[Federal Register Volume 61, Number 41 (Thursday, February 29, 1996)]
[Rules and Regulations]
[Pages 7946-7947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4542]




[[Page 7945]]

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Part V





Department of Housing and Urban Development





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24 CFR Part 266



Regulatory Reinvention; Streamlining of Housing Finance Agency Risk-
Sharing Program for Insured Affordable Multifamily Project Loans; Final 
Rule

  Federal Register / Vol. 61, No. 41 / Thursday, February 29, 1996 / 
Rules and Regulations   

[[Page 7946]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

24 CFR Part 266

[Docket No. FR-3981-F-01]
RIN 2502-AG60


Regulatory Reinvention; Streamlining of Housing Finance Agency 
Risk-Sharing Program for Insured Affordable Multifamily Project Loans

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

ACTION: Final rule.

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SUMMARY: This final rule streamlines HUD's regulations governing the 
Housing Finance Agency (HFA) Risk-Sharing program at 24 CFR part 266. 
Specifically, this rule removes regulatory provisions from part 266 
which are best set forth in non-regulatory guidance. Under the HFA 
Risk-Sharing Program, HFAs are permitted to originate and service 
mortgage loans that are fully insured by the Federal Housing 
Administration. Participating HFAs are required to share in the risk 
associated with monetary losses that may result from loan defaults. 
HUD's elimination of redundant or unnecessary language from part 266 
will increase program flexibility and assist in HUD's continuing 
efforts to streamline title 24.

EFFECTIVE DATE: April 1, 1996.

FOR FURTHER INFORMATION CONTACT: Jane Luton, Director, New Products 
Division, Office of Multifamily Housing Development, Room 6142, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410, telephone number (202) 708-2556 (this is not a 
toll-free number). For hearing- and speech-impaired persons, this 
number may be accessed via TDD by calling the Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On March 4, 1995, President Clinton issued a memorandum to all 
Federal departments and agencies regarding regulatory reinvention. In 
response to this memorandum, HUD conducted a page-by-page review of its 
regulations to determine which can be eliminated, consolidated, or 
otherwise improved. As part of this review, HUD reexamined its 
regulations governing the Housing Finance Agency (HFA) Risk-Sharing 
Program at 24 CFR part 266. Under the HFA Risk-Sharing Program, HFAs 
are permitted to originate and service mortgage loans that are fully 
insured by the Federal Housing Administration. Participating HFAs are 
required to share in the risk associated with monetary losses that may 
result from loan defaults.
    HUD has determined that the regulations for the HFA Risk-Sharing 
Program can be improved and streamlined by eliminating unnecessary 
provisions. After careful consideration, HUD has decided to retain most 
of part 266, inasmuch as the regulations are incorporated by reference 
in each approved HFA's Risk-Sharing Agreement. Since the Risk-Sharing 
Agreement forms the basis for operating the program, it is in HUD's 
interest, and that of program participants, to retain most sections of 
part 266. However, this final rule removes those sections of part 266 
concerning the application process and the contents of the Risk-Sharing 
Agreement.
    With respect to the section on application requirements, 
applications are solicited through publication of a notice in the 
Federal Register. Since that notice contains the requirements for 
submitting an application, including required exhibits, it is 
unnecessary to repeat such requirements in part 266. Therefore, this 
final rule revises Sec. 266.105, which concerns the application 
requirements, to simply state that HUD will identify all necessary 
requirements for the submission of an application through Federal 
Register notice.
    With respect to the section on the contents of the Risk-Sharing 
Agreement, an agreement for use by State and local HFAs participating 
in the program has been developed. Therefore, it is no longer necessary 
to list the items to be included in the Risk-Sharing Agreement. 
Accordingly, this final rule amends Sec. 266.15 to remove such a list.

II. Justification for Final Rulemaking

    HUD generally 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 for exceptions to the 
general rule if the agency finds good cause to omit advance notice and 
public participation. The good cause requirement is satisfied when 
prior public procedure is ``impracticable, unnecessary, or contrary to 
the public interest'' (24 CFR 10.1). HUD finds that good cause exists 
to publish this rule for effect without first soliciting public 
comment. This final rule merely removes unnecessary provisions which 
can best be set forth in non-regulatory guidance. This rule does not 
establish or affect substantive policy. Therefore, prior public comment 
is unnecessary.

III. Other Matters

A. Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this final rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. This rule merely 
streamlines 24 CFR part 266 by removing provisions which do not require 
regulatory codification. The rule will have no adverse or 
disproportionate economic impact on small businesses.

B. Environmental Impact

    This rulemaking does not have an environmental impact. This 
rulemaking simply amends an existing regulation by streamlining 
provisions and does not alter the environmental effect of the 
regulations being amended. A Finding of No Significant Impact with 
respect to the environment was made in accordance with HUD regulations 
in 24 CFR part 50 that implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of 
development of regulations implementing the HFA Risk-Sharing Program. 
That finding remains applicable to this rule and is available for 
public inspection between 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.

C. Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that 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. No programmatic or policy changes 
will result from this rule that would affect the relationship between 
the Federal Government and State and local governments.

D. Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule will not have 
the potential for significant impact on 

[[Page 7947]]
family formation, maintenance, or 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.

List of Subjects in 24 CFR Part 266

    Aged, Fair housing, Intergovernmental relations, Mortgage 
insurance, Low and moderate income housing, Reporting and recordkeeping 
requirements.

    Accordingly, 24 CFR part 266 is amended as follows:

PART 266--HOUSING FINANCE AGENCY RISK-SHARING PROGRAM FOR INSURED 
AFFORDABLE MULTIFAMILY PROJECT LOANS

    1. The authority citation for 24 CFR part 266 continues to read as 
follows:

    Authority: 12 U.S.C. 1707; 42 U.S.C. 3535(d).

    2. Section 266.15 is revised to read as follows:


Sec. 266.15  Risk-Sharing Agreement.

    Execution of a Risk-Sharing Agreement is a prerequisite to 
participation in this program. The Risk-Sharing Agreement shall be in a 
form acceptable to the Commissioner.
    3. Section 266.105 is revised to read as follows:


Sec. 266.105  Application requirements.

    (a) Applications for approval as a HUD-approved multifamily 
mortgagee. HFAs that are not HUD-approved mortgagees at the time of 
their application to participate in the program under this part must 
submit, concurrently, separate applications for approval to participate 
in the program and for approval to operate as a HUD-approved mortgagee. 
Application for approval as a HUD-approved mortgagee must be submitted 
to HUD in accordance with the applicable HUD requirements.
    (b) Applications for participation in program. Applications from 
HFAs for approval to participate in the program under this part will be 
submitted in response to a notice published in the Federal Register. 
The notice will include the required application exhibits and any other 
information or documentation necessary for approval for participation 
in the Risk-Sharing Program.

    Dated: February 22, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 96-4542 Filed 2-28-96; 8:45 am]
BILLING CODE 4210-27-P