[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] ======================================================================= ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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