Single Family Mortgage Insurance; Section 203(k) Consultant Placement and Removal Procedures

[Federal Register: October 24, 2001 (Volume 66, Number 206)]
[Proposed Rules]
[Page 53929-53934]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc01-29]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 200 and 203
[Docket No. FR-4592-P-01]
RIN 2502-AH51

Single Family Mortgage Insurance; Section 203(k) Consultant
Placement and Removal Procedures

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish placement and removal
procedures for HUD's list of qualified consultants under the Section
203(k) Rehabilitation Loan Insurance program. The 203(k) Program is the
Federal Housing Administration's (FHA's) primary program for the
rehabilitation and repair of single family properties. A 203(k) lender
may select a qualified independent consultant, who is an expert in the
field of home inspection, cost estimating, and construction, to perform
various tasks required for the rehabilitation of the property.
Presently, there are no regulatory procedures for placing a consultant
on, nor for removing a poorly performing consultant from, the list. HUD
believes that the establishment of these placement and removal
procedures will better protect 203(k) borrowers and lenders and
safeguard FHA insurance funds.

DATES: Comments Due Date: December 24, 2001.

ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC 20410-0500. Communications should
refer to the above docket number and title. Facsimile (FAX) comments
are not acceptable. A copy of each communication submitted will be
available for public inspection and copying between 7:30 a.m. and 5:30
p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Vance T. Morris, Director, Office of
Single Family Program Development, 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--The Section 203(k) Rehabilitation Loan Insurance
Program

Section 203(k) of the National Housing Act (12 U.S.C. 1709(k))
authorizes HUD to insure loans for the purchase and/or rehabilitation
and repair of residential properties. The 203(k) Program is HUD's
primary program for the rehabilitation and repair of single family
properties. Section 203(k) loan insurance enables homebuyers and
homeowners to finance both the purchase (or refinance) of a house and
the cost of its rehabilitation through a single mortgage. The
regulations implementing the 203(k) Program are located in 24 CFR
203.50 and 24 CFR 203.440 through 203.449. The program is administered
by HUD's Office of Single Family Housing-Federal Housing Administration
(FHA).
The 203(k) Program fills a unique and important role for
homebuyers. In the conventional loan market, a homebuyer who purchases
a home that is in need of repair or modernization usually has to follow
a complicated and costly process. The homebuyer must obtain financing
to purchase the dwelling, additional financing for the rehabilitation
work, and a permanent mortgage after rehabilitation is completed to pay
off the interim loans. The interim acquisition and improvement loans
often have relatively high interest rates and short repayment terms.
The 203(k) Program was designed to address this situation. Under this
program, a homebuyer may obtain a single loan, at a long-term fixed (or
variable) rate, to finance both the acquisition and rehabilitation of
the property.
The extent of the rehabilitation covered by 203(k) loan insurance
may range from relatively minor (though exceeding $5,000 in cost) to
virtual reconstruction. For example, a home that has been demolished,
or will be razed as part of rehabilitation, is eligible, provided that
some of the existing foundation system remains in place. Section 203(k)
loan insurance can also finance the rehabilitation of the residential
portion of a property that has non-residential uses. In addition to
typical home rehabilitation projects, the 203(k) Program can be used to
convert a property of any size to a one-to four-unit dwelling.
HUD requires that properties financed under this program meet
certain basic health, safety, energy efficiency and structural
standards. All improvements undertaken with loan insurance under the
203(k) Program must comply with the HUD minimum property standards and
all local codes and ordinances.

II. 203(k) Consultants

One of the most time consuming and difficult parts of the 203(k)
loan process is for the borrower to properly prepare the required cost
estimate, work write-up, and architectural exhibits. A borrower using
the 203(k) Program may choose to have a qualified independent
consultant, who is an expert in the field of home inspection, cost
estimating, and construction, perform these tasks. The use of a
consultant by the borrower is not required. However, many borrowers
elect to use consultants to expedite processing of their 203(k) loans.
Although the borrower determines whether to use a consultant, the
lender is solely responsible for selecting the 203(k) consultant and
for determining the scope of the work to be performed by the
consultant. The consultant must enter into a written agreement with the
lender that completely explains what services the consultant will
perform for the lender. Consultant fees are set in accordance with
HUD's established fee schedule. The lender may require that the
borrower enter into a written agreement obligating the borrower to pay
for any or all of the consultant fees, whether or not the property is
rehabilitated. The fee charged by the consultant may be included in the
mortgage as a part of the cost of rehabilitation.
In some cases, the lender may also request a consultant to conduct
a preliminary feasibility analysis. The purpose of this analysis is to
determine the extent of the rehabilitation work required, a rough cost
estimate of the work, and the expected market value of the property
after completion of the work. The analysis may be conducted before or
after submission of the sales contract to the seller.
The consultant may perform the required draw inspections for the
release of funds during the construction period. The lender may also
have the consultant conduct the plan review to ensure that the
architectural exhibits are acceptable and comply with all applicable
program requirements. HUD notes that the plan review is a mandatory
step in the processing of the 203(k) loan. There is no requirement that
the consultant conduct the plan review. However, if a consultant is not
used to perform this function, the borrower must hire an independent
plan reviewer.
HUD, through its four Homeownership Centers (HOCs), maintains lists
of qualified consultants

[[Page 53931]]

on the applicable HOC internet website.
Only those consultants included on a HOC's list of qualified
consultants may be employed by the lender as a consultant under the
203(k) Program. Currently, to apply for placement on the list of
qualified consultants, a consultant must submit his or her
qualifications to the appropriate HOC and demonstrate knowledge of
203(k) Program requirements.

III. This Proposed Rule--Placement and Removal of 203(k)
Consultants

A. Placement Procedures

This proposed rule would establish the placement and removal
procedures for 203(k) consultants in subpart F to part 200 of the FHA
regulations (entitled ``Placement and Removal Procedures for
Participation in FHA Programs''). Part 200 (entitled ``Introduction to
FHA Programs'') prescribes requirements that apply to several of the
FHA programs. The 203(k) consultant placement procedures would be
located in a new Sec. 200.191.
The proposed rule would provide that, to apply for placement on the
list, a consultant must submit an application (or materials) in a form
prescribed by HUD. To be eligible for placement on the list:
1. The consultant must demonstrate to HUD that it has a minimum of
three years' experience as a remodeling contractor, general contractor
or home inspector. A state license as a state certified engineer or
architect may be submitted in lieu of the documentation of the three
years' experience.
2. If located in a state that requires the licensing of home
inspectors, the consultant would be required to submit proof of such
licensing.
3. The consultant must submit a narrative description of the
consultant's ability to perform home inspections, prepare architectural
drawings, use proper methods of cost estimating and complete draw
inspections.
4. The consultant must certify that it has read and fully
understands the requirements of the HUD handbook on the 203(k) Program
(4240.4), and all Mortgagee Letters and other instructions issued by
HUD relating to the 203(k) Program. Copies of HUD Handbook 4240.4 and
the HUD Mortgagee Letters concerning the 203(k) Program may be obtained
by accessing the HUD internet Web site at http://www.hud.gov.
5. The consultant must not be listed on the General Service
Administration's Suspension and Debarment List, HUD's Limited Denial of
Participation List, or HUD's Credit Alert Interactive Voice Response
System.
HUD also intends to develop a formal comprehensive examination on
the 203(k) Program, which consultants would be required to pass before
placement on the list. Consultants included on the list on the date
this examination is enacted would have until 6 months following this
date to pass the comprehensive test. Failure of the 203(k) consultant
to pass the examination by the deadline date would constitute cause for
removal from the list.
The inclusion of a consultant on the list means only that the
consultant has met the qualifications and conditions prescribed by the
Secretary for placement on the list of consultants qualified for the
203(k) Program. The inclusion of a consultant on the list does not
create or imply a warranty or endorsement by HUD of the consultant, nor
does it represent a warranty of any work performed by the consultant.

B. Removal Procedures

This proposed rule would also establish regulatory standards for
the removal of a poorly performing consultant from the list. HUD has
determined that regulatory removal procedures are necessary to better
protect 203(k) lenders and safeguard FHA insurance funds. The proposed
removal procedures are largely modeled on the existing and successful
procedures for the removal of appraisers from the FHA Appraiser Roster
(see the final rule published on April 3, 2000 (66 FR 17974)).
These procedures would supplement HUD's existing debarment,
suspension and limited denial of participation remedies. The proposed
removal procedure would provide a less lengthy process, and would fully
protect the due process rights of consultants. The removal procedures
would be located in new Sec. 200.192 of subpart F.
The proposed rule provides that HUD may remove a consultant for any
cause that HUD determines to be detrimental to HUD or its programs.
Cause for removal includes, but is not limited to:
1. Poor performance on a HUD quality control field review;
2. Failure to comply with applicable regulations or other written
instructions or standards issued by HUD;
3. Failure to comply with applicable Civil Rights requirements;
4. Being debarred or suspended, or subject to a limited denial of
participation;
5. Misrepresentation or fraudulent statements;
6. Failure to retain standing as a state licensed architect or
state-licensed engineer (unless the consultant can demonstrate the
required three years' experience as a home inspector or remodeling
contractor); or
7. Serving, or having served, as the rehabilitation consultant for
properties securing 203(k) mortgages of which a significant percentage
are in foreclosure, default or claim status.
8. Failure to respond within a reasonable time to HUD inquiries or
requests for documentation.
The removal procedure proposed by this rule would require HUD to
give a consultant written notice of a proposed decision to remove the
consultant from the list. This notice would state the reasons for, and
the duration of, the proposed removal. The consultant would be given
not less than 20 days from the date of the removal notice to submit a
written response appealing the proposed removal. The consultant would
also have the right to submit a written request for a conference along
with the written response. This procedure would not be applicable,
however, if the consultant has been debarred or suspended or subject to
a limited denial of participation.
A HUD official, designated by the Secretary, would review the
consultant's appeal and send the consultant a final decision either
affirming, modifying, or cancelling the removal from the list. The HUD
official designated by the Secretary to review the consultant's appeal
would not be someone involved in HUD's initial removal decision. HUD
would respond with a decision within 30 days of receiving the appeal
or, if the consultant has requested a conference, within 30 days after
the completion of the conference. HUD may extend the 30-day period by
providing written notice to the consultant.
If the consultant does not submit a timely written response, the
removal would become effective 20 days after the date of HUD's initial
removal notice (or after a longer period provided in the notice). If
the consultant submits a written response, and the removal decision is
affirmed or modified, the removal would become effective on the date of
HUD's notice affirming or modifying its initial removal decision.
The proposed addition of Sec. 200.192 would not prohibit HUD from
debarring, suspending, issuing a limited denial of participation,
seeking a false claims action, or taking such other action against a
consultant as provided for in 24 CFR part 24 (entitled ``Government
Debarment and Suspension and Governmentwide Requirements for Drug-Free
Workplace (Grants)''), or from seeking any other remedy against a

[[Page 53932]]

consultant available to HUD by statute or otherwise.
A consultant who has been removed from the list may apply for
placement on the list after the period for the consultant's removal
from the list has expired.

C. Small Business Concerns Related to the Removal of Consultants

With respect to removing a consultant from the list, or taking
other appropriate enforcement action against a consultant, HUD is
cognizant that section 222 of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Public Law 104-121) (referred to as ``SBREFA'')
requires the Small Business and Agriculture Regulatory Enforcement
Ombudsman to ``work with each agency with regulatory authority over
small businesses to ensure that small business concerns that receive or
are subject to an audit, on-site inspection, compliance assistance
effort or other enforcement related communication or contact by agency
personnel are provided with a means to comment on the enforcement
activity conducted by this personnel.'' To implement this statutory
provision, the Small Business Administration has requested that
agencies include the following language on agency publications and
notices that are provided to small businesses concerns at the time the
enforcement action is undertaken. The language is as follows:

Your Comments Are Important

The Small Business and Agriculture Regulatory Enforcement
Ombudsman and 10 Regional Fairness Boards were established to
receive comments from small businesses about federal agency
enforcement actions. The Ombudsman will annually evaluate the
enforcement activities and rate each agency's responsiveness to
small business. If you wish to comment on the enforcement actions of
[insert agency name], call 1-888-REG-FAIR (1-888-734-3247).

As HUD stated in its notice describing HUD's actions on the
implementation of SBREFA, which was published on May 21, 1998 (63 FR
28214), HUD intends to work with the Small Business Administration to
provide small entities with information on the Fairness Boards and
National Ombudsman program, at the time enforcement actions are taken,
to ensure that small entities have the full means to comment on the
enforcement activity conducted by HUD.

IV. Findings and Certifications

Public Reporting Burden

The information collection requirements contained in 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) and are
pending OMB approval. In accordance with the Paperwork Reduction Act,
HUD 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 proposed rule is
estimated as follows:

Reporting and Recordkeeping Burden
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Estimated
Number of average time Estimated
Section reference Number of responses per for annual burden
parties respondent requirement (in hours)
(in hours)
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200.191 (Consultant Application Package)........ 2,500 1 4 10,000
200.191(b)(6) (Consultant Proficiency Exam)..... 2,500 1 36 90,000
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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 proposal. Under the
provisions of 5 CFR part 1320, OMB is required to make a decision
concerning this collection of information between 30 and 60 days after
today's publication date. Therefore, a comment on the information
collection requirements is best assured of having its full effect if
OMB receives the comment within 30 days of today's publication. This
time frame does not affect the deadline for comments to the agency on
the proposed rule, however. Comments must refer to the proposal by name
and docket number (FR-4592) and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and
Budget, New Executive Office Building, Washington, DC 20503;
and
Ethelene Washington, Reports Liaison Officer, Office of the Assistant
Secretary for Housing-Federal Housing Commissioner, Department of
Housing and Urban Development, 451--7th Street, SW., Room 9114,
Washington, DC 20410.

Regulatory Planning and Review

The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866, 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 an economically significant
regulatory action under the Order). Any changes made to this rule as a
result of that review are identified in the docket file, which is
available for public inspection in the office of the Department's Rules
Docket Clerk, Room 10276, 451 Seventh Street, SW., Washington, DC
20410-0500.

Environmental Impact

This proposed rule would establish placement and removal procedures
for HUD's list of qualified 203(k) rehabilitation loan consultants. The
proposed rule would 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, or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Therefore, in

[[Page 53933]]

accordance with 24 CFR 50.19(c)(1), this proposed rule is categorically
excluded from the requirements of the National Environmental Policy Act
(42 U.S.C. 4321 et seq.).

Regulatory Flexibility Act

The Secretary has reviewed this proposed rule before publication,
and by approving it certifies, in accordance with the Regulatory
Flexibility Act (5 U.S.C. 605(b)), that this proposed rule would not
have a significant economic impact on a substantial number of small
entities. The reasons for HUD's determination are as follows.
The proposed rule would establish the procedure by which a
consultant, who has violated FHA single family mortgage insurance
program requirements, may be removed from HUD's list of qualified
203(k) consultants. Accordingly, to the extent that this proposed rule
would impact small entities it will be as a result of actions taken by
small entities themselves--that is, violation of single family program
regulations and requirements.
Further, the proposed rule would provide several procedural
safeguards designed to minimize any potential impact on small entities.
For example, the rule grants consultants, selected for removal from the
list, the opportunity to provide a written response and to request a
conference regarding a proposed removal. The rule also specifies that
the official designated by HUD to review an appeal may not be the same
HUD official involved in the initial removal decision. In addition, the
proposed examination requirements would be ``phased-in'' for
consultants on the list, and not take effect until six months after the
effective date of promulgation. This delayed effective date will
provide consultants on the list with additional time to meet the new
requirements.
Notwithstanding HUD's determination that this rule will not have a
significant economic effect on a substantial number of small entities,
HUD specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.

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 proposed 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 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 Unfunded Mandates
Reform Act of 1995.

Catalog of Federal Domestic Assistance Numbers

The Catalog of Federal Domestic Assistance Number for the Section
203(k) Rehabilitation Loan Insurance program is 14.108.

List of Subjects

24 CFR Part 200

Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Home improvement, Housing standards, Lead
poisoning, Loan programs--housing and community development, Minimum
property standards, Mortgage insurance, Organization and functions
(Government agencies), Penalties, Reporting and recordkeeping
requirements, Social security, Unemployment compensation, Wages.

24 CFR Part 203

Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and
recordkeeping requirements, Solar energy.

Accordingly, for the reasons described in the preamble, HUD
proposes to amend 24 CFR parts 200 and 203 as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

1. The authority citation for 24 CFR part 200 is revised to read as
follows:

Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).

2. In subpart F as proposed to be added at 66 FR 48082, add a new
undesignated centerheading and Secs. 200.190 through 200.193 to read as
follows:

Subpart F--Placement and Removal Procedures for Participation in
FHA Programs

Sec.

Section 203(k) Rehabilitation Loan Consultants

200.190 HUD list of qualified 203(k) consultants.
200.191 Placement of 203(k) consultant.
200.192 Removal of 203(k) consultant.
200.193 Responsibilities of 203(k) consultants on the list.

Section 203(k) Rehabilitation Loan Consultants

Sec. 200.190 HUD list of qualified 203(k) consultants.

(a) Qualified consultant list. HUD maintains a list of qualified
consultants for use in the rehabilitation loan insurance program
authorized by section 203(k) of the National Housing Act (12 U.S.C.
1709(k)) (referred to as the ``203(k) Program'').
(b) Consultant functions. Only a consultant included on the list
may be selected by the lender to conduct any consultant function under
the 203(k) Program (see Sec. 203.50(l) of this chapter).
(c) Disclaimer. The inclusion of a consultant on the list means
only that the consultant has met the qualifications and conditions
prescribed by the Secretary for placement on the list of consultants
qualified for the 203(k) Program. The inclusion of a consultant on the
list does not create or imply a warranty or endorsement by HUD of the
consultant, nor does it represent a warranty of any work performed by
the consultant.

Sec. 200.191 Placement of 203(k) consultant.

(a) Application. To be considered for placement on the list, a
consultant must apply to HUD using an application (or materials) in a
form prescribed by HUD.
(b) Eligibility. To be eligible for placement on the list:
(1) The consultant must demonstrate to HUD that it either:
(i) Has at least three years' experience as a remodeling
contractor, general contractor or home inspector; or
(ii) Is a state-licensed architect or state-licensed engineer;
(2) If located in a state that requires the licensing of home
inspectors, the consultant must submit proof of such licensing;
(3) The consultant must submit a narrative description of the
consultant's ability to perform home inspections, prepare architectural
drawings, use proper methods of cost estimating and complete draw
inspections;
(4) The consultant must certify that it has read and fully
understands the

[[Page 53934]]

requirements of the HUD handbook on the 203(k) Program (4240.4) and all
HUD Mortgagee Letters (see http://www.hudclips.org) and other
instructions relating to the 203(k) Program;
(5) The consultant must not be listed on:
(i) The General Service Administration's Suspension and Debarment
List;
(ii) HUD's Limited Denial of Participation List; or
(iii) HUD's Credit Alert Interactive Voice Response System;
(6) The consultant must have passed a comprehensive examination on
the 203(k) Program, if HUD has developed such an exam.
(c) Delayed effective date of examination requirement for
consultants currently on the list. Consultants who are included on the
list on the date when the requirement for the examination described in
paragraph (b)(6) of this section becomes effective have until 6 months
following this date to pass the comprehensive exam. Failure to pass the
examination by the deadline date constitutes cause for removal under
Sec. 200.192.

Sec. 200.192 Removal of 203(k) consultant.

(a) Cause for removal. HUD may remove a consultant from the list
for any cause that HUD determines to be detrimental to HUD or its
programs. Cause for removal includes, but is not limited to:
(1) Poor performance on a HUD quality control field review;
(2) Failure to comply with applicable regulations or other written
instructions or standards issued by HUD;
(3) Failure to comply with applicable Civil Rights requirements;
(4) Being debarred or suspended, or subject to a limited denial of
participation;
(5) Misrepresentation or fraudulent statements;
(6) Failure to retain standing as a state licensed architect or
state-licensed engineer (unless the consultant can demonstrate the
required three years experience as a home inspector or remodeling
contractor);
(7) Serving, or having served, as the rehabilitation consultant for
properties securing 203(k) mortgages of which a significant percentage
are in foreclosure, default or claim status; or
(8) Failure to respond within a reasonable time to HUD inquiries or
requests for documentation.
(b) Procedure for removal. A consultant that is debarred or
suspended, or subject to a limited denial of participation will be
automatically removed from the list. In all other cases, the following
procedure for removal will be followed:
(1) HUD will give the consultant written notice of the proposed
removal. The notice will state the reasons for, and the duration of,
the proposed removal.
(2) The consultant will have 20 days from the date of the notice
(or longer, if provided in the notice) to submit a written response
appealing the proposed removal and to request a conference. A request
for a conference must be in writing and must be submitted along with
the written response.
(3) A HUD official will review the appeal and send a response
either affirming, modifying, or cancelling the removal. The HUD
official will not be someone who was involved in HUD's initial removal
decision. HUD will respond with a decision within 30 days of receiving
the appeal or, if the consultant has requested a conference, within 30
days after the completion of the conference. HUD may extend the 30-day
period by providing written notice to the consultant.
(4) If the consultant does not submit a timely written response,
the removal will be effective 20 days after the date of HUD's initial
removal notice (or after a longer period provided in the notice). If a
written response is submitted, and the removal decision is affirmed or
modified, the removal will be effective on the date of HUD's notice
affirming or modifying the initial removal decision.
(c) Placement on the list after removal. A consultant that has been
removed from the list may apply for placement on the list (in
accordance with Sec. 200.191) after the period of the consultant's
removal from the list has expired. An application will be rejected if
the period for the consultant's removal from the list has not expired.
(d) Other action. Nothing in this section prohibits HUD from taking
such other action against a consultant, as provided in 24 CFR part 24,
or from seeking any other remedy against a consultant available to HUD
by statute or otherwise.

Sec. 200.193 Responsibilities of 203(k) consultants on the list.

All consultants included on the list are responsible for:
(a) Obtaining and reading the HUD handbook on the 203(k) Program
(4240.4) and any updates to the handbook.
(b) Complying with the HUD handbook on the 203(k) Program (4240.4),
and any updates to the handbook, when performing any consultant
function under the 203(k) Program.
(c) Obtaining and reading all Mortgagee Letters and other
instructions issued by HUD relating to the 203(k) Program.
(d) Complying with all Mortgagee Letters and other instructions
issued by HUD relating to the 203(k) Program, when undertaking any
consultant function under the 203(k) Program.
(e) Complying with HUD's request for documentation relating to any
203(k) project on which the consultant has worked.
(f) Complying with HUD's monitoring requirements relating to the
203(k) Program.

PART 203--SINGLE FAMILY MORTGAGE INSURANCE

3. The authority citation for 24 CFR part 203 continues to read as
follows:

Authority: 12 U.S.C. 1709, 1710, 1715b, and 1715u; 42 U.S.C.
3535(d).

4. Add Sec. 203.50(l) to read as follows:

Sec. 203.50 Eligibility of rehabilitation loans.

* * * * *
(l) Rehabilitation loan consultants. HUD maintains a list of
qualified consultants, in accordance with Secs. 200.190-200.193 of this
chapter. The lender may select a consultant on the list to perform one
or more of the following tasks:
(1) Conduct a preliminary feasibility analysis before or after the
submission of a sales contract;
(2) Prepare the cost estimate, work write-up, and architectural
exhibits required for the rehabilitation of the property;
(3) Conduct a plan review; and
(4) Conduct the draw inspections for the release of funds during
the construction phase of the project.

Dated: July 12, 2001.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 01-26709 Filed 10-23-01; 8:45 am]
BILLING CODE 4210-27-P

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Single Family Mortgage Insurance; Section 203(k) Consultant Placement and Removal Procedures

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