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Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs; Additional Exceptions to Time Restriction on Sales
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[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Rules and Regulations]
[Page 33138-33143]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-27]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 203
[Docket No. FR-4911-F-02]
RIN 2502-AI18
Prohibition of Property Flipping in HUD's Single Family Mortgage
Insurance Programs; Additional Exceptions to Time Restriction on Sales
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This final rule amends HUD's regulations that address the
predatory practice of property ``flipping'' and establishes certain
time restrictions regarding the sale of properties whose purchase is
being financed with Federal Housing Administration (FHA) mortgage
insurance. The final rule broadens the exceptions to the time
restrictions on sales to include government-sponsored enterprises
(GSEs), state- and federally chartered financial institutions,
nonprofits organizations approved to purchase HUD Real Estate-Owned
(REO) single-family properties at a discount with resale restrictions,
local and state governments and their instrumentalities, and, upon
announcement by HUD through issuance of a notice, sales of properties
in areas designated by the President as Federal disaster areas. This
final rule follows publication of a December 23, 2004, interim rule,
and takes into consideration the public comments received on the
interim rule.
DATES: Effective Date: July 7, 2006.
FOR FURTHER INFORMATION CONTACT: Margaret Burns, 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). Hearing- or speech-impaired
individuals may access this number through TTY by calling the toll-free
Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On December 23, 2004 (69 FR 77114), HUD published an interim rule
revising its regulations addressing property ``flipping'' in the
Federal Housing Administration (FHA) single-family mortgage insurance
programs at 24 CFR 203.37a. Property ``flipping'' is a predatory
lending practice whereby a property that was acquired is quickly resold
for a considerable profit with an artificially inflated value, often
assisted by a mortgagee's collusion with the property appraiser and
with others involved in the mortgage loan transaction. Most property
flipping occurs within a matter of days after the initial property
acquisition. Minor cosmetic improvements, if any, may be made to the
property to make it appeal to an unwary homeowner.
Among other requirements, Sec. 203.37a sets forth time
restrictions that make properties that have recently been resold
ineligible as security for FHA-insured mortgage financing.
Specifically, Sec. 203.37a prohibits FHA-insured mortgage financing
for any property being sold in 90 days or less after acquisition by the
seller. Properties that are sold between 91 and 180 days after
acquisition by the sellers to homebuyers seeking FHA-insured
[[Page 33139]]
financing are generally eligible for an FHA-insured mortgage, but are
subject to additional documentation requirements to ensure that any
increases in the values of the properties are supportable.
HUD's regulation at Sec. 203.37a also provides that the time
restrictions on resales do not apply to sales by HUD of its Real
Estate-Owned (REO) properties pursuant to 24 CFR part 291, as well as
single-family assets in revitalization zones that HUD acquires and
sells under the provisions of section 204 of the National Housing Act
(12 U.S.C. 1710). Those time restrictions are also inapplicable to the
sale of properties acquired by an employer or relocation agency in
connection with the relocation of an employee who needs to sell his/her
home in order to relocate.
The December 23, 2004, interim rule broadened the exceptions to the
time restrictions to include all federal agencies that acquire
properties as a result of a function of their programs and quickly
market and sell these acquired properties. The interim rule also
clarified that the time restrictions on sales do not apply to
properties that have been acquired by inheritance.
Although the scope of the December 23, 2004, interim rule was
limited to the two additional exceptions described above (for federal
agencies and inherited properties), HUD recognized that there may be
other circumstances or categories of sales where an exception to the
time restrictions may be appropriate and consistent with the goals of
the property flipping restrictions. Accordingly, HUD issued the
regulatory amendments on an interim basis and provided the public with
a 60-day comment period.
II. This Final Rule: Differences Between the December 23, 2004, Interim
Rule and This Final Rule
This final rule follows publication of the December 23, 2004,
interim rule and takes into consideration the public comments received
on the interim rule. After careful consideration of the public
comments, HUD has decided to include additional exemptions to the time
restrictions on resales. Specifically, additional exceptions to the
time restrictions on property resales will now include: (1) The
government-sponsored enterprises (GSEs); (2) state- and federally
chartered financial institutions; (3) nonprofit organizations approved
to purchase HUD Real Estate-Owned (REO) single-family properties at a
discount with resale restrictions; and (4) local and state governments
and their instrumentalities.
In addition, as a result of HUD's experience with recovery efforts
following Hurricane Katrina, the Department believes that an additional
exemption to the time restriction is justified for presidentially
declared disaster areas. When the President declares an area a federal
disaster area, and housing options may be immediately limited, it is
important that homeownership opportunities be made available in the
affected areas as soon as possible. The additional exemption will
increase homeownership opportunities and bring these properties into
the marketplace quickly to assist displaced individuals and families,
when the president declares a county, parish, state, or city as a
disaster area. The final rule provides that, only upon announcement by
HUD through issuance of a notice, sales of properties located in areas
designated by the President as federal disaster areas will be exempt
from the time restriction on resales. This particular property flipping
exemption will become effective only when the notice is actually
issued. The notice will specify the duration for which the exemption
will be in effect.
III. Discussion of Public Comments
The public comment period on the December 23, 2004, interim rule
closed on February 22, 2005. HUD received 69 public comments on the
interim rule. Comments were received from nonprofit community
development organizations; trade organizations representing the real
estate, mortgage banking, and homebuilder industries; mortgage loan
originators; and private citizens. This section of the preamble
presents a summary of the significant issues raised by the public
commenters and HUD's responses to these issues, the vast majority of
which were requests that specific types of transactions be exempt from
the time sale restrictions.
Comment: Nonprofit community housing development organizations
(CHDOs) should be exempted from the time restrictions on resales.
Several commenters explained that one particular nonprofit community
development corporation, with whom the commenters are affiliated,
operates a purchase, rehabilitation, and resale program for
homeownership. Under that program, a homebuyer is pre-approved by a
lender, the CHDO purchases and rehabilitates a home within 30 to 45
days, and the CHDO then transfers ownership to the homebuyer. The
commenters wrote that the restrictions of the 90-day prohibition would
cause hardships for homebuyers in that the homebuyer must continue to
pay rent or stay in substandard housing; the lender must renew the loan
approval documents, adding expense for the homebuyer; the appraiser
must recertify the home's value, adding expense for the homebuyer; and
the interest rate lock-ins are not always available for this length of
time, adding expense to the homebuyer. Another commenter wrote that
CHDOs should be exempted from the time restrictions on resales due to
the monitoring of CHDO activities by federal and state programs. The
commenter, writing on behalf of an association of nonprofit developers,
wrote that HUD's HOME program has designated CHDOs as Participating
Jurisdictions to act on behalf of HUD. The commenter also wrote that
flipping restrictions have adversely affected programs designed to
serve people at limited income levels, and that because organization
and development activities performed by CHDOs are funded and monitored
by federal and state government agencies, CHDOs using state and federal
programs do not engage in predatory lending practices.
HUD Response. HUD recognizes the potential hardship the 90-day
holding period may impose on legitimate transactions; however, HUD does
not agree that CHDOs should be exempt from the 90-day prohibition on
property flipping without meeting additional criteria. While HUD
recognizes the valuable contribution that many CHDOs have made in
furthering homeownership opportunities, CHDOs are private, nonprofit
enterprises that do not necessarily receive the level of oversight HUD
believes is necessary to exempt this category of housing provider.
CHDOs may or may not receive federal funding, and the level of
supervision or monitoring may not be sufficient for HUD to exempt CHDOs
across the board.
In this final rule, however, HUD is exempting nonprofit
organizations approved to purchase HUD homes, and these nonprofit
organizations may also be CHDOs. This exemption will also apply to
instrumentalities of government acceptable to HUD that provide
secondary financing for the borrower's down payment or closing costs as
per section 528 of the National Housing Act (12 U.S.C. 1735f-6), and
those HUD-approved nonprofit groups permitted to purchase HUD REO
properties at a discount with resale restrictions. CHDOs that have met
either of these thresholds are exempt from the time resale restrictions.
Comment: Nonprofit entities should be excluded from the time resale
restrictions. Two commenters wrote that nonprofit organizations whose
business
[[Page 33140]]
is the furtherance of affordable housing should be exempted.
HUD Response. HUD has not revised the rule in response to these
comments. While HUD recognizes that the majority of nonprofit
organizations operate their affordable housing programs in a
responsible manner, the obtaining of Internal Revenue Service nonprofit
status does not alone guarantee responsible leadership or operational
integrity. HUD has, in some areas, suffered considerable losses to its
insurance funds by the actions of nonprofit organizations that
victimized homebuyers as well. Therefore, this final rule continues to
provide that status as a nonprofit alone will not exempt that entity
from the time restriction on resales. However, HUD recognizes the
valuable contribution nonprofit organizations make in the expansion of
affordable housing opportunities. Accordingly, as described elsewhere
in this preamble, the final rule exempts nonprofit organizations
approved to purchase HUD REO properties.
Comment: Nonprofit organizations that participate as a buyer and
reseller of HUD homes in HUD's Single Family Property Disposition
(SFPD) Program and nonprofit entities approved to utilize the HUD
Discount Program to provide affordable housing to low-income families
should be exempt from the time restrictions on resales. One commenter
wrote that the SFPD Program holds the resale price at no more than 10
percent margin over net development cost, and that the current rule
forced the commenter to offer a low-income buyer significantly worse
terms than under the previous FHA loan commitment. Another commenter
wrote that nonprofit organizations participating in the REO Program can
hold only so many properties at one time, thus creating a financial
burden for the nonprofit organization, and that it is impossible for a
nonprofit organization to inflate the sales price when it is regulated
by the so-called 110 percent rule. The commenter wrote that a homebuyer
often must move on to another house or switch to conventional
financing. Another commenter wrote that abuse of the HUD Discount
Program would be impossible with the current checks and balances in
place, and that time resale restrictions hinder nonprofits from what
they are supposed to do; therefore ``the losers * * * are the low
income families.''
HUD Response. HUD agrees with the commenters that nonprofit
organizations that have been approved to purchase HUD REO properties
should not be subject to the time restrictions on resales when those
nonprofits are reselling a property it bought from HUD's inventory. The
limits imposed on the resale price preclude the egregious sceneries of
artificially inflated values that were the basis of the original
property-flipping rule. Also, as stated above, those nonprofit
organizations that have received HUD approval to participate in the HUD
Discount Program will be exempt from the time restrictions on resales.
Comment: State-licensed, federally-chartered lenders, or FHA-
approved lenders, including Fannie Mae and Freddie Mac, should be
exempt from the time restrictions on resales. One commenter stated that
the intent of the 90-day rule is to prohibit property flipping, but
that lending institutions do not engage in such an activity. Allowing
state-licensed, federally chartered FHA-approved lenders to be exempt
would increase lending opportunities in low- to moderate-income
communities and expand homeownership in them. The commenter explained
that because many borrowers cannot proceed with FHA's 203(k) loans
under the 90-day rule, the effect of the 90-day rule is to promote
investor purchases rather than owner occupancy. Another commenter wrote
that regulated lenders are consistently reviewed and would have much to
lose if they flipped property. The commenter explained that the
majority of flipping cases have involved mostly appraisers, real estate
brokers, and sellers--not lenders. Lenders have an incentive to sell
foreclosed property quickly, and everyone wins--the lender, the new
homeowner, and the neighborhood; and allowing exceptions for the REO
properties of regulated lenders would expand the availability of FHA's
203(k) program. Another commenter wrote that Fannie Mae, Freddie Mac,
or bank-owned institutional lenders are simply left with inventory and
are trying to sell the inventory as quickly as possible, and, most of
the time, at a very under-inflated price. The commenter wrote that
Fannie Mae ``appears to be changing their guidelines in an attempt to
monitor and control property flipping.''
HUD Response. HUD agrees and recognizes that state- and federally
chartered financial institutions, and the GSEs, are highly regulated or
supervised by state and federal agencies and do not engage in predatory
practices. HUD believes that because these entities are so closely
monitored, restricting these institutions from resales would ultimately
hurt prospective FHA borrowers. Therefore, this final rule exempts
these enterprises from the time restrictions on resales.
Comment: Homebuilders' trade-in transactions should be exempt from
time restrictions on resales. One commenter wrote that when a
homebuilder accepts a homebuyer's existing home as a trade-in, the
homebuilder makes the necessary repairs, and then the homebuyer sells
the home quickly. The commenter wrote that builders assume risks in
these transactions. The commenter explained that the 90-day resale
prohibition blocks legitimate transactions and creates unnecessary
hardships for builders and customers by preventing potential buyers
from using FHA's mortgage insurance programs. The commenter wrote that
HUD should repeal Sec. 203.37a(b)(2) and amend CFR 203.37a(b)(3) to
apply to ``Resales occurring up to 180 days following acquisition.''
The commenter wrote that trade-in practices of builders do not fit
HUD's description of property flipping as described in the interim rule
and that HUD has provided no proof that extending the exceptions to
cover builders' trade-in transactions would ``substantially weaken the
regulatory safeguards against property flipping.''
HUD Response. HUD has not revised the rule to exempt builders from
the property-flipping time restrictions for trade-ins connected with
the resale of acquired homes. Under such trade-in programs, there are
no assurances to prevent the subsequent purchaser from becoming a
victim of collusion among the seller, the lender, and the appraiser. It
was never HUD's intention to eliminate the ability of builders,
investors, and contractors to profit from their actions, but rather to
ensure that homebuyers are not purchasing overvalued houses and
becoming the unwitting victims of predatory practices. While most
builders do not engage in the practices that the property flipping
regulation is meant to preclude, the opportunity to victimize the
unwitting purchaser would be enhanced by exempting trade-ins from the
property flipping rule.
Comment: Investors, including real estate agents, should be exempt
from time restrictions on resales. One commenter wrote that investors
make legitimate livings purchasing and reconditioning distressed
properties and that legitimate property reconditioning is not done
overnight. The commenter wrote that one of this rule's consequences may
be continued curtailment of real estate investors in the affordable
housing market. The commenter wrote that HUD should consider granting
exceptions to the time
[[Page 33141]]
sale restrictions, on a case-by-case basis, when the mortgagee can show
that the sales price of the property corresponds with its market value.
HUD Response. HUD has not adopted the commenter's suggestion. While
most investors do operate in a responsible manner, the abuses uncovered
that resulted in the issuance of HUD's regulatory prohibition on
property flipping were the result of actions by investors, other
sellers, real estate agents, appraisers, and others with a vested
interest in the sale of real estate. HUD also does not agree to case-
by-case exceptions due to resource limitations. Mortgagees have always
been required to show that the sales price corresponds to the market
value; the problem lies with false appraised values, which are often
central to the egregious abuse that the property flipping regulations
are designed to prevent.
Comment: Local, county, and state government agencies and the
instrumentalities of local governments, including state housing finance
agencies, should be exempt from time restrictions on resales. One
commenter wrote that local, county, and state government agencies
should be exempt from time sale restrictions, because they at times
acquire properties as a result of the function of their programs:
revitalizating neighborhoods, retaining affordability, resolving
overcrowding, etc. The properties acquired are then sold to a
qualifying low-income household within a time frame that works for all
parties involved, which can be less than 90 days, and most of these
households require FHA mortgage insurance. Another commenter wrote that
state housing finance agencies should be exempted.
HUD Response. HUD agrees, and, as described elsewhere in this
preamble, will exempt those enterprises permitted under section 528 of
the National Housing Act to provide secondary financing on FHA-insured
mortgages. HUD believes that because such entities are permitted under
the law to provide such down payment assistance, that suggests that
they also be exempt from the property flipping restrictions.
Comment: Family members' property transactions should be exempt
from time restrictions on resales. One commenter wrote that an
exception should be granted to a family member who quitclaims his or
her interest in a property to another family member because of illness
or financial hardship; the family member may then quickly refinance the
property to pay for medical expenses. Another commenter requested
exemptions for properties acquired in a divorce situation.
HUD Response. Nothing in the property flipping rule precludes the
individual who obtains ownership from a quitclaim deed from
refinancing. However, HUD does not believe it would be appropriate to
carve out resale exemptions for such rarely occurring events and ones
that would require substantial documentation in order to obtain such an
exemption (i.e., proof of family member relationship, as well as
financial hardship or illness). The individual that gives the quitclaim
due to illness or financial difficulty may sell the property him or
herself or execute power of attorney to another family member to do so
on his/her behalf. Divorce situations are not subject to the property
flipping rules since the acquisition of property in such situations
does not occur from a sale but as the result of a court order,
separation agreement, or divorce decree and, in most cases, the seller
would have been on title previously with the vacating spouse.
Comment: Additional co-tenancy transactions should be exempt from
time restrictions on resales. One commenter wrote that general
situations where a property may have been transferred from two owners
into the name of one of those owners (i.e., divorce, joint ownership to
sole ownership, etc.) should not be considered property flipping. The
commenter cited an example where two non-married individuals jointly
owned a property, and one of them assumed the mortgage into his own
name; thus, the other party signed the entire property over to one
person. The commenter wrote that in that example, there was not truly a
sale even though it would appear of record that one person sold his or
her one half-interest to the other individual. The commenter asked
whether the property flipping regulations would define this situation
as property flipping.
HUD Response. HUD has never considered such a scenario as meeting
the threshold for triggering the 90-day waiting period for resale
eligibility using FHA financing. Most such transactions do not
constitute a ``sale'' and, as long as one of the parties retains
ownership, that party may sell without the necessity of being the sole
owner for 90 days.
Comment: The time resale restrictions are not fair to real estate
agents, builders, contractors, buyers, and lenders. One commenter wrote
that real estate agents, because they must hold homes taken in on trade
from a homeowner, would lose many resale opportunities due to a 90-day
waiting period. The commenter wrote that the problem really seems to be
with the appraisers and the commenter asks whether the real issue is
that appraisers cannot determine the property values. The commenter
explained that the rule is not fair to buyers, since buyers have a
right to obtain the best sale price possible. Contractors and builders
are often experts at remodeling homes, and the 90-day rule limits the
ability of buyers to purchase homes that contractors and builders have
remodeled. The commenter questioned why some government agencies are
exempt from the rule and wrote, ``Limiting the turnover of homes does
not change the value of the home. It only puts a limitation on the
buyer, the remodeler, the Realtor and the Lender that had to foreclose
on the property.''
HUD Response. HUD has not revised the rule in response to this
comment. HUD continues to believe that 90 days is not an unreasonable
waiting period if actual remodeling, repairs, and improvements are
being made on a property before it is resold.
Comment: Any outstanding uninsured cases should be insured. One
commenter requested that any outstanding uninsured cases where a
governmental agency was the seller be insured at this point.
HUD Response. HUD will advise its Homeownership Centers (HOCs) that
if any unendorsed loans become eligible for insurance due to the
changes promulgated in this final rule, that endorsement should go
forward if all other eligibility criteria are met.
Comment: Clarification sought as to indemnification of a government
agency. One commenter asked for clarification concerning loans where
HUD has required indemnification due to property flipping involving a
governmental agency. The commenter asked if the lenders would now be
free from indemnification.
HUD Response. HUD has surveyed four of its HOCs and is not aware of
any indemnification requests being executed by lenders where the seller
was a government agency. However, HUD will instruct the HOCs that they
are to lift indemnification if it was requested solely due to the
status of the seller as a government agency.
Comment: Property flipping does not correlate with time resale
restrictions. One commenter wrote that HUD's definition of property
flipping may unfairly link the time in which a recently acquired
property is sold with separate fraudulent acts.
HUD Response. HUD fully recognizes that the time resale
restrictions are not a total solution to predatory lending.
Nevertheless, in HUD's examination of
[[Page 33142]]
predatory lending practices, egregious examples of predatory lending
included property resales occurring within a short time period and
organized by appraisers and lenders as pre-arranged transactions with
an unwitting buyer. This illustrates that property resales in short
time frames often correlate with predatory lending practices. Thus, a
90-day holding period helps assure that the buyer is not victimized by
a seller who acquires a property with the intention of immediately
flipping it to the buyer for an amount that could not be realized
without the help of the appraiser and others who would profit illicitly
from the resale.
IV. Justification for Final Rulemaking for Properties Located in
Presidentially Declared Disaster Areas
Before issuing a rule for effect in accordance with HUD's
regulations on rulemaking in 24 CFR part 10, HUD generally publishes a
rule for public comment. However, part 10 provides for exceptions to
the general rule if the agency finds good cause to omit advanced notice
and public participation. The good cause requirement is satisfied when
prior public procedure is ``impractical, unnecessary, or contrary to
the public interest'' (see 24 CFR 10.1). HUD finds that good cause
exists to publish this rule for effect without first soliciting public
comment on the exemption to the time restriction on resales for those
properties located in presidentially declared disaster areas, in that
prior public comment on this exemption is contrary to the public
interest. The reason for HUD's determination is as follows.
An exemption for presidentially declared disaster areas would
benefit those areas in which housing options may be immediately
limited. As noted above in this preamble, it is important that
homeownership opportunities be made available in affected areas as soon
as possible, and this exemption should increase homeownership
opportunities and bring these properties into the marketplace
relatively quickly. Delaying the effectiveness of this section of the
final rule for public comment on this exemption would unnecessarily
delay the public from immediate access to additional housing
opportunities. Accordingly, HUD has determined that it would be
contrary to the public interest to delay the effectiveness of this
amended final rule to solicit prior public comment.
V. Findings and Certifications
Executive Order 12866, 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 an economically
significant regulatory action, as provided under section 3(f)(1) of the
order). The docket file is available for public inspection between the
hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office
of General Counsel, Department of Housing and Urban Development, 451
Seventh Street, SW., Room 10276, Washington, DC 20410-0500. Due to
security measures at the HUD Headquarters building, please schedule an
advance appointment to review the docket file by calling the
Regulations Division at (202) 708-3055 (this is not a toll-free number).
Environmental Impact
A Finding of No Significant Impact with respect to the environment
was made for this final rule 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 et seq.). That 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, Office of General Counsel, Department of Housing
and Urban Development, 451 Seventh Street, SW., Room 10276, Washington,
DC 20410-0500. Due to security measures at the HUD Headquarters
building, please schedule an appointment to review the finding by
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number).
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 does not impose any new or revised obligations of any
kind on small entities participating in the FHA single-family mortgage
insurance programs. Rather, the final rule is exclusively concerned
with clarifying the scope of current regulatory requirements.
Specifically, the final rule broadens the exceptions to the property-
flipping time restrictions. To the extent that the final rule has any
impact on small entities, it will be to benefit those small entities
that fall under one of the listed exemptions to the time restrictions
on resales. Accordingly, 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 order. This final rule will 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 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 will not
impose any federal mandates on any state, local, or tribal government,
or on the private sector, within the meaning of UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance Numbers for 24 CFR part
203 are 14.117 and 14.133.
List of Subjects in 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 amends 24
CFR part 203 as follows:
PART 203--SINGLE FAMILY HOUSING MORTGAGE INSURANCE
? 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. 3535d.
? 2. Section 203.37a is amended by revising paragraph (c) to read as
follows:
[[Page 33143]]
Sec. 203.37a Sale of property.
* * * * *
(c) Exceptions to the time restrictions on sales. The time restrictions
on sales described in paragraph (b) of this section do not apply to:
(1) Sales by HUD of Real Estate-Owned (REO) properties under 24 CFR
part 291 and of single family assets in revitalization areas pursuant
to section 204 of the National Housing Act (12 U.S.C. 1710);
(2) Sales by another agency of the United States Government of REO
single family properties pursuant to programs operated by these agencies;
(3) Sales of properties by nonprofit organizations approved to purchase
HUD REO single family properties at a discount with resale restrictions;
(4) Sales of properties that were acquired by the sellers by
inheritance;
(5) Sales of properties purchased by an employer or relocation
agency in connection with the relocation of an employee;
(6) Sales of properties by state- and federally-chartered financial
institutions and government-sponsored enterprises (GSEs);
(7) Sales of properties by local and state government agencies; and
(8) Only upon announcement by HUD through issuance of a notice,
sales of properties located in areas designated by the President as
federal disaster areas. The notice will specify how long the exception
will be in effect.
* * * * *
Dated: May 25, 2006.
Brian D. Montgomery,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. E6-8844 Filed 6-6-06; 8:45 am]
BILLING CODE 4210-67-P