[Federal Register Volume 78, Number 75 (Thursday, April 18, 2013)]
[Proposed Rules]
[Pages 23178-23183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-09131]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5 and 202
[Docket No. FR-5536-P-01]
RIN 2502-AJ00
Federal Housing Administration (FHA) Approval of Lending
Institutions and Mortgagees: Streamlined Reporting Requirements for
Small Supervised Lenders and Mortgagees
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would streamline the FHA financial
statement reporting requirements for lenders and mortgagees who are
supervised by federal banking agencies and whose consolidated assets do
not meet the thresholds set by their supervising federal banking
agencies for submission of audited financial statements (currently set
at $500 million in consolidated assets). HUD's regulations currently
require all supervised lenders and mortgagees to submit annual audited
financial statements as a condition of FHA lender approval and
recertification. Through this proposed rule, in lieu of the annual
audited financial statements, small supervised lenders and mortgagees
would be required to submit the unaudited financial regulatory reports
that align with their fiscal year ends and are required to be submitted
to their supervising federal banking agencies. Small supervised lenders
and mortgagees would only be required to submit audited financial
statements if HUD determines that the supervised lenders or mortgagees
pose heightened risk to the FHA insurance fund.
This rule does not impact FHA's annual audited financial statements
submission requirement for nonsupervised and large supervised lenders
and mortgagees. The rule also does not impact those supervised lenders
and mortgagees with consolidated assets in an amount that requires that
lenders or mortgagees submit audited financial statements to their
respective supervising federal banking agencies. Finally, HUD has
[[Page 23179]]
taken the opportunity afforded by this proposed rule to make three
technical changes to current regulations regarding reporting
requirements for FHA-approved supervised lenders and mortgagees.
DATES: Comment Due Date: June 17, 2013.
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 800-877-8339. Copies of all comments submitted
are available for inspection and downloading at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Richard Toma, Deputy Director, Office
of Lender Activities and Program Compliance, Office of Housing,
Department of Housing and Urban Development, 490 L'Enfant Plaza East
SW., Room P3214, Washington, DC 20024-8000; telephone number 202-708-
1515 (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
As part of HUD's efforts to strengthen risk management of the FHA
insurance funds, HUD published a final rule on April 20, 2010,
entitled, ``Federal Housing Administration: Continuation of FHA
Reform--Strengthening Risk Management Through Responsible FHA-Approved
Lenders'' (75 FR 20718). The April 20, 2010, final rule increased the
net worth requirements for FHA-approved lenders and mortgagees,
eliminated HUD's approval of loan correspondents, and amended the
general approval standards for lenders and mortgagees. The goal of
increasing the net worth requirements was to ensure that FHA-approved
lenders and mortgagees are sufficiently capitalized. To monitor
compliance with the net worth requirements, the April 20, 2010, final
rule requires all lenders and mortgagees to provide annual audited
financial statements within 90 days of their fiscal year ends as a
condition of FHA approval and recertification. The requirement for the
submission of annual audited financial statements applies to all FHA-
approved lenders and mortgagees, irrespective of their net worth.
Interested readers should refer to the preamble of the April 20, 2010,
final rule for additional information regarding the risk management
amendments to the FHA program requirements.
II. This Proposed Rule
A. Streamlined Reporting Requirements for Small Supervised Lenders and
Mortgagees
Since publication of the April 20, 2010, final rule, HUD has
determined that the FHA requirement for all supervised lenders and
mortgagees to submit annual audited financial statements may prove to
be prohibitively expensive for small supervised lenders and mortgagees
who wish to participate in FHA programs. While HUD takes its
counterparty risk management responsibilities seriously, HUD seeks to
balance its management of risk with the execution of its mission. In
order to ensure that FHA products and programs remain available in the
communities served by small supervised lenders and mortgagees, HUD
proposes through this rule to modify its annual audited financial
statements reporting requirement for these institutions.
Lenders and mortgagees supervised by the Board of Governors of the
Federal Reserve System; the Federal Deposit Insurance Corporation
(FDIC); and the National Credit Union Administration (NCUA)
(collectively the ``federal banking agencies''), are required to submit
audited financial statements to their respective supervising federal
banking agencies where the lenders' or mortgagees' consolidated assets
meet or exceed the minimum thresholds established by those federal
banking agencies; which thresholds are all currently $500 million or
more in consolidated assets and are currently codified at 12 CFR
363.1(a) and 12 CFR 715.4(c). Lenders and mortgagees whose consolidated
assets for the applicable fiscal year are less than their supervising
federal banking agency's threshold for submission of audited financial
statements (hereinafter ``small lenders and mortgagees'') are required
to submit unaudited financial regulatory reports. These unaudited
financial regulatory reports currently include a consolidated or fourth
quarter Report of Condition and Income (Federal Financial Institutions
Examination Council forms 031 and 041, also known as the ``Call
Report''), a consolidated or fourth quarter Thrift Financial Report,
and a consolidated or fourth quarter NCUA Call Report (NCUA Form 5300
or 5310).
In an effort to be consistent with the financial reporting
requirements designated by the supervisory federal banking agencies for
small lenders and mortgagees, HUD will no longer require small
supervised lenders or mortgagees to submit audited financial
statements. Instead, HUD will require that small supervised lenders and
mortgagees submit the unaudited financial regulatory reports that they
are required to submit to their supervising federal banking agencies.
HUD has determined that the financial regulatory reports required by
the federal banking agencies contain sufficient information for HUD to
ensure that small supervised lenders and mortgagees are suitably
capitalized
[[Page 23180]]
to meet potential needs associated with their participation in FHA
lending programs, without the potentially prohibitive financial burden
of preparing annual audited financial statements.
In order to manage the risk to the FHA insurance fund, HUD retains
the right to request additional financial documentation, up to and
including audited financial statements, if HUD determines that a small
supervised lender or mortgagee poses a heightened risk to the FHA
insurance fund. HUD has determined that the following factors are
relevant, but not exhaustive, in determining if a small supervised
lender or mortgagee poses a heightened risk to the FHA insurance fund:
(1) Failing to provide required financial submissions under Sec.
202.6(c)(2) within the required 90-day period following the lender's or
mortgagee's fiscal year end; (2) maintaining insufficient adjusted net
worth or unrestricted liquid assets as required by Sec. 202.5(n); (3)
reporting opening cash and equity balances that do not agree with the
prior year's reported cash and equity balances; (4) experiencing an
operating loss of 20 percent or greater of the lender's or mortgagee's
net worth for the annual reporting period as governed by Sec.
202.5(m)(1); (5) experiencing an increase in loan volume over the prior
12-month period, determined by the Secretary to be significant; (6)
undertaking significant changes to business operations, such as a
merger or acquisition; and (7) other factors that the Secretary
considers appropriate in indicating a heightened risk to the FHA
insurance fund.
Consistent with the requirements of the federal banking agencies,
HUD will continue to require audited financial statements for
supervised lenders and mortgagees whose consolidated assets meet or
exceed the threshold set by the federal banking agencies, presently
located at 12 CFR 363.1(a) and 12 CFR 715.4(c)--currently $500 million
or more in consolidated assets. Because the asset threshold established
by the federal banking agencies may change over time, this proposed
rule references the regulations of the federal banking agencies instead
of a numeric figure. HUD specifically seeks comments from small
supervised lenders and mortgagees on whether they are required to
provide annual audited financial statement to any other regulating
body, such as a state agency.
B. Technical Amendments
HUD has taken the opportunity afforded by this proposed rule to
make three conforming amendments to current regulations regarding
reporting requirements for FHA-approved supervised lenders and
mortgagees. These nonsubstantive amendments will codify existing
requirements and correct a regulatory citation. The amendments are as
follows:
1. Audited financial statement for large supervised lenders and
mortgagees. The regulations at Sec. 202.7(b)(4) require that
nonsupervised lenders and mortgagees comply with HUD's uniform
financial reporting standards codified in 24 CFR part 5, subpart H, and
establish requirements governing the contents of the required audited
financial statements. While the April 20, 2010, final rule codified the
requirement that supervised lenders also submit audited financial
statements, it did not specify that these statements must be submitted
in accordance with the same requirements as those applicable to
nonsupervised institutions under Sec. 202.7(b)(4). Instead, HUD
clarified via mortgagee letter that supervised lenders and mortgagees
should comply with the audit requirements of Sec. 202.7(b)(4).\1\ This
proposed rule would codify the mortgagee letter guidance by adding a
new Sec. 202.6(b)(4) to govern audited financial statements submitted
by supervised lenders and mortgagees. Consistent with existing
practice, the new provision mirrors the language of Sec. 202.7(b)(4).
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\1\ See Mortgagee Letter 2009-31, issued on September 18, 2009,
and available at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/2009ml.cfm.
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2. Technical correction to uniform financial reporting standards.
The applicability section of HUD's uniform financial reporting
regulations (Sec. 5.801) was not updated by the April 20, 2010, final
rule. Accordingly, Sec. 5.801(a)(5) of those regulations still
provides that the uniform financial standards apply to ``nonsupervised
lenders, nonsupervised mortgagees, and loan correspondents.'' The April
20, 2010, final rule eliminated HUD's approval of loan correspondents
and clarified that supervised lenders and mortgagees are also subject
to the uniform financial reporting requirements. This proposed rule
would make the conforming amendments to Sec. 5.801(a)(5).
3. Technical correction to Sec. 202.3(b). The regulation at Sec.
202.3(b) incorrectly refers to the yearly verification report
``required by Sec. 202.5(n)(2).'' As a result of other changes made by
the April 20, 2010, final rule, the verification report requirement is
now found in Sec. 202.5(m). This proposed rule corrects the outdated
citation.
III. Costs and Benefits of the Proposed Rule
The total cost savings from the reporting and recordkeeping burden
for small supervised lenders and mortgagees would be approximately
$110,770. HUD currently has 1,471 approved supervised lenders and
mortgagees who are required to submit annual audited financial
statements, of which HUD approximates that 857 are small supervised
lenders and mortgagees whom this rule will benefit. Under this proposed
rule, small supervised lenders and mortgagees would no longer be
required to complete and submit the Online Annual Financial Statements
and Reports, but would instead submit an electronic copy of the
unaudited financial regulatory report that aligns with their fiscal
year end, as required by and submitted to their supervising federal
banking agency. Currently it takes a lender or mortgagee 3 hours to
complete the required Online Annual Financial Statements and Reports
submission.\2\ HUD estimates that this new requirement would take .25
hours per lender or mortgagee. Therefore, the burden on each lender or
mortgagee would be reduced by 2.75 hours. The cost to the lender or
mortgagee to complete the Online Annual Financial Statements and
Reports is $47 per hour.\3\ By submitting the unaudited financial
regulatory report required by the lender's or mortgagee's supervised
federal banking agency, each small supervised lender or mortgagee would
save $129.25, resulting in a total industry savings for all 857 small
entities of approximately $110,770. HUD recognizes that additional
savings may result for small supervised lenders and mortgagees who no
longer complete annual audits as a result of this rule.
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\2\ PRA Submission 2502-0005, http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=200910-2502-005.
\3\ Id.
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IV. Findings and Certifications
Paperwork Reduction Act
The information collection requirements for this proposed 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.
[[Page 23181]]
This proposed rule would amend 24 CFR part 202. Part 202 currently
contains the collection of information approved by OMB, and the OMB
control number is 2502-0005. The collection title is, ``HUD-FHA Title
I/Title II Lender Approval, Annual Recertification, Noncompliance
Forms, Reports, Ginnie Mae Issuer Approval, and Credit Watch
Termination Reinstatement.'' As proposed below, this rule would amend
the collection of information currently required by ``item n,'' the
online submission of annual audited financial statements by Title I and
Title II nonsupervised lenders, supervised lenders and nonsupervised
loan correspondents, of OMB control number 2502-0005 (hereinafter,
Annual Audited Financial Statement). This proposed rule is estimated to
reduce the burden in the existing information collection requirement as
follows:
Reporting and Recordkeeping Burden
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Estimated
Number of annual audited average time
Section reference financial statement for Estimated total burden
respondents requirement
(hours)
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Current: 24 CFR part 202 requirements. All Lenders: 3,370 \4\... 3.00 10,110 hours.
Proposed: 24 CFR part 202 requirements Large Supervised and all 3.00 7,753.25 hours (7,539 hours
Nonsupervised Lenders: and 214.25 hours,
2,513. respectively).
Small Supervised Lenders: .25
857.
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Percentage of Burden Change........... Estimated net reduction of burden 23%
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In accordance \4\ 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:
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\4\ The current PRA states that 11,000 annual audited financial
statements are collected, but loan correspondents are no longer HUD-
approved and required to submit annual audited financial statements.
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(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.
(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.,
by 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 proposed rule by name and docket number (FR-5583-P-01) and must
be sent to:
HUD Desk Officer, Office of Management and Budget, New Executive Office
Building, Washington, DC 20503, Fax number: 202-395-6947; and
Reports Liaison Officer, Office of Housing, Department of Housing and
Urban Development, 451 7th Street SW., Room 9128, 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 Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and, therefore, subject to review by OMB in accordance with the
requirements of the order. Executive Order 13563 (Improving Regulations
and Regulatory Review) directs 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.'' Executive Order 13563
also directs that, where relevant, feasible, and consistent with
regulatory objectives and to the extent permitted by law, agencies are
to identify and consider regulatory approaches that reduce burdens and
maintain flexibility and freedom of choice for the public. Accordingly,
HUD has determined that aligning FHA's financial reporting requirements
for small supervised lenders and mortgagees with the financial
reporting requirements of the federal banking agencies eliminates
unnecessary financial and administrative burdens posed by FHA's current
requirement to submit an audited financial statement, and thereby
enhances the ability of small supervised lenders and mortgagees to
participate in FHA programs. HUD has concluded that the federal banking
agencies have controls in place through examination and monitoring to
takeover institutions experiencing significant financial distress that
pose a risk to depositors. Therefore, the information within the
financial regulatory reports being provided to the federal banking
agencies is comprehensive and provides the data necessary for FHA to
analyze a small supervised lender's or mortgagee's net worth and assets
to determine if financial risk is posed to the FHA fund. In a case
where a small supervised lender or mortgagee shows sign of financial
risk, HUD retains the right to request additional financial
documentation, up to and including audited financial statements. As a
result, this rule was determined to not be a significant regulatory
action under section 3(f) of Executive Order 12866, Regulatory Planning
and Review, and therefore was not reviewed by OMB.
[[Page 23182]]
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This proposed rule would not have a significant economic impact on a
substantial number of small entities because the rule is specifically
intended to ease the regulatory burden on small entities. The current
regulations require full independent audited financial statements, over
and above what is required by federal banking agencies in their
oversight of these small supervised lenders and mortgagees. This
proposed rule would bring HUD's reporting practices in line with that
of the federal banking agencies and, as discussed above, reduce the
cost of participating in FHA programs by releasing small supervised
lenders and mortgagees from the requirement to submit annual audited
financial statements. Instead the rule would require the submission of
the unaudited financial regulatory report already required by the small
supervised lender's or mortgagee's supervising federal banking agency.
Notwithstanding HUD's determination that this rule would 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 would meet HUD's objectives as described
in the preamble to this rule.
Environmental Impact
This 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. Nor does it establish, revise, or
provide for standards for construction or construction materials,
manufactured housing, or occupancy. This rule is limited to the
procedures governing the submission of financial reports by small
supervised lenders and mortgagees applying to participate, or
recertifying for participation, in FHA's single-family programs.
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).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either (1) imposes substantial direct compliance costs on state and
local governments and is not required by statute, or (2) preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This rule would not have
federalism 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 would
not impose any federal mandates on any state, local, or tribal
governments, or on the private sector, within the meaning of the UMRA.
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
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Crime,
Government contracts, Grant programs--housing and community
development, Individuals with disabilities, Intergovernmental
relations, Loan programs--housing and community development, Low and
moderate income housing, Mortgage insurance, Penalties, Pets, Public
housing, Rent subsidies, Reporting and recordkeeping requirements,
Social security, Unemployment compensation, Wages.
24 CFR Part 202
Administrative practice and procedure, Home improvement,
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements.
Accordingly, for the reasons stated in the preamble, HUD proposes
to amend 24 CFR parts 5 and 202 to read as follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
0
1. The authority citation for part 5 continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 3535(d),
Sec. 327, Pub. L. 109-115, 119 Stat. 2936, and Sec. 607, Pub. L.
109-162, 119 Stat. 3051.
0
2. Revise Sec. 5.801 paragraph (a)(5) to read as follows:
Sec. 5.801 Uniform financial reporting standards.
(a) * * *
(5) HUD-approved Title I and Title II supervised and nonsupervised
lenders and mortgagees.
* * * * *
PART 202--APPROVAL OF LENDING INSTITUTIONS AND MORTGAGEES
0
3. The authority citation for part 202 continues to read as follows:
Authority: 12 U.S.C. 1703, 1709 and 1715b; 42 U.S.C. 3535(d).
0
4. In Sec. 202.3 paragraph (b), revise the citation to ``Sec. 202.5
(n)(2)'' to read ``Sec. 202.5 (m)''.
0
5. Revise Sec. 202.5 paragraph (g) to read as follows:
Sec. 202.5 General approval standards.
* * * * *
(g) Financial statements. Except as provided in Sec. 202.6(c), the
lender or mortgagee shall furnish to the Secretary a copy of its
audited financial statements within 90 days of its fiscal year end,
furnish such other information as the Secretary may request, and submit
to an examination of that portion of its records that relates to its
Title I and/or Title II program activities.
* * * * *
0
6. In Sec. 202.6, add new paragraphs (b)(4) and (c) to read as
follows:
Sec. 202.6 Supervised lenders and mortgagees.
* * * * *
(b) * * *
(4) Audit report. Except as provided in paragraph (c) of this
section, a lender or mortgagee must:
(i) Comply with the financial reporting requirements in 24 CFR part
5, subpart H. Audit reports shall be based on audits performed by a
certified public accountant, or by an independent public accountant
licensed by a regulatory authority of a State or other political
subdivision of the United States on or before December 31, 1970, and
shall include:
(A) Financial statements in a form acceptable to the Secretary,
including a balance sheet and a statement of
[[Page 23183]]
operations and retained earnings, a statement of cash flows, an
analysis of the mortgagee's net worth adjusted to reflect only assets
acceptable to the Secretary, and an analysis of escrow funds; and
(B) Such other financial information as the Secretary may require
to determine the accuracy and validity of the audit report.
(ii) Submit a report on compliance tests prescribed by the
Secretary.
(c) Financial statements requirements for small supervised lenders
and mortgagees.
(1) Definitions. For the purposes of this section, the following
definitions apply:
(i) Federal banking agency means the Board of Governors of the
Federal Reserve System; the Federal Deposit Insurance Corporation; and
the National Credit Union Administration; or any successor agency
thereof.
(ii) Small supervised lender or mortgagee means a supervised lender
or mortgagee possessing consolidated assets below the threshold for
required audited financial reporting as established by the federal
banking agency that is responsible for the oversight of that supervised
lender or mortgagee.
(2) Financial statement requirements. Small supervised lenders and
mortgagees shall not be subject to the requirement to submit a copy of
an audited financial statement under Sec. 202.5(g) and the audit
report requirements under paragraph (b)(4) of this section. Small
supervised lenders and mortgagees are required, within 90 days of their
fiscal year end, to furnish to the Secretary the unaudited financial
regulatory report--a consolidated or fourth quarter Report of Condition
and Income (Federal Financial Institutions Examination Council forms
031 and 041, also known as the ``Call Report''), a consolidated or
fourth quarter Thrift Financial Report, or a consolidated or fourth
quarter NCUA Call Report (NCUA Form 5300 or 5310), or such other
financial regulatory report as may be required--that aligns with the
small supervised lender's or mortgagee's fiscal year end and that the
small supervised lender or mortgagee is required to submit to their
respective federal banking agency.
(3) Requirement for audited financial statement and other
information based on determination of heightened risk to the FHA
insurance fund. If the Secretary determines that a small supervised
lender or mortgagee poses a heightened risk to the FHA insurance fund,
the lender or mortgagee must provide upon request, additional financial
documentation, up to and including an audited financial statement, and
other information as the Secretary determines necessary. The Secretary
may determine that a small supervised lender or mortgagee poses a
heightened risk to the FHA insurance fund based upon, but not limited
to, one or more of the following factors:
(i) Failing to provide required financial submissions under Sec.
202.6(c)(2) within the required 90-day period following the lender's or
mortgagee's fiscal year end;
(ii) Maintaining insufficient adjusted net worth or unrestricted
liquid assets as required by Sec. 202.5(n);
(iii) Reporting opening cash and equity balances that do not agree
with the prior year's reported cash and equity balances;
(iv) Experiencing an operating loss of 20 percent or greater of the
lender's or mortgagee's net worth for the annual reporting period as
governed by Sec. 202.5(m)(1);
(v) Experiencing an increase in loan volume over the prior 12-month
period, determined by the Secretary to be significant;
(vi) Undertaking significant changes to business operations, such
as a merger or acquisition; and
(vii) Other factors that the Secretary considers appropriate in
indicating a heightened risk to the FHA insurance fund.
Dated: March 25, 2013.
Carol J. Galante,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2013-09131 Filed 4-17-13; 8:45 am]
BILLING CODE 4210-67-P