[Federal Register: April 4, 2007 (Volume 72, Number 64)]
[Rules and Regulations]
[Page 16687-16689]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap07-21]
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Part VI
Department of Housing and Urban Development
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24 CFR Part 234
Approval of Condominiums in Puerto Rico on Evidence of Presentment of
Legal Documents; Final Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 234
[Docket No. FR-5009-F-02]
RIN 2502-AI36
Approval of Condominiums in Puerto Rico on Evidence of
Presentment of Legal Documents
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This final rule amends the Department's regulations to provide
that the date of recordation for purposes of obtaining Federal Housing
Administration (FHA) approval of a condominium development in the
Commonwealth of Puerto Rico for mortgage insurance under the section
234(c) program is the date the condominium legal documents are
presented to the Commonwealth Office of the Property Registry. This
final rule enables parties to obtain mortgage insurance upon
presentment of legal documents, whether the condominium regime is under
construction, proposed for construction, or was established by
conversion. Instituting a single standard for approval of mortgage
insurance will result in a reduction in risk, time, and cost for
developers and help to increase FHA activity and homeownership
opportunities in Puerto Rico. This final rule follows publication of a
May 23, 2006, proposed rule on which HUD did not receive any public
comments. Accordingly, HUD is adopting the May 23, 2006, proposed rule
without change.
DATES: Effective Date: May 4, 2007.
FOR FURTHER INFORMATION CONTACT: Maynard T. Curry, Housing Program and
Policy Specialist, Office of Single Family Program Development, Office
of Housing, Department of Housing and Urban Development, 451 Seventh
Street, SW., Room 9266, Washington, DC 20410-7000, telephone (202) 708-
2121 (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 (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On May 23, 2006, HUD published a proposed rule (71 FR 29754) for
public comment to amend the Department's regulations governing Federal
Housing Administration (FHA) approval of condominium developments in
the Commonwealth of Puerto Rico for mortgage insurance under section
234 of the National Housing Act (12 U.S.C 1715y(c)) (the Act). Section
234(c) of the Act authorizes the Secretary of HUD to insure an
individual mortgage on a one-family unit in a multifamily project and
an undivided interest in the common areas and facilities that serve the
project. Section 234(k) of the Act provides that, before FHA mortgage
insurance can be placed on a unit in a condominium project converted
from rental property, at least one year must elapse between the date of
conversion and the date application for insurance is made. HUD's
regulations implementing section 234 of the Act are codified at 24 CFR
part 234.
In response to a severe backlog at the Puerto Rico Commonwealth
Office of the Property Registry, which resulted in developers and
proponents being responsible for paying assessments and costs
associated with operating and maintaining the multifamily project as a
condominium before mortgage insurance could be obtained, HUD issued a
February 7, 2003, final rule that amended the definition of conversion.
The final rule changed the definition of conversion with respect to
Puerto Rico, to allow the running of the one-year waiting period to
begin upon presentment for inscription (i.e., recording) of the
required documentation.
This revision allowed the Department to approve condominium
developments in Puerto Rico for FHA mortgage insurance on individual
units within the multifamily project on the basis of evidence of
presentment of legal documents and the parties' obtaining title
insurance on each unit. The final rule thereby relieved Puerto Rican
lenders from the heavy burden of holding section 234(c) loans without
insurance, while waiting for documents to be recorded to meet the then-
existing definition of conversion.
The May 23, 2006, proposed rule would revise the part 234
regulations to provide that, in the case of Puerto Rico, the date of
presentment should serve as the date of recordation for all condominium
regimes, which includes existing rental units that have been converted,
units under construction, or units that are planned for construction.
The proposed regulatory changes were designed to expand the scope of
recordation while better reflecting the realities of the inscription
process in Puerto Rico. Condominium plans would still have to comply
with the legal requirements of the local jurisdiction. In addition, the
proposed rule would not alter property rights, which are conferred by
the legal documents themselves and not their recordation. The proposed
rule would allow all condominium regimes in Puerto Rico to obtain FHA
approval for mortgage insurance at the time of presentment of
condominium documents. This would establish a uniform approach to the
FHA mortgage insurance approval process by allowing FHA mortgage
insurance to be placed on condominiums, whether they be conversions of
existing rental units, units under construction, or units planned for
construction, following presentment of the condominium's legal
documents to the Commonwealth Office of the Property Registry.
For more detailed information regarding the proposed regulatory
changes, please refer to the preamble of the May 23, 2006, proposed
rule.
II. This Final Rule
This final rule follows the publication of a May 23, 2006, proposed
rule. The public comment period on the proposed rule closed on July 24,
2006. HUD did not receive any public comments on the proposed rule.
HUD, therefore, is issuing this final rule without change from the
proposed rule.
III. Findings and Certifications
Information Collection Requirements
The information collection requirements contained in the section
234(c) program have been approved by the Office of Management and
Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520) and assigned OMB Control Number 2502-0059. In accordance with the
Paperwork Reduction Act, HUD may not conduct or sponsor, and a person
is not required to respond to, a collection of information, unless the
collection displays a currently valid OMB control number.
Environmental Review
This amendment is categorically excluded from environmental review
under the National Environmental Policy Act (42 U.S.C. 4321). In
keeping with the exclusion provided for in 24 CFR 50.19(c)(1), this
amendment does not direct, provide for assistance, or loan and mortgage
insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, this amendment is categorically
excluded because it amends an existing
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document where the existing document as a whole would not fall within
the exclusion in 24 CFR 50.19(c)(1).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments and the private sector. This final rule does not
impose any federal mandates on any state, local, or tribal government
or the private sector within the meaning of UMRA.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires an agency to conduct regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements, unless the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. This rule will not
have a significant economic impact on a substantial number of small
entities for the following reasons: (1) there are no anti-competitive
discriminatory aspects of the rule with regard to small entities, and
(2) there are no unusual procedures that would need to be complied with
by small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits, to the
extent practicable and permitted by law, an agency from promulgating a
regulation that has federalism implications and either imposes
substantial direct compliance costs on state and local governments and
is not required by statute, or preempts state law, unless the relevant
requirements of section 6 of the executive order are met. This rule
does not have federalism implications and does not impose substantial
direct compliance costs on state and local governments or preempt state
law within the meaning of the executive order.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for 24 CFR part
234 are 14.117 and 14.133.
List of Subjects in 24 CFR Part 234
Condominiums, Mortgage insurance, Reporting and recordkeeping
requirements.
0
Accordingly, for the reasons described in the preamble, HUD amends 24
CFR part 234 to read as follows:
PART 234--CONDOMINIUM OWNERSHIP MORTGAGE INSURANCE
0
1. The authority citation for 24 CFR part 234 continues to read as
follows:
Authority: 12 U.S.C. 1715b and 1715y; 42 U.S.C. 3535(d).
0
2. Revise Sec. 234.26(b) and (d)(1) to read as follows:
Sec. 234.26 Project requirements.
* * * * *
(b) Plan of condominium ownership. The project in which the unit is
located shall have been committed to a plan of condominium ownership by
a deed, or other recorded instrument, that is acceptable to the
Commissioner. In the case of condominium documents in the Commonwealth
of Puerto Rico, the Commissioner will accept documents presented for
inscription (recordation) to the Commonwealth Office of the Property
Registry so long as the mortgagor obtains a title insurance policy that
reflects the condominium regime.
* * * * *
(d) * * *
(1) The deed of the family unit and the deed or other recorded
instrument committing the project to a plan of condominium ownership
must comply with legal requirements of the jurisdiction. In the case of
condominium documents in the Commonwealth of Puerto Rico, the
Department will accept documents presented for inscription
(recordation) to the Commonwealth Office of Property Registry for
certification purposes so long as the mortgagor obtains a title
insurance policy that reflects the condominium regime.
* * * * *
Dated: March 20, 2007.
Brian D. Montgomery,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. E7-6088 Filed 4-3-07; 8:45 am]
BILLING CODE 4210-67-P