[Federal Register Volume 60, Number 59 (Tuesday, March 28, 1995)]
[Rules and Regulations]
[Pages 16032-16033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7552]




[[Page 16031]]

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Part IV





Department of Housing and Urban Development





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24 CFR Part 203



Single Family Mortgage Limits: Redelegation of Authority; Final Rule 
and Notice

  Federal Register / Vol. 60, No. 59 / Tuesday, March 28, 1995 / Rules 
and Regulations   
[[Page 16032]] 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner

24 CFR Part 203

[Docket No. R-95-1778; FR-3866-F-01]
RIN 2502-AG47


Single Family Mortgage Limits: Redelegation of Authority; Final 
Rule

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 Single Family Mortgage Insurance 
regulations to recognize the redelegation of the authority to increase 
Federal Housing Administration (FHA) single family maximum mortgage 
limits and designate high cost areas. The FHA Commissioner is 
redelegating this authority to certain officials in HUD's local 
offices. This redelegation is consistent with the primary objectives of 
the recent reorganization of HUD's Office of Housing, which are to 
provide local offices with more direct authority and to enhance the 
delivery of services to clients.

EFFECTIVE DATE: April 27, 1995.

FOR FURTHER INFORMATION CONTACT: Maynard Curry, Office of Insured 
Single Family Housing, Room 9276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410, telephone 
(202) 708-2121, or (202) 708-4594 (TDD). (These numbers are not toll-
free.)

SUPPLEMENTARY INFORMATION:

Background

    Section 203(b)(2) of the National Housing Act and 24 CFR 
203.18(a)(1) prevent insured mortgages for 1-family residences from 
exceeding 95 percent of the median house price for the area, as 
determined by the Secretary. To date, the determination of the median 
price is based on actual sales prices for new and existing homes. The 
authority to make this determination has been delegated to the 
Assistant Secretary for Housing-Federal Housing Commissioner (the 
Commissioner). The Commissioner issues periodic notices in the Federal 
Register announcing the mortgage limits for each area of the country 
after determining the median house price for each area. A local HUD 
office can recommend interim changes for specific areas based on 
locally-gathered information on changes in house prices, but those 
changes cannot be announced without approval by the Commissioner.
    HUD has recently been reorganized to provide more direct authority 
to its local offices regarding operation of its programs. Regulations 
that reserve to Headquarters functions that are locally-based, such as 
the determination of median house prices in an area, are inconsistent 
with the new emphasis on empowerment of local offices.
    HUD is taking two actions to recognize the reorganization and to 
facilitate the timely adjustment of area mortgage limits in response to 
increases1 in median area house prices. First, HUD is amending two 
provisions in the current regulations (24 CFR 203.18(h) and 
203.18b(b)(2)) to provide greater administrative flexibility regarding 
the determination and announcement of mortgage limits based on median 
area house prices. Second, HUD is preparing a formal delegation of 
authority to identify specified officials in the local offices who are 
authorized to determine median area house prices and the resulting 
maximum mortgage amounts. HUD is also publishing this delegation of 
authority today as a separate document.

    \1\HUD has avoided reducing mortgage limits in response to 
temporary reductions in local market prices. Therefore, the focus of 
this rulemaking is only on increases to mortgage limits.
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    HUD expects that increases in median house prices can be determined 
at the local level more rapidly than at Headquarters and with 
comparable accuracy. Currently Headquarters staff makes recommendations 
to the Commissioner based on two approaches. Under the first approach, 
a comprehensive review is performed of median house prices in all 
areas. This review occurs from time to time, but normally no more 
frequently than annually. Price data comes from two sources: the 
Federal Housing Finance Board (FHFB) and the WEFA Group, a private 
consulting firm. A chart is prepared for approval by the Commissioner 
that shows the maximum mortgage amount for each area based on 95 
percent of the median house price in the area (subject to a statutory 
floor and ceiling on these amounts). The last such chart was published 
in the Federal Register on March 15, 1993 (58 FR 13950).
    HUD also has a procedure for receiving and reviewing local appeals 
between publication of the charts with national updates if ``any party 
believes that a mortgage limit established by the Secretary * * * does 
not accurately reflect the median house prices in an area.'' 24 CFR 
203.18b(a). The party seeking a change in the mortgage limit (typically 
a mortgagee or an organization of mortgagees or real estate 
professionals) must collect and submit data showing the actual sales 
prices for all new and existing homes in the area over a period of time 
that varies with the number of sales involved. This data goes to the 
local office, which submits a recommendation based on the data to the 
Commissioner for a final determination. Once the Commissioner approves 
a change in the mortgage limit for an area based on the change in 
median house price, the new mortgage limit can be made effective 
through an administrative announcement to affected mortgagees in 
advance of being included in a Federal Register notice.
    Under this final rule, the local appeals approach will serve as the 
usual method leading to mortgage limit increases, except that local 
offices may also take the initiative in generating submissions of 
actual sales price data to compensate for the lack of periodic national 
updates. The change in regulations and the delegation of authority do 
not prevent the Commissioner from also approving appropriate mortgage 
limit increases when information available to the Commissioner 
indicates that increases are warranted. The Commissioner may continue 
to receive periodic information on median house prices from national 
sources such as FHFB and the WEFA Group to confirm the accuracy of 
local office determinations. The Commissioner will maintain a national 
compilation of mortgage limits for all areas and may choose to continue 
periodic publication of a national compilation in the Federal Register 
for information purposes.
    HUD will add a new chapter to HUD Handbook 4000.2 to ensure that 
local offices have adequate instructions on their new role. These 
instructions will cover such matters as appropriate sources of house 
sales price data, extra weight that may be given to new home sales 
prices in certain circumstances, and identification of the pertinent 
``area'' in compliance with the statutory definition of that term. 
These instructions should ensure a high degree of consistency in 
approach among the different local offices.

Justification for Final Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. However, part 10 provides an exception from that 
general rule with respect to rules governing HUD's organization or its 
own internal practices or procedures. This final rule [[Page 16033]] is 
limited to a revision of the respective roles of the Commissioner and 
the local offices and therefore qualifies for the exception.

Other Matters

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule does not have a significant 
economic impact on a substantial number of small entities. The 
redelegation of authority implemented by this rule is a matter of HUD's 
internal practices or procedures, and it will not have an impact on 
small entities.

Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations, 
the policies and procedures contained in this rule relate only to 
delegations of authority and therefore are categorically excluded from 
the requirements of the National Environmental Policy Act.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
States or their political subdivisions, or the relationship between the 
Federal government and the States, or on the distribution of power and 
responsibilities among the various levels of government. The 
redelegation of authority implemented by this rule is a matter of HUD's 
internal practices or procedures. As a result, the rule is not subject 
to review under the Order.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule does not have 
potential for significant impact on family formation, maintenance, and 
general well-being, and thus is not subject to review under the Order. 
No significant change in existing HUD policies or programs will result 
from promulgation of this rule, as those policies and programs relate 
to family concerns.

Regulatory Agenda

    This rule was not listed in HUD's Semiannual Agenda of Regulations 
published on November 14, 1994 (59 FR 57632) in accordance with 
Executive Order 12866 and the Regulatory Flexibility Act.

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, HUD amends 24 CFR part 203 as follows:

PART 203--SINGLE FAMILY MORTGAGE INSURANCE

    1. The authority citation for part 203 is revised to read as 
follows:

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

    2. In Sec. 203.18, paragraph (h) is revised to read as follows:


Sec. 203.18  Maximum mortgage amounts.

* * * * *
    (h) Notice of maximum mortgage amount. A maximum mortgage amount 
based on the 1-family median house price for an area under paragraph 
(a)(1) of this section may be made effective by:
    (1) Providing direct notice to affected mortgagees through an 
administrative issuance; or
    (2) Publishing a notice in the Federal Register.


Sec. 203.18b  [Amended]

    3. In Sec. 203.18b, paragraph (b)(2) is amended by removing the 
second sentence.

    Dated: March 20, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 95-7552 Filed 3-27-95; 8:45 am]
BILLING CODE 4210-27-P