[Federal Register: December 15, 2004 (Volume 69, Number 240)]
[Rules and Regulations]
[Page 75203-75205]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de04-24]
[[Page 75203]]
-----------------------------------------------------------------------
Part IV
Department of Housing and Urban Development
-----------------------------------------------------------------------
24 CFR Part 206
Home Equity Conversion Mortgage (HECM) Program; Insurance for Mortgages
To Refinance Existing HECMs and Reduced Initial Mortgage Insurance
Premiums (MIP); Final Rule
[[Page 75204]]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 206
[Docket No. FR-4667-F-03]
RIN 2502-AH63
Home Equity Conversion Mortgage (HECM) Program; Insurance for
Mortgages To Refinance Existing HECMs and Reduced Initial Mortgage
Insurance Premiums (MIP)
AGENCY: Office of Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: On March 25, 2004, HUD published an interim rule implementing
certain statutory changes to the Home Equity Conversion Mortgage (HECM)
Program made by section 201 of the American Homeownership and Economic
Opportunity Act of 2000 (AHEOA). Among other changes, the rule provided
for a reduced initial mortgage insurance premium (MIP) on HECM
refinancings. The interim rule requested comments on the MIP provision
of the rule. This final rule follows publication of the March 25, 2004,
interim rule. HUD did not receive any public comments on the interim
regulatory change regarding the reduced MIP for HECM refinancings and,
therefore, is adopting the interim rule without change.
DATES: Effective Date: January 14, 2005.
FOR FURTHER INFORMATION CONTACT: Vance T. Morris, Director, Office of
Single Family Program Development, Office of Insured Single Family
Housing, Room 9266, Department of Housing and Urban Development, 451
Seventh Street, SW., Washington, DC 20410-8000; telephone (202) 708-
2121 (this is not a toll-free number). Individuals with speech or
hearing impairments may access this number through TTY by calling the
toll-free Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION
I. Background
HUD's Home Equity Conversion Mortgage (HECM) Program enables
homeowners 62 years of age or older who have paid off their mortgages
or have small mortgage balances to stay in their homes while using some
of their equity as income. The program enables these homeowners to
obtain financing with a Federal Housing Administration (FHA) insured
reverse mortgage, which is a mortgage that converts equity into income.
The FHA insures HECM loans to protect lenders against loss. Such a loss
could occur if amounts withdrawn exceed equity when the homeowner's
property is sold. The statutory authority for the HECM Program is
section 255 of the National Housing Act (12 U.S.C. 1715z-20) (NHA).
HUD's regulations implementing the HECM Program are located at 24 CFR
part 206.
Section 201 of the American Homeownership and Economic Opportunity
Act of 2000 (Pub. L. 106-569, approved December 27, 2000) (AHEOA) made
several changes to the HECM Program. Among other amendments, section
201(a) of AHEOA added a new section 255(k) to the NHA. Section 255(k)
in part authorizes FHA to offer mortgage insurance for the refinancing
of existing HECMs and establishes several homeowner protection and
streamlining requirements concerning such refinancings. On June 5, 2001
(66 FR 30278), HUD published a proposed rule to implement certain
statutory changes to the HECM Program made by section 201 of the AHEOA.
The proposed rule solicited public comments on the proposed changes to
the HECM Program regulations. Two commenters wrote that, in addition to
implementing the changes contained in the proposed rule, HUD should
also implement its statutory authority to reduce the initial mortgage
insurance premium (MIP) for HECM refinancings. Specifically, section
201(a) of AHEOA added a new section 255(k)(4) to the NHA which
authorizes HUD to reduce the amount of the initial MIP collected on a
HECM refinancing.
On March 25, 2004 (69 FR 15586), HUD published an interim rule that
considered the public comments received on the proposed rule and made
effective the proposed regulatory changes to the HECM Program contained
in the June 5, 2001 proposed rule. In response to the public comments
requesting that HUD implement section 255(k)(4) of the NHA, the interim
rule also established a reduced MIP for HECM refinancings.
The regulatory provisions of the March 25, 2004, interim rule took
effect on April 26, 2004. However, in order to provide for public
comments on the amount of the MIP, HUD issued the MIP provision on an
interim basis and requested public comments for a period of 60 days on
the amount of the initial MIP. HUD did not request public comment on
the other provisions of the interim rule, since these provisions were
contained in the July 5, 2001, proposed rule and were, therefore,
already the subject of public comments.
As noted above, certain statutory changes to the HECM Program were
already enumerated in the June 5, 2001, proposed rule. For more
information on these prior changes, interested persons should refer to
the June 5, 2001, proposed rule preamble; for information on the
agency's discussion of the public comments received on the June 5,
2001, proposed rule, interested persons should refer to the March 25,
2004, interim rule preamble.
II. This Final Rule
This final rule follows publication of the March 25, 2004, interim
rule. The comment period on the initial MIP provision closed on May 25,
2004. HUD did not receive any public comments on the interim regulatory
change regarding the reduced initial MIP for HECM refinancings.
Accordingly, this final rule adopts the interim rule of March 25, 2004,
without changes.
Specifically, this final rule adopts Sec. 206.53(c), which was
established by the March 25, 2004, interim rule. New Sec. 206.53(c)
implements the statutory authority provided to HUD by section 255(k) of
the NHA to reduce the initial MIP for HECM refinancings. The change
provides that the initial MIP paid by the mortgagee shall not exceed
two percent of the increase in the maximum claim amount (i.e., the
difference between the maximum claim amount for the new home equity
conversion mortgage and the maximum claim amount for the existing home
equity conversion mortgage that is being refinanced).
HUD believes that the initial MIP limit made effective by this rule
will result in a lower initial MIP for a refinanced HECM loan than for
a comparable ``first'' HECM secured by a similar property. Also, the
initial MIP limit will allow more homeowners to refinance their HECM
loans at a lower interest rate, thus allowing homeowners to stay in
their homes while using some of their equity.
III. Findings and Certifications
Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866 (entitled ``Regulatory Planning and Review'').
OMB determined that this rule is a ``significant regulatory action'' as
defined in section 3(f) of the order (although not economically
significant, as provided in section 3(f)(1) of the order). Any changes
made to this rule subsequent to its submission to OMB are identified in
the docket file, which is available for public inspection in the
Regulations Division, Room 10276,
[[Page 75205]]
Office of General Counsel, Department of Housing and Urban Development,
451 Seventh Street, SW., Washington, DC 20410-0500.
Information Collection Requirements
The information collection requirements contained in Sec. 206.53
have been approved by OMB in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-
0524. 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 control number.
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 the private sector. This rule does not impose
any Federal mandates on any State, local, or tribal government or the
private sector within the meaning of UMRA.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
was made at the proposed rule stage in accordance with HUD regulations
at 24 CFR part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding
remains applicable to this final rule and is available for public
inspection between the hours of 8 a.m. and 5 p.m. weekdays in the
Regulations Division, Room 10276, Office of General Counsel, Department
of Housing and Urban Development, 451 Seventh Street, SW., Washington,
DC 20410-0500.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
The amendments made by this final rule will not impose any economic
costs on small lenders and other participants in the HECM Program.
Lenders will not be adversely affected by the reductions in the initial
MIP established by this final rule, since the initial MIP is payable to
HUD and not the lenders. Therefore, the undersigned certifies that this
final rule will not have a significant economic impact on a substantial
number of small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on State and local
governments and is not required by statute, or the rule preempts State
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This final 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.
Catalog of Domestic Assistance Number
The Catalog of Domestic Assistance Number for the HECM Program is
14.871.
List of Subjects in 24 CFR Part 206
Aged, Condominiums, Loan programs--housing and community
development, Mortgage insurance, Reporting and recordkeeping
requirements.
Accordingly, for the reasons stated in the preamble, the interim
rule for part 206 of subpart B of Title 24 of the Code of Federal
Regulations, revising Sec. 206.31(a)(1) and adding Sec. 206.53,
published on March 25, 2004, at 69 FR 15586, is promulgated as final,
without change.
Dated: November 5, 2004.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 04-27310 Filed 12-14-04; 8:45 am]
BILLING CODE 4210-27-P