[Federal Register Volume 77, Number 71 (Thursday, April 12, 2012)]
[Proposed Rules]
[Pages 21880-21890]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8705]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 200
[Docket No. FR-5444-P-01]
RIN 2502-AJ09
Federal Housing Administration (FHA): Multifamily Accelerated
Processing--Enhancing and Strengthening Multifamily Accelerated
Processing
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: Multifamily Accelerated Processing (MAP) is a processing
system introduced in 2000 as a pilot program to facilitate the
accelerated processing of loan applications for FHA multifamily
mortgage insurance, which generally involve the refinance, purchase,
new construction, or rehabilitation of multifamily properties. These
transactions are costly, complicated, and time-consuming to process.
Prior to MAP, HUD field offices were encouraged to develop and test
individual fast-track processing systems for use by qualified FHA-
approved lenders that were experienced in processing loan applications
for multifamily mortgages. The intent was to considerably reduce the
processing time of applications. These test procedures included
providing qualified lenders with the option of preparing FHA forms and
undertaking preliminary underwriting for certain types of loan
applications. Fast-track processing procedures developed by individual
HUD offices that facilitated processing applications without
sacrificing quality or increasing risk were consolidated into a
national test of fast-track style processing of multifamily mortgage
insurance applications under the name ``MAP.'' MAP has been
administered to date through direct instructions to FHA-approved
lenders under a MAP Guide. Given its experience to date with MAP, HUD
believes the MAP accelerated processing procedures have been
successful. To ensure the continued quality and efficiency of MAP
procedures, HUD is codifying in regulations key provisions of MAP and
introducing new provisions to strengthen MAP, to assure the integrity
and competency of FHA-approved lenders as directed by the Helping
Families Save Their Homes Act of 2009.
DATES: Comment Due Date: June 11, 2012.
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. All submissions must refer to the above
docket number and title.
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 20410-0500.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
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
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 appointment to review the public comments must be
scheduled in advance 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
Federal Relay Service at 800-877-
[[Page 21881]]
8339. Copies of all comments submitted are available for inspection and
downloading at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Terry W. Clark, Office of Multifamily
Development, Office of Housing, Department of Housing and Urban
Development, 451 7th Street SW., Room 6134, Washington, DC 20410;
telephone number 202-402-2663 (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 Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
A. MAP
The purpose of MAP is to have in place an accelerated system for
processing FHA multifamily mortgage insurance applications that is
consistent at each HUD multifamily processing office, and that
significantly reduces the amount of time that HUD staff spends
reviewing those applications. Under MAP, the lender is responsible for
preparation of most of the application exhibits, such as the appraisal,
and for making a recommendation to HUD based upon the lender's
processing and underwriting. This results in a considerable time
savings for the lender. For example, under MAP, FHA-approved lenders
are provided an earlier review of the application for insurance on new
construction and substantial rehabilitation. Therefore, if the
application is rejected at a pre-application stage, the lender and
borrower do not spend the time and money required to prepare the more
extensive exhibits and analysis for the application for an FHA firm
commitment. While considerable responsibility for preparation of
documents and initial review is placed with the lender, FHA still
reviews a lender's exhibits and makes the final underwriting decision.
MAP is not automatically available to all FHA-approved lenders. To
use MAP, an FHA-approved lender must apply for approval and be approved
as a MAP lender by HUD's Office of Multifamily Housing Development,
Lender Qualification and Monitoring Division (LQMD). The appraisers and
MAP-approved underwriters of the FHA-approved lender seeking MAP-lender
designation must also attend a MAP training session. Lenders that are
approved as MAP lenders are determined by HUD to be skilled in
underwriting multifamily housing loans and in the preparation of
applications for FHA multifamily mortgage insurance. Approval is on a
nationwide basis; consequently, the MAP lender may submit applications
using MAP regardless of where the property is located or which
Multifamily Hub or Program Center will be processing the loan. As a
condition of the opportunity to use MAP, a MAP lender's MAP loans are
subject to post-endorsement review by LQMD. MAP-lender approval will be
for a defined period, and may be renewed, denied renewal, or terminated
by FHA as provided in this proposed rule. For example, if the MAP
lender fails to meet HUD standards for underwriting loans, its MAP
designation also may be terminated.
Under the current MAP system, MAP may be used for the following
FHA-insured multifamily programs: Section 220 (apartments in urban
renewal areas), Sections 221(d)(3) and 221(d)(4) (apartments), Section
223(a)(7) (refinance of existing insured properties), Section 223(f)
(acquisition or refinancing of existing apartments), and Section 231
(housing for the elderly) new construction or substantial
rehabilitation. MAP may be used for such other FHA-insured multifamily
programs as may be announced by FHA.
From the outset, through MAP, FHA has strived to strike a careful
balance between expedited processing and ensuring an acceptable level
of risk for HUD's multifamily mortgage insurance programs. Based on
HUD's experience to date with MAP, this proposed rule strives not only
to maintain that balance but to enhance the quality, competency, and
integrity of FHA-approved lenders that are approved as MAP lenders and
to manage risk to a level that is acceptable to FHA.
B. MAP Today
The MAP program has changed significantly in recent years. Since
its commencement in 2000, there are now more than 100 FHA-approved MAP
lenders. Multifamily loan volume has increased seven-fold, while the
number of HUD multifamily housing staff has declined. Transactions are
larger and more complex than in the past, and mixed-use projects with
commercial components are more common. Most projects have market rents
and fewer than in the past are supported by rental assistance. The
insured portfolio is growing quickly, but with some concentrations in
markets that have experienced soft or deteriorating conditions, and
with repeat borrowers in some markets. MAP is increasingly used for
affordable housing construction and preservation projects with tax
credits and other subsidies, and these transactions require special
expertise to process.
C. Strengthening the Quality of FHA-Approved Lenders and Underwriters
Part of the impetus to review the MAP system, particularly the
qualifications of an FHA-approved lender to engage in MAP, and to
codify lender qualifications and the core requirements of MAP, is the
Helping Families Save Their Homes Act of 2009 (HFSH Act). The HFSH Act
(Division A of Pub. L. 111-22, approved May 20, 2009), among other
things, directs FHA to strengthen the existing FHA lender approval
process, including by ensuring that only lenders of integrity are
approved by FHA as approved mortgagees.
FHA responded to this statutory direction by taking several steps.
Shortly following enactment of the HFSH Act, FHA issued Mortgagee
Letter 2009-31, entitled ``Strengthening Counterparty Risk
Management,'' which advised FHA-lenders of the additional ineligibility
criteria established by the HFSH Act, and the immediate applicability
of such criteria. FHA also issued Mortgagee Letter 2009-41, which
addressed Appraisal Performance Standards and Sanctions, and that
reminded FHA-approved lenders of their responsibility, along with the
appraisers, for the quality and accuracy of appraisals. By final rule
issued on April 20, 2010 (75 FR 20718), FHA increased the net worth
requirements of FHA-approved lenders, both single family and
multifamily lenders. These increases were the first since 1993, and
were adopted to ensure that FHA-approved lenders are sufficiently
capitalized for the financial transactions occurring, and the
concomitant risks present, in today's economy. On May 2, 2011, at 76 FR
24507, FHA announced the update of 36 multifamily rental project loan-
closing documents, the majority of which had not been updated in more
than two decades. The updated closing documents reflected the greater
flexibility provided to lenders to address problems that arise in
management of the property, but also greater responsibility to
undertake increased due diligence to assure sound underwriting in
insured multifamily projects.
All these steps that have been taken are directed to raising the
level of competency and integrity of participating lenders, and
ensuring the continued viability and availability of FHA mortgage
insurance programs. This proposed rule, which addresses the MAP system,
is another such step to strengthen FHA, its programs, and participants,
and is consistent with
[[Page 21882]]
recent Congressional direction for FHA to focus on minimize risk in its
multifamily housing programs. In the Senate Committee Report that
accompanied the Senate bill, S.1596, which provides Fiscal Year (FY)
2012 appropriations for HUD, the Committee noted that as a result of
the housing crisis, the demand for FHA multifamily housing loans has
increased, and stated: ``In an effort to respond to this increased
demand, HUD is streamlining its multifamily processes and updating its
programs to address current market conditions. The Committee also
expects FHA to increase its attention to the additional risk this
volume brings, and expects FHA to dedicate the same level of attention
to risks in the multifamily program as it has to risks in its single
family program.'' (See Senate Report 113-83, issued September 21, 2011,
at page 135.) The changes proposed by this rule, as discussed in the
following sections of this preamble, will not only improve the MAP
system, by increasing efficiency in the system, but also reduce risk to
FHA.
II. This Proposed Rule
This rule proposes to establish codified regulations for lender and
underwriter eligibility and tier qualification criteria for MAP
participation, and for FHA's process for approving MAP lenders and
underwriters. Currently, HUD's MAP regulations, codified in 24 CFR part
200, subpart Y, address only the enforcement actions that FHA may take
against a MAP lender. As the following discussion will highlight,
enforcement actions remain a key part of the regulations, but HUD
proposes, through this rule, to add new provisions to 24 CFR part 200,
subpart Y, to provide for a tiered approval system, the periodic
expiration of approval, and lender application for reapproval under the
MAP system.
New regulatory section, Sec. 200.1401, entitled ``Purpose of MAP
and this Subpart,'' reflects the broader scope of the MAP regulations
as proposed to be revised to this rule, and new section Sec. 200.1403,
the definition section, defines terms used in the proposed revised
regulations. New regulatory section, Sec. 200.1407, sets out the
responsibilities of the MAP lender. These responsibilities reflect the
obligation of the MAP lender to not only ensure the skill and
competency of the lender's principal staff members, but to also ensure
that the MAP lender is operating with the integrity contemplated by the
HFSH Act.
A. Tiered MAP Lender and Underwriter Approval
The MAP approval tiers, set out in Sec. 200.1411(b) and Sec.
200.1413(b), are based on HUD's experience in administering the MAP
program, which has shown that the most difficult programs to underwrite
are those for new construction and substantial rehabilitation or that
involve various sources of government assistance. HUD recognizes that
all MAP lenders and underwriters do not necessarily have the skills and
experience to competently handle all the MAP programs. Tiered approval
will assure that MAP programs with greater underwriting demands and
higher risk will require participants to have greater expertise. Both
new and existing lenders and underwriters must comply with tier
requirements to submit an application under MAP and must be approved by
tier based upon meeting the tier qualifications. Section 200.1413 of
the proposed rule set outs the lender eligibility and application
process for MAP approval.
Section 200.1415 of the proposed rule establishes the MAP
eligibility and application approval process for underwriters. The
addition of a separate MAP eligibility and approval process for
underwriters underscores the significance of having an experienced and
skilled underwriter for MAP processing. Consistent with Sec. 200.1415
concerning underwriter eligibility, Sec. 200.1425 provides for post-
approval training for underwriters, and Sec. 200.1427 provides that
HUD may terminate the approval of an underwriter that has not submitted
a pre-application or application for Firm Commitment for a period of 2
years.
The tier approval designation for which MAP lenders and
underwriters will be approved will be based on their multifamily
transaction experience, as evidenced by recently closed loans and each
loan's performance. As provided in Sec. 200.1411(b), HUD will
establish four approval tiers:
Tier 1: Market-rate refinancing under Section 223(f) or 223(a)(7);
Tier 2: Refinancing under Section 223(f) or Section 223(a)(7) of
affordable housing properties with government subsidies;
Tier 3: Market-rate new construction or substantial rehabilitation
under Section 220, 221(d), 231 or 241;
Tier 4: New construction or substantial rehabilitation under
Sections 220, 221(d), 231, or 241 of affordable housing properties with
government subsidies. Government subsidies refer to such programs as
the Low-Income Housing Tax Credit (LIHTC) program, tax-exempt bond
financing, HUD's Section 8 Project-Based Rental Assistance program, and
HUD's Section 236 Interest Reduction Payments and similar forms of
rental subsidy for affordable housing.
As provided in the accompanying notice, published elsewhere in
today's Federal Register, HUD will from time to time issue the
quantity, specific characteristics, and recentness of transactions that
a lender or underwriter must have underwritten in order to have the
adequate recent experience required for each tier. Each issuance will
be preceded by notice and the opportunity for public comment. The
relevant lending experience that HUD will recognize need not be
exclusively with FHA programs, but may also be with those of Fannie
Mae, Freddie Mac, state housing finance agencies, conventional lenders,
or commercial banks. Non-FHA loan program experience must be equivalent
to the programs offered under MAP and to the underwriting functions
required under MAP, to be given credit. For current MAP lenders and
underwriters, relevant lending activity involving MAP programs will be
given the most weight. Consistent with HUD's commitment to notify MAP
lenders or prospective MAP lenders of changes to the requisite
experience needed, Sec. 200.1417(a)(1)(iii) provides for HUD to limit
the size of a loan that an approved MAP lender may process, with such
limitation established either by the number of units for which a loan
can be made or by the dollar amount of the loan. Although an applicant
may meet the criteria for approval as a MAP lender at a requested tier
or at a lower tier, HUD may decide, based on the applicant's MAP
application and experience to date, or based on the conditions of the
housing market at the time, that limitations should be placed on the
size of loans processed by a MAP lender or lenders.
With respect to tier approval, Sec. 200.1423 permits an approved
MAP lender or underwriter to submit an application at any time
requesting approval at a higher tier than originally assigned to the
MAP lender or underwriter. In determining whether the MAP lender or
underwriter meets the criteria for a higher tier, HUD will follow the
procedures in Sec. Sec. 200.1413, 200.1415, and 200.1417.
B. Periodic Renewal of MAP Lender Approval
A key goal of this proposed rule is to assure a high level of
quality and integrity of FHA-approved lenders that are approved to be
MAP lenders. As provided in Sec. 200.1407, a MAP-
[[Page 21883]]
approved lender is given considerable authority and responsibility in
the processing of multifamily mortgage transactions. Given the trust
and responsibility that FHA places in these lenders, it is important
for FHA to ensure that these lenders, not only at the time of initial
MAP lender approval but throughout the lenders' tenure as MAP lenders,
remain lenders of competency and integrity, and are up-to-date on
changes in multifamily transactions and skilled and experienced in
underwriting and processing loan applications for these transactions.
The expiration of MAP lender approval and the requirement to apply
periodically for renewal of MAP-approval designation will help ensure
that MAP lenders remain competent to fast-track multifamily mortgage
insurance applications through the MAP system.
Currently, MAP approval designation does not expire unless there is
an enforcement action that results in termination, or there is an
eligibility requirement that the FHA-approved lender no longer meets.
As provided in Sec. 200.1417(b), this rule proposes to change the
existing MAP system by requiring MAP approved lenders to apply to renew
their approval every 4 years. At such time, the MAP lender's
performance will be reviewed and FHA will determine whether the MAP-
approval designation should be renewed. This proposed rule provides in
Sec. 200.1421, that no later than 90 days before the date of the end
of the 4-year period of a MAP lender's approval, the MAP lender must
reapply for approval. The requirement to renew MAP-lender designation
allows FHA to assess the lender's 4-year performance as a MAP lender,
and determine whether the FHA-approved lender's designation as a MAP
lender should be renewed or disapproved, and if it should be renewed at
the tier for which the FHA-approved lender was previously approved or
at a lower tier, if so warranted.
For example, FHA may determine that the MAP lender's experience
during the preceding 4 years is not sufficient or at a level of
performance for the FHA-approved MAP lender to maintain its current
tier approval; however, the FHA-approved MAP lender can be renewed
under a lower tier at which its performance has been satisfactory. The
proposed period for MAP approval is based on HUD's experience that MAP
lenders' performance, underwriting practices, and business processes
typically evolve over time as changes in personnel, management, and
market conditions occur. As a result, the capacity of the institution
may be markedly different from when it was originally approved and
assigned to a tier by HUD. HUD has determined that a 4 year approval
period appropriately balances the need to protect the FHA insurance
fund with HUD's desire to minimize inconvenience to lenders. Upon
application for renewal, the lender's record, including any sanctions
or enforcement actions taken against the lender, its default and claim
rates, and the overall performance of its underwritten or closed loans
will be taken into account when determining whether MAP approval should
be renewed or disapproved. Although a lender's initial and ongoing MAP
approval period will normally be for 4 years, the term of approval may
be shorter based upon a review of the lender's application and record.
C. Conditional MAP Approval and Expiration of Existing MAP Approvals
The proposed rule provides, in Sec. 200.1417(b)(3), that FHA may
also grant conditional MAP lender or underwriter approval if the lender
or underwriter lacks experience in processing or underwriting FHA loan
applications. If the lender or underwriter satisfies the conditions
imposed by FHA, for example, by undertaking additional training within
a specified period of time or completing a predetermined number of
acceptably underwritten closings, then full approval may be granted
upon completion of the condition. Conditional approval, however, will
not be indefinite. FHA will impose a deadline for the completion of the
conditions for which full approval is necessary, usually one year from
the date on which conditional approval is granted. Conditional approval
may be granted for initial MAP approval, or may be granted in cases
where a currently approved MAP lender requests an upgrade in tier
approval.
The proposed rule provides, in Sec. 200.1419, that MAP lender and
underwriter approvals issued prior to the effective date of the final
rule under this rulemaking will expire 45 days following the lender's
or underwriter's receipt of a letter from HUD inviting the lender or
underwriter to apply for tier approval. HUD anticipates that it will
send such letters to approximately 25 percent of lenders and
underwriters with existing approvals per year, for 4 years, and that
this pace may vary depending upon HUD's resources for processing
applications. If the lender or underwriter submits a timely application
for tier approval, the existing approval will continue to be valid
until HUD notifies the applicant of the action it is taking on the
application for tier approval. A lender or underwriter that fails to
respond in a timely manner to the letter will be eligible for approval
at Tier 1 for a period of time as provided for conditional approvals in
Sec. 200.1417(b).
D. Other Provisions of the Proposed Rule
Additional New Regulatory Sections
In addition to the new sections discussed above in this preamble,
new Sec. 200.1405 addresses the multifamily programs eligible for MAP
processing, which will be posted on HUD's Web site; such postings will
ensure that the most up-to-date list of eligible MAP multifamily
programs is available to the public. As noted earlier, Sec. 200.1407
lists the responsibilities of a MAP lender. As also noted earlier,
Sec. 200.1413(b) addresses the tier-specific criteria that lenders
must meet. Paragraph (a) of this section, Sec. 200.1413(a), addresses
the general requirements for MAP-lender approval. Section 200.1419
addresses appeals, and provides that an applicant may submit a written
appeal of any HUD decision regarding the applicant under Sec. Sec.
200.1411 through 200.1427. This section provides that the appeal must
be submitted to HUD within 30 days of the date of the applicant's
receipt of HUD's written notification to the applicant of its decision.
This section also provides that HUD will respond to the applicant's
appeal within 60 days of HUD's receipt of the applicant's appeal, and
that if HUD's appeal decision confirms HUD's original decision, no
further appeals will be accepted.
Existing Regulatory Sections
As noted earlier in this preamble, this proposed rule builds upon
the existing regulations in 24 CFR part 200, subpart Y, which currently
address MAP enforcement and sanctions. The enforcement provisions
remain in place with certain organization revisions. For example, the
proposed rule would eliminate provisions vesting existing authorities
to undertake certain enforcement and corrective actions against MAP
lenders and underwriters in a MAP Lender Review Board. HUD has found
that it is unnecessary to create and maintain such a board because it
is duplicative of other offices within HUD, such as the Lender
Qualifications and Monitoring Division that are responsible for
monitoring and ensuring compliance with MAP requirements. This change
would not alter the existing authorities to take such actions, nor the
procedural protections,
[[Page 21884]]
including notice and opportunity to be heard, that are provided in
Sec. 200.1535. Rather, it would merely revise provisions that
currently specify that it is the MAP Lender Review Board that is vested
with the authorities. Accordingly, existing references to the MAP
Lender Review Board in 24 CFR part 200, subpart Y, would be replaced
simply with references to HUD. HUD would specify the office or official
that would carry out these functions through its ordinary delegations
process. At the final rule stage, HUD will include amendatory
instructions that will make a nomenclature change throughout subpart Y
to substitute ``HUD'' wherever the terms ``the MAP Lender Review
Board'' and ``Board'' appear.
E. Proposed MAP Rule--Increasing Efficiency and Reducing Burden
Since its inception, MAP has been shown to increase efficiency in
processing multifamily mortgage applications without increasing risk to
FHA. Under the current structure, an approved lender or underwriter can
originate any qualifying multifamily mortgage. This rule proposes to
further increase efficiency by approving lenders and underwriters for
one of four tiers based on their origination experience.
The primary benefit of changes proposed by this rule is to further
increase the efficiency and processing of multifamily mortgage
applications. The tiered structure will decrease the number of rejected
applications, reducing time spent by lenders and FHA staff in reviewing
applications. This change will be accomplished by better aligning
lenders and underwriters with the programs with which they are most
experienced. FHA does not expect a change in volume of their
multifamily originations as a result of the creation of tiers within
the MAP program or a significant shift of business between lenders
within MAP. Instead, HUD expects that the number of unsuccessful
applications will decrease.
In FY 2011, approximately 230 multifamily mortgage applications
were not approved. FHA staff spent approximately 400 hours processing
MAP mortgage applications. The Bureau of Labor Statistics reports
almost $40 per hour as the median wage for government employees in
financial operations. Meanwhile, lenders spent about 450 hours of staff
time preparing applications for new construction or substantial
rehabilitation and approximately 300 hours of staff time on mortgage
applications for refinance. Based on HUD's knowledge of the industry,
the hourly rate for staff preparing applications is approximately $75.
If implementation of the changes proposed by this rule is successful in
eliminating 75 percent of these unapproved applications, FHA would save
$2.772 million in staff time and lenders would save $5.003 million in
staff time. In sum, this proposed rule can be expected to produce
benefits totaling $7.775 million.
Table 1--Avoided Staff Time Preparing Unsuccessful Mortgage Applications
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Number of Hours per Total annual
applications * response Hourly cost cost
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FHA:
New Construction/Substantial Rehabilitation. 98 400 $40 $1,572,000
Refinance................................... 75 400 40 1,200,000
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FHA Subtotal............................ .............. .............. .............. 2,772,000
Lenders:
New Construction/Substantial Rehabilition... 98 450 75 3,315,938
Refinance................................... 75 300 75 1,687,500
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Lender Subtotal......................... .............. .............. .............. 5,003,478
---------------------------------------------------------------
Total Costs......................... .............. .............. .............. 7,775,489
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* Number of Applications is approximately 75 percent of the number of unapproved MAP mortgage applications in FY
2011.
In addition to creating tiers, this rule proposes to require
renewal as a MAP lender every 4 years.\1\ This new requirement will
increase costs to participating lenders as additional staff time will
be spent preparing the MAP renewal application. There are currently 92
approved MAP lenders. FHA estimates that lenders spend about 40 hours
preparing documents for each MAP approval. Following the initial tier
placement, lenders may subsequently decide to apply for adjustment to a
higher tier (before the 4-year period ends). FHA expects about ten
underwriters and five lenders to apply for adjustment to a higher tier,
requiring about 20 hours per application. Finally, although FHA
currently receives several appeals each year, the number could increase
slightly as a lender could appeal not only a rejection but also the
tier in which the lender is placed. In FY 2011, only two appeals were
filed for denied applications. FHA does not expect an increase of more
than three appeals annually as a result of the change to a tiered
system. Preparation of each appeal by a lender or underwriter is
expected to require one hour of applicant time.
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\1\ Currently approved lenders will be required to submit an
application of renewal, with about one-quarter renewing annually
over a 4-year period.
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Based on knowledge of industry wages, the estimated hourly wage of
lenders and underwriters that prepare these types of documents is
approximately $100. The table below shows the total cost estimate per
category. The total cost to lenders and underwriters as a result of
this rule would be $398,300.
[[Page 21885]]
Table 2--Costs of Renewal, Adjustment, and Appeals
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Hours per Total annual
Type Number response Hourly cost cost
----------------------------------------------------------------------------------------------------------------
Lender renewal.................................. 92 40 $100 $368,000
Adjustment to Higher Tier....................... 15 20 100 30,000
Appeals......................................... 3 1 100 300
---------------------------------------------------------------
Total Costs................................. .............. .............. .............. 398,300
----------------------------------------------------------------------------------------------------------------
As a processing system, much of the processes of MAP as the above
tables reflect pertain to information collection (that is, submission
of documentation to HUD and HUD review of the documentation) or
recordkeeping. The MAP information collection requirements are subject
to the notice and comment procedures of the Paperwork Reduction Act of
1995 (PRA). The requirements are currently approved under PRA and
reflect OMB approval numbers. Consistent with the requirements of the
PRA, these requirements must be published for notice and comment every
3 years. The changes that this rule would make to the current
information collection requirements are set out in the table provided
in the following section of the preamble, Section IV, and the public
comment that this rule solicits also solicits comment on the reporting
and recordkeeping burden.
III. Regulatory Review
Executive Order (EO) 13563, entitled ``Improving Regulation and
Regulatory Review,'' was signed by the President on January 18, 2011,
and published on January 21, 2011 (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.'' Section 4 of the EO, entitled ``Flexible Approaches,''
provides, in relevant part, that where relevant, feasible, and
consistent with regulatory objectives, and to the extent permitted by
law, each agency shall identify and consider regulatory approaches that
reduce burdens and maintain flexibility and freedom of choice for the
public. HUD submits that the changes proposed by this rule to the MAP
system are consistent with the EO's directions. As the preceding
section discussed, the changes proposed by this rule will increase
efficiency in the MAP system both for HUD and MAP approved lenders.
IV. Findings and Certifications
Paperwork Reduction Act
The information collection requirements contained in this rule have
been submitted to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance
with the Paperwork Reduction Act, an agency 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.
The burden of the information collections in this rule is estimated
as follows:
Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Response Burden hours
Information collection Number of frequency Total annual per response Total annual
respondents (average) responses (in hours) hours
----------------------------------------------------------------------------------------------------------------
Sec. 200.1413(c) 10 new Annually....... 10 40 400
(application for approval of applicants.
tier qualification).
Sec. 200.1415(b) 60 underwriters. Annually....... 60 20 1,200
(underwriter's application
for MAP approval).
Sec. 200.1421 (renewal of 23 lenders Annually....... 23 20 460
MAP lender approval). renewing
annually.
Sec. 200.1421 (adjustment 10 underwriters Annually....... 15 20 300
of approval to a higher and 5 lenders
tier). applying
annually.
Sec. 200.1429 (appeals).... 5 appeals....... Annually....... 5 1 5
----------------------------------------------------------------------------------
Total.................... 113............. ............... 113 101 2,365
----------------------------------------------------------------------------------------------------------------
In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning this
collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated
collection techniques or other forms of information technology; e.g.,
permitting electronic submission of responses.
Interested persons are invited to submit comments regarding the
information collection requirements in this rule. Comments must refer
to the proposal by name and docket number (FR-444-P-01) and must be
sent to:
HUD Desk Officer, Office of Management and Budget, New Executive Office
Building,
[[Page 21886]]
Washington, DC 20503, Fax: (202) 395-6947, and
Reports Liaison Officer, Office of Housing, Department of Housing and
Urban Development, 451 7th Street SW., Room 9116, Washington, DC 20410.
Interested persons may submit comments regarding the information
collection requirements 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.
Regulatory Flexibility Act
The Regulatory Flexibility Act (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. MAP lenders consist
of both small and large FHA-approved lenders that have the skill and
experience to take on responsibilities that would otherwise be handled
by FHA staff in the processing of applications. The system commenced as
a demonstration to determine whether multifamily mortgage insurance
applications could be processed on an accelerated basis without risking
the quality of processing and without increasing risk to the FHA
insurance fund. Overall, the MAP system has been effective, and HUD is
proposing to codify, in regulation, key requirements of the MAP system.
Through this rule, HUD is proposing improved oversight of the MAP
system, to meet the statutory directive that HUD ensure that only
lenders of integrity are approved by FHA as FHA-approved mortgagees,
and remain lenders of integrity, competency, and skill after FHA
approval is granted. HUD is not proposing significant changes to
participation in the MAP system. The eligibility requirements
essentially remain the same, with only minor adjustment to ensure that
the lenders have experience in processing the more complex
transactions. However, HUD is proposing that MAP lenders have their MAP
approval designation renewed every 4 years. This renewal-approval
process will improve the quality of monitoring of MAP lenders by HUD,
because the renewal process provides for a minimum performance review
of the MAP lender by HUD every 4 years. The new requirements introduced
by HUD through this proposed rule pertain to a MAP lender's
performance, regardless of whether the MAP lender is small or large.
The codification of the eligibility criteria, together with HUD's
oversight requirements, which are already codified, will provide a
convenient location for FHA-approved lenders and other interested
parties to reference the key features and requirements of the MAP
system. For these 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 would not have a
significant economic effect on a substantial number of small entities,
HUD specifically invites comments regarding less burdensome
alternatives to this rule that would meet HUD's objectives as described
in this preamble.
Environmental Impact
This rule does not direct, provide for assistance or loan and
mortgage insurance 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. The rule is, therefore, categorically excluded
under 24 CFR 50.19(c)(k1) and a Finding of No Significant Impact
(FONSI) does not need to be prepared for this document.
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.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2
U.S.C. 1531-1538) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments and the private sector. This rule does not impose
any federal mandate on any state, local, or tribal government or the
private sector within the meaning of UMRA.
List of Subjects in 24 CFR Part 200
Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Housing standards, Lead poisoning, Loan
programs--housing and community development, Mortgage insurance,
Organization and functions (Government agencies), Penalties, Reporting
and recordkeeping requirements, Social Security, Unemployment
compensation, Wages.
For the reasons stated in the preamble, HUD proposes to amend 24
CFR part 200, as follows:
PART 200--INTRODUCTION TO FHA PROGRAMS
1. The authority citation for 24 CFR part 200 continues to read as
follows:
Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
2. Revise the heading of subpart Y and add Sec. Sec. 200.1401,
200.1403, 200.1405, 200.1407, 200.1409, 200.1411, 200.1413, 200.1415,
200.1417, 200.1419, 200.1421, 200.1423, 200.1425, 200.1427, and
200.1429, and undesignated headings, and revise the subpart table of
contents to read as follows:
Subpart Y--Multifamily Accelerated Processing (MAP): Eligibility,
Approval, Quality Assurance, and Enforcement for MAP Lenders and
Underwriters
General
Sec.
200.1401 Purpose of MAP and this subpart.
200.1403 Definitions.
200.1405 FHA programs eligible for MAP processing.
200.1407 MAP lender responsibilities.
Approval of Lenders and Underwriters
200.1411 Approval required.
200.1413 Lender eligibility and application for MAP approval.
200.1415 Underwriter eligibility and application for MAP approval.
200.1417 HUD's review of MAP lender and underwriter approval
applications.
200.1419 Expiration of previously granted MAP approvals.
200.1421 Renewal of lender approval.
200.1423 Adjustment of approval to a higher tier.
[[Page 21887]]
200.1425 Post-approval underwriter training requirement.
200.1427 Inactive underwriters.
200.1429 Appeals.
Map Lender Quality Assurance Enforcement
200.1500 Sanctions against a MAP lender.
200.1505 Warning letter.
200.1510 Probation.
200.1515 Suspension of MAP privileges.
200.1520 Termination of MAP privileges.
200.1525 Settlement agreements.
200.1530 Bases for sanctioning a MAP lender.
200.1535 MAP Lender Review Board.
200.1540 Imminent harm notice of action.
200.1545 Appeals of sanction decisions.
General
Sec. 200.1401 Purpose of MAP and this subpart.
(a) MAP is a national accelerated processing system for the FHA
multifamily mortgage insurance programs. An FHA-approved lender that is
approved to process multifamily mortgage insurance applications under
MAP is responsible for preparation of the majority of the exhibits
involved in the processing of a multifamily mortgage insured by FHA,
such as the appraisal required for an application for mortgage
insurance, and for making a recommendation to HUD based upon the
lender's processing and underwriting. HUD, however, reviews the
lender's exhibits and makes the final underwriting decision.
(b) This subpart establishes the criteria by which a new or
existing FHA-approved lender or underwriter receives and maintains MAP
approval, the basic responsibilities of a MAP lender, the manner in
which FHA will monitor a MAP Lender's performance, the enforcement
actions that FHA may take against a MAP lender for violation of
requirements, and the due process procedures available to a MAP lender.
Unless superseded by the requirements of this part, the MAP processing
instructions, submission, and reporting requirements issued through
supplemental guidance remain applicable to the MAP system.
Sec. 200.1403 Definitions.
The definitions in 24 CFR 200.3 are applicable to this subpart.
Additionally, as used in this subpart:
Government subsidy means one or more of the following: Low-Income
Housing Tax Credits, Section 8 Project-Based Rental Assistance, Rent-
restricted bond financing, Section 236 Interest Reduction Payments, and
any other similar form of affordable housing subsidy, as identified by
HUD.
In good standing means being in compliance with all applicable FHA
and MAP requirements, not being in inactive status (in accordance with
Sec. 200.1427, as applicable), not being subject to or under
consideration for MAP approval, suspension, or termination and, in the
case of a lender, being approved to participate in FHA Multifamily
Mortgage Insurance programs as a supervised lender or mortgagee or
nonsupervised lender or mortgagee.
Principal means a primary participant of the lender entity, who is
empowered to act as the lender's representative.
Principal staff members refer to those persons designated by the
lender as approved MAP underwriter(s), construction loan
administrator(s), and other authorized signatory(s) with authority to
bind the lender on MAP loan applications.
Sec. 200.1405 FHA programs eligible for MAP processing.
FHA-insured multifamily programs that are eligible for processing
under MAP are listed on HUD's Web site at www.hud.gov.
Sec. 200.1407 MAP lender responsibilities.
(a) A MAP lender shall comply with such processing instructions,
submission, and reporting requirements through the regulations of this
subpart and as may be otherwise specified by HUD through supplemental
guidance.
(b) A MAP lender must submit to the HUD office, as designated by
HUD, the qualifications of the MAP lender's principal staff members or
consultants who will be reviewing or preparing the lender's application
for mortgage loan insurance.
(c) MAP lenders must establish and maintain separation between the
underwriting and origination functions to ensure that individuals
performing underwriting functions do not face any incentive to approve
a loan that does not meet applicable underwriting standards. Minimum
standards for establishing and maintaining such separation include, but
are not limited to, the following:
(1) An individual may not underwrite or participate in underwriting
a loan if the individual will receive or expects to receive either
directly or indirectly any compensation that is contingent upon
origination of that loan;
(2) Underwriting staff are not evaluated by origination staff, and
compensation of underwriting staff shall not be tied to loan production
levels;
(3) Underwriters must be full-time, salaried employees of the
lender and may not be independent contractors or temporary workers;
(4) Origination staff shall be precluded from hiring contractors,
such as appraisers or market analysts, on behalf of underwriters; and
(5) MAP lenders shall ensure that origination staff does not have
management authority over or influence on the duties or conclusions of
underwriting staff.
(d)(1) A MAP lender must submit annually to HUD, in accordance with
procedures specified by HUD, including, but not limited to, the
requirements of 24 CFR 200.62, an update of MAP lender status,
certified by an individual who is authorized to bind the MAP lender.
The certified update must be submitted no later than June 30 of each
year and must:
(i) List the names of the following individuals:
(A) The MAP lender's MAP-approved underwriters and the tiers at
which they are approved;
(B) The MAP lender's construction loan administrators (if
applicable); and
(C) Individuals who are authorized to bind the MAP lender by
signing FHA mortgage insurance applications; and
(ii) State that all of the MAP lender's MAP-approved underwriters
have received tier approval and have attended the training required
under Sec. 200.1425.
(2) False claims and statements may result in criminal and civil
penalties pursuant to 12 U.S.C. 1735f-14, 18 U.S.C. 1001, 1010, 1012,
and 31 U.S.C. 3729, 3802.
Approval of Lenders and Underwriters
Sec. 200.1411 Approval required.
(a) General. A lender may not process and an underwriter may not
underwrite a loan application utilizing MAP unless:
(1) The lender is approved by and is in good standing with HUD as a
MAP lender for the loan transaction for which the application is
submitted; and
(2) The underwriter who will underwrite the loan and sign the
underwriter's narrative is approved by and is in good standing with HUD
as a MAP underwriter for that lender and for the tier designation and
loan program under which the application is submitted. Approval as a
MAP underwriter does not entitle an underwriter to underwrite loans for
a lender other than for the MAP-approved lender that submitted the
underwriter application approved by HUD. A MAP-approved lender that
employs an underwriter previously approved as an underwriter for
another MAP-approved lender must submit an application for underwriter
approval in accordance with Sec. 200.1415(b), and HUD will evaluate
the application and take action in accordance with Sec. 200.1417.
[[Page 21888]]
(b) Tiered approval. HUD will provide approvals and renewals of
approvals of new and existing MAP lenders and underwriters on a tiered
basis in accordance with a lender's or underwriter's experience and
qualifications at the time of application. A MAP lender or underwriter
may not use MAP to process or underwrite loan transactions that are not
covered by the lender's or underwriter's approval tier (``covered loan
transactions''), which are as follows:
(1) Tier 1: MAP-eligible acquisition and refinancing programs
without government subsidies;
(2) Tier 2: MAP-eligible acquisition and refinancing programs with
or without government subsidies;
(3) Tier 3: All MAP-eligible programs without government subsidies;
and
(4) Tier 4: All MAP-eligible programs, with or without government
subsidies.
(c) Nationwide validity. Approval as a MAP lender or underwriter,
which includes approval at a particular tier, is valid for transactions
nationwide, regardless of where the property that will serve as the
security for the mortgage is located or which HUD office will process a
transaction. Approved lenders and their approval tier will be posted on
HUD's Web site, which will be regularly updated to reflect any change
in the lender's tier or MAP-approval status.
Sec. 200.1413 Lender eligibility and application for MAP approval.
To be eligible for designation as a MAP lender, a lender must meet
the general requirements under paragraph (a) of this section and the
applicable tier-specific requirements under paragraph (b) of this
section. HUD will not approve the application of a lender that does not
meet the Tier 1 requirements.
(a) General requirements. The lender:
(1) Must be approved as an FHA-approved lender under parts 202 of
this chapter;
(2) Must not be subject to judgments arising from lawsuits or
administrative proceedings that would adversely impact its ability to
conduct business as a lender, or subject to any of the ineligibility
criteria specified in 24 CFR 202.5(j); and
(3) Must have an employee who is approved by HUD as a MAP
underwriter. Application for the qualifying MAP underwriter approval
may be submitted prior to or simultaneously with a lender's application
for MAP-lender approval.
(b) Tier-specific requirements. For a lender to obtain approval at
a specific tier:
(1) The lender must have adequate capacity and experience in
processing and in underwriting covered loan transactions for that tier
using FHA insurance programs, or non-FHA transactions that are
equivalent to covered transactions for that tier.
(i) A non-FHA transaction will be deemed the equivalent of using
FHA insurance programs for a covered transaction for a tier if HUD
determines that the quality and scope of underwriting and processing
required and actually performed for the non-FHA transaction are
equivalent to that required using FHA insurance programs for the
covered transaction. Non-FHA transactions that may be used to
demonstrate tier qualifications include those of Fannie Mae, Freddie
Mac, state housing finance agencies, conventional lenders, and
commercial banks;
(ii) HUD will from time to time issue the quantity, specific
characteristics, and recentness of transactions that a lender must have
processed or underwritten in order to have the adequate recent
experience required for each tier. Each issuance will be preceded by
notice and the opportunity for public comment.
(2) The lender must have a satisfactory record processing and
underwriting covered transactions for the tier at which approval is
requested. In reviewing the lender's record, HUD will consider
enforcement actions taken against the lender, warning letters issued to
the lender, the lender's default and claim rates, and the overall
performance of its previously underwritten or closed loans.
(c) Application. (1) The lender must submit an application for MAP
approval or for tier qualification in such form as required by HUD,
demonstrating that the lender meets the applicable eligibility
requirements under this section.
(2) HUD may from time to time announce its suspension of acceptance
of applications under this section. The announcement shall specify the
reasons for the suspension of acceptance of applications.
(3) An FHA-approved lender that has had its MAP lender designation
terminated may not submit an application for MAP lender designation for
a period of one year following the date of termination of the prior MAP
lender designation.
Sec. 200.1415 Underwriter eligibility and application for MAP
approval.
(a) To be eligible for designation as a MAP underwriter, an
individual must be a full-time employee of the lender that is seeking
or has received approval as a MAP Lender, and must have adequate
experience in underwriting covered loan transactions using FHA
insurance programs for the specific tier for which the underwriter
seeks designation, or non-FHA transactions that are equivalent to
covered transactions for that tier.
(1) A non-FHA transaction will be deemed the equivalent of using
FHA insurance programs for a covered transaction for a tier if HUD
determines that the quality and scope of underwriting and processing
required and actually performed for the non-FHA transaction are
equivalent to that required using FHA insurance programs for the
covered transaction. Non-FHA transactions that may be used to
demonstrate tier qualifications include those of Fannie Mae, Freddie
Mac, state housing finance agencies, conventional lenders, and
commercial banks.
(2) HUD will from time to time issue the quantity, specific
characteristics, and recentness of transactions that an underwriter
must have underwritten in order to have the adequate recent experience
required for each tier. Each issuance will be preceded by notice and
the opportunity for public comment.
(b) A lender must submit an underwriter's application for MAP-
underwriter approval or for underwriter-tier qualification in such form
as required by HUD that demonstrates that the underwriter meets the
applicable eligibility requirements under this section.
Sec. 200.1417 HUD's review of MAP lender and underwriter approval
applications.
(a) HUD will review a MAP lender or underwriter approval
application, along with any information from HUD offices where the
applicant's prior loan applications or exhibits have been submitted
within the preceding time period specified by HUD.
(1)(i) If HUD determines that the applicant meets the criteria for
approval in Sec. 200.1413 or Sec. 200.1415, as applicable, the
applicant is eligible for approval for the requested tier and HUD will
notify the applicant of its decision to designate the lender or
underwriter as a MAP lender or underwriter under the tier for which the
lender or underwriter applied.
(ii) If HUD determines that the applicant does not meet the
criteria for the requested tier but the applicant meets the criteria
for approval at a lower tier, HUD may approve the application at the
lower tier. In such a case, HUD will notify the applicant of its
eligibility for approval at a lower tier and advise the applicant of
the reasons that HUD
[[Page 21889]]
did not approve the applicant at the requested tier.
(iii) Whether HUD approves an applicant at a requested tier under
paragraph (a)(1)(i) of this section or at a lower tier under paragraph
(a)(1)(ii) of this section, HUD reserves the right to limit the number
of units or the dollar amount per loan application that an approved
applicant may process, when HUD determines that there is a necessity to
limit the loans being processed to such amount or size, as HUD may
specify by notice.
(2) If HUD determines that the applicant does not meet the criteria
for approval in Sec. 200.1413 or Sec. 200.1415, as applicable, HUD
will disapprove the application and notify the applicant of its
decision and of the reason for the disapproval.
(3) If HUD is unable to determine the eligibility of an applicant,
HUD may, at its discretion, disapprove the application and notify the
applicant of the reason for its decision or ask the applicant to
correct identified deficiencies in the application and resubmit it.
(b) Period of approval. Unless an approval is affected by an
enforcement action under this part, an approval granted under this
section shall be valid, as follows:
(1) Except as provided under paragraph (b)(3) of this section and
under Sec. 200.1427, the approval of an underwriter will not expire so
long as the underwriter remains active and in the employment of the
lender under which approval was granted, and without interruption.
(2) Except as provided in paragraphs (b)(3) of this section, or for
reasons otherwise specified by HUD in writing, the approval of a lender
as a MAP lender is valid for a period of 4 years from the date on which
HUD notifies the lender of the approval;
(3)(i) A lender or underwriter without prior experience in
processing or underwriting FHA loan applications may be eligible for
conditional approval. Conditional approval will be valid for a period
of one year from the date on which HUD notifies the applicant of the
approval, unless HUD decides to allow an extension of the period of
conditional approval for an additional one-year period. During the
conditional approval period, HUD may impose limits on the number of
loan applications that may be submitted, or the number of units or
dollar amount per loan application, or any combination of these limits.
(ii) To be eligible for conversion to full MAP approval status, the
lender or underwriter must, during the period of conditional approval:
(A) Underwrite and submit to HUD loan applications that result in
Firm Commitments from HUD, in a minimum number as specified by HUD at
the time conditional approval is granted, in accordance with the
applicant's experience;
(B) Satisfy any additional conditions that HUD has imposed on the
lender or underwriter at the time the conditional approval was granted;
and
(C) Demonstrate acceptable capacity to process and underwrite loan
applications using FHA insurance programs for covered loan transactions
for the tier for which conditional approval has been granted.
(iii) The approval of a lender or underwriter that is converted
from conditional to full MAP approval status is valid, unless otherwise
specified by HUD, for the remainder of the 4-year period beginning on
the date that HUD notified the applicant of its initial conditional
approval.
(iv) If a lender or underwriter does not comply with the
requirements under paragraphs (b)(3)(ii)(A) through (C) of this
section, HUD may extend the term of conditional approval or terminate
the conditional approval.
Sec. 200.1419 Expiration of previously granted MAP approvals.
(a) Expiration. A MAP lender or underwriter approval that was
granted by HUD prior to [effective date of final rule to be inserted at
the final rule stage] shall expire upon the later of the following:
(1) Four years following the date on which the approval was
granted;
(2) Forty-five days following the lender's or underwriter's receipt
of a letter from HUD inviting the lender or underwriter to apply for
tier approval, if by such date the lender or underwriter has not
submitted an application in accordance with Sec. 200.1413(c) or
1415(b); or
(3) Upon HUD's notification of the lender or underwriter of the
action HUD has taken on the lender or underwriter's application
submitted in accordance with Sec. 200.1413(c) or Sec. 200.1415(b),
provided that the lender or underwriter submitted the application
within 45 days of the date of the lender or underwriter's receipt of a
letter from HUD inviting the lender or underwriter to apply for tier
approval.
(b) One-time approval at Tier 1 in absence of submission. A lender
whose MAP approval was granted by HUD prior to [effective date of final
rule to be inserted at final rule stage] and that does not submit an
application in accordance with Sec. 200.1413(c) within 45 days
following the lender's receipt of a letter from HUD inviting the lender
to apply for tier approval, shall be eligible for approval at Tier 1
for a period of time as provided in Sec. 200.1417(b).
Sec. 200.1421 Renewal of lender approval.
(a) No later than 90 days before the date of the expiration of MAP-
lender approval, the MAP lender may submit an application, in such form
as required by HUD, for renewal of MAP-lender approval. The application
for renewal must demonstrate that the lender continues to meet the
applicable eligibility requirements under Sec. 200.1411 and Sec.
200.1413 of this part.
(b) HUD will review a lender's application for renewal of MAP
approval, along with any information provided by HUD offices to which
the applicant's loan applications or exhibits have been submitted
within the previous approval period or periods, up to a maximum of 4
years. HUD may determine that the lender's experience or the
performance of the lender's loans endorsed during the preceding 4 years
is not sufficient for the lender to renew its approval at the current
tier. In considering an application for renewal of MAP approval, HUD
will follow the procedures and may take any action described in Sec.
200.1417.
Sec. 200.1423 Adjustment of approval to a higher tier.
(a) An approved lender or underwriter may submit an application, in
such form as required by HUD, for approval at a higher tier. The lender
or underwriter must demonstrate that it meets the applicable
eligibility requirements for the tier of approval that the lender or
underwriter is seeking.
(b) HUD will review a lender or underwriter's application for MAP
approval at a higher tier, along with any information provided by HUD
offices where the applicant's loan applications or exhibits have been
submitted within the previous approval period or periods, up to a total
period of time as published by HUD for public comment. In considering
an application for MAP approval at a higher tier, HUD will follow the
procedures and may take any action described in Sec. 200.1417.
Approval of a MAP lender at a higher tier shall be valid as provided in
Sec. 200.1417(a)(1).
Sec. 200.1425 Post-approval underwriter training requirement.
Newly approved MAP underwriters must attend a MAP training session
provided or approved by HUD in order to be eligible to satisfy the
underwriter requirement at Sec. 200.1411(a)(2).
[[Page 21890]]
Sec. 200.1427 Inactive underwriters.
An underwriter who at the time of the lender's annual certification
to HUD pursuant to Sec. 200.1407(d) has not submitted a pre-
application or application for Firm Commitment for a period of 2 years
will be designated as inactive. Inactive underwriters may be terminated
from the MAP program because of inactivity and, if so, must reapply for
approval to participate in MAP programs.
Sec. 200.1429 Appeals.
(a) An applicant may submit a written appeal of any HUD decision
regarding the applicant under Sec. Sec. 200.1411 through 200.1427 of
this subpart. Any such appeal must be submitted to the designated HUD
appeal official within 30 days of the date of receipt of HUD's written
notification to the applicant of HUD's decision. HUD's written
notification will advise who is the designated HUD appeal official and
provide the address for such official. The written appeal may set forth
the reasons why the HUD decision should be reconsidered or changed, or
may request an informal conference, or both.
(b) HUD will respond to an applicant's appeal within 60 days from
the date of HUD's receipt of the written appeal. If HUD's response to
the appeal is to confirm HUD's original decision, no further appeal
will be accepted from the applicant.
3. Immediately before Sec. 200.1500, add an undesignated heading,
to read as follows:
Map Lender Quality Assurance Enforcement
4. In Sec. 200.1505, revise paragraph (c) to read as follows:
Sec. 200.1505 Warning letter.
* * * * *
(c) Relationship to other sanctions. The issuance of a warning
letter is not subject to the procedures in Sec. 200.1535, and is not a
prerequisite to the probation, or suspension, or termination of MAP
privileges.
5. In Sec. 200.1510, revise paragraphs (a) and (b)(1) to read as
follows:
Sec. 200.1510 Probation.
(a) In general. HUD may place a lender on probation, in accordance
with the procedures of Sec. 200.1535.
(b) Effect of probation. (1) Probation is intended to be corrective
in nature and not punitive. As a result, release from probation is
conditioned upon the lender meeting a specific requirement or
requirements, such as replacement of a staff member. A lender's failure
to take prompt corrective action after being placed on probation may be
the basis for a recommendation of either suspension or termination.
* * * * *
6. In Sec. 200.1515, revise paragraph (a) to read as follows:
Sec. 200.1515 Suspension of MAP privileges.
(a) In general. HUD may suspend a lender's eligibility for MAP, in
accordance with the procedures of Sec. 200.1535.
* * * * *
7. In Sec. 200.1520, revise paragraph (a) to read as follows:
Sec. 200.1520 Termination of MAP privileges.
(a) In general. Except as provided in paragraph (b) of this
section, HUD may terminate a lender's MAP privileges in accordance with
the procedures of Sec. 200.1535.
* * * * *
8. In Sec. 200.1525, revise paragraph (a) to read as follows:
Sec. 200.1525 Settlement agreements.
(a) HUD staff, as authorized, may negotiate a settlement agreement
with a MAP lender before or after the issuance of a warning letter or
referral to HUD.
* * * * *
9. In Sec. 200.1535, revise the heading and paragraphs (a)(1) and
(a)(2), paragraph (b) introductory text, and (f)(1) to read as follows:
Sec. 200.1535 Procedures for imposition of sanctions.
(a) Authority. (1) Sanctions. HUD may impose appropriate sanctions
on a MAP lender after:
(i) Conducting an impartial review of all information and
documentation submitted to HUD; and
(ii) Making factual determinations that there has been a violation
of MAP requirements.
(2) Settlement agreements. HUD is authorized to approve settlement
agreements in accordance with Sec. 200.1525 of any pending matter.
* * * * *
(b) Notice of violation. Before HUD reviews a matter for
consideration of a sanction, HUD will issue written notice of violation
to the MAP lender's contact person as listed on the Multifamily MAP Web
site. The notice is sent by overnight delivery and must be signed for
by an employee of the MAP lender upon receipt. The notice:
* * * * *
(f) HUD action. (1) HUD will consider the evidence included in the
administrative record and make a final decision concerning the matter.
Any record of confidential communications within HUD at this stage of
the proceedings is privileged from disclosure and will not be regarded
as a part of the administrative record of any matter.
* * * * *
10. Revise the heading of Sec. 200.1545 to read as follows:
Sec. 200.1545 Appeals of sanction decisions.
* * * * *
Dated: March 16, 2012.
Carol J. Galante,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2012-8705 Filed 4-11-12; 8:45 am]
BILLING CODE 4210-67-P