HUD Issues Final Rule on Standardizing Method of Payment for FHA Insurance Claims

Targeted News Service

WASHINGTON, Aug. 25 -- The Department of Housing & Urban Development published the following rule in the Federal Register:

Federal Housing Administration (FHA): Standardizing Method of Payment for FHA Insurance Claims

A Rule by the Housing and Urban Development Department on 08/25/2015

Publication Date: Tuesday, August 25, 2015

Agency: Department of Housing and Urban Development

Entry Type: Rule

Action: Final rule.

Document Citation: 80 FR 51466

Page: 51466 -51469 (4 pages)

CFR: 24 CFR 203

24 CFR 207

24 CFR 220

24 CFR 221

24 CFR 232

24 CFR 236

24 CFR 241

Agency/Docket Number: Docket No. FR-5805-F-02

RIN: 2502-AJ26

Document Number: 2015-20827

Shorter URL: https://federalregister.gov/a/2015-20827

Action

Final Rule.

Summary

This final rule is a cost-savings measure to update HUD's regulations regarding the payment of FHA insurance claims in debentures. Section 520(a) of the National Housing Act grants the Secretary discretion to pay insurance claims in cash or debentures. Although some sections of HUD's regulations have provided mortgagees the option to elect payment of FHA insurance claims in debentures, HUD has not paid an FHA insurance claim in debentures under these regulations in approximately 5 years. This final rule amends applicable FHA regulations to bring consistency in determining the method of payment for FHA insurance claims. This final rule follows publication of the February 20, 2015, proposed rule and adopts the proposed rule without change.

DATES:

Effective Date: September 24, 2015.

FOR FURTHER INFORMATION CONTACT:

For information about: HUD's Single Family Housing program, contact Ivery Himes, Director, Office of Single Family Asset Management, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 9172, Washington, DC 20410; telephone number 202-708-1672; HUD's Multifamily Housing program, contact Sivert Ritchie, Multifamily Claims Branch, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 6252, Washington, DC 20410-8000; telephone number 202-708-2510. The telephone numbers listed above are not toll-free numbers. Persons with hearing or speech impairments may access these numbers through TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background--the February 20, 2015, Proposed Rule

On February 20, 2015, HUD published a rule in the Federal Register, at 80 FR 9253, proposing to bring consistency and uniformity to the payment of FHA insurance claims among FHA programs. Under section 520(a) of the National Housing Act, the Secretary has the discretion to pay insurance claims in either cash or debentures. [1] HUD pursued this proposed rule because some of FHA's regulations provided mortgagees with the ability to request and receive payment of an insurance claim on a loan insured under the National Housing Act in debentures. As a result of these regulations, HUD was required to maintain an interagency agreement with the United States Department of the Treasury (Treasury), which is the agency responsible for issuing and servicing debentures, costing HUD over $206,000 per year, despite the fact that there are no current debentures being serviced by Treasury for HUD, and HUD has not paid an FHA insurance claim in debentures in approximately 5 years.

The February 20, 2015, rule proposed amending FHA's regulations to bring uniformity and consistency in the payment of FHA insurance claims among FHA programs in the following sections: sections 203.400, 203.476, 203.478, 207.259, 220.751, 220.760, 220.822, 221.762, 232.885, 236.265, 241.261, 241.885, and 241.1205. As a result of these changes, section 220.760 was proposed to be removed because it was unnecessary. Please see the February 20, 2015, proposed rule for a more detailed description of the proposed changes.

II. This Final Rule

The public comment period for the proposed rule closed on April 21, 2015, and HUD did not receive any public comments. As a result, this final rule adopts the proposed rule without change.

III. Findings and Certifications

Regulatory Review--Executive Order 13563

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.

Consistent with Executive Order 13563, the purposes of the reform to FHA's regulations regarding Secretarial discretion of the type of FHA insurance claim payment are to eliminate unnecessary spending and to bring consistency regarding the payment of insurance claims across FHA programs. As discussed in the preamble, the interagency agreement with Treasury costs HUD over $206,000 per year, even though HUD currently does not have any debentures for payment of FHA insurance claims in circulation, and has not made a payment in debentures in approximately 5 years for these insurance claims. In addition, different FHA programs treat payment of FHA insurance claims differently, and this final rule simplifies the regulations so that the authority to determine the method of claim payment rests with the Secretary who can determine whether it is fiscally prudent to offer FHA insurance claim payments in debentures, cash, or both.

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 final rule only changes the party which has the authority to determine the method of payment of FHA single family, multifamily, and healthcare insurance claims. Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

Environmental Impact

This final rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate the following: real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction. Furthermore, the rule does not establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this final 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 (i) imposes substantial direct compliance costs on State and local governments and is not required by statute or (ii) 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.

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 final rule does not impose any Federal mandates on any State, local, or tribal governments or on the private sector, within the meaning of the UMRA.

Paperwork Reduction Act

This final rule reduces information collection requirements already 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.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance number for Mortgage Insurance-Homes is 14.117; Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities is 14.129; Mortgage Insurance-Rental Housing is 14.134; and Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects is 14.155.

List of Subjects

24 CFR Part 203

Hawaiian Natives

Home improvement

Indians--lands

Loan programs--housing and community development; Mortgage insurance; Reporting and recordkeeping requirements; Solar energy

24 CFR Part 207

Manufactured homes

Mortgage insurance

Reporting and recordkeeping requirements

Solar energy

24 CFR Part 220

Home improvement

Loan programs--housing and community development

Mortgage insurance

Reporting and recordkeeping requirements

Urban renewal

24 CFR Part 221

Low and moderate income housing

Mortgage insurance

Reporting and recordkeeping requirements

24 CFR Part 232

Fire prevention

Health facilities

Loan programs--health

Loan programs--housing and community development

Mortgage insurance

Nursing homes

Reporting and recordkeeping requirements

24 CFR Part 236

Grant programs--housing and community development

Low and moderate income housing

Mortgage insurance

Rent subsidies

Reporting and recordkeeping requirements

24 CFR Part 241

Home improvement

Loan programs--housing and community development

Mortgage insurance

Reporting and recordkeeping requirements

Solar energy

Dated: August 12, 2015.

Edward L. Golding,

Principal Deputy, Assistant Secretary for Housing.

Approved: August 12, 2015.

Nani A. Coloretti,

Deputy Secretary.

Footnotes

1. 12 U.S.C. 1735d.

Editor's Note: Regulatory text for this document has been omitted. If you are interested in this material, send an e-mail to [email protected].

Myron Struck, editor, Targeted News Service, Springfield, Va., 703/304-1897; [email protected]; http://www.targetednews.com

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