[Federal Register Volume 63, Number 5 (Thursday, January 8, 1998)]
[Rules and Regulations]
[Pages 1302-1303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-441]



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Part III





Department of Housing and Urban Development





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



Electronic Payment of Multifamily Insurance Premiums; Final Rule

  Federal Register / Vol. 63, No. 5 / Thursday, January 8, 1998 / Rules 
and Regulations  

[[Page 1302]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

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

[Docket No. FR-4203-F-02]


Electronic Payment of Multifamily Insurance Premiums

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

ACTION: Final rule.

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SUMMARY: This rule establishes 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 does not affect the initial payment of MIPs.

EFFECTIVE DATE: February 9, 1998.

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, the Department of Housing and Urban Development 
(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, approximately 90 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 the Department 
with numerous tangible benefits that reduce servicing costs, the 
Department is proposing that ACH become the sole method for collecting 
annual MIPs. The Department feels that this rule does 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.
    A proposed rule was published on July 2, 1997, at 62 FR 35716, and 
the public was afforded a 60-day comment period which closed on 
September 2, 1997. No public comments were received. Accordingly, this 
final rule adopts the proposed rule without change.

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 does.

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 does 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.

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 do 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

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rule is not subject to review under the order.

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 amends parts 207, 251, 252, 255, and 
266 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 is added to subpart B 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 after Sec. 266.608 and immediately 
before the undesignated center heading ``INSURANCE ENDORSEMENT,'' 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: December 24, 1997.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 98-441 Filed 1-7-98; 8:45 am]
BILLING CODE 4210-27-P