[Federal Register Volume 63, Number 22 (Tuesday, February 3, 1998)]
[Proposed Rules]
[Pages 5660-5661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2621]



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Part IV





Department of Housing and Urban Development





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24 CFR Part 203



Suspension of Authority To Insure New FHA Single Family Mortgages on 
Indian Reservations Pursuant to Section 248 of the National Housing 
Act; Proposed Rule

  Federal Register / Vol. 63, No. 22 / Tuesday, February 3, 1998 / 
Proposed Rules  

[[Page 5660]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 203

[Docket No. FR-4251-P-01]
RIN 2502-AH00


Suspension of Authority To Insure New FHA Single Family Mortgages 
on Indian Reservations Pursuant to Section 248 of the National Housing 
Act

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

ACTION: Proposed rule.

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SUMMARY: This rule proposes to suspend the authority of the HUD 
Secretary to provide FHA insurance pursuant to section 248 of the 
National Housing Act for mortgage loans made for the financing of 
single family homes on Indian reservations. The suspension would be in 
effect whenever authority is available to the Department to guarantee 
additional loans under its Indian Housing Loan Guarantee program 
authorized by section 184 of the Housing and Community Development Act 
of 1992. The rule would suspend a program that has not been effective 
in promoting housing opportunities for Native Americans and permit HUD 
to focus scarce resources on the similar section 184 program, whenever 
authority under that program is available. In recent fiscal years the 
Department has received annually a limited amount of additional 
authority to guarantee new loans under section 184. If that pattern is 
not continued, or if the available section 184 authority is otherwise 
exhausted, the Department would resume mortgage insurance under the 
section 248 program.

DATES: Comment due date: April 6, 1998.

ADDRESSES: Interested persons are invited to submit comments regarding 
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. An original and four copies of 
comments should be provided. 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: John J. Coonts, Office of the Insured 
Single Family Housing, Room 9162, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410. Telephone: 
(202) 708-3046. (This is not a toll-free number.) For hearing-and 
speech-impaired persons, this number may be accessed via TTY by calling 
the Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Background

    The mortgage insurance program for mortgages on Indian reservations 
was initially authorized under the Housing and Urban--Rural Recovery 
Act of 1983, which added Section 248 to the National Housing Act. The 
Department implemented the program by a final rule (51 FR 21871, June 
16, 1986) that added several new provisions to 24 CFR part 203, 
including new Secs. 203.43h, 203.438 and 203.664 and amendments to 
Secs. 203.350 and 203.604.
    The new program was intended to encourage mortgage lenders to 
extend loans on Indian reservations and other trust or restricted land 
(``Indian land''). Indian land is generally subject to restraints 
against alienation and other title issues, and mortgage lenders are 
reluctant to make mortgage loans because of the extreme difficulty in 
bringing and completing a foreclosure action, if the mortgagor 
defaults. Because FHA generally requires a mortgagee to convey good 
marketable title to the HUD Secretary in presenting a claim for 
insurance, and good marketable title is difficult or impossible to 
obtain as a result of a foreclosure on Indian land, mortgage lenders 
were hesitant to make such mortgage loans.
    Section 248 provided ways to mortgagees to overcome these title and 
claim issues, primarily by providing the lender with a right to assign 
a defaulted mortgage to the HUD Secretary, but the program has always 
operated at a very low volume. The Clinton Administration has made 
extensive efforts over the past four years to publicize the program and 
encourage its use. Mortgage lenders and Native Americans, however, have 
found another similar HUD program--the section 184 loan guarantee 
program--to be more attractive based on the large volume of loans made 
in comparison to the history of section 248. Thus, the Department 
believes it is smart management to apply its resources to a program 
that works and accomplishes the same goals. Section 184 has proven to 
be substantially more effective in providing housing opportunities for 
Native Americans. Under a Memorandum of Understanding, the HUD Office 
of Insured Single Family Housing will provide support to the HUD Office 
of Native American Programs to assure that the lending community and 
Native Americans have adequate access to information about Section 184.
    The Department proposes to amend Sec. 203.43h to suspend new 
insurance, excepting only cases with a HUD conditional commitment or DE 
underwriter's Statement of Appraised Value issued no later than 90 days 
after the effective date of the final rule, as long as the Department 
has authority to guarantee new loans under its section 184 program. 
Insurance for streamlined refinancing would continue to be available 
for any mortgage that has been insured under section 248.

Findings and Certifications

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so 
doing certifies that this proposed rule does not have a significant 
economic impact on a substantial number of small entities. The proposed 
rule merely suspends new insurance for a program that has no 
significant volume, whenever the Department has guarantee authority 
under the similar but more successful section 184 program. Any lenders 
that participated in the suspended program can easily qualify to 
participate under the section 184 program. The proposed rule has no 
adverse or disproportionate economic impact on small businesses. Small 
entities are specifically invited, however, to comment on whether this 
proposed rule will significantly affect them, and persons are invited 
to submit comments according to the instructions in the DATES and 
ADDRESSES sections in the preamble of this proposed rule.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implements section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under Section 6(a) 
of Executive Order 12612, Federalism, has determined that this proposed 
rule

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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. No programmatic or policy changes 
would result from this proposed rule that affect the relationship 
between the Federal Government and State and local governments.

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 does not impose any Federal mandates on any State, local, or 
tribal governments, or on the private sector, within the meaning of the 
UMRA.

List of Subjects in Part 203

    Loan programs--housing and community development, Mortgage 
insurance, Reporting and recordkeeping requirements.

    Accordingly, the Department proposes to amend part 203 of Title 24 
of the Code of Federal Regulations as follows:

PART 203--SINGLE FAMILY MORTGAGE INSURANCE

    1. The authority citation for 24 CFR part 203 continues to read as 
follows:

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

    2. Section 203.43h is amended by revising the introductory text to 
read as follows:


Sec. 203.43h  Eligibility of mortgages on Indian land insured pursuant 
to Section 248 of the National Housing Act.

    No mortgage will be insured pursuant to section 248 of the National 
Housing Act unless the Secretary determined that there is no available 
authority to guarantee a mortgage under section 184 of the Housing and 
Community Development Act of 1992, or before [a date of 90 days after 
the effective date of final rule will be inserted in the final rule] 
the Secretary issued a conditional commitment or a Direct Endorsement 
underwriter issued a Statement of Appraised Value in connection with 
the mortgage. If insurance is available under the preceding sentence, a 
mortgage covering a one-to-four family residence located on Indian land 
shall be eligible for insurance pursuant to section 248 of the National 
Housing Act (12 U.S.C. 1715z-13), notwithstanding otherwise applicable 
requirements related to marketability of title, if the mortgage meets 
the requirements of this subpart as modified by this section and is 
made by an Indian tribe, or on a leasehold estate by an Indian who will 
occupy it as a principal residence. Mortgage insurance on cooperative 
shares is not authorized under this section.
* * * * *
    Dated: December 10, 1997.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 98-2621 Filed 2-2-98; 8:45 am]
BILLING CODE 4210-27-P