[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Proposed Rules]
[Pages 35716-35718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17291]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 207, 251, 252, 255, and 266

[Docket No. FR-4203-P-01]


Electronic Payment of Multifamily Insurance Premiums

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

ACTION: Proposed rule.

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SUMMARY: This rule proposes that all annual multifamily mortgage 
insurance premium (MIP) collections in accordance with 24 CFR parts 
207, 251, 252, 255, and 266 be made by the Automated Clearing House 
(ACH) program. The purpose of this rule is to improve the efficiency of 
the Multifamily Mortgage Insurance Program and reduce costs to HUD 
lenders. This rule would not affect the initial payment of MIPs.

DATES: Comment Due Date: September 2, 1997.

ADDRESSES: Interested persons are invited to submit comments regarding

[[Page 35717]]

this proposed rule to the Rules Docket Clerk, room 10276, Office of 
General Counsel, Department of Housing and Urban Development, 451 
Seventh Street SW., Washington, DC 20410-0500. Comments should refer to 
the above docket number and title. A copy of each comment submitted 
will be available for public inspection and copying during regular 
business hours at the above address. Facsimile (FAX) comments are not 
acceptable.

FOR FURTHER INFORMATION CONTACT: Samuel N. Conner, Acting Director, 
Multifamily Accounting and Servicing Division, Room 6208, Department of 
Housing and Urban Development, 451 7th Street SW., Washington, DC 
20024; telephone (202) 708-0223. Hearing-impaired or speech-impaired 
individuals may access the voice telephone number listed above by 
calling the Federal Information Relay Service during working hours at 
1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Background

    In August 1985, HUD implemented the Automated Clearing House (ACH) 
program. The Multifamily Insurance Operations Branch entered into the 
program in 1992, with voluntary participation by mortgagees for payment 
of multifamily mortgage insurance premiums (MIPs).
    The ACH program is designed to provide FHA approved lenders the 
opportunity to utilize their personal computers to authorize 
electronically the payment of MIPs, instead of sending checks through 
lockbox. Currently, more than 60 percent of HUD's MIPs are being 
collected through the ACH program.
    The mortgagees' terminal operators tie their personal computers 
into the collection agent's ACH system. The collection agent originates 
an ACH file of debit transactions based on bills.
    Each evening, the collection agent originates an ACH file of debit 
transactions based on the data keyed by the mortgagees. When the debit 
transactions have been processed, the ACH will transmit the MIP data to 
HUD's Multifamily Information System. Through this ACH process, the 
debit amount is drawn electronically from the designated mortgagee's 
bank account that day.
    After transmission, the insurance premium transactions are 
processed in the same manner as in the past.
    The ACH transfer system uses the mortgagee number as part of the 
``log on'' procedure. Any error in the mortgagee number results in the 
ACH transfer system rejecting the ``log on'' attempt. In addition, the 
ACH transfer system balances the dollar fields in each detail 
transaction to the amount entered, along with the item number. Where 
there is an error, the system produces an error message that describes 
the problem. The error must be corrected before the ACH transfer system 
will prepare the ACH entries.
    The general Late Charge policy for the ACH program is the same as 
for MIPs sent to the Atlanta lockbox address. Late charges are levied 
if payment is received later than 15 days after due date. For the ACH 
program, the late charge amount is automatically calculated by the 
system.
    ACH provides lenders with numerous tangible benefits that should 
reduce their servicing costs. The advantages of ACH are:
    (1) Control of payment timing--the use of ACH debits and credits 
can increase control of payment initiation and funds availability;
    (2) Banking costs are reduced--ACH transfer costs less than paper 
check and wire transfer;
    (3) Accounting reconciliation is reduced--payments are computerized 
and cash application is more automated than with manual systems;
    (4) On-line edits can reduce data errors created by manual 
recording; and
    (5) The chance of lost/late mail is eliminated.
    Because ACH provides mortgage lenders as well as HUD with numerous 
tangible benefits that reduce servicing costs, HUD is proposing that 
ACH become the sole method for collecting annual MIPs. HUD believes 
that this rule will not have a significant economic impact on the 
smaller lending community since personal computing is so pervasive 
within the industry. The rule implements a program that will enhance 
operations and be cost beneficial for all mortgage lenders. 
Implementation of this process will be phased-in and coordinated with 
lenders on an individual basis.

Other Matters

Environmental Review

    This amendment is excluded from the environmental review 
requirements of the National Environmental Policy Act (42 U.S.C. 4321-
4347) and the other related Federal environmental laws and authorities, 
as set forth in 24 CFR part 50. In keeping with the exclusion provided 
for in 24 CFR 50.19(c)(1), this amendment would not ``direct, provide 
for assistance or loan and mortgage insurance for, or otherwise govern 
or regulate property acquisition, disposition, lease, rehabilitation, 
alteration, demolition, or new construction, or set out or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy.'' Accordingly, under 24 CFR 50.19(c)(2), this 
amendment is categorically excluded because it amends a previous 
document where the underlying document as a whole would not fall within 
the exclusion set forth in 24 CFR 50.19(c)(1), but the amendment by 
itself would do so.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities. A survey of presently 
insured mortgagees indicates that nearly all mortgagees have computers 
that would allow them to submit electronic payments. The cost of the 
software package is approximately $30.00. HUD recognizes, however, that 
the uniform application of requirements on entities of differing sizes 
often places a disproportionate burden on small entities. Therefore, 
HUD specifically solicits comments as to whether this proposed rule 
would significantly impact a substantial number of small entities, and 
as to any less burdensome alternatives.

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 would 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. As a result, 
the rule is not subject to review under the order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (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 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 
UMRA.

[[Page 35718]]

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers are 14.129, 
14.155, and 14.188.

List of Subjects

24 CFR Part 207

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

24 CFR Part 251

    Low and moderate income housing, Mortgage insurance, Reporting and 
recordkeeping requirements.

24 CFR Part 252

    Health facilities, Loan programs--health, Loan programs--housing 
and community development, Mortgage insurance, Nursing homes, Reporting 
and recordkeeping requirements.

24 CFR Part 255

    Low and moderate income housing, Mortgage insurance, Reporting and 
recordkeeping requirements.

24 CFR Part 266

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

    Accordingly, the Department proposes to amend Subtitle B, Chapter 
II, Subchapter B, of Title 24 of the Code of Federal Regulations as 
follows:

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

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

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

    2. A new Sec. 207.252e to subpart B is added to read as follows:


Sec. 207.252e  Method of payment of mortgage insurance premiums.

    In the cases that the Commissioner deems appropriate, the 
Commissioner may require, by means of instructions communicated to all 
affected mortgagees, that mortgage insurance premiums be remitted 
electronically.

PART 251--COINSURANCE FOR THE CONSTRUCTION OR SUBSTANTIAL 
REHABILITATION OF MULTIFAMILY HOUSING PROJECTS

    3. The authority citation for part 251 continues to read as 
follows:

    Authority: 12 U.S.C. 1515b, 1715z-9; 42 U.S.C. 3535(d).

    4. A new Sec. 251.6 is added to read as follows:


Sec. 251.6  Method of payment of mortgage insurance premiums.

    In the cases that the Commissioner deems appropriate, the 
Commissioner may require, by means of instructions communicated to all 
affected lenders, that mortgage insurance premiums be remitted 
electronically.

PART 252--COINSURANCE OF MORTGAGES COVERING NURSING HOMES, 
INTERMEDIATE CARE FACILITIES, AND BOARD AND CARE HOMES

    5. The authority citation for part 252 continues to read as 
follows:

    Authority: 12 U.S.C. 1515b, 1715z-9; 42 U.S.C. 3535(d).

    6. A new Sec. 252.6 is added to read as follows:


Sec. 252.6  Method of payment of mortgage insurance premiums.

    The provisions of 24 CFR 251.6 shall apply to this part.

PART 255--COINSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING 
MULTIFAMILY HOUSING PROJECTS

    7. The authority citation for part 255 is revised to read as 
follows:

    Authority: 12 U.S.C. 1515b, 1715z-9; 42 U.S.C. 3535(d).

    8. A new Sec. 255.6 is added to read as follows:


Sec. 255.6  Method of payment of mortgage insurance premiums.

    The provisions of 24 CFR 251.6 shall apply to this part.

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

    9. The authority citation for part 266 continues to read as 
follows:

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

    10. A new Sec. 266.610 is added to read as follows:


Sec. 266.610  Method of payment of mortgage insurance premiums.

    In the cases that the Commissioner deems appropriate, the 
Commissioner may require, by means of instructions communicated to all 
affected mortgagees, that mortgage insurance premiums be remitted 
electronically.

    Dated: May 30, 1997.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 97-17291 Filed 7-1-97; 8:45 am]
BILLING CODE 4210-27-P