[Federal Register Volume 65, Number 23 (Thursday, February 3, 2000)]
[Rules and Regulations]
[Page 5406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2316]



[[Page 5405]]

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Part IV





Department of Housing and Urban Development





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24 CFR Part 206



Home Equity Conversion Mortgage Insurance; Right of First Refusal 
Permitted for Condominium Associations; Final Rule

  Federal Register / Vol. 65, No. 23 / Thursday, February 3, 2000 / 
Rules and Regulations  

[[Page 5406]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 206

[Docket No. FR-4267-F-02]
RIN 2502-AG93


Home Equity Conversion Mortgage Insurance; Right of First Refusal 
Permitted for Condominium Associations

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

ACTION:  Final rule.

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SUMMARY:  This final rule removes, for the Home Equity Conversion 
Mortgage (HECM) insurance program only, the restriction on FHA mortgage 
insurance for a dwelling unit in a condominium project where the 
condominium association has a right of first refusal.

DATES:  Effective Date: March 6, 2000.

FOR FURTHER INFORMATION CONTACT:  Vance Morris, Director, Home Mortgage 
Insurance Division, Room 9266, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410, telephone 
(voice) (202) 708-2700. (This is not a toll-free number.) Hearing-
impaired or speech-impaired individuals may access the voice telephone 
listed by calling the Federal Information Relay Service during working 
hours at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Background

    HUD published an interim rule on April 9, 1998 (63 FR 17654) to 
permit a condominium unit owner to obtain an FHA-insured Home Equity 
Conversion Mortgage (HECM) when the condominium association holds a 
right of first refusal. The interim rule created an exception to the 
general policy for FHA single family programs which bars most rights of 
first refusal, including all rights of first refusal held by 
condominium associations. The interim rule does not permit condominium 
associations to exercise their rights of first refusal to engage in 
practices that violate the Fair Housing Act, and the Department stated 
in the preamble to the interim rule that all of its enforcement 
authority would be used if illegal discriminatory practices occur as a 
result of the exercise of a right of first refusal.

Public Comment

    HUD received one public comment on the interim rule. It suggested 
that the exception created by the interim rule for condominiums be 
expanded to include planned unit developments (PUDs), to permit HUD to 
insure HECMs on property in PUDs where a homeowner association holds a 
right of first refusal. The Department will consider this suggestion in 
the future, and may go forward with further rulemaking if it is decided 
that PUDs should be included in the same exception as condominiums. At 
this time, however, the Department has not determined that such a 
change is needed. It is appropriate to conclude this rulemaking by 
adopting the interim rule as a final rule without change.

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 
doing so certifies that this interim rule will not have a significant 
economic impact on a substantial number of small entities. This rule 
removes the restriction on FHA mortgage insurance for a dwelling unit 
in a condominium project where the condominium association has a right 
of first refusal to purchase units that are offered for sale.

Environmental Finding

    A Finding of No Significant Impact with respect to the environment 
was made at the interim rule stage in accordance with 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). This 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, Office 
of General Counsel, Department of Housing and Urban Development, Room 
10276, 451 7th Street S.W., Washington, D.C. 20410.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has Federalism implications and either imposes 
substantial compliance costs on State and local governments or is not 
required by statute, or preempts State law, unless the relevant 
requirements of section 6 of the Executive Order are met. This final 
rule does not have Federalism implications and does not impose 
substantial direct compliance costs on State and local governments or 
preempt State law within the meaning of the Executive 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 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.

Catalog of Domestic Federal Assistance

    The Catalog of Federal Domestic Assistance number for the Home 
Equity Conversion Mortgage Program is 14.183.

List of Subjects in 24 CFR Part 206

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

    Accordingly, the interim rule published at 63 FR 17654, April 9, 
1998, is adopted as final without change.

    Dated: January 20, 2000.
William C. Apgar,
Assistant Secretary for Housing-- Federal Housing Commissioner.
[FR Doc. 00-2316 Filed 2-2-00; 8:45 am]
BILLING CODE 4210-27-P