[Federal Register Volume 63, Number 185 (Thursday, September 24, 1998)]
[Rules and Regulations]
[Pages 51250-51251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25567]



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Part VI





Department of Housing and Urban Development





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24 CFR Part 320



Ginnie Mae MBS Program: Book Entry Securities; Interim Rule

  Federal Register / Vol. 63, No. 185 / Thursday, September 24, 1998 / 
Rules and Regulations  

[[Page 51250]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 320

[Docket No. FR-4331-I-01]


Ginnie Mae MBS Program: Book Entry Securities

AGENCY: Government National Mortgage Association, HUD.

ACTION: Interim rule.

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SUMMARY: This rule revises the security issuance procedures for Ginnie 
Mae. Physical securities now will be issued only upon the request of 
the registered holder. Ginnie Mae is revising two sections of part 320 
to reflect this change. These changes bring Ginnie Mae's security 
issuance procedures up to date with modern practices.

DATES: Effective Date: October 26, 1998, Comment Due Date: November 23, 
1998.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Rules Docket Clerk, Regulations Division, Office of 
the General Counsel, Room 10276, Department of Housing & Urban 
Development, 451 Seventh Street, S.W., Washington, D.C. 20410-8000. 
Communications should refer to the above docket number and title. A 
copy of each communication submitted will be available for public 
inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays at the 
above address. Facsimile (FAX) comments will not be accepted.

FOR FURTHER INFORMATION CONTACT: Thomas R. Weakland, Vice President, 
Office of Program Administration, Government National Mortgage 
Association, Room 6204, Department of Housing and Urban Development, 
451 Seventh Street, Washington, D.C. 20410-0500. Telephone (202) 708-
2884 (voice) or 202-708-1734 (TTY). For hearing- and speech-impaired 
persons, this number may be accessed via TTY by calling the Federal 
Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Background

    The Government National Mortgage Association (Ginnie Mae) 
guarantees mortgage-backed securities of approved issuers. Ginnie Mae 
wishes to adopt a true book entry system for the securities that it 
guarantees, instead of the current system under which a physical 
security is issued and immobilized (stored). Accordingly, Ginnie Mae is 
revising Sec. 320.5 to: (1) revise paragraph (a) to indicate that only 
physical securities will specify payment and maturity dates; (2) 
indicate the date on and after which physical securities will be issued 
only at the request of the registered holder; and (3) establish when 
Ginnie Mae considers a book entry security to be guaranteed. Finally, 
the current language of Sec. 320.13 states that the Ginnie Mae guaranty 
must appear on the face of the security. Ginnie Mae has revised this 
section to remove this statement because there is no physical security 
under a true book entry system.

Justification for Interim Rulemaking

    In general, the Department publishes a rule for public comment 
before issuing a rule for effect, in accordance with its own 
regulations on rulemaking at 24 CFR part 10. Part 10, however, does 
provide in Sec. 10.1 for exceptions from that general rule where the 
Department finds good cause to omit advance notice and public 
participation. The good cause requirement is satisfied when the prior 
public procedure is ``impracticable, unnecessary, or contrary to the 
public interest''.
    The Department finds that good cause exists to publish this interim 
rule for effect without first soliciting public comment, in that the 
elimination of the physical security represents an internal Ginnie Mae 
adjustment which is part of Ginnie Mae's continuing effort to implement 
paperless pool processing. In connection with this rule, Ginnie Mae 
notes that the Department of Treasury published a proposed rule on 
March 4, 1996 (61 FR 8420) that proposed to incorporate recent and 
significant changes in commercial law addressing the holdings of 
securities in book entry form through financial intermediaries. Ginnie 
Mae, in developing its rule, had the benefit of reviewing the Treasury 
rule and the public comments received on the Treasury proposed rule, 
which was published in final on August 23, 1996 (61 FR 43626). In 
issuing this rule published in today's Federal Register, Ginnie Mae 
considered the public comments received on the Treasury proposed rule. 
In addition, there is only one registered holder of Ginnie Mae book 
entry securities, which is the designated depository. Ginnie Mae's 
designated depository is working with Ginnie Mae to effect this program 
change. Any investor potentially adversely affected by book entry can 
avoid the adverse impact of the rule by getting a physical security 
through the registered holder. Further, book entry securities issued 
without an immobilized security will only be done prospectively. 
Physical securities backing book entry securities that are already 
issued will continue to be stored. In consideration of these issues, 
advance public comment was determined not necessary, but HUD welcomes 
comments from the public and is soliciting comment on this rule.

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 interim rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. Ginnie Mae's 
designated depository is the only entity affected by this revision, and 
the designated depository is not a small entity. The interim rule will 
have no adverse or disproportionate economic impact on small 
businesses. Notwithstanding HUD's determination that this rule will not 
have a significant economic impact on small entities, HUD specifically 
invites comments regarding alternatives to this rule that would meet 
HUD's objectives as described in this preamble.

Environmental Impact

    This rulemaking is exempt from the environmental review procedures 
under 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) because of the exemption under Sec. 50.19(c)(1) which pertains to 
``the approval of policy documents that do 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 to provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy.'' This rulemaking simply amends existing 
regulations regarding the form of guaranteed securities.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this interim 
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 interim rule that 
would affect the relationship between the Federal Government and State 
and local governments.

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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 interim 
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.

Executive Order 12866

    This rule was reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866 on Regulatory Planning and Review, issued 
by the President on September 30, 1993. Any changes made in the rule 
subsequent to its submission to OMB are identified in the docket file, 
which is available for public inspection as provided under the section 
of this preamble entitled ADDRESS.

Catalog of Federal Domestic Assistance

    There is no Catalog of Federal Domestic Assistance number for the 
Ginnie Mae MBS program.

List of Subjects for 24 CFR Part 320

    Mortgages.

    Accordingly, 24 CFR part 320 is amended as follows:

PART 320--GUARANTY OF MORTGAGE-BACKED SECURITIES

    1. The authority citation for 24 CFR part 320 continues to read as 
follows:

    Authority: 12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 
4343(d).

    2. Section 320.5 is amended by revising the last sentence of 
paragraph (a) and by adding new paragraphs (e) and (f), to read as 
follows:


Sec. 320.5  Securities.

    (a) * * * The securities, if issued in physical form, must specify 
the dates by which payments are to be made to the holders thereof, and 
must indicate the accounting period for collections on the pool's 
mortgages relating to each such payment, and the securities, if issued 
in physical form, must also specify a date on which the entire 
principal will have been paid or will be payable.
* * * * *
    (e) Securities issued on or before October 31, 1998, are issued in 
physical form. On or after November 1, 1998, securities are issued in 
book entry form, and physical securities are issued only upon the 
request of the registered holder.
    (f) On or after November 1, 1998, Ginnie Mae guarantees a book 
entry security when the transfer agent indicates by book entry that a 
security has been transferred to a registered holder.

(Approved by the Office of Management and Budget under control 
number 2503-0009)

    3. Section 320.13 is revised to read as follows:


Sec. 320.13  Guaranty.

    The Association guarantees the timely payment, whether or not 
collected, of the interest on the outstanding balance and the specific 
principal installments. The Association's guaranty is backed by the 
full faith and credit of the United States.

    Dated: August 26, 1998.
George S. Anderson,
Executive Vice President, Government National Mortgage Association.
[FR Doc. 98-25567 Filed 9-23-98; 8:45 am]
BILLING CODE 4210-01-P