[Federal Register: September 4, 2008 (Volume 73, Number 172)]
[Rules and Regulations]
[Page 51596-51597]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04se08-4]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 206
[Docket No. FR-5129-F-02]
RIN 2502-AI49
Home Equity Conversion Mortgages (HECMs): Determination of
Maximum Claim Amount; and Eligibility for Discounted Mortgage Insurance
Premium for Certain Refinanced HECM Loans
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This final rule adopts, without change, an interim rule that
made two technical changes to HUD's Home Equity Conversion Mortgage
(HECM) program. First, the interim rule extended the date for
calculating the maximum claim amount in the HECM program from the date
of the underwriter's receipt of the appraisal report to the date of
closing. This change provides a more easily verifiable and more easily
identifiable date. Second, the interim rule corrected an unintended
consequence that results in a situation where HECM loans that are not
in default but have been assigned pursuant to regulatory provisions,
and remain in effect, are not eligible to be refinanced with a
discounted initial mortgage insurance premium (MIP). The interim rule
permitted such HECM loans to be eligible for the discounted initial MIP
upon refinancing, in accordance with the purpose of the HECM program,
which is to improve the financial situation of elderly homeowners. HUD
received one public comment in response to a solicitation of comments
on the interim rule, which was supportive of the interim rule.
DATES: Effective Date: October 6, 2008.
FOR FURTHER INFORMATION CONTACT: James Beavers, Deputy Director, Single
Family Program Development, Office of Single Family Housing, Department
of Housing and Urban Development, 451 Seventh Street, SW., Washington,
DC 20410-8000; telephone number 202-708-2121 (this is not a toll-free
number). Persons with hearing or speech impairments may access this
number through TTY by calling the toll-free Federal Information Relay
Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
The statutory and regulatory background to this rule is fully
discussed in the preamble to the January 8, 2008, interim rule at 73 FR
1434-1435. HUD's Home Equity Conversion Mortgage (HECM) statute is at
section 255 of the National Housing Act, 12 U.S.C. 1715z-20.
The January 2008 interim rule revised the point in time at which
the appraised value of the property and the maximum dollar amount for
an area under 12 U.S.C. 1709(b)(2) are compared to determine the
maximum claim amount. The definition of ``maximum claim amount''
currently codified in HUD's regulations in 24 CFR 206.3 provides that
both of these values ``must be as of the date the Direct Endorsement
Lender or Lender Insurance Underwriter receives the appraisal report.''
For reasons described in the January 8, 2008, interim rule, however,
the date is changed to the date of loan closing.
The interim rule also addressed an issue in the HECM program in
which refinanced HECM notes assigned to HUD under assignment provisions
at Sec. 206.107(a)(1) (election of assignment or shared premium
option) and Sec. 206.121(b) (assignment to HUD when the mortgagee is
unable or unwilling to make payments to mortgagor), but not in default,
could not be insured at the reduced initial mortgage insurance premium
(MIP) rates applicable to refinanced HECM loans. The interim rule
clarified that refinanced HECM loans in these categories are also
eligible for mortgage insurance at the reduced rate.
II. This Final Rule
This final rule adopts the interim rule without change. The
following provides a summary of the regulatory amendments made by the
interim rule, and adopted without change by the final rule.
The interim rule removed the second sentence of 24 CFR
206.3, and revised the first sentence to read:
Maximum claim amount means the lesser of the appraised value of
the property, as determined by the appraisal used in underwriting
the loan, or the maximum dollar amount for an area established by
the Secretary for a one-family residence under section 203(b)(2) of
the National Housing Act (as adjusted where applicable under section
214 of the National Housing Act) as of the date of loan closing.
The interim rule revised the last sentence of Sec.
206.53(a) to remove the term ``presently'' and clarify that the
refinancing provisions apply to ``existing'' HECM loans, including
those assigned under Sec. Sec. 206.107(a)(1) and 206.121(b).
III. Discussion of Public Comments
The public comment period on the January 8, 2008, interim rule
closed on March 10, 2008. HUD received one comment, which supported the
change made by the rule, and urged HUD to make other changes to the
program regulations that would especially assist elderly minority
homeowners. With no other issues for consideration at the final rule
stage, HUD is adopting the interim rule without change.
IV. Findings and Certifications
Environmental Impact
The final rule involves external administrative or fiscal
requirements or procedures that are related to loan limits and rate or
cost determinations and that do not constitute a development decision
affecting the physical condition of specific project areas or building
sites. Accordingly, under 24 CFR 50.19(c)(6), this rule is
categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a 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 final rule would not have a significant impact on entities,
because the establishment of a date of maximum claim amount is an
automated process and merely changing the date as of which the
calculation is made imposes no additional burden on any entity.
Allowing for discounted MIPs for refinancings provides a benefit to
borrowers and presents no impact on any business entities.
Accordingly, the undersigned certifies that this rule will not have
a significant economic impact on a substantial number of small
entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This rule would not have
federalism
[[Page 51597]]
implications and would not impose substantial direct compliance costs
on state and local governments or preempt state law within the meaning
of the Executive Order.
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 on the private sector. This final rule will not
impose any federal mandates on any state, local, or tribal governments,
or on the private sector, within the meaning of UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance (CFDA) program number is
14.183.
List of Subjects in 24 CFR Part 206
Aged, Condominiums, Loan programs--housing and community
development, Mortgage insurance, Reporting and recordkeeping
requirements.
PART 206--HOME EQUITY CONVERSION MORTGAGE INSURANCE
0
Accordingly, the interim rule amending 24 CFR part 206, which was
published at 73 FR 1434 on January 8, 2008, is adopted as a final rule
without change.
Dated: August 22, 2008.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. E8-20471 Filed 9-3-08; 8:45 am]
BILLING CODE 4210-67-P