[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30912]
[[Page Unknown]]
[Federal Register: December 20, 1994]
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Part VII
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Secretary
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24 CFR Parts 25 and 26
Mortgagee Review Board; Proceedings Before a Hearing Officer; Proposed
Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Parts 25 and 26
[Docket No. R-94-1563; FR-3065-P-02]
RIN 2501-AB24
Mortgagee Review Board; Proceedings Before a Hearing Officer
AGENCY: Office of the Secretary, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would make changes in the Department's
regulations governing sanctions imposed by the Mortgagee Review Board.
The proposed rule would also make conforming changes to the regulations
concerning HUD's hearing officers, consistent with the revisions
proposed herein and in the proposed revision to 24 CFR part 24
published elsewhere in today's Federal Register. The changes to the
Mortgagee Review Board actions are intended to follow more closely the
statutory provisions set forth at 12 U.S.C. 1708(c). The Department
considers these proposed revisions necessary to comply with the
President's directive to streamline agency operations throughout the
Executive Branch. The proposed revisions are also an element in the
Government reinvention process at the Department.
DATES: Comment due date. Comments must be submitted on or before
February 21, 1995.
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,
S.W., Washington, D.C. 20410. Communications should refer to the above
docket number and title. 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: Emmett N. Roden, Assistant General
Counsel for Administrative Proceedings, Office of General Counsel, U.S.
Department of Housing and Urban Development, 451 7th Street, S.W., Room
10251, Washington, D.C. 20410, telephone (202) 708-2350. The telephone
number for the hearing impaired (TDD) is (202) 708-9300. These are not
toll-free numbers.
SUPPLEMENTARY INFORMATION: Section 202 of the National Housing Act (12
U.S.C. 1708 (c) and (d)) established the Mortgagee Review Board
(``Board''). Section 202(c)(4) directs the Board to ``hold a hearing on
the record'' concerning sanctions it has taken against a mortgagee, if
the mortgagee so requests within 30 days notice of the Board's action.
However, HUD's current regulations delegate the Board's authority to
hold hearings to hearing officers (administrative law judges and Board
of Contract Appeals judges). These proceedings have proven extremely
time-consuming and expensive. Accordingly, this proposed rule will
return the hearing function to the Board, thereby streamlining the
hearing process.
The proposed rule also implements the 1992 amendments to Section
202. These amendments limited a suspension issued by the Board to not
more than one year, unless extended for not more than six additional
months, to protect the public interest, or unless extended with the
mortgagee's agreement. The amendments also clarified that the term
``mortgagee'' included lenders or loan correspondents approved under
the National Housing Act.
The proposed rule also would make conforming changes to HUD's
regulations governing hearing officers, consistent with the proposed
revisions both to the Board's regulations and to 24 CFR part 24,
published elsewhere in today's Federal Register.
Written comments from the public will be considered prior to
issuance of a final rule. No hearing will be conducted with respect to
this proposed rule.
Findings and Other Matters
Environmental Impact
A Finding of No Significant Impact with respect to the environment
required by the National Environmental Policy Act of 1969 (42 U.S.C.
4331) is unnecessary since the rule addresses administrative decisions
whose content does not constitute a development decision nor affect the
physical condition of a project area or building.
The Regulatory Flexibility Act
Under 5 U.S.C. 605(b) (the Regulatory Flexibility Act), the
Secretary by his approval of this rule certifies that this rule would
not have a significant economic impact on a substantial number of small
entities. The rule would implement statutory authority that is intended
to protect the Department's programs from abusive practices, but it
should have no adverse or disproportionate economic impact on small
businesses.
Executive Order 12866, Regulatory Planning and Review
This rule was reviewed and approved by the Office of Management and
Budget as a significant rule, as this term is defined in Executive
Order 12866, which was signed by the President on September 30, 1993.
Any changes to the rule as a result of that review are contained in the
public file for the rule in the Department's Office of the Rules Docket
Clerk.
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. The rule alters the administrative procedures associated with
the prosecution of abuses of HUD programs, but it has no impact on
family-related concerns.
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 between them and other levels of government. The
rule's major effects are on individuals and businesses.
Semiannual Agenda of Regulations
This rule was listed as sequence number 1718 in the Department's
Semiannual Agenda of Regulations published on November 14, 1994 (59 FR
57632, 57640) pursuant to Executive Order 12866 and the Regulatory
Flexibility Act.
List of Subjects
24 CFR Part 25
Administrative practice and procedure, Loan programs--housing and
community development, Organization and functions (Government
agencies).
24 CFR Part 26
Administrative practice and procedure.
Accordingly, 24 CFR parts 25 and 26 would be amended as follows:
PART 25--MORTGAGEE REVIEW BOARD
1. The authority citation for part 25 would be revised to read as
follows:
Authority: 12 U.S.C. 1708 (c) and (d), 1709(s), 1715b and
1735(f)-14; 42 U.S.C. 3535(d).
2. Section 25.2 would be revised to read as follows:
Sec. 25.2 Establishment of Board.
The Mortgagee Review Board was established in the Federal Housing
Administration, which is in the Office of the Assistant Secretary for
Housing--Federal Housing Commissioner, by section 202(c)(1) of the
National Housing Act, (12 U.S.C. 1708(c)(1)), as added by section 142
of the Department of Housing and Urban Development Reform Act of 1989
(Pub. L. 101-235, 103 Stat. 1987). Except as limited by this part, the
Mortgagee Review Board shall exercise all of the functions of the
Secretary with respect to administrative actions against mortgagees and
lenders and such other functions as are provided in this part. The
Mortgagee Review Board may, in its discretion, approve the initiation
of a suspension or debarment action against a mortgagor or lender by
any Suspending or Debarring Official under part 24 of this title. The
Mortgagee Review Board shall have all powers necessary and incident to
the performance of these functions. The Mortgagee Review Board may
redelegate its authority to impose administrative sanctions on the
grounds specified in Secs. 25.9 (e), (h), and (u), to take all other
nondiscretionary acts, and to review submissions and conduct hearings
in accordance with Sec. 25.8. With respect to actions taken against
Title I lenders, the Mortgagee Review Board may redelegate its
authority to take administrative actions on the grounds specified in 24
CFR 202.3(j), 202.5(a), and 202.5(c) of this title (as incorporated in
Sec. 202.6(b)(1) of this title).
3. In Sec. 25.3, a definition for Hearing official would be added
after the definition for Cease and desist order, a definition for Loan
correspondent would be added after the definition for Letter of
reprimand and the definition of Mortgagee would be revised to read as
follows:
Sec. 25.3 Definitions.
* * * * *
Hearing official. The hearing official is a Departmental official
designated by the Board to conduct hearings under Sec. 25.8.
* * * * *
Loan correspondent. A financial institution approved by the
Secretary to originate direct loans under Title I of the National
Housing Act, 12 U.S.C. 1702 et seq., for sale or transfer to a
sponsoring lending institution which holds a valid Title I contract of
insurance and which is not under suspension.
* * * * *
Mortgagee. (1) For purposes of this part, the term ``mortgagee''
includes:
(i) The original lender under the mortgage, as that term is defined
at sections 201(a) and 207(a)(1) of the National Housing Act, 12 U.S.C.
1707(a) and 1713(a)(1);
(ii) A lender or loan correspondent as defined in this section; or
(iii) A branch office or subsidiary of the mortgagee, lender or
loan correspondent.
(2) The term ``mortgagee'' also includes successors and assigns of
the mortgagee, lender or loan correspondent, as are approved by the
Commissioner.
* * * * *
4. In Sec. 25.5, paragraphs (c)(1), (c)(2) and (d)(4)(iii) would be
revised to read as follows:
Sec. 25.5 Administrative actions.
* * * * *
(c) Suspension--(1) General. The Board may issue an order
temporarily suspending a mortgagee's HUD/FHA approval if there exists
adequate evidence of a violation(s) under Sec. 25.9 and continuation of
the mortgagee's HUD/FHA approval, pending or at the completion of, any
audit, investigation, or other review, or such administrative or other
legal proceedings as may ensue, would not be in the public interest or
in the best interests of the Department. Suspension shall be based upon
adequate evidence.
(2) Duration. A suspension shall last for a specified period of
time, but not less than 6 months and generally not more than 1 year.
The Board may extend the suspension for an additional 6 months it if
determines that the extension is in the public interest. These time
limits may also be extended upon the voluntary written agreement of the
mortgagee.
* * * * *
(d) * * *
(4) * * *
(iii) Upon receipt of the hearing official's decision under
Sec. 25.8.
* * * * *
5. Section 25.7 would be revised to read as follows:
Sec. 25.7 Notice of administrative action.
Whenever the Board takes an action to issue a letter of reprimand,
place a mortgagee on probation, or to suspend or withdraw a mortgagee's
approval, the Board shall promptly notify the mortgagee in writing of
the determination. Except for a letter of reprimand, the notice shall
describe the nature and duration of the administrative action, shall
specifically state the violations and shall set forth the findings of
the Board. The notice shall inform the mortgagee of its right to a
hearing regarding the administrative action (except for a letter of
reprimand) and of the manner and time in which to request a hearing
pursuant to Sec. 25.8. A supplemental notice may be issued in the
discretion of the Board to add or modify the reasons for the action.
6. Section 25.8 would be revised to read as follows:
Sec. 25.8 Hearings and hearing request.
(a) Hearing request. In the case of probation, suspension or
withdrawal action, a mortgagee is entitled to a hearing on the record
before a hearing official designated by the Board. The mortgagee shall
submit its request for a hearing within 30 days of receiving the
Board's notice of administrative action. The request shall be addressed
to the Board Docket Clerk, Department of Housing and Urban Development,
451 7th Street, S.W., Washington, D.C. 20410. The request shall
specifically respond to the violations set forth in the notice of
administrative action. If the mortgagee fails to request a hearing
within 30 days after receiving the notice of administrative action, the
Board's action shall become final.
(b) Procedural rules. The hearing official shall hold a de novo
hearing within 30 days of HUD's receipt of the mortgagee's request,
unless the mortgagee requests a later hearing date or requests an
informal conference, under paragraph (e) of this section, in addition
to the hearing. The mortgagee or its representative shall be afforded
an opportunity to appear, submit documentary evidence, present
witnesses and confront any witness the agency presents. The parties
shall not be allowed to present members of the Board as witnesses. A
transcribed record of the hearing shall be made available at cost to
the mortgagee.
(c) Hearing location. The hearing shall generally be held in
Washington, D.C. However, upon a showing of undue hardship or other
cause, the hearing official may, in his or her discretion, order the
hearing to be held in a location other than Washington, D.C.
(d) Hearing official's decision. The hearing official shall make a
written decision within 45 days after the conclusion of the hearing,
unless the hearing official extends this period for good cause. If
there is any dispute as to material facts, the hearing official shall
make written findings of fact. The decision shall be based upon the
facts as found, together with any information and argument submitted by
the parties and any other information in the administrative record. The
hearing official's decision shall be mailed to the mortgagee, and shall
serve as the final agency action concerning the mortgagee.
(e) Informal conference. The mortgagee may request an informal
conference with respect to a notice of withdrawal, suspension, or
probation. The conference shall, at the option of the mortgagee, be in
lieu of or precede the hearing on the Board action. The mortgagee must
submit the request for an informal conference to the Board Docket Clerk
within 30 days after receipt of the notice of Board action. If the
mortgagee elects to request a hearing in addition to the conference,
the mortgagee must include with the request for a conference and
hearing an express waiver of the mortgagee's right to the hearing
within 30 days after the Department's receipt of the request for
hearing. The conference shall be conducted by the hearing official, or
another designated official, within 15 days after receipt of the
request for a conference.
6. In Sec. 25.9, paragraphs (i) and (w) would be revised to read as
follows:
Sec. 25.9 Grounds for an administrative action.
* * * * *
(i) Failure or refusal of an approved mortgagee to comply with an
order of the Board, the Secretary, or the hearing official;
* * * * *
(w) Any other reasons the Board, the Secretary, or the hearing
official, as appropriate, determines to be so serious as to justify an
administrative sanction;
* * * * *
Sec. 25.12 [Amended]
7. In Sec. 25.12(a), the words ``Hearing Officer'' would be removed
and in their place, the words ``hearing official'' would be added, and
the last sentence would be removed.
8. Section 25.16 would be revised to read as follows:
Sec. 25.16 Prohibition against modification of Board orders.
The hearing official shall not modify or otherwise disturb in any
way an order or notice by the Board, except after having conducted a
hearing in accordance with Sec. 25.8.
Sec. 25.17 [Removed]
9. Section 25.17 would be removed.
PART 26--PROCEEDINGS BEFORE A HEARING OFFICER
10. The authority citation for part 26 would be revised to read as
follows:
Authority: 42 U.S.C. 3535(d).
11. In Sec. 26.1, the second sentence would be revised to read as
follows:
Sec. 26.1 Purpose.
* * * These rules of procedure apply to hearings with respect to
determinations by the Multifamily Participation Review Committee
pursuant to 24 CFR part 200, subpart H, and to hearings conducted
pursuant to a referral by a debarring or suspending official of a
dispute with respect to material facts at issue in an administrative
sanction matter under 24 CFR part 24, unless such regulations at parts
200 or 24 provide otherwise. * * *
Dated December 8, 1994.
Henry G. Cisneros,
Secretary
[FR Doc. 94-30912 Filed 12-19-94; 8:45 am]
BILLING CODE 4210-32-P
