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Mortgagee Time Limits for Supplemental Claims for Additional Insurance Benefits

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 [Federal Register: April 10, 2006 (Volume 71, Number 68)]
[Rules and Regulations]
[Page 18151-18153]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap06-13]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 207
[Docket No. FR-4957-F-02]
RIN 2502-AI31

Mortgagee Time Limits for Supplemental Claims for Additional 
Insurance Benefits

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

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SUMMARY: This final rule amends HUD's regulations to establish a time 
limit for filing supplemental multifamily mortgage insurance claims. 
The time limit established will provide an incentive for mortgagees to 
complete all mortgage insurance claims in a timely manner. This final 
rule revises and further defines the term ``final payment.'' This final 
rule follows publication of a May 6, 2005, proposed rule, and takes 
into consideration the public comments received on the proposed rule.

DATES: Effective Date: May 10, 2006.

FOR FURTHER INFORMATION CONTACT: Kimberly R. Munson, Housing Project 
Manager, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 6180, Washington, DC 20410-8000; telephone (202) 708-
1320 (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 Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 207 of the National Housing Act (12 U.S.C. 1713) (NHA) 
authorizes the Secretary to insure certain eligible multifamily 
mortgages and to pay insurance benefits to the mortgagee. HUD's 
regulations implementing multifamily mortgage insurance eligibility 
requirements and contract rights and obligations regarding insurance 
benefits can be found at 24 CFR part 207. Under part 207, upon an 
assignment of the mortgage or a conveyance of the property to the 
Federal Housing Commissioner (Commissioner), and delivery by the 
mortgagee of items required pursuant to part 207, the Commissioner will 
pay insurance benefits to the mortgagee. After the initial insurance 
claim is paid to the mortgagee at final settlement, the Commissioner 
may also pay additional benefits due to adjustments or corrections of 
the claim amount paid at final settlement. These additional claims are 
often known as supplemental insurance claims.
    For several years, a considerable number of mortgagees have filed 
supplemental insurance claims for additional insurance benefits more 
than a year after the Commissioner paid a final settlement on the 
mortgagee's initial insurance claim. These supplemental insurance 
claims are often belatedly filed in part due to insufficient 
preparation when filing the initial insurance claim. The large and 
complex nature of supplemental insurance claims, and the time spent 
reviewing and processing these claims, delays processing and payment of 
all initial and supplemental insurance claims.
    On May 6, 2005, HUD published a proposed rule (70 FR 24272) that 
amended HUD's multifamily mortgage insurance regulations at 24 CFR part 
207 to require mortgagees to file all supplemental insurance claims 
with HUD within 6 months after the date of final payment of the initial 
insurance claim. Requiring that mortgagees file supplemental insurance 
claims within this time period creates an incentive for mortgagees to 
complete all final settlements promptly and will allow HUD to decrease 
some of its reviewing and processing costs. For the purposes of the 
proposed rule, the term ``final payment'' was defined to mean the 
payment of the initial claim that is made at final settlement by the 
Commissioner based upon the submission by the mortgagee of all required 
documents and information.

II. This Final Rule

    This final rule follows publication of the May 6, 2005, proposed 
rule. The public comment period for the proposed rule closed on July 5, 
2005, and HUD received one public comment. After careful consideration 
of the comment, HUD has decided to revise the definition of ``final 
payment.''
    The commenter, an attorney, wrote first that the 6-month time limit 
should begin not from the date of final payment, but, rather, from the 
date the mortgagee receives the HUD mortgage insurance claim settlement 
statement. The commenter also wrote that the proposed regulation should 
indicate that HUD is bound by its original claim computation based on 
information HUD receives from the mortgagee. The commenter explained 
that this indication is necessary because a supplemental insurance 
claim time limit may be affected by HUD's reexamination of the original 
claim computation.
    HUD understands the commenter's first point and has revised the 
language to more accurately reflect settlement by defining the time 
limit for filing as 6 months from the date of ``final settlement'' 
rather than ``final payment'' of the insurance claim. The term ``final 
settlement'' shall mean the payment of the insurance claim in either 
cash or debentures, as appropriate, or the billing for an overpayment 
of a partial claim. HUD, however, is not adopting the commenter's 
second suggestion. HUD must make claim adjustments for various reasons 
and cannot restrict its authority to reopen a claim, which may occur 
sometimes years after the final settlement. For example, when a 
mortgagee submits a claim with unreported mortgage payments received 
from a project owner, HUD must at that time reexamine an original claim 
computation, regardless of when the original claim was filed.

III. Findings and Certifications

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 rule imposes no additional economic or other burdens on mortgagees 
participating in HUD's multifamily mortgage insurance programs. All 
such mortgagees, regardless of size, are subject to the new 
requirements proposed by the rule. The rule establishes a 6-month time 
limitation for all mortgagees to file supplemental multifamily housing 
mortgage insurance claims. Small mortgagees will have no more 
additional compliance costs than other mortgagees within this 6-month 
time limit as a result of this rule. Therefore, the undersigned 
certifies that this final rule will not have a significant economic 
impact on a substantial number of small entities.

Environmental Impact

    In accordance with 24 CFR 50.19(c)(1) of the Department's 
regulations, this final 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, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Therefore, this

[[Page 18153]]

final rule is categorically excluded from the requirements of the 
National Environmental Policy Act (42 U.S.C. 4321 et seq.).

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (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 the private sector. This final rule does not 
impose any federal mandates on any state, local, or tribal government 
or the private sector within the meaning of UMRA.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from publishing any 
rule that has federalism implications and 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 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.

List of Subjects in 24 CFR Part 207

    Manufactured homes; Mortgage insurance; Reporting and recordkeeping 
requirements; Solar energy.

? Accordingly, for the reasons described in the preamble, HUD amends 24 
CFR part 207 as follows:

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

? 1. The authority citation for 24 CFR part 207 continues to read as 
follows:

    Authority: 12 U.S.C. 1701z-11(e), 1709(c)(1), 1713, and 1715b; 
42 U.S.C. 3535d.

? 2. Section 207.259(f) is added to read as follows:

Sec.  207.259  Insurance benefits.

* * * * *
    (f) Mortgagee Time Limits for Supplemental Claims for Additional 
Insurance Benefits. A mortgagee may not file for any additional 
payments of its mortgage insurance claim more than six months after the 
date of final settlement of the insurance claim by the Commissioner. 
For the purpose of this section, the term final settlement shall mean 
the payment of the insurance claim (in cash or debentures) or billing 
for any overpayment of a partial claim that is made by the 
Commissioner. Final settlement is based upon the submission by the 
mortgagee of all required documents and information pursuant to part 
207 of this chapter.

    Dated: April 3, 2006.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 06-3410 Filed 4-7-06; 8:45 am]
BILLING CODE 4210-67-P

 
 

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