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Discontinuation of the Section 221(d)(2) Mortgage Insurance Program
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[Federal Register: January 19, 2001 (Volume 66, Number 13)]
[Rules and Regulations]
[Page 5911-5913]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ja01-20]
[[Page 5911]]
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Part III
Department of Housing and Urban Development
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24 CFR Part 221
Discontinuation of the Section 221(d)(2) Mortgage Insurance Program;
Final Rule
[[Page 5912]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 221
[Docket No. FR-4588-F-02]
RIN 2502-AH50
Discontinuation of the Section 221(d)(2) Mortgage Insurance
Program
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This final rule discontinues HUD's section 221(d)(2) mortgage
insurance program. The section 221(d)(2) program is rarely used by
homebuyers, primarily due to its low mortgage limits. Accordingly, HUD
will no longer enter into new contracts for mortgage insurance under
the program. The final rule removes those provisions of the section
221(d)(2) regulations concerning eligibility for participation in the
program, and replaces them with a savings clause. The rule, however,
retains those regulatory provisions regarding the contract rights and
servicing responsibilities for existing program participants. This
final rule follows publication of a September 28, 2000 proposed rule.
There were no public comments on the proposed rule, and HUD is adopting
the proposed regulatory amendments without change.
DATES: Effective Date: February 20, 2001.
FOR FURTHER INFORMATION CONTACT: Vance T. Morris, Director, Office of
Single Family Program Development, Office of Insured Single Family
Housing, Room 9266, U.S. 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). Hearing- or speech-impaired
individuals may access this number via TTY by calling the toll-free
Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 221(d)(2) of the National Housing Act (12 U.S.C.
1715l(d)(2)), authorizes HUD to insure private lenders against loss
from default on mortgage loans made to finance the purchase,
construction, or rehabilitation of low-cost, one- to four-family homes.
HUD's regulations implementing the section 221(d)(2) program are
located in 24 CFR part 221.
On September 28, 2000 (65 FR 58338), HUD published a proposed rule
to discontinue the section 221(d)(2) mortgage insurance program. The
program is rarely used by homebuyers, primarily due to its low mortgage
limits. Moreover, the section 221(d)(2) program provides few
homeownership opportunities not already made available by other HUD
mortgage insurance programs, primarily the single family home mortgage
insurance programs authorized by section 203 of the National Housing
Act (12 U.S.C. 1709) (implemented by HUD in 24 CFR part 203), and the
condominium mortgage insurance program authorized by section 234 of the
National Housing Act (12 U.S.C. 1715y) (implemented by HUD in 24 CFR
part 234). For these reasons, HUD has decided to discontinue the
section 221(d)(2) program.
II. This Final Rule
This final rule adopts the policies and procedures of the September
28, 2000 proposed rule. The public comment period for the proposed rule
closed on November 27, 2000. By close of business on that date, HUD had
not received any public comments on the proposed rule. Accordingly,
this final rule adopts the proposed regulatory amendments without
change.
The final rule removes HUD's regulations establishing the
eligibility requirements for section 221(d)(2) mortgage insurance in
subpart A of 24 CFR part 221. A savings clause is retained in subpart A
of the part 221 regulations, which provides that the authority to
insure section 221(d)(2) mortgages is terminated, except that HUD will
endorse for insurance validly processed mortgages under direct
endorsement where the credit worksheet was signed by the mortgagee's
underwriter before the effective date of the final rule. The savings
clause also provides that subpart A, as it existed immediately before
the termination date, will continue to govern the rights and
obligations of insured mortgage lenders, mortgagors, and HUD with
respect to section 221(d)(2) single family loans insured before the
effective date of the final rule, and to the aforementioned direct
endorsement loans.
III. Findings and Certifications
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. 4223). That finding remains
applicable to this final rule and is available for public inspection
between the hours of 7:30 a.m. and 5:30 p.m. weekdays in the Office of
the Rules Docket Clerk, Office of General Counsel, Room 10276,
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC.
Regulatory Flexibility Act
The Secretary has reviewed this final rule before publication, and
by approving it certifies, in accordance with the Regulatory
Flexibility Act (5 U.S.C. 605(b)), that this final rule will not have a
significant economic impact on a substantial number of small entities.
As noted above, the section 221(d)(2) program is rarely used by
homebuyers. Mortgage lenders eligible to participate in the section
221(d)(2) program are also generally eligible to participate in other,
alternative, FHA single family mortgage insurance programs that are
preferred by homebuyers (such as the section 203 and section 234(c)
programs). Accordingly, HUD's decision to discontinue the section
221(d)(2) program is not anticipated to have a significant economic
impact on a substantial number of mortgage lenders participating in
these FHA programs.
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 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) 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 would not
impose any Federal mandates on any State, local, or tribal governments,
or on the private sector, within the meaning of the Unfunded Mandates
Reform Act of 1995.
[[Page 5913]]
Catalog of Federal Domestic Assistance Number
The Catalog of Federal Domestic Assistance program number
applicable to 24 CFR part 221 is 14.120: Mortgage Insurance--Homes for
Low/Moderate Income Families.
List of Subjects in 24 CFR Part 221
Low and moderate income housing, Mortgage insurance, Reporting and
recordkeeping requirements.
Accordingly, for the reasons described in the preamble, HUD amends
24 CFR part 221 to read as follows:
PART 221--LOW COST AND MODERATE INCOME MORTGAGE INSURANCE
1. The authority citation for part 221 is revised to read as
follows:
Authority: 12 U.S.C. 1715b, 1715l; 42 U.S.C. 3535(d).
2. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements--Low Cost Homes--Savings Clause
Sec. 221.1 Savings clause.
(a) Effective February 20, 2001, the authority to insure mortgages
under section 221(d)(2) of the National Housing Act (12 U.S.C.
1715l(d)(2)) for low cost and moderate income mortgage insurance is
terminated, except that HUD will endorse for insurance validly
processed mortgages under direct endorsement where the credit worksheet
was signed by the mortgagee's underwriter before February 20, 2001.
(b) Subpart A of this part, as it existed immediately before
February 20, 2001, will continue to govern the rights and obligations
of insured mortgage lenders, mortgagors, and HUD with respect to
section 221(d)(2) single family loans insured before February 20, 2001,
or in accordance with paragraph (a) of this section, pursuant to the
applicable provisions of this subpart.
Dated: January 9, 2001.
William C. Apgar,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 01-1534 Filed 1-18-01; 8:45 am]
BILLING CODE 4210-27-P