Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations
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36260 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations DEPARTMENT OF HOUSING AND flexibility to the program by allowing Two changes are made to § 203.18 URBAN DEVELOPMENT additional groups to be exempted. which explain how the maximum ``Origination approval agreement'' is mortgage amount is calculated. A 24 CFR Parts 200, 201, 202, 203, 206, included in the heading of § 202.11. parenthetical phrase is removed from 221, 233, 234, 280 and 291 The rule deletes § 202.12(d). That § 203.18(a)(1)(ii) to reflect the 1994 paragraph indicates that approval of a legislative change that set the maximum [Docket No. FR±3977±F±01] supervised mortgagee that is a banking dollar amount for an area at 75% of the RIN 2501±AG61 institution or a trust company included current Freddie Mac limit, instead of approval of the mortgagee when acting 75% of the 1992 Freddie Mac limit. A Office of the Assistant Secretary for in a fiduciary capacity. The Department new § 203.18(i) is added to recognize Housing-Federal Housing considers that the paragraph may be that the maximum mortgage amount for Commissioner; Single Family misleading by implying that only an energy efficient mortgage may exceed Miscellaneous Amendments, supervised mortgagees that are banking the area dollar limit that would Clarifications, and Corrections institutions or trust companies may otherwise apply, under conditions hold mortgages in a trust or other prescribed by the Secretary in AGENCY: Office of the Assistant fiduciary capacity. Subject to any accordance with section 106 of the Secretary for Housing-Federal Housing limitations that may appear in Energy Policy Act of 1992. Commissioner, HUD. regulations for particular programs, Section 203.19(c) which applied to ACTION: Final rule. such as § 203.434, regarding a the now-repealed section 203(m) declaration of trust for a pool of single program for mortgage insurance for SUMMARY: This final rule makes a variety family mortgages, the Department does of technical amendments, clarifications seasonal homes is deleted as obsolete. not restrict mortgagees from holding Language is added in § 203.22(a) to and corrections to regulations for the mortgages in a trust or other fiduciary clarify that the mortgage provision single family mortgage insurance capacity. The Department eliminated providing for payment of mortgage programs. None of the amendments or trusts as eligible mortgagees through a insurance premium installments by the clarifications add to the regulatory 1992 revision of part 202 but there was mortgagor does not require payment for burden for mortgagors or mortgagees. no intent to prevent FHA-insured any longer than the period during which EFFECTIVE DATE: August 8, 1996. mortgages from being held as trust mortgage insurance premiums are FOR FURTHER INFORMATION CONTACT: John assets by an approved mortgagee. The payable by the mortgagee to HUD. J. Coonts, Director, Office of Insured Department will deal only with the Obsolete language regarding payment of Single Family Housing, Department of mortgagee, rather than others who may annual charges on ``open-end'' advances Housing and Urban Development, Room have interests in the mortgages, and will is deleted. 9266, 451 Seventh Street, SW, hold the mortgagee solely responsible Sections 203.24(a)(i) and 203.44, and Washington, DC 20410. Telephone: for complying with obligations imposed related provisions in other parts such as (202) 708±3046; TTY: (202) 4594. (These on mortgagees. 234.70, are amended by deleting are not toll-free telephone numbers.) The provisions regarding approval references to open-end advances. SUPPLEMENTARY INFORMATION: This rule and recertification fees for Title I Section 203.30 is amended to add a is designed to make a large number of lenders and Title II mortgagees are new paragraph (d) regarding technical improvements to the amended by adding a new sentence compliance, for buildings having four regulations for single family programs. permitting the Secretary to identify (4) or more units which were built for The changes will not add to the classes or groups of lenders or first occupancy after March 13, 1991, regulatory burden for mortgagors or mortgagees that are exempt from one or with the Fair Housing Act new mortgagees. Some of the changes are more of the fees. The current exemption contruction requirements at 24 CFR corrections of small errors in the current for governmental lenders and 100.205. regulations that will have no substantive mortgagees is left intact. Sections 203.36 and 234.67 are change on the way the rules have been Part 203 deleted as unnecessary. See sections applied in practice. Other changes will 203.16 and 234.15 regarding the use of The rule eliminates the requirement offer relief from unnecessary a dwelling for transient or hotel in § 203.17(b) (and corresponding requirements. purposes. Following is an explanation of requirements in §§ 221.45 and The language in section 203.38 is changes made by the rule. 234.25(b)) that mortgages involve a amended by changing the two principal obligation in multiples of $50 references to ``unit'' to ``one or more Part 200 if the mortgage does not include dwellings.'' A technical change is made to part financing of a one-time mortgage In §§ 203.40, 203.251(s), and 234.1(n), 200 to remove a reference to part 267 insurance premium (MIP) payable ``Commonwealth of the Northern which has been removed from the Code pursuant to § 203.280. One time MIP has Mariana Islands'' is substituted for the of Federal Regulations. been replaced by the up-front segment ``Trust Territory of the Pacific Islands'' of risk-based mortgage insurance because the Commonwealth of the Part 201 premiums under §§ 203.284 and Northern Mariana Islands is the only The rule makes a typographical 203.285. Rather than substitute the up- portion of the former Trust Territory of correction to the table of contents and front segment of risk-based MIP for the the Pacific Islands in which FHA single to § 201.18. one time MIP, however, the Department family programs are currently has determined that there is no longer authorized. Part 202 any reason for the general requirement The ``rule of seven'' in § 203.42 Section 202.3 is amended to revise that other mortgages without a financed currently prohibits mortgage insurance paragraph (j) to provide that the premium be in multiples of $50. All when a mortgagor is purchasing a Secretary may identify classes or groups mortgages may now be in multiples of property to be rented that is ``part of, or of lenders that are exempt from one or $1. Corresponding changes are made to adjacent or contiguous to, a project, more of these fees. This provides more §§ 221.45 and 234.52. subdivision or group of similar rental Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations 36261 properties'' in which the mortgagor will of the difficulty of operating the Sections 203.356 and 203.402 have a financial interest in more than Hawaiian home lands program for the regarding the notice of foreclosure are seven dwelling units. This rule removes General Insurance Fund (as required for amended to provide a more consistent ``subdivision'' from the quoted section 203(k) loans) in addition to the application of the rules for curtailment language. Denial of mortgage insurance Mutual Mortgage Fund. This difficulty of debenture interest included in simply because a mortgagor has a no longer exists as a result of a insurance benefits paid to mortgagees. financial interest in eight units in a very subsequent statutory change that Section 203.356 is divided into large subdivision does not further the provides for all Hawaiian home land subsection (a) for the requirements to purpose of the ``rule of seven,'' which is mortgages to be in the General Insurance provide the notice of foreclosure, and to avoid insuring single family Fund. subsection (b) for exercising reasonable mortgages on rental units that are in Section 225 of the National Housing diligence in prosecuting the foreclosure. such close geographical proximity with Act authorizes FHA insurance for open- Section 203.402(k)(1) is also subdivided. other similar rental units that they could end mortgages under which the New subsection 203.402(k)(1)(ii) limits logically be considered part of one mortgagee could advance additional the amount of debenture interest that multifamily project rather than funds under the mortgage to finance the Secretary may curtail if the unrelated single family units. In later improvements or repairs that mortgagee does not provide the practice, current departmental policy in would substantially protect or improve Secretary the notice of foreclosure. This applying the ``rule of seven'' has been the basic livability or utility of the change will reduce the debenture directed to properties within a two- property. Although mentioned in the interest curtailment when the mortgagee block radius from one another. regulations, FHA does not have proceeded to foreclose with reasonable Continued reference to a subdivision administrative procedures for the diligence, despite its failure to forward would cause confusion regarding the processing of open-end mortgages; they the initial notice of foreclosure. The intent of § 203.42. are not provided for in HUD's specific cap on debenture interest Section 203.43(c)(3) and the instructions for mortgage forms, and curtailment will be set by administrative corresponding § 234.52(c) are amended GNMA has no programs for the pooling issuances, but the curtailment will not to permit a $50 increase in the monthly of open-end mortgages. Various exceed what is currently being assessed. payment for refinancing to a shorter provisions in parts 203 and 234, Sections 203.378, 203.379, and term, to reflect the prevailing policy that including §§ 203.44 and 234.70, are 203.380 regarding property condition has been applied to date on a waiver amended to make clear that FHA is not and adjustments for damage are basis.