[Federal Register Volume 76, Number 168 (Tuesday, August 30, 2011)]
[Proposed Rules]
[Pages 53851-53853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22189]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 203
[Docket No. FR-5461-P-01]
RIN 2502-AJ01
Federal Housing Administration (FHA): Suspension of Section
238(c) Single-Family Mortgage Insurance in Military Impacted Areas
AGENCY: Office of the Assistant Secretary of Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would suspend FHA's mortgage insurance
program for military impacted areas under section 238(c) of the
National Housing Act (Act). This single-family mortgage insurance
program, established by regulation in 1977, has been significantly
underutilized for the past several years. Additionally, these mortgage
loans are insured under comparable terms and conditions as loans
insured under HUD's primary single-family mortgage insurance program
under section 203(b) of the National Housing Act. Accordingly, those
borrowers who would be served under section 238(c) of the Act are
served equally well under the section 203(b) mortgage insurance
program. The suspension of this mortgage insurance program is
consistent with the President's budget request for Fiscal Year 2012.
DATES: Comment Due Date: October 31, 2011.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 7th Street,
SW., Room 10276, Washington, DC 20410-0500. Communications must refer
to the above docket number and title. There are two methods for
submitting public comments.
1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street, SW., Room 10276,
Washington, DC 20410-0001.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
http://www.regulations.gov. HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a comment,
ensures timely receipt by HUD, and enables HUD to make them immediately
available to the public. Comments submitted electronically through the
http://www.regulations.gov Web site can be viewed by other commenters
and interested members of the public. Commenters should follow the
instructions provided on that site to submit comments electronically.
Note: To receive consideration as public comments, comments
must be submitted through one of the two methods specified above.
Again, all submissions must refer to the docket number and title of
the rule. No Facsimile Comments. Facsimile (FAX) comments are not
acceptable.
Public Inspection of Public Comments. All properly submitted
comments and communications submitted to HUD will be available for
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the
above address. Due to security measures at the HUD Headquarters
building, an advance appointment to review the public comments must be
scheduled by calling the Regulations Division at 202-708-3055 (this is
not a toll-free number). Individuals with speech or hearing impairments
may access this number via TTY by calling the toll-free Federal Relay
Service at 800-877-8339. Copies of all comments submitted are available
for inspection and downloading at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Karin Hill, Director, Office of Single
[[Page 53852]]
Family Program Development, Office of Housing, Department of Housing
and Urban Development, 451 7th Street, SW., Room 9278, 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 via TTY by calling the Federal Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 238(c) of the National Housing Act (12 U.S.C. 1715z-3(c))
(Act) was added by the Housing and Community Development Act of 1977
(Pub. L. 95-128) to authorize HUD to insure mortgages executed in
connection with the construction, repair, rehabilitation, or purchase
of property located near any installation of the Armed Forces of the
United States in federally impacted areas in which conditions are such
that one or more of the applicable insuring requirements under another
single-family mortgage insurance program cannot be met. In addition,
insurance may only be provided under section 238(c) if: (1) HUD finds
that the benefits to be derived from providing the insurance outweigh
the risk of probable costs to the government; and (2) the Secretary of
the Department of Defense certifies that there is no present intention
to curtail substantially the personnel assigned or to be assigned to
the installation. HUD is authorized to establish premiums and other
charges to assure that the mortgage insurance program authorized under
section 238(c) of the Act is actuarially sound, and to prescribe terms
and conditions relating to the insurance found to be necessary and
appropriate to the implementation of section 238(c). HUD's regulation
implementing section 238(c) is codified at 24 CFR 203.43e. The
regulation, promulgated in 1977, closely tracks the language of section
238(c) of the Act, and the section 238(c) mortgage insurance program is
not subject to any regulatory requirements different from HUD's
principal single-family mortgage insurance program authorized under
section 203(b) of the Act.\1\
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\1\ From 1977 to 1983, mortgages insured under section 238(c)
were subject to a higher mortgage insurance premium than other FHA
single-family mortgage insurance programs (0.5 percent vs. 1.0
percent). In 1983, HUD reduced the mortgage insurance premium for
section 238(c) mortgages to conform to other FHA programs because
HUD determined that ``the actuarial experience under Section 238(c)
provides no basis for charging a higher mortgage insurance premium
in federally impacted areas'' (see 48 FR 35088-01).
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Although established to ensure the availability of affordable
housing in military impacted areas, the program has been minimally
utilized by eligible borrowers. Section 238(c) mortgage insurance has
been available in only six counties throughout the country, three in
Georgia and three in New York. From January 1, 2005, to June 30, 2010,
FHA insured 4,542 single-family home loans in these six counties, and
only 2,309 were endorsed under section 238(c) of the Act. The 2,309
loans endorsed since 2005 represent only .05 percent of all FHA-insured
loans endorsed during that span.
The President's budget request for Fiscal Year (FY) 2011
acknowledged the underutilization of the section 238(c) program and
advised that HUD would take action to halt the availability of the
program in light of the significant underutilization. The FY 2011
budget request found at http://www.gpoaccess.gov/usbudget/fy11/index.html states the following:
The Budget assumes that HUD will administratively suspend the
Section 238(c) program in 2011. The Section 238(c) program provides
single family mortgage insurance similar to MMI for a small number
of families in areas affected by military installations. The
elimination of Section 238(c) will not negatively impact the
availability of FHA insured financing in the six counties currently
covered under this program. (See HUD Appendix to the Budget at page
620 at http://www.gpoaccess.gov/usbudget/fy11/appendix.html).\2\
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\2\ The President's Budget for FY 2012, found at http://www.whitehouse.gov/omb/budget/Overview, contains identical language
to the paragraph cited above in the HUD Appendix to the FY 2012
Budget at page 591.
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II. This Proposed Rule
Consistent with the President's budget request, HUD proposes to
suspend the section 238(c) program and remove Sec. 203.43e from its
codified regulations. HUD's proposed removal of the regulations at
Sec. 203.43e is not inconsistent with suspension of the section 238(c)
mortgage insurance program. As noted in Section I of this preamble, the
regulatory language tracks the statutory language. As also noted
earlier in this preamble, section 238(c) mortgage insurance operates in
a comparable manner as HUD's primary single-family mortgage insurance.
If HUD subsequently determines that there is a demand for this program
and that military families would be better served by this program, HUD
can reactivate the program on the basis of the statutory language and
does not need a regulation to make insurance available under this
program. If such a situation occurs, HUD would notify the public
through Federal Register notice that the program has been activated, so
that eligible borrowers would be able to inquire about the availability
of insurance under this program from their lenders. HUD notes that the
removal of the regulations at Sec. 203.43e would have no impact on
loans already endorsed for FHA insurance under the section 238(c)
program.
The proposed suspension of this underutilized mortgage insurance
program, and the proposed removal of the regulations at 24 CFR 203.43e,
is not only consistent with the President's budget requests for FY 2011
and 2012, but with the President's Executive Order (EO) 13563, entitled
``Improving Regulation and Regulatory Review,'' signed by the President
on January 18, 2011, and published on January 21, 2011, at 76 FR 3821.
This EO requires executive agencies to analyze regulations that are
``outmoded, ineffective, insufficient, or excessively burdensome, and
to modify, streamline, expand, or repeal them in accordance with what
has been learned.'' For the reasons discussed in the Background section
of this preamble, HUD has determined that the underutilization of the
section 238(c) mortgage insurance program renders the program and its
regulations outmoded and HUD, therefore, proposes to suspend the
program and remove the regulations.
III. Findings and Certification
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.
The proposed rule would not modify or add any new regulatory
burdens on FHA-approved mortgage lenders. Rather, the proposed rule
would remove Sec. 203.43e from HUD's regulations, in conformity to
HUD's (and the Administration's) decision to no longer exercise its
authority to insure mortgages under section 238(c) of the Act. As more
fully discussed above in the preamble to this rule, the mortgage
insurance authority provided by section 238(c) of the Act has been
minimally sought by eligible borrowers and consequently minimally
utilized by lenders and other small entities participating in the FHA
programs. Further, as noted above, section 238(c) mortgage insurance
operated in a manner comparable to FHA's mortgage insurance program
under section 203(b)
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of the Act, HUD's primary single-family mortgage insurance program.
Accordingly, for the above reasons, the undersigned certifies that
this rule will not have a significant economic impact on a substantial
number of small entities. Notwithstanding HUD's determination that this
rule will not have a significant effect on a substantial number of
small entities, HUD specifically invites comments regarding any less
burdensome alternatives to this rule that will meet HUD's objectives as
described in the preamble to this rule.
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 will not have federalism
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 proposed rule does
not impose any federal mandates on any state, local, or tribal
governments, or on the private sector, within the meaning of UMRA.
Environmental Impact
This proposed rule 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, under 24 CFR 50.19(c)(1), this rule
is categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321).
Catalogue of Federal Domestic Assistance
The Catalogue of Federal Domestic Assistance Number for the
principal FHA single-family mortgage insurance program is 14.117.
List of Subjects in 24 CFR Part 203
Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and
recordkeeping requirements, Solar energy.
Accordingly, for the reasons discussed in the preamble, HUD
proposes to amend 24 CFR part 203 to read as follows:
PART 203--SINGLE FAMILY MORTGAGE INSURANCE
1. The authority citation for part 203 continues to read as
follows:
Authority: 12 U.S.C. 1709, 1710, 1715b, 1715z-16, and 1715u; 42
U.S.C. 3535(d).
Sec. 203.43e [Removed]
2. Remove Sec. 203.43e.
Dated: August 24, 2011.
Carol J. Galante,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2011-22189 Filed 8-29-11; 8:45 am]
BILLING CODE 4210-67-P