Federal Register Volume 62, Number 79 (Thursday, April 24, 1997)]
[Rules and Regulations]
[Pages 20080-20088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10282]
[[Page 20079]]
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Part IV
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Parts 24, 25, 30, 200, 201, 202, 203, 206, 241, 266 and 3500
Approval of Lending Institutions and Mortgagees Streamlining; Final
Rule
Federal Register / Vol. 62, No. 79 / Thursday, April 24, 1997 / Rules
and Regulations
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 24, 25, 30, 200, 201, 202, 203, 206, 241, 266 and 3500
[Docket No. FR-4106-F-01]
RIN 2502-AG78
Approval of Lending Institutions and Mortgagees Streamlining;
Final Rule
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
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SUMMARY: This final rule amends regulations at 24 CFR part 202 relating
to the Approval of Lending Institutions and Mortgagees. In an effort to
comply with the President's regulatory reform initiatives, these
amendments streamline part 202 by removing provisions that are
duplicative and unnecessary and by simplifying the organization of text
that is being retained. It is not the purpose of this rule to introduce
substantive changes, and none have been made.
EFFECTIVE DATE: May 27, 1997.
FOR FURTHER INFORMATION CONTACT: Lynn S. Herbert, Director, Lender
Approval and Recertification Division, Office of Lender Activities and
Program Compliance, Room B-133-P3214, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410. Telephone:
(202) 708-3976. (This is not a toll-free number.) For hearing- and
speech-impaired persons, this number may be accessed via TTY by calling
the Federal Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION: On March 4, 1995, President Clinton issued a
memorandum to all Federal departments and agencies regarding regulatory
reinvention. In response to this memorandum, the Department of Housing
and Urban Development (HUD) conducted a page-by-page review of its
regulations to determine which could be eliminated, consolidated, or
otherwise improved. HUD has determined that part 202, setting forth
regulations for the Approval of Lending Institutions and Mortgagees,
can be streamlined by combining many provisions of its subparts A and B
in order to remove provisions which are duplicative and need not be
repeated. As a result of this streamlining, general provisions that had
been set forth separately for Title I lenders and Title II mortgagees
are now consolidated in a new subpart A. A new subpart B contains
provisions specific to each of the five classes of institutions that
are eligible for approval as a lender or mortgagee, or both. Last is a
new subpart C that contains provisions uniquely applicable to either
Title I or Title II programs. Conforming changes have also been made to
other parts of 24 CFR.
Justification for Final Rulemaking
HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with its own regulations on rulemaking
in 24 CFR part 10. However, part 10 provides for exceptions to the
general rule if the agency determines that there is good cause for
omitting 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). HUD finds that this rule falls within that exception. These
amendments merely remove unnecessary regulatory provisions. They
contain policy that is already established and has been previously
expressed, and they in no way affect the substance of existing
provisions. Solicitation of public comment is therefore unnecessary.
Other Matters
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this final rule, and in so
doing certifies that this rule does not have a significant economic
impact on a substantial number of small entities. This rule merely
streamlines regulations by removing unnecessary provisions. The rule
has no adverse or disproportionate economic impact on small businesses.
Environmental Impact
This rulemaking is exempt from the environmental review procedures
under HUD regulations in 24 CFR part 50 that implement section
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C.
4332) because of the exemption under Sec. 50.19(c)(1) which pertains to
``the approval of policy documents that do not direct, provide for
assistance or loan and mortgage insurance for, or otherwise govern or
regulate property acquisition, disposition, lease, rehabilitation,
alteration, demolition, or new construction, or set out to provide for
standards for construction or construction materials, manufactured
housing, or occupancy.'' This rulemaking simply amends an existing
regulation by eliminating administrative provisions and does not alter
the environmental effect of the regulations being amended.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
does 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 various levels of government. No programmatic or policy changes
result from this rule that affect 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
the potential for significant impact on family formation, maintenance,
or general well-being, and thus is not subject to review under the
Order. No significant change in existing HUD policies or programs
result from promulgation of this rule.
List of Subjects
24 CFR Part 24
Administrative practice and procedure, Drug abuse, Government
contracts, Government procurement, Grant programs, Loan programs,
Reporting and recordkeeping requirements.
[[Page 20081]]
24 CFR Part 25
Administrative practice and procedure, Loan programs--housing and
community development, Organization and functions (Government
agencies).
24 CFR Part 30
Administrative practice and procedure, Grant programs--housing and
community development, Loan programs--housing and community
development, Mortgages, Penalties.
24 CFR Part 200
Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Home improvement, Housing standards,
Incorporation by reference, Lead poisoning, Loan programs--housing and
community development, Minimum property standards, Mortgage insurance,
Organization and functions (Government agencies), Penalties, Reporting
and recordkeeping requirements, Social security, Unemployment
compensation, Wages.
24 CFR Part 201
Health facilities, Historic preservation, Home improvement, Loan
programs--housing and community development, Manufactured homes,
Mortgage insurance, Reporting and recordkeeping requirements.
24 CFR Part 202
Administrative practice and procedure, Home improvement,
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 203
Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and
recordkeeping requirements, Solar energy.
24 CFR Part 206
Aged, Condominiums, Loan programs--housing and community
development, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 241
Energy conservation, Home improvement, Loan programs--housing and
community development, Mortgage insurance, Reporting and recordkeeping
requirements, Solar energy.
24 CFR Part 266
Aged, Fair housing, Intergovernmental relations, Mortgage
insurance, Low and moderate income housing, Reporting and recordkeeping
requirements.
24 CFR Part 3500
Consumer protection, Condominiums, Housing, Mortgages, Mortgage
servicing, Reporting and recordkeeping requirements.
Accordingly, in title 24 of the Code of Federal Regulations, parts
24, 25, 30, 200, 201, 202, 203, 206, 241, 266 and 3500 are amended to
read as follows:
PART 24--GOVERNMENT DEBARMENT AND SUSPENSION AND GOVERNMENTWIDE
REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)
1. The authority citation for 24 CFR part 24 continues to read as
follows:
Authority: Executive Order 12549, secs. 5151-5160, Drug-Free
Workplace Act of 1988, Pub. L. 100-690, Title V, Subtitle D, (41
U.S.C. 701 et seq.); sec. 7(d), Department of Housing and Urban
Development Act (42 U.S.C. 3535(d)).
2. Section 24.110 is amended by revising paragraph (a)(3)(ii) to
read as follows:
Sec. 24.110 Coverage.
(a) * * *
(3) * * *
(ii) Sanctions under this part against mortgagees and lenders
approved by HUD to participate in Federal Housing Administration
programs may be initiated only with the approval of the Mortgagee
Review Board.
* * * * *
PART 25--MORTGAGEE REVIEW BOARD
3. The authority citation for 24 CFR part 25 continues to read as
follows:
Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), and 1735(f)-14;
42 U.S.C. 3535(d).
4. Section 25.2 is amended by revising the final sentence to read
as follows:
Sec. 25.2 Establishment of Board.
* * * With respect to actions taken against Title I lenders and
loan correspondents, the Board may redelegate its authority to take
administrative actions for failure to remain in compliance with the
requirements for approval in 24 CFR 202.5(i), 202.5(n), 202.7(b)(4),
202.8(b)(1) and 202.8(b)(3).
5. Section 25.3 is amended by revising the definitions of
``Lender'' and ``Loan correspondent'' to read as follows:
Sec. 25.3 Definitions.
* * * * *
Lender. A financial institution as defined in paragraphs (a) and
(b) of the definition of lender in Sec. 202.2 of this title.
Loan correspondent. A financial institution as defined in paragraph
(c) of the definition of lender in Sec. 202.2 of this title.
* * * * *
6. Section 25.9 is amended by revising paragraphs (x) and (cc) to
read as follows:
Sec. 25.9 Grounds for an administrative action.
* * * * *
(x) Failure to submit a report required under 24 CFR 202.12(c)
within the time determined by the Commissioner, or to commence or
complete a plan for corrective action under that section within the
time agreed upon by the Commissioner.
* * * * *
(cc) Violation by a Title I lender or loan correspondent of any of
the applicable provisions of this section or 24 CFR 202.11(a)(2).
* * * * *
PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT
7. The authority citation for 24 CFR part 30 continues to read as
follows:
Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, 1735f-15;
15 U.S.C. 1717a; 42 U.S.C. 3535(d).
8. Section 30.320 is amended by revising paragraph (k) to read as
follows:
Sec. 30.320 Violations by mortgagees and lenders.
* * * * *
(k) Makes a payment that is prohibited under 24 CFR 202.5(l);
* * * * *
PART 200--INTRODUCTION TO FHA PROGRAMS
9. The authority citation for 24 CFR part 200 continues to read as
follows:
Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).
10. Section 200.10 is revised to read as follows:
Sec. 200.10 Lender requirements.
The requirements set forth in part 202 of this chapter regarding
approval, recertification, withdrawal of approval, approval for
servicing, report requirements and conditions for supervised
mortgagees, nonsupervised mortgagees, investing mortgagees, and
governmental and similar institutions, apply to these programs.
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PART 201--TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS
11. The authority citation for 24 CFR part 201 continues to read:
Authority: 12 U.S.C. 1703; 42 U.S.C. 1436a and 3535(d).
Sec. 201.10 [Amended]
12. Section 201.10 is amended to remove the last sentence of
paragraph (g).
13. Section 201.20 is amended by adding paragraph (a)(3) to read as
follows:
Sec. 201.20 Property improvement loan eligibility.
(a) * * *
(3) For any property improvement loan or combination of such loans
on the same property with a total principal balance in excess of
$15,000, the borrower shall have equity in the property being improved
at least equal to the loan amount. However, this requirement shall not
be applicable to any loan originated by or on behalf of a governmental
institution to provide assistance to a low- or moderate-income family
or individual. Acceptable procedures for determining the market value
of the property and evaluating whether the borrower has sufficient
equity in the property will be established by the Secretary and
published in the Federal Register.
* * * * *
14. Section 201.26 is amended by revising paragraph (a)(1)(iii) to
read as follows:
Sec. 201.26 Conditions for loan disbursement.
(a) * * *
(1) * * *
(iii) For any loan or combination of loans on the same property
with a total unpaid principal balance in excess of $15,000, the
borrower has equity in the property being improved at least equal to
the loan amount, except that this requirement shall not be applicable
to any loan originated by or on behalf of a governmental institution to
provide assistance to a low- or moderate-income family or individual.
* * * * *
15. Part 202 is revised to read as follows:
PART 202--APPROVAL OF LENDING INSTITUTIONS AND MORTGAGEES
Subpart A--General Requirements
Sec.
202.1 Purpose.
202.2 Definitions
202.3 Approval status for lenders and mortgagees.
202.4 Request for determination of compliance.
202.5 General approval standards.
Subpart B--Classes of Lenders and Mortgagees
202.6 Supervised lenders and mortgagees.
202.7 Nonsupervised lenders and mortgagees.
202.8 Loan correspondent lenders and mortgagees.
202.9 Investing lenders and mortgagees.
202.10 Governmental institutions, Government-sponsored enterprises,
Public Housing Agencies and State housing agencies.
Subpart C--Title I and Title II Specific Requirements
202.11 Title I.
202.12 Title II.
Authority: 12 U.S.C. 1703, 1709 and 1715b; 42 U.S.C. 3535(d).
Subpart A--General Requirements
Sec. 202.1 Purpose.
This part establishes minimum standards and requirements for
approval by the Secretary of lenders and mortgagees to participate in
the Title I and Title II programs.
Sec. 202.2 Definitions.
Act means the National Housing Act.
Claim means a single family insured mortgage for which the
Secretary pays an insurance claim within 18 months after endorsement
for insurance.
Default means a single family insured mortgage in default for 90 or
more days within 1 year after endorsement for insurance.
Lender or Title I lender means a financial institution that:
(a) Holds a valid Title I Contract of Insurance and is approved by
the Secretary under this part as a supervised lender under Sec. 202.6,
a nonsupervised lender under Sec. 202.7, an investing lender under
Sec. 202.9 or a governmental or similar institution under Sec. 202.10;
(b) Is under suspension or held a Title I contract that has been
terminated but remains responsible for servicing or selling Title I
loans that it holds and is authorized to file insurance claims on such
loans; or
(c) Is a loan correspondent approved for Title I programs only
under Sec. 202.8.
Loan or Title I loan means a loan authorized for insurance under
Title I of the Act.
Mortgage, Title II mortgage or insured mortgage means a mortgage or
a loan insured under Title II of the Act.
Mortgagee or Title II mortgagee means a mortgage lender which is
approved to participate in the Title II programs as a supervised
mortgagee under Sec. 202.6, a nonsupervised mortgagee under Sec. 202.7,
a loan correspondent under Sec. 202.8, an investing mortgagee under
Sec. 202.9 or a governmental or similar institution under Sec. 202.10.
Multifamily mortgagee means a mortgagee approved to participate
only in multifamily Title II programs, except that for purposes of
Sec. 202.8(b)(1) the term also means a mortgagee approved to
participate in both single family and multifamily Title II programs.
Normal rate means the rate of defaults and claims on insured
mortgages for the geographic area served by a HUD field office, or
other area designated by the Secretary, in which a mortgagee originates
mortgages.
Origination approval agreement means the Secretary's agreement that
a mortgagee is approved to originate single family insured mortgages.
Title I program(s) means an insurance program or programs
authorized by Title I of the Act.
Title II program(s) means an insurance program or programs
authorized by Title II or Title XI of the Act.
Sec. 202.3 Approval status for lenders and mortgagees.
(a) Initial approval. A lender or mortgagee may be approved for
participation in the Title I or Title II programs upon filing a request
for approval on a form prescribed by the Secretary and signed by the
applicant. The approval form shall be accompanied by such documentation
as may be prescribed by the Secretary.
(1) Approval is signified by:
(i) The Secretary's agreement that the lender or mortgagee is
considered approved under the Title I or Title II programs, except as
otherwise ordered by the Mortgagee Review Board or an officer or
subdivision of the Department to which the Mortgagee Review Board has
delegated its power, unless the lender or mortgagee voluntarily
relinquishes its approval;
(ii) Consent by the lender or mortgagee to comply at all times with
the general approval requirements of Sec. 202.5, and with additional
requirements governing the particular class of lender or mortgagee for
which it was approved as described under subpart B at Secs. 202.6-
202.10; and
(iii) Under the Title I program, the issuance of a Contract of
Insurance or approval as a loan correspondent lender which constitutes
an agreement between the Secretary and the lender and which governs
participation in the Title I program.
(2) Limitations on approval:
(i) Separate approval as lender or mortgagee is required for
participation
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in the Title I or Title II programs, respectively. Application must be
made, and approval will be granted, on the basis of one or both
categories of programs, as is appropriate.
(ii) Separate approval as mortgagee is required for the Single
Family Mortgage Insurance Programs and for the Multifamily Mortgage
Insurance Programs. Application must be made, and approval will be
granted, on the basis of either or both categories, as is appropriate.
(iii) In addition to the requirements for approval as a Title II
mortgagee, the Secretary may from time to time issue eligibility
requirements for participation in specific programs, such as the Direct
Endorsement program.
(iv) A Title II mortgagee may be approved to operate either on a
nationwide basis or on a geographically restricted basis in only those
areas designated by the Secretary.
(v) A Title I lender may originate loans or purchase advances of
credit only within a geographic lending area approved by the Secretary.
Expansion of this lending area shall be subject to a determination by
the Secretary that the lender is able to originate loans in compliance
with part 201 of this chapter within such expanded area.
(3) Authorized agents. A mortgagee approved under Sec. 202.6,
Sec. 202.7 or Sec. 202.10 as a nonsupervised mortgagee, supervised
mortgagee or governmental or similar institution may, with the approval
of the Secretary, designate a nonsupervised or supervised mortgagee as
authorized agent for the purpose of submitting applications for
mortgage insurance in its name and on its behalf.
(b) Recertification. On each anniversary of the approval of a
lender or mortgagee, the Secretary will determine whether
recertification, i.e., continued approval, is appropriate. The
Secretary will review the yearly verification report required by
Sec. 202.5(n)(2) and other pertinent documents, ascertain that all
application and annual fees have been paid, and request any further
information needed to decide upon recertification.
(c) Termination. (1) Termination of the Title I Contract of
Insurance.
(i) Notice. A Contract of Insurance may be terminated in accordance
with its terms by the Secretary or by the Secretary's designee upon
giving the lender at least 5 days prior written notice.
(ii) Informal meeting. If requested, and before expiration of the
5-day notice period, a lender shall be entitled to an informal meeting
with the Department official taking action to terminate the Contract of
Insurance.
(iii) Effect of termination. Termination of a Contract of Insurance
shall not affect:
(A) The Department's obligation to provide insurance coverage with
respect to eligible loans originated before the termination, unless
there was fraud or misrepresentation;
(B) A lender's obligation to continue to pay insurance charges or
premiums and meet all other obligations, including servicing,
associated with eligible loans originated before termination; or
(C) A lender's right to apply for and be granted a new Title I
Contract of Insurance, provided that the requirements for approval
under this part are met.
(2) Termination of the origination approval agreement.
(i) Scope and frequency of review. Every three months, the
Secretary will review the number of defaults and claims on mortgages
originated by each mortgagee in the geographic area served by a HUD
field office. For this purpose and for all other purposes under
paragraph (c) of this section, a mortgage is considered to be
originated in the same Federal fiscal year in which it is insured. The
Secretary may also review the performance of a mortgagee's branch
offices individually and may impose the sanctions provided for in this
section on a branch as well as on a mortgagee's overall operation.
(ii) Effect of default and claim rate determination.
(A) If a mortgagee had a rate of defaults and claims on insured
mortgages originated in an area during the Federal fiscal year which
was in excess of 200 percent of the normal rate, and in excess of the
national default and claim rate for insured mortgages, the Secretary
will notify the mortgagee that its origination approval agreement shall
be terminated 60 days after notice was given, without action by the
Mortgagee Review Board, except as provided in paragraph (c)(2)(ii)(C)
of this section.
(B) Before the Secretary sends the termination notice, the
Secretary shall review the census tract area concentrations of the
defaults and claims. If the Secretary determines that the excessive
rate is the result of mortgage lending in under-served areas, the
Secretary may determine not to terminate the origination approval
agreement.
(C) Prior to termination the mortgagee may request an informal
conference with the Deputy Assistant Secretary for Single Family
Housing or that official's designee. After considering relevant reasons
and factors beyond the mortgagee's control that contributed to the
excessive default and claim rates, the Deputy Assistant Secretary for
Single Family Housing or designee may withdraw the termination notice
and notify the mortgagee that it is being placed on credit watch
status.
(iii) Credit watch status. If a mortgagee had a rate of defaults
and claims on insured mortgages originated in an area during a Federal
fiscal year which was greater than 150 percent but equal to or less
than 200 percent of the normal rate, the Secretary will notify the
mortgagee that it is being placed on credit watch status. Before the
credit watch notice is sent, the Secretary shall review the census
tract area concentrations of the defaults and claims. If the Secretary
determines that the excessive rate is the result of mortgage lending in
under-served areas, the Secretary may determine not to place the
mortgagee on credit watch status.
(iv) Effect of credit watch status. Insured mortgages originated
during a 6 month period from the date of the credit watch notice will
be reviewed for excessive default rates. A mortgagee will be removed
from credit watch status if the rate of defaults and claims for the 6
month tracking period decreases to 150 percent or less of the normal
rate 1 year after that 6 month tracking period. The origination
approval agreement for a mortgagee on credit watch status may be
terminated if the mortgagee's rate of defaults and claims on insured
mortgages originated in an area during the 6 month tracking period is
more than 150 percent of the normal rate 1 year after that 6 month
tracking period. The Secretary shall provide 60 days notice and an
opportunity for an informal conference, as required by paragraph
(c)(2)(ii)(C) of this section, to a mortgagee which will have its
origination approval agreement terminated subsequent to a credit watch.
(v) Rights and obligations in the event of termination. If a
mortgagee's origination approval agreement is terminated, it may not
originate single family insured mortgages unless a new origination
approval agreement is accepted by the Secretary, notwithstanding any
other provision of this part except Sec. 202.3(c)(2)(v)(A). Termination
of the origination approval agreement shall not affect:
(A) The Secretary's ability to insure eligible mortgages, absent
fraud or misrepresentation, if the mortgagor and all terms and
conditions of the mortgage had been approved before the termination by
the Direct Endorsement mortgagee or were covered by a firm commitment
issued by the Secretary;
[[Page 20084]]
however, no other mortgages originated by the mortgagee shall be
insured unless a new origination approval agreement is accepted by the
Secretary;
(B) A mortgagee's obligation to continue to pay insurance premiums
and meet all other obligations, including servicing, associated with
insured mortgages;
(C) A mortgagee's right to apply for a new origination approval
agreement provided that the mortgagee is still an approved mortgagee,
the general approval standards of Sec. 202.5 and the specific
requirements of Secs. 202.6, 202.7, 202.8, 202.10 and 202.12(c)
continue to be met, and the Secretary determines that the underlying
causes for termination have been satisfactorily remedied; or
(D) A mortgagee's right to purchase insured mortgages or to service
its own portfolio or the portfolios of other mortgagees with which it
has a servicing contract.
(d) Withdrawal and suspension of approval. Lender or mortgagee
approval may be suspended or withdrawn by the Mortgagee Review Board as
provided in part 25 of this title.
Sec. 202.4 Request for determination of compliance.
Pursuant to section 539(a) of the Act, any person may file a
request that the Secretary determine whether a lender or mortgagee is
in compliance with Sec. 202.12(a) or with provisions of this chapter
implementing sections 223(a)(7) and 535 of the Act such as
Secs. 201.10(g), 203.18d and 203.43(c)(5) of this chapter (only section
535 applies to lenders). The request for determination shall be made to
the following address: Department of Housing and Urban Development,
Office of Lender Activities and Program Compliance, 451 Seventh Street
SW., Washington, DC, 20410. The Secretary shall inform the requestor of
the disposition of the request. The Secretary shall publish in the
Federal Register the disposition of any case referred by the Secretary
to the Mortgagee Review Board.
Sec. 202.5 General approval standards.
To be approved for participation in the Title I or Title II
programs, and to maintain approval, a lender or mortgagee shall meet
and continue to meet the general requirements of paragraphs (a)-(n) of
this Sec. 202.5 (except as provided in Sec. 202.10(b)) and the
requirements for one of the eligible classes of lenders or mortgagees
in Secs. 202.6 through 202.10.
(a) Business form. The lender or mortgagee shall be a corporation
or other chartered institution, a permanent organization having
succession or a partnership. A partnership must meet the requirements
of paragraphs (a)(1) through (4) of this section.
(1) Each general partner must be a corporation or other chartered
institution consisting of two or more persons.
(2) One general partner must be designated as the managing general
partner. The managing general partner shall comply with the
requirements of paragraphs (b), (c) and (f) of this section. The
managing general partner must have as its principal activity the
management of one or more partnerships, all of which are mortgage
lenders or property improvement or manufactured home lenders, and must
have exclusive authority to deal directly with the Secretary on behalf
of each partnership. Newly admitted partners must agree to the
management of the partnership by the designated managing general
partner. If the managing general partner withdraws or is removed from
the partnership for any reason, a new managing general partner shall be
substituted, and the Secretary shall be immediately notified of the
substitution.
(3) The partnership agreement shall specify that the partnership
shall exist for the minimum term of years required by the Secretary.
All insured mortgages and Title I loans held by the partnership shall
be transferred to a lender or mortgagee approved under this part prior
to the termination of the partnership. The partnership shall be
specifically authorized to continue its existence if a partner
withdraws.
(4) The Secretary must be notified immediately of any amendments to
the partnership agreement which would affect the partnership's actions
under the Title I or Title II programs.
(b) Employees. The lender or mortgagee shall employ competent
personnel trained to perform their assigned responsibilities in
consumer or mortgage lending, including origination, servicing and
collection activities, and shall maintain adequate staff and facilities
to originate and service mortgages or Title I loans, in accordance with
applicable regulations, to the extent the mortgagee or lender engages
in such activities.
(c) Officers. All employees who will sign applications for mortgage
insurance on behalf of the mortgagee or report loans for insurance
shall be corporate officers or shall otherwise be authorized to bind
the lender or mortgagee in the origination transaction. The lender or
mortgagee shall ensure that an authorized person reports all
originations, purchases, and sales of Title I loans or Title II
mortgages to the Secretary for the purpose of obtaining or transferring
insurance coverage.
(d) Escrows. The lender or mortgagee shall not use escrow funds for
any purpose other than that for which they were received. It shall
segregate escrow commitment deposits, work completion deposits, and all
periodic payments received under loans or insured mortgages on account
of ground rents, taxes, assessments, and insurance charges or premiums,
and shall deposit such funds with one or more financial institutions in
a special account or accounts that are fully insured by the Federal
Deposit Insurance Corporation or the National Credit Union
Administration, except as otherwise provided in writing by the
Secretary.
(e) Servicing. A lender shall service or arrange for servicing of
the loan in accordance with the requirements of part 201 of this
chapter. A mortgagee shall service or arrange for servicing of the
mortgage in accordance with the servicing responsibilities contained in
subpart C of part 203 and in part 207 of this chapter, with all other
applicable regulations contained in this title, and with such
additional conditions and requirements as the Secretary may impose.
(f) Business changes. The lender or mortgagee shall provide prompt
notification to the Secretary of all changes in its legal structure,
including, but not limited to, mergers, terminations, name, location,
control of ownership, and character of business.
(g) Financial statements. The lender or mortgagee shall, upon
request by the Secretary, furnish a copy of its latest financial
statement, furnish such other information as the Secretary may request,
and submit to an examination of that portion of its records which
relates to its Title I and/or Title II program activities.
(h) Quality control plan. The lender or mortgagee shall implement a
written quality control plan, acceptable to the Secretary, that assures
compliance with the regulations and other issuances of the Secretary
regarding loan or mortgage origination and servicing.
(i) Fees. The lender or mortgagee unless approved under
Sec. 202.10, shall pay an application fee and annual fees, including
additional fees for each branch office authorized to originate Title I
loans or submit applications for mortgage insurance, at such times and
in such amounts as the Secretary may require. The mortgagee may
identify additional classes or groups of lenders or mortgagees that may
be exempt from one or more of these fees.
(j) Ineligibility. Neither the lender or mortgagee, nor any
officer, partner,
[[Page 20085]]
director, principal or employee of the lender or mortgagee shall:
(1) Be suspended, debarred or otherwise restricted under part 24 or
part 25 of this title, or under similar procedures of any other Federal
agency;
(2) Be indicted for, or have been convicted of, an offense which
reflects upon the responsibility, integrity or ability of the lender or
mortgagee to participate in the Title I or Title II programs;
(3) Be subject to unresolved findings as a result of HUD or other
governmental audits or investigations; or
(4) Be engaged in business practices that do not conform to
generally accepted practices of prudent mortgagees or that demonstrate
irresponsibility.
(k) Branch offices. A lender may, upon approval by the Secretary,
maintain branch offices for the origination of Title I loans. A branch
office of a mortgagee must be registered with the Department in order
to originate mortgages or submit applications for mortgage insurance.
The lender or mortgagee shall remain fully responsible to the Secretary
for the actions of its branch offices.
(l) Conflict of interest. A mortgagee may not pay anything of
value, directly or indirectly, in connection with any insured mortgage
transaction or transactions to any person or entity if such person or
entity has received any other consideration from the mortgagor, seller,
builder, or any other person for services related to such transactions
or related to the purchase or sale of the mortgaged property, except
that consideration approved by the Secretary may be paid for services
actually performed. The mortgagee shall not pay a referral fee to any
person or organization.
(m) Reports. Each lender and mortgagee must submit a yearly
verification report on a form prescribed by the Secretary. Upon
application for approval and with each annual recertification, each
lender and mortgagee must submit a certification that it has not been
refused a license and has not been sanctioned by any State or States in
which it will originate insured mortgages or Title I loans. In
addition, each mortgagee shall file the following:
(1) An audited or unaudited financial statement, within 30 days of
the end of each fiscal quarter in which the mortgagee experiences an
operating loss of 20 percent of its net worth, and until the mortgagee
demonstrates an operating profit for two consecutive quarters or until
the next recertification, whichever is the longer period; and
(2) A statement of net worth within 30 days of the commencement of
voluntary or involuntary bankruptcy, conservatorship, receivership or
any transfer of control to a Federal or State supervisory agency.
(n) Net worth. (1) Each supervised or nonsupervised lender or
mortgagee approved under Secs. 202.6 and 202.7 shall have a net worth
of not less than $250,000 in assets acceptable to the Secretary. Each
supervised or nonsupervised mortgagee, except a multifamily mortgagee,
shall have additional net worth in excess of $250,000 of not less than
one percent of the mortgage volume exceeding $25,000,000 in value, but
total net worth is not required to exceed $1,000,000. Mortgage volume
is calculated as of the end of the fiscal year being audited and equals
the sum of:
(i) The aggregate original principal amount of mortgages that the
mortgagee originated and that were insured during the fiscal year or
the mortgagee purchased as a sponsor from its loan correspondent(s)
during the fiscal year; and
(ii) The aggregate principal amount, as of the end of the fiscal
year, of all mortgages that are serviced by the mortgagee at the end of
the fiscal year but were not counted as mortgages originated by the
mortgagee or purchased from its loan correspondent(s).
(2) Net worth requirements for loan correspondent lenders or
mortgagees approved under Sec. 202.8 are described in that section.
Subpart B--Classes of Lenders and Mortgagees
Sec. 202.6 Supervised lenders and mortgagees.
(a) Definition. A supervised lender or mortgagee is a financial
institution which is a member of the Federal Reserve System or an
institution whose accounts are insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration. A supervised
mortgagee may submit applications for mortgage insurance. A supervised
lender or mortgagee may originate, purchase, hold, service or sell
loans or insured mortgages, respectively.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a supervised lender or mortgagee shall meet
the following requirements:
(1) Net worth. The net worth requirements appear in Sec. 202.5(n).
(2) Liquid assets. A Title II mortgagee shall have liquid assets
consisting of cash or its equivalent acceptable to the Secretary in the
amount of 20 percent of its net worth, up to a maximum liquidity
requirement of $100,000.
(3) Notification. A lender or mortgagee shall promptly notify the
Secretary in the event of termination of its supervision by its
supervising agency.
(4) Fidelity bond. A Title II mortgagee shall have fidelity bond
coverage and errors and omissions insurance acceptable to the Secretary
and in an amount required by the Secretary, or alternative insurance
coverage approved by the Secretary, that assures the faithful
performance of the responsibilities of the mortgagee.
Sec. 202.7 Nonsupervised lenders and mortgagees.
(a) Definition. A nonsupervised lender or mortgagee is a lending
institution which has as its principal activity the lending or
investing of funds in real estate mortgages, consumer installment
notes, or similar advances of credit, or the purchase of consumer
installment contracts, and which is not approved under any other
section of this part. A nonsupervised mortgagee may submit applications
for mortgage insurance. A supervised lender or mortgagee may originate,
purchase, hold, service or sell insured mortgages, respectively.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a nonsupervised lender or mortgagee shall
meet the following requirements:
(1) Net worth. The net worth requirements appear in Sec. 202.5(n).
(2) Liquid assets. The mortgagee shall have liquid assets
consisting of cash or its equivalent acceptable to the Secretary in the
amount of 20 percent of its net worth, up to a maximum liquidity
requirement of $100,000.
(3) Credit source--(i) Title I. A lender shall have and maintain a
reliable warehouse line of credit or other funding program acceptable
to the Secretary of not less than $500,000 for use in originating or
purchasing Title I loans.
(ii) Title II. Except for multifamily mortgagees, a mortgagee shall
have a warehouse line of credit or other mortgage funding program
acceptable to the Secretary which is adequate to fund the mortgagee's
average 60 day origination operations, but in no event shall the
warehouse line of credit or funding program be less than $1,000,000.
(4) Audit report. (i) A lender or mortgagee shall file an audit
report with
[[Page 20086]]
the Secretary within 90 days of the close of its fiscal year (or within
an extended time if an extension is granted in the sole discretion of
the Secretary) and at such other times as may be requested. 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, and shall include:
(A) 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 mortgagee's net worth adjusted to reflect
only assets acceptable to the Secretary, and an analysis of escrow
funds; and
(B) Such other financial information as the Secretary may require
to determine the accuracy and validity of the audit report.
(ii) A mortgagee must submit a report on compliance tests
prescribed by the Secretary.
(5) Fidelity bond. A Title II mortgagee shall have fidelity bond
coverage and errors and omissions insurance acceptable to the Secretary
and in an amount required by the Secretary, or alternative insurance
coverage approved by the Secretary, that assures the faithful
performance of the responsibilities of the mortgagee.
Sec. 202.8 Loan correspondent lenders and mortgagees.
(a) Definitions--Loan correspondent. (1) A loan correspondent
lender does not hold a Title I Contract of Insurance and may not
purchase or hold loans but may be approved to originate Title I direct
loans for sale or transfer to a sponsor or sponsors which holds a valid
Title I Contract of Insurance and is not under suspension.
(2) A loan correspondent mortgagee is a mortgagee that has as its
principal activity the origination of mortgages for sale or transfer to
its sponsor or sponsors or that meets the definition of a supervised
mortgagee in Sec. 202.6(a) but applies for approval as a loan
correspondent mortgagee. A loan correspondent mortgagee may originate
mortgages and submit applications for mortgage insurance but it may not
hold, purchase or service insured mortgages, except that a loan
correspondent mortgagee meeting the definition of a supervised
mortgagee in Sec. 202.6(a) may service insured mortgages in its own
portfolio.
Sponsor. (1) With respect to Title I programs, a sponsor is a
lender that holds a valid Title I Contract of Insurance and meets the
net worth requirement for the class of lender to which it belongs.
(2) With respect to Title II programs, a sponsor is a mortgagee
which holds a valid origination approval agreement, is approved to
participate in the Direct Endorsement program, and meets the net worth
requirement for the class of mortgagee to which it belongs.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a loan correspondent lender or mortgagee
shall meet the following requirements:
(1) Net worth. A loan correspondent lender or mortgagee shall have
a net worth of not less than $50,000 in assets acceptable to the
Secretary, plus an additional $25,000 for each branch office authorized
by the Secretary, up to a maximum requirement of $250,000, except that
a multifamily mortgagee shall have a net worth of not less than
$250,000 in assets acceptable to the Secretary.
(2) Notification. A loan correspondent lender or mortgagee and each
of its sponsors shall provide prompt notification to the Secretary if
their loan correspondent agreement is terminated.
(3) Audit report. A loan correspondent lender or mortgagee shall
file an audit report with the Secretary within 90 days of the close of
its fiscal year (or within such extended time as may be granted by in
the sole discretion of the Secretary), and at such other times as the
Secretary may request, except that a loan correspondent mortgagee
meeting the definition of Sec. 202.6(a) need not file annual audit
reports. 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, and
shall include:
(i) A financial statement, in a form acceptable to the Secretary,
including a balance sheet, statement of operations and retained
earnings, an analysis of the 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
to determine the accuracy and validity of the audit report.
(4) Liquid assets. A loan correspondent mortgagee shall maintain
liquid assets consisting of cash or its equivalent acceptable to the
Secretary in the amount of 20 percent of its net worth, up to a maximum
liquidity requirement of $100,000.
(5) A loan correspondent lender or mortgagee may sell or transfer
loans or mortgages only to its sponsors, although a loan correspondent
mortgagee may sell to a mortgagee that is not a sponsor with the
Secretary's approval. There is no limitation on the number of sponsors
that a loan correspondent lender or mortgagee may have and no
limitation on the number of loan correspondents that a lender or
mortgagee may sponsor.
(6) Each sponsor must obtain approval of its loan correspondent
lenders or mortgagees from the Secretary.
(7) Each sponsor shall be responsible to the Secretary for the
actions of its loan correspondent lenders or mortgagees in originating
loans or mortgages, unless applicable law or regulation requires
specific knowledge on the part of the party to be held responsible. If
specific knowledge is required, the Secretary will presume that a
sponsor has knowledge of the actions of its loan correspondent lenders
or mortgagees in originating loans or mortgages and the sponsor is
responsible for those actions unless it can rebut the presumption with
affirmative evidence.
(8) A loan correspondent mortgagee shall comply with the warehouse
line of credit requirements of Sec. 202.7(b)(3)(ii), unless there is a
written agreement by its sponsor to fund all mortgages originated by
the loan correspondent mortgagee.
(9) For mortgages processed through Direct Endorsement under
Secs. 203.5 and 203.255(b) of this chapter, underwriting shall be the
responsibility of the Direct Endorsement sponsor and the mortgage shall
be closed in the loan correspondent mortgagee's own name or the name of
the sponsor that will purchase the loan. For mortgages not processed
through Direct Endorsement, the mortgage must be both underwritten and
closed in the loan correspondent's own name.
(10) A loan correspondent lender shall close all loans in its own
name prior to sale or transfer of the loans to its sponsor.
Sec. 202.9 Investing lenders and mortgagees.
(a) Definition. An investing lender or mortgagee is an organization
that is not approved under any other section of this part. An investing
lender or mortgagee may purchase, hold or sell Title I loans or Title
II mortgages, respectively, but may not originate Title I loans or
Title II mortgages in its own name or submit applications for the
insurance of mortgages. An investing mortgagee may not service Title I
loans or Title II mortgages without prior approval of the Secretary. An
investing lender or
[[Page 20087]]
mortgagee is not required to meet a net worth requirement.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, an investing lender or mortgagee shall meet
the following requirements:
(1) Funding arrangements. An investing lender or mortgagee shall
have, or have made arrangements for, funds sufficient to support a
projected investment of at least $1,000,000 in property improvement,
manufactured home or real estate loans or mortgages.
(2) Officers and staff. In lieu of the staffing and facilities
requirements in Sec. 202.5(b), an investing lender or mortgagee shall
have officers or employees who are capable of managing its activities
in purchasing, holding, and selling Title I loans or Title II
mortgages.
(3) Fidelity bond. An investing mortgagee shall maintain fidelity
bond coverage and errors and omissions insurance acceptable to the
Secretary and in an amount required by the Secretary, or alternative
insurance coverage approved by the Secretary, that assures the faithful
performance of the responsibilities of the mortgagee.
Sec. 202.10 Governmental institutions, Government-sponsored
enterprises, public housing agencies and State housing agencies.
(a) Definition. A Federal, State or municipal governmental agency,
a Federal Reserve Bank, a Federal Home Loan Bank, the Federal Home Loan
Mortgage Corporation, or the Federal National Mortgage Association may
be an approved lender or mortgagee. A mortgagee approved under this
section may submit applications for Title II mortgage insurance. A
lender or mortgagee approved under this section may originate,
purchase, service or sell Title I loans and insured mortgages,
respectively. A mortgagee or lender approved under this section is not
required to meet a net worth requirement. A mortgagee shall maintain
fidelity bond coverage and errors and omissions insurance acceptable to
the Secretary and in an amount required by the Secretary, or
alternative insurance coverage approved by the Secretary, that assures
the faithful performance of the responsibilities of the mortgagee.
There are no additional requirements beyond the general approval
requirements in Sec. 202.5 or as provided under paragraph (b) of this
section.
(b) Public housing agencies and State housing agencies. Under such
terms and conditions as the Secretary may prescribe and notwithstanding
the general requirements of Sec. 202.5 or the requirements of paragraph
(a) of this section, a public housing agency or its instrumentality or
a State housing agency may be approved as a mortgagee for the purpose
of originating and holding multifamily mortgages funded by issuance of
tax exempt obligations by the agency.
(c) Audit requirements. The insuring of loans and mortgages under
the Act constitutes ``financial assistance'' for purposes of audit
requirements set out in part 44 of this title. State and local
governments (as defined in 24 CFR 44.2) that receive insurance as
lenders and mortgagees shall conduct audits in accordance with HUD
audit requirements at part 44 of this title.
Subpart C--Title I and Title II Specific Requirements
Sec. 202.11 Title I.
(a) Administrative actions.--(1) Types of action. In addition to
termination of the Contract of Insurance, certain sanctions may be
imposed under the Title I program. The administrative actions that may
be applied are set forth in 24 CFR 25.5. Civil money penalties may be
imposed against Title I lenders and mortgagees pursuant to Sec. 25.12
and part 30 of this title.
(2) Grounds for action. Administrative actions shall be based upon
both the grounds set forth in Sec. 25.9 and as follows:
(i) Failure to properly supervise and monitor dealers under the
provisions of part 201 of this title;
(ii) Exhaustion of the general insurance reserve established under
part 201 of this title;
(iii) Maintenance of a Title I claims/loan ratio representing an
unacceptable risk to the Department; or
(iv) Transfer of a Title I loan to a party that does not have a
valid Title I Contract of Insurance.
(b) [Reserved].
Sec. 202.12 Title II.
(a) Tiered pricing.--(1) General requirements. (i) Prohibition
against excess variation. The customary lending practices of a
mortgagee for its single family insured mortgages shall not provide for
a variation in mortgage charge rates that exceeds two percentage
points. A variation is determined as provided in paragraph (a)(6) of
this section.
(ii) Customary lending practices. The customary lending practices
of a mortgagee include all single family insured mortgages originated
by the mortgagee, including those funded by the mortgagee or purchased
from the originator if requirements of the mortgagee have the effect of
leading to violation of this section by the originator. The
responsibility of sponsors of loan correspondent mortgagees is also
governed by Sec. 202.8(b)(7).
(iii) Basis for permissible variations. Any variations in the
mortgage charge rate up to two percentage points under the mortgagee's
customary lending practices must be based on actual variations in fees
or cost to the mortgagee to make the mortgage loan, which shall be
determined after accounting for the value of servicing rights generated
by making the loan and other income to the mortgagee related to the
loan. Fees or costs must be fully documented for each specific loan.
(2) Area. For purposes of this section, an area is:
(i) An area used by HUD for purposes of Sec. 203.18(a) of this
chapter to determine the median 1-family house price for an area; or
(ii) The area served by a HUD field office but excluding any area
included in paragraph (a)(2)(i) of this section.
(3) Mortgage charges. Mortgage charges include any charges under
the mortgagee's control and not collected for the benefit of third
parties. Examples are interest, discount points and origination fees.
(4) Interest rate. Whenever a mortgagee offers a particular
interest rate for a mortgage type in an area, it may not restrict the
availability of the rate in the area on the basis of the principal
amount of the mortgage. A mortgagee may not direct mortgage applicants
to any specific interest rate category on the basis of mortgage size.
(5) Mortgage charge rate. The mortgage charge rate is defined as
the amount of mortgage charges for a mortgage expressed as a percentage
of the initial principal amount of the mortgage.
(6) Determining excess variations. Variation in mortgage charge
rates for a mortgage type is determined by comparing all mortgage
charge rates offered by the mortgagee within an area for the mortgage
type for a designated day or other time period, including mortgage
charge rates for all actual mortgage applications.
(7) Mortgage type. A mortgage type for purposes of paragraph (a)(6)
of this section will include those mortgages that are closely parallel
in important characteristics affecting pricing and charges, such as
level of risk or processing expenses. The Secretary may develop
standards and definitions regarding mortgage types.
(8) Recordkeeping. Mortgagees are required to maintain records on
pricing
[[Page 20088]]
information, satisfactory to the Secretary, that would allow for
reasonable inspection by HUD for a period of at least 2 years.
Additionally, many mortgagees are required to maintain racial, ethnic,
and gender data under the regulations implementing the Home Mortgage
Disclosure Act (12 U.S.C. 2801-2810).
(b) Servicing. Any mortgagee that services mortgages must be
approved by the Secretary under Sec. 202.6, Sec. 202.7 or Sec. 202.10,
or be specifically approved for servicing under Sec. 202.9(a).
(c) Report and corrective plan requirements. If a mortgagee
approved for participation in Title II programs is notified by the
Secretary that it had a rate of defaults and claims on HUD-insured
mortgages during the preceding year, or during recent years, which was
higher than the normal rate, it shall submit a report, within 60 days,
containing an explanation for the above-normal rate of defaults and
claims, and, if required by the Secretary, a plan for corrective action
with regard to mortgages in default and its mortgage processing system
in general.
PART 203--SINGLE FAMILY MORTGAGE INSURANCE
16. The authority citation for 24 CFR part 203 continues to read as
follows:
Authority: 12 U.S.C. 1709, 1710, 1715b, and 1715u; 42 U.S.C.
3535(d). Subpart C also is issued under 12 U.S.C. 1715u.
17. Section 203.3 is amended by revising paragraph (d)(1)(iii) to
read as follows:
Sec. 203.3 Approval of mortgagees for Direct Endorsement.
* * * * *
(d) * * *
(1) * * *
(iii) Make changes in the quality control plan required by
Sec. 202.5(h) of this chapter; and
* * * * *
18. Section 203.5 is amended by revising the second sentence of
paragraph (c) to read as follows:
Sec. 203.5 Direct Endorsement process.
* * * * *
(c) * * * Mortgagee procedures that evidence such due diligence
shall be incorporated as part of the quality control plan required
under Sec. 202.5(h) of this chapter. * * *
* * * * *
PART 206--HOME EQUITY CONVERSION MORTGAGE INSURANCE
19. The authority citation for 24 CFR part 206 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715z-1720; 42 U.S.C. 3535(d).
20. Section 206.9 is amended by revising paragraph (b) to read as
follows:
* * * * *
(b) HUD approved mortgagees. Any mortgagee authorized under
paragraph (a) of this section and approved under part 202 of this
chapter, except an investing mortgagee approved under Sec. 202.9 of
this chapter, is eligible to apply for insurance. A mortgagee approved
under Secs. 202.6, 202.7, 202.9 or 202.10 of this chapter may purchase,
hold and sell mortgages insured under this part without additional
approval.
PART 241--SUPPLEMENTARY FINANCING FOR INSURED PROJECT MORTGAGES
21. The authority citation for 24 CFR part 241 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715z-6; 42 U.S.C. 3535(d).
22. Section 241.1040 is amended to read as follows:
Sec. 241.1040 Eligible lenders.
Lenders approved as mortgagees under Secs. 202.6, 202.7 or 202.9 of
this chapter are eligible for insurance of equity loans under this
subpart.
PART 266--HOUSING FINANCE AGENCY RISK-SHARING PROGRAM FOR INSURED
AFFORDABLE MULTIFAMILY PROJECT LOANS
23. The authority citation for 24 CFR part 266 continues to read as
follows:
Authority: 12 U.S.C. 1707; 42 U.S.C. 3535(d).
24. Section 266.100 is amended by revising the first sentence of
paragraph (a) to read as follows:
Sec. 266.100 Qualified housing finance agency (HFA).
(a) To participate in the program, an HFA must apply and be
specifically approved for the pilot program described in this part, in
addition to being approved as a mortgagee under Sec. 202.10. * * *
* * * * *
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT
25. The authority citation for 24 CFR part 3500 continues to read
as follows:
Authority: 12 U.S.C. 2601 et seq., 42 U.S.C. 3535(d).
26. Section 3500.2 is amended by revising the final sentence of the
definition of ``mortgage broker'' to read as follows:
Sec. 3500.2 Definitions.
* * * * *
Mortgage broker * * * A loan correspondent approved under
Sec. 202.8 of this title for Federal Housing Administration programs is
a mortgage broker for purposes of this part.
* * * * *
Dated: April 9, 1997.
Andrew Cuomo,
Secretary.
[FR Doc. 97-10282 Filed 4-23-97; 8:45 am]
BILLING CODE 4210-32-P
