[Federal Register Volume 61, Number 43 (Monday, March 4, 1996)]
[Rules and Regulations]
[Pages 8458-8459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4909]
[[Page 8457]]
_______________________________________________________________________
Part IX
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner
_______________________________________________________________________
24 CFR Part 202
Approval of Lending Institutions and Mortgagees Streamlining; Final
Rule
Federal Register / Vol. 61, No. 43 / Monday, March 4, 1996 / Rules
and Regulations
[[Page 8458]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing
Commissioner
24 CFR Part 202
[Docket No. FR-4036-F-01]
RIN 2502-AG68
Approval of Lending Institutions and Mortgagees Streamlining
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This final rule amends HUD's regulations at 24 CFR part 202
relating to Approval of Lending Institutions and Mortgagees. In an
effort to comply with the President's regulatory reform initiatives,
this rule will streamline subparts A & B, which relate to approval of
Title I Lending Institutions and Approval of Mortgagees, respectively,
because certain provisions are not necessary.
EFFECTIVE DATE: April 3, 1996.
FOR FURTHER INFORMATION CONTACT: Karen Garner-Wing, Director, Lender
Approval and Recertification Division, Office of Lender Activities and
Land Sales Registration, Room 9146, 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 TDD 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 conducted a page-by-page review of its
regulations to determine which can be eliminated, consolidated, or
otherwise improved. HUD has determined that the regulations for
Approval of Lending Institutions and Mortgagees can be streamlined to
remove provisions which are no longer necessary to be codified in the
Code of Federal Regulations. This rule will not change the substantive
requirements of the part but will eliminate redundant provisions.
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 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). HUD finds that good cause exists
to publish this rule for effect without first soliciting public
comment. This rule merely removes unnecessary regulatory provisions and
does not establish or affect substantive policy. Therefore, prior
public comment is 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 will not have a significant economic
impact on a substantial number of small entities. This rule merely
streamlines regulations by removing unnecessary provisions. The rule
will have no adverse or disproportionate economic impact on small
businesses.
Environmental Impact
This rulemaking does not have an environmental impact. This
rulemaking simply amends an existing regulation by eliminating
administrative provisions and does not alter the environmental effect
of the regulations being amended. A Finding of No Significant Impact
with respect to the environment was made in accordance with 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) at the time
of development of regulations regarding the Approval of Lending
Institutions and Mortgagees. That finding remains applicable to this
rule and 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
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street SW., Washington, DC.
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
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 various levels of government. No programmatic or policy changes
will result from this rule that would 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 will 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 will
result from promulgation of this rule.
List of Subjects in 24 CFR Part 202
Administrative practice and procedure, Home improvement,
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements.
Accordingly, 24 CFR part 202 is amended as follows:
PART 202--APPROVAL OF LENDING INSTITUTIONS AND MORTGAGES
1. The authority citation for part 202 continues to read as
follows:
Authority: 12 U.S.C. 1703, 1709, and 1715b; 42 U.S.C. 3535(d).
Subpart A--Approval of Title I Lending Institutions
2. Section 202.3 is amended by:
a. Removing and reserving paragraph (d); and
b. Revising paragraph (j) to read as follows:
Sec. 202.3 General approval requirements.
* * * * *
(d) [Reserved]
* * * * *
(j) Except for Government Institutions as defined in Sec. 202.2, it
shall pay an application fee and annual fee, including an additional
fee for each branch office authorized by the Secretary to originate
Title I loans. These fees shall be in such amounts as the Secretary may
require.
* * * * *
Sec. 202.4 [Amended]
3. Section 202.4 is amended by removing and reserving paragraph
(b).
Sec. 202.5 [Amended]
4. Section 202.5 is amended by removing and reserving paragraph
(b).
5. Section 202.9 is revised to read as follows:
[[Page 8459]]
Sec. 202.9 Administrative actions.
(a) General. The provisions of 24 CFR part 25 shall be applicable
to a lender participating in the Title I program. Administrative
actions which may be applied are set forth in 24 CFR 25.5. Civil money
penalties may also be imposed against Title I lenders pursuant to 24
CFR 25.13 and part 30 of this title. For purposes of this section the
term ``lender'' shall also include loan correspondents as defined in
Sec. 202.2(b) of this subpart A.
(b) Grounds for administrative actions. Administrative actions
shall be based upon both the grounds set forth in 24 CFR 25.9 and as
follows:
(1) Failure to properly supervise and monitor dealers under the
provisions of 24 CFR part 201;
(2) Exhaustion of the general insurance reserve established under
24 CFR part 201;
(3) Maintenance of a claims/loan ratio representing an unacceptable
risk to the Department; or
(4) Transfer of a Title I loan to a party that does not have a
valid Contract of Insurance.
Subpart B--Approval of Mortgagees
6. Section 202.11 is amended by:
a. Revising paragraphs (a)(1) introductory text, (a)(1)(i), and
(b); and
b. Removing and reserving paragraphs (a)(3) and (c), to read as
follows:
Sec. 202.11 Approval, recertification, withdrawal of approval and
termination of approval agreement.
(a) Approval. (1) A mortgagee may be approved for participation in
the mortgage insurance programs authorized by the National Housing Act
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
to support the request for approval. Approval of the application shall
constitute:
(i) The Secretary's agreement that the mortgagee shall be
considered an approved mortgagee unless suspended or withdrawn pursuant
to 24 CFR part 25, or unless the mortgagee voluntarily relinquishes its
approval;
* * * * *
(3) [Reserved]
* * * * *
(b) Recertification of approval. On each anniversary of the
approval of a mortgagee, the Secretary shall undertake a
recertification procedure to determine whether continued approval is
appropriate. The Secretary shall review the yearly verification report
required by Sec. 202.12(h)(2) and other pertinent documents, determine
whether all application and annual fees which are due have been paid,
and request any additional information needed to make a determination
regarding continuation of approval.
(c) [Reserved]
* * * * *
7. Section 202.12 is amended by:
a. Removing and reserving paragraph (e), and
b. Redesignating paragraph (o) as paragraph (n)(5) and revising
newly redesignated paragraph (n)(5); and
c. Reserving paragraph (o), to read as follows:
Sec. 202.12 General approval requirements.
* * * * *
(e) [Reserved]
* * * * *
(n) * * *
(5) Mortgagees shall have the required net worth upon approval,
except that supervised and nonsupervised mortgagees may have a net
worth of $250,000 for the first year of approval.
(o) [Reserved]
* * * * *
8. Section 202.18 is revised to read as follows:
Sec. 202.18 Approval for servicing.
All mortgagees who wish to service FHA-insured mortgages must be
approved by the Secretary under Sec. 202.13, (supervised mortgagees),
Sec. 202.14, (nonsupervised mortgagees), or Sec. 202.17 (governmental
institutions).
9. Section 202.19 is revised to read as follows:
Sec. 202.19 Report requirements.
(a) Definitions. For the purpose of this section:
(1) Normal rate for early serious defaults and early claims means
the rate set forth in Sec. 202.11(d)(i).
(2) Early serious defaults or claims higher than the normal rate
means the rate set forth in Secs. 202.11(d)(ii) and 202.11(d)(iii).
(3) Endorsement means initial endorsement or initial/final
endorsement, as applicable, with respect to multifamily mortgages.
(b) Requirements. If a mortgagee approved for participation in the
insurance programs under Secs. 202.10 through 202.18 is notified by the
Secretary that it had a rate of early serious defaults or early claims
on HUD-insured mortgages during the preceding year, or during recent
years, which was higher than the normal rate for the geographic area or
areas in which it does business, it shall submit a report, within 60
days, containing an explanation for the above-normal rate of early
serious defaults or early 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. In determining whether a plan is
required, the Secretary may consider relevant information and
statements from the mortgagee.
10. Section 202.20 is amended by revising paragraph (i) to read as
follows:
Sec. 202.20 Tiered Pricing.
* * * * *
(i) Request for determination of compliance. Pursuant to section
539(a) of the National Affordable Housing Act, any person may file a
request that the Secretary determine whether a mortgagee or Title I
lender is in compliance with this section or with sections implementing
sections 223(a)(7) and 535 of the National Housing Act (12 U.S.C. 1701
et seq.) , such as Secs. 201.10(g), 203.18d, and 203.43(c)(5) of this
chapter (only Section 535 applies to Title I lenders). The request for
determination shall be made to the following address: Department of
Housing and Urban Development, Office of Lender Activities and Land
Sales Registration, 45l Seventh Street, SW, Washington, DC 204l0. 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.
Dated: February 22, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 96-4909 Filed 3-1-96; 8:45 am]
BILLING CODE 4210-27-P
