2017-15668. Mortgage and Loan Insurance Programs Under the National Housing Act-Debenture Interest Rates

AGENCY:

Office of the Assistant Secretary for Housing, HUD.

ACTION:

Notice.

SUMMARY:

This Notice announces changes in the interest rates to be paid on debentures issued with respect to a loan or mortgage insured by the Federal Housing Administration under the provisions of the National Housing Act (the Act). The interest rate for debentures issued under Section 221(g)(4) of the Act during the 6-month period beginning July 1, 2017, is 21/4 percent. The interest rate for debentures issued under any other provision of the Act is the rate in effect on the date that the commitment to insure the loan or mortgage was issued, or the date that the loan or mortgage was endorsed (or initially endorsed if there are two or more endorsements) for insurance, whichever rate is higher. The interest rate for debentures issued under these other provisions with respect to a loan or mortgage committed or endorsed during the 6-month period beginning July 1, 2017, is 27/8 percent.

FOR FURTHER INFORMATION CONTACT:

Yong Sun, Department of Housing and Urban Development, 451 Seventh Street SW., Room 5148, Washington, DC 20410-8000; telephone [phone] (this is not a toll-free number). Individuals with speech or hearing impairments may access this number through TTY by calling the toll-free Federal Information Relay Service at [phone].

SUPPLEMENTARY INFORMATION:

Section 224 of the National Housing Act (12 U.S.C. 1715o) provides that debentures issued under the Act with respect to an insured loan or mortgage (except for debentures issued pursuant to Section 221(g)(4) of the Act) will bear interest at the rate in effect on the date the commitment to insure the loan or mortgage was issued, or the date the loan or mortgage was endorsed (or initially endorsed if there are two or more endorsements) for insurance, whichever rate is higher. This provision is implemented in HUD's regulations at 24 CFR 203.405, 203.479, 207.259(e)(6), and 220.830. These regulatory provisions state that the applicable rates of interest will be published twice each year as a notice in the Federal Register.

Section 224 further provides that the interest rate on these debentures will be set from time to time by the Secretary of HUD, with the approval of the Secretary of the Treasury, in an amount not in excess of the annual interest rate determined by the Secretary of the Treasury pursuant to a statutory formula based on the average yield of all outstanding marketable Treasury obligations of maturities of 15 or more years.

The Secretary of the Treasury (1) has determined, in accordance with the provisions of Section 224, that the statutory maximum interest rate for the period beginning July 1, 2017, is 27/8 percent; and (2) has approved the establishment of the debenture interest rate by the Secretary of HUD at 27/8 percent for the 6-month period beginning July 1, 2017. This interest rate will be the rate borne by debentures issued with respect to any insured loan or mortgage (except for debentures issued pursuant to Section 221(g)(4)) with insurance commitment or endorsement date (as applicable) within the latter 6 months of 2017.

For convenience of reference, HUD is publishing the following chart of debenture interest rates applicable to mortgages committed or endorsed since January 1, 1980:

Effective interest rate	on or after	prior to
91/2	Jan. 1, 1980	July 1, 1980
97/8	July 1, 1980	Jan. 1, 1981
113/4	Jan. 1, 1981	July 1, 1981
127/8	July 1, 1981	Jan. 1, 1982
123/4	Jan. 1, 1982	Jan. 1, 1983
101/4	Jan. 1, 1983	July 1, 1983
103/8	July 1, 1983	Jan. 1, 1984
111/2	Jan. 1, 1984	July 1, 1984
133/8	July 1, 1984	Jan. 1, 1985
115/8	Jan. 1, 1985	July 1, 1985
111/8	July 1, 1985	Jan. 1, 1986
101/4	Jan. 1, 1986	July 1, 1986
81/4	July 1, 1986	Jan. 1. 1987
8	Jan. 1, 1987	July 1, 1987
9	July 1, 1987	Jan. 1, 1988
91/8	Jan. 1, 1988	July 1, 1988
93/8	July 1, 1988	Jan. 1, 1989
91/4	Jan. 1, 1989	July 1, 1989
9	July 1, 1989	Jan. 1, 1990
81/8	Jan. 1, 1990	July 1, 1990
9	July 1, 1990	Jan. 1, 1991
83/4	Jan. 1, 1991	July 1, 1991
81/2	July 1, 1991	Jan. 1, 1992
8	Jan. 1, 1992	July 1, 1992
8	July 1, 1992	Jan. 1, 1993
73/4	Jan. 1, 1993	July 1, 1993
7	July 1, 1993	Jan. 1, 1994
65/8	Jan. 1, 1994	July 1, 1994
73/4	July 1, 1994	Jan. 1, 1995
83/8	Jan. 1, 1995	July 1, 1995
71/4	July 1, 1995	Jan. 1, 1996
61/2	Jan. 1, 1996	July 1, 1996
71/4	July 1, 1996	Jan. 1, 1997
63/4	Jan. 1, 1997	July 1, 1997
71/8	July 1, 1997	Jan. 1, 1998
63/8	Jan. 1, 1998	July 1, 1998
61/8	July 1, 1998	Jan. 1, 1999
51/2	Jan. 1, 1999	July 1, 1999
61/8	July 1, 1999	Jan. 1, 2000
61/2	Jan. 1, 2000	July 1, 2000
61/2	July 1, 2000	Jan. 1, 2001
6	Jan. 1, 2001	July 1, 2001
57/8	July 1, 2001	Jan. 1, 2002
51/4	Jan. 1, 2002	July 1, 2002
53/4	July 1, 2002	Jan. 1, 2003
5	Jan. 1, 2003	July 1, 2003
41/2	July 1, 2003	Jan. 1, 2004
51/8	Jan. 1, 2004	July 1, 2004
51/2	July 1, 2004	Jan. 1, 2005
47/8	Jan. 1, 2005	July 1, 2005
41/2	July 1, 2005	Jan. 1, 2006
47/8	Jan. 1, 2006	July 1, 2006
53/8	July 1, 2006	Jan. 1, 2007
43/4	Jan. 1, 2007	July 1, 2007
5	July 1, 2007	Jan. 1, 2008
41/2	Jan. 1, 2008	July 1, 2008
45/8	July 1, 2008	Jan. 1, 2009
41/8	Jan. 1, 2009	July 1, 2009
41/8	July 1, 2009	Jan. 1, 2010
41/4	Jan. 1, 2010	July 1, 2010
41/8	July 1, 2010	Jan. 1, 2011
37/8	Jan. 1, 2011	July 1, 2011
41/8	July 1, 2011	Jan. 1, 2012
27/8	Jan. 1, 2012	July 1, 2012
23/4	July 1, 2012	Jan. 1, 2013
21/2	Jan. 1, 2013	July 1, 2013
27/8	July 1, 2013	Jan. 1, 2014
35/8	Jan. 1, 2014	July 1, 2014
31/4	July 1, 2014	Jan. 1, 2015
3	Jan. 1, 2015	July 1, 2015
27/8	July 1, 2015	Jan. 1, 2016
27/8	Jan. 1, 2016	July 1, 2016
21/2	July 1, 2016	Jan. 1, 2017
23/4	Jan. 1, 2017	July 1, 2017
27/8	July 1, 2017	Jan. 1, 2018

Section 215 of Division G, Title II of Public Law 108-199, enacted January 23, 2004 (HUD's 2004 Appropriations Act) amended Section 224 of the Act, to change the debenture interest rate for purposes of calculating certain insurance claim payments made in cash. Therefore, for all claims paid in cash on mortgages insured under Section 203 or 234 of the National Housing Act and endorsed for insurance after January 23, 2004, the debenture interest rate will be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years, as found in Federal Reserve Statistical Release H-15. The Federal Housing Administration has codified this provision in HUD regulations at 24 CFR 203.405(b) and 24 CFR 203.479(b).

Section 221(g)(4) of the Act provides that debentures issued pursuant to that paragraph (with respect to the assignment of an insured mortgage to the Secretary) will bear interest at the “going Federal rate” in effect at the time the debentures are issued. The term “going Federal rate” is defined to mean the interest rate that the Secretary of the Treasury determines, pursuant to a statutory formula based on the average yield on all outstanding marketable Treasury obligations of 8- to 12-year maturities, for the 6-month periods of January through June and July through December of each year. Section 221(g)(4) is implemented in the HUD regulations at 24 CFR 221.255 and 24 CFR 221.790.

The Secretary of the Treasury has determined that the interest rate to be borne by debentures issued pursuant to Section 221(g)(4) during the 6-month period beginning July 1, 2017, is 21/4 percent.

The subject matter of this notice falls within the categorical exemption from HUD's environmental clearance procedures set forth in 24 CFR 50.19(c)(6). For that reason, no environmental finding has been prepared for this notice.

(Authority: Sections 211, 221, 224, National Housing Act, 12 U.S.C. 1715b, 1715l, 1715o; Section 7(d), Department of HUD Act, 42 U.S.C. 3535(d).)

Dated: July 14, 2017.

Dana T. Wade,

General Deputy Assistant Secretary for Housing.