[Federal Register Volume 67, Number 209 (Tuesday, October 29, 2002)]
[Notices]
[Pages 66038-66042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27559]



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Part II





Department of Housing and Urban Development





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Notice of FHA Accelerated Claim Disposition Demonstration; Notice

  Federal Register / Vol. 67, No. 209 / Tuesday, October 29, 2002 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4691-N-02]


Notice of FHA Accelerated Claim Disposition Demonstration

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

ACTION: Notice.

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SUMMARY: This notice announces HUD's establishment of the Accelerated 
Claim Disposition (ACD) Demonstration. Under the ACD Demonstration, HUD 
will pay accelerated claims on certain defaulted FHA-insured mortgages. 
HUD intends to select up to nine mortgagees to participate in the ACD 
Demonstration. The demonstration will have a limited initial duration 
and will include mortgage loans secured by properties located within 
the jurisdiction of HUD's Philadelphia, Pennsylvania and Atlanta, 
Georgia Homeownership Centers (HOCs). At the conclusion of the 
demonstration, HUD will assess its success and determine whether to 
implement the ACD process, on a permanent basis, throughout the 
country. This notice follows publication of a February 5, 2002 Federal 
Register notice proposing the establishment of the ACD Demonstration, 
and takes into consideration the public comments received on the 
earlier notice.

FOR FURTHER INFORMATION CONTACT: Kathleen S. Malone, Director, Office 
of Asset Sales, Room 6266, U.S. Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410; telephone: 
(202) 708-2625 (this is not a toll-free telephone number). Hearing- and 
speech-impaired persons may access this telephone number via TTY by 
calling the toll-free Federal Information Relay Service at 1-800-877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background--HUD's February 5, 2002 Federal Register Notice

    On February 5, 2002 (67 FR 5418), HUD published a notice in the 
Federal Register announcing its intent to establish the Accelerated 
Claim Disposition (ACD) Demonstration, and soliciting public comments 
on the proposal. The ACD Demonstration is authorized under section 204 
of the National Housing Act (12 U.S.C. 1710), as amended by section 601 
of the Fiscal Year 1999 Departments of Veterans Affairs and Housing and 
Urban Development and Independent Agencies Appropriations Act (Pub. L. 
105-276, approved October 21, 1998) (the FY 1999 HUD Appropriations 
Act). Section 601 of the FY 1999 HUD Appropriations Act amended section 
204 to make more effective the methods for paying insurance claims and 
disposing of HUD-acquired single family mortgages and properties.
    Under amended section 204(a)(1)(A) of the National Housing Act, the 
Secretary of HUD is authorized to pay accelerated claims upon 
assignment of certain defaulted FHA-insured mortgage loans. Before 
implementing the new accelerated claim payment process authorized by 
amended section 204 on a nationwide basis, HUD has decided to conduct a 
demonstration involving a group of defaulted mortgages. The ACD 
Demonstration will allow HUD to assess the success of the new 
accelerated claim payment process and to address any programmatic 
concerns before authorizing its use throughout the country. Publication 
of the February 5, 2002 notice allowed HUD to solicit input on how the 
ACD Demonstration should be structured and its success evaluated.

II. Significant Changes to Proposed ACD Demonstration

    This notice announces HUD's establishment of the ACD Demonstration. 
The notice follows publication of the February 5, 2002 notice, and 
takes into consideration the public comments received on the earlier 
notice. The most significant changes that have been made to the ACD 
Demonstration since publication of the February 5, 2002 notice are as 
follows:

A. Changes Regarding FHA Insurance Requirements

    1. Eligibility of FHA-insured mortgages on two to four-unit homes. 
HUD has expanded eligibility for the ACD Demonstration to include FHA 
single family mortgages on one to four-unit homes. The February 5, 2002 
notice limited eligibility to FHA mortgages on one-unit homes. 
Mortgages on two to four-unit homes have a higher risk of foreclosure, 
all other factors being equal. Inclusion of these mortgages in the ACD 
Demonstration will therefore increase the number of defaulted loans 
available for submission of an accelerated claim and enhance the 
usefulness of the ACD process for participating mortgagees. 
Accordingly, HUD has determined that inclusion of these mortgages in 
the ACD Demonstration is appropriate.
    2. FHA endorsement date. The notice specifies that the FHA 
endorsement date of the mortgage loan must be prior to February 5, 
2002.
    3. No pending or paid partial FHA insurance claim. The notice 
provides that there must be no pending or paid partial FHA mortgage 
insurance claim in connection with the defaulted mortgage.

B. Changes Regarding Loan Status

    1. Minimum unpaid principal balance. The notice provides that the 
mortgage must have an unpaid principal balance of no less than $20,000.
    2. Minimum length of default prior to payment of accelerated claim. 
This notice clarifies that to be eligible for an accelerated claim, a 
mortgage must be in default for at least four full monthly installments 
(i.e., four full mortgage payments are due and unpaid).
    3. Maximum length of default prior to payment of accelerated claim. 
Related to the preceding clarification, HUD will also establish a 
maximum number of missed payments beyond which it will not pay an 
accelerated claim on a defaulted mortgage. This maximum number of 
missed payments will vary depending on the location of the underlying 
property, and will be based on the foreclosure timelines for the 
various jurisdictions in the Atlanta and Philadelphia Homeownership 
Centers (HOCs). The schedule of maximum missed mortgage payments will 
be provided to mortgagees prior to their agreement to participate in 
the ACD Demonstration.
    4. Revised loan to value requirements. This notice provides that, 
to be eligible under the ACD Demonstration, a mortgage must have a loan 
to value ratio of 85 percent or greater, rather than the 90 percent 
specified in the February 5, 2002 notice. HUD has determined that a 
high percentage of claims meeting the lower loan to value ratio satisfy 
the other eligibility criteria for an accelerated claim. Revising the 
loan to value ratio will make more loans eligible for the ACD process, 
thereby increasing its usefulness for participating mortgagees and 
better enabling HUD to evaluate the success of the ACD Demonstration. 
Accordingly, HUD believes that inclusion of these mortgages in the ACD 
Demonstration is appropriate.
    5. Need for Broker's Price Opinion (BPO). This notice clarifies 
that BPOs are not used to calculate loan eligibility for the ACD 
Demonstration. However, BPOs will be required for all loans for which a 
claim is submitted. The BPO will be made available to private sector 
firms who qualify to participate in a competitive bidding process to 
select a participant in the joint venture formed for disposition of the 
mortgage loans. Participating mortgagees will be reimbursed for BPOs on 
all loans for which a claim is submitted and paid.

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    6. FICO score no longer an eligibility criterion. This notice 
provides that a mortgagor's FICO score will no longer be used as an 
eligibility criterion under the ACD Demonstration. (FICO stands for 
Fair, Issac and Company--the company that has developed the 
mathematical formulas used to derive FICO scores.)
    7. Indemnification Agreement. The notice provides that the mortgage 
loan must not be, to the knowledge of the participating mortgagee, 
subject to an Indemnification Agreement as of the provisional claim 
approval date.

C. Changes Regarding Loss Mitigation

    1. Loss mitigation evaluation. The notice provides that, for each 
defaulted mortgage, the participating mortgagee (or the prior servicer 
of the defaulted mortgage) has evaluated all of the loss mitigation 
actions provided in 24 CFR 203.605 and determined that no such action 
is appropriate or, if appropriate, that such action has been tried and 
has failed.
    2. Special forbearance relief. To be eligible under the ACD 
Demonstration, the mortgage loan must not be subject to special 
forbearance relief under 24 CFR 203.614.

D. Changes Regarding Property Securing Mortgage

    1. Exclusion of properties located in asset control areas. This 
notice provides that the ACD Demonstration will exclude loans secured 
by properties located in asset control areas designated under section 
204(h) of the National Housing Act, as added by section 602 of the FY 
1999 HUD Appropriations Act.
    2. Properties seized by the United States. The mortgage must not be 
secured by a property that has been seized by the U.S. Department of 
Justice or subject to a seizure order in connection with a drug-related 
case.
    3. Limit on cost of repairs. As of the provisional claim approval 
date, the cost of any required repairs to the property must be less 
than 10% of the property's value.

E. Changes Regarding Foreclosure

    1. Foreclosure sales and deeds-in-lieu of foreclosure. For a 
mortgage to be eligible for an accelerated claim, there must not have 
been a foreclosure sale or pre-foreclosure sale of the property, no 
deed-in-lieu of foreclosure has been accepted, and no foreclosure sale 
has been scheduled within sixty days following the claim date.
    2. Commencement of foreclosure proceedings. If foreclosure of the 
property has been initiated, the foreclosure action may not have been 
contested in order for the defaulted mortgage to be eligible under the 
ACD Demonstration.

III. Discussion of the Public Comments Received on the February 5, 2002 
Notice

    The public comment period on the February 5, 2002 notice closed on 
April 8, 2002. HUD received 21 comments on the notice. Mortgage 
companies, legal aid providers, nonprofit housing and community 
development organizations, and national organizations representing 
mortgage bankers and realtors submitted comments. This section of the 
preamble presents a discussion of the most significant issues raised by 
the public commenters on the February 5, 2002 notice, and HUD's 
responses to these comments.
    Comment: Participation in the ACD Process should be voluntary. 
Several of the commenters made this suggestion.
    HUD Response: Participation in the ACD Demonstration is voluntary.
    Comment: Participating mortgagees should be required to fully 
comply with loss mitigation processes. Some commenters expressed 
concern that the ACD Demonstration could result in families losing 
their homes if participating mortgagees do not fully utilize the 
existing HUD loss mitigation process.
    HUD Response: The ACD Demonstration will not compromise existing 
loss mitigation standards and requirements. Only those mortgagees 
qualified in the top tier of the FHA Tiering System (which ranks 
mortgagees in loss mitigation use) are eligible to participate in the 
ACD Demonstration. Participating mortgagees must exhaust all loss 
mitigation options prior to submitting a claim under the ACD 
Demonstration. Further, HUD expects that the joint venture Manager will 
be motivated to avoid foreclosure and seek to restructure loans in 
accordance with market value and owner income.
    Comment: HUD should permit use of additional risk scoring models. 
Several commenters suggested that participating mortgagees be allowed 
to use risk scoring models, other than the Freddie Mac Early Indicator 
Risk Scoring System, to determine the eligibility of a mortgage for an 
accelerated claim.
    HUD Response: HUD has not adopted the change suggested by the 
commenters. Mortgagees participating in the ACD Demonstration are 
required to use the Freddie Mac Early Indicator Risk Scoring System. 
However, HUD will explore the use of other risk scoring models for use 
in the permanent ACD program.
    Comment: HUD should conduct an audit before terminating FHA 
mortgage insurance. One commenter suggested that HUD conduct pre-claim 
audits to ensure the eligibility of a loan for an accelerated claim 
prior to termination of FHA insurance. Alternatively, the commenter 
suggested that HUD conduct a post-claim audit but not terminate FHA 
insurance until the audit is complete.
    HUD Response. HUD has not adopted the change requested by the 
commenter. The ACD Demonstration will contain several safeguards to 
ensure that a defaulted loan qualifies for payment of an accelerated 
claim. Participating mortgagees are required to assure that loans meet 
the eligibility criteria for an accelerated claim. HUD will also review 
the eligibility of defaulted loans during the pre-claim process and 
notify the participating mortgagees of provisional approval or 
disapproval of the submitted loans. FHA mortgage insurance will be 
terminated upon payment of the claim.
    Comment: Will FHA insurance be restored for a mortgage loan 
reassigned to the participating mortgagee? One commenter asked this 
question.
    HUD Response. If the FHA insurance was valid prior to submittal of 
the accelerated claim, HUD will reinstate the mortgage insurance after 
reassignment of the loan to the participating mortgagee.
    Comment: ACD Demonstration should take into consideration other 
community revitalization and affordable housing programs and 
initiatives. One commenter made this suggestion. The commenter was 
particularly concerned about the potential impacts of the ACD 
Demonstration on the program for the disposition of HUD-owned single 
family assets in asset control areas authorized by section 602 of the 
FY 1999 HUD Appropriations Act.
    HUD Response. HUD agrees and has revised the ACD Demonstration in 
response to the concerns expressed by the commenter. Specifically, the 
ACD Demonstration will not include any mortgages secured by a property 
located within an asset control area.
    Comment: Objection to use of BPO in calculating loan to value 
ratio. Several commenters objected to the use of a BPO in calculating 
the loan to value ratio of the defaulted mortgage. The commenters 
suggested that HUD reimburse mortgagees for the cost of the BPO, or 
permit the use of an Automated Valuation Model (AVM) analysis to 
determine the value of the property.
    HUD Response. BPOs are not used to calculate the loan to value 
ratios to determine eligibility for the ACD

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Demonstration. Loan to value ratios will be determined using the 
original appraisal or, if none is available, the original principal 
balance of the mortgage. However, BPOs will be required for all loans 
for which a claim is submitted, and made available to bidders 
qualifying for participation in the joint venture. Participating 
mortgagees will be reimbursed for BPOs on all loans for which a claim 
is submitted and paid.
    Comment: FICO score should not be used in determining loan 
eligibility. One commenter suggested that HUD eliminate some of the 
specific loan eligibility criteria during the demonstration period, and 
specifically suggested the removal of the FICO score requirement.
    HUD Response. HUD will not use the FICO score eligibility criterion 
during this demonstration period. The FICO score requirement is being 
removed both in response to the public comments and because the 
requirement overlapped with other eligibility criteria.
    Comment: Loans should be in default for longer than three months to 
qualify for the ACD process. Several commenters suggested that HUD 
extend the three-month period that a loan must be default to qualify 
for payment of an accelerated claim.
    HUD Response. In response to these comments, this notice clarifies 
that HUD will not pay an accelerated claim until an eligible mortgage 
is in default for at least four full monthly installments (i.e., four 
full mortgage payments are due and unpaid). Further, HUD will also 
establish a maximum number of missed payments beyond which it will not 
pay an accelerated claim on a defaulted mortgage. This maximum number 
of missed payments will vary depending on the location of the 
underlying property, and will be based on the foreclosure timelines for 
the various states located within the jurisdictions of the Atlanta and 
Philadelphia HOCs. The schedule of maximum missed mortgage payments 
will be provided to mortgagees prior to their agreement to participate 
in the ACD Demonstration.
    Comment: Accelerated claim amount should be based on the mortgage 
note interest rate. Several commenters wrote that HUD should base the 
amount of the accelerated claim on the mortgage note rate of interest 
(rather than on the debenture rate). The commenters also suggested that 
the amount of the claim be calculated from the date of the last paid 
installment rather than from the date of default.
    HUD Response. HUD is statutorily required to pay insurance claims 
based on the debenture rate from the date of default.
    Comment: Submission of a Mortgage Insurance Certificate (MIC) 
should not be required for payment of an accelerated claim. A few 
commenters opposed requiring the submission of a paper MIC as part of 
the claim submission process.
    HUD Response. HUD has eliminated the submission of an MIC as a 
prerequisite for the payment of an accelerated claim. For claim payment 
under the ACD Demonstration, HUD will rely on representations and 
information provided by participating mortgagees (including a screen 
print-out from the FHA Connection portfolio screen verifying mortgagee 
identification number, property address and current holder) as well as 
internal information to determine insurance status. Participating 
mortgagees will, however, be required to submit the MIC with the 
collateral files (and obtain a duplicate original MIC if the original 
MIC is missing) following claim submission. Mortgagees will continue to 
be required to submit the original or a duplicate MIC as a prerequisite 
to submitting a conveyance or other disposition claim for FHA single 
family mortgage insurance benefits.
    Comment: Factors for consideration in evaluating the success of the 
ACD Demonstration. Several commenters submitted helpful recommendations 
regarding the factors HUD should consider in evaluating the success of 
the ACD Demonstration.
    HUD Response. HUD appreciates all of the suggestions made by these 
commenters. HUD will consider all of these comments in determining the 
criteria for evaluating the ACD Demonstration. A summary of the results 
of the evaluation will be published in the Federal Register.

IV. Overview of the ACD Demonstration

A. Duration

    The ACD Demonstration will have a limited duration. HUD may extend 
the duration of the demonstration in order to accurately assess its 
effectiveness.

B. Geographic Scope

    The demonstration will initially include mortgages secured by 
properties located within the jurisdiction of HUD's Philadelphia, 
Pennsylvania and Atlanta, Georgia HOCs. HUD may decide at a future date 
to expand the scope of the ACD Demonstration to include one or more 
additional HOCs.
    The Philadelphia HOC serves Connecticut, Delaware, the District of 
Columbia, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New 
Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, 
and West Virginia.
    The Atlanta HOC serves Alabama, Florida, Georgia, Kentucky, 
Illinois, Indiana, Mississippi, North Carolina, South Carolina, and 
Tennessee, as well as the Caribbean.

C. Participating Mortgagees

    Mortgagee participation in the ACD Demonstration is voluntary. HUD 
will select up to 9 eligible mortgagees to participate in the ACD 
Demonstration. In order to be selected for participation in the ACD 
Demonstration, a mortgagee must satisfy all of the following criteria:
    1. Number of serviced loans. The mortgagee must currently service 
in excess of 20,000 mortgage loans secured by properties that are 
located within the jurisdiction of the Philadelphia or Atlanta HOCs.
    2. Loss mitigation performance. The mortgagee must be qualified in 
the top tier of the FHA Tiering System, which ranks mortgagees in loss 
mitigation use. The FHA Tiering System was developed by HUD's National 
Servicing and Loss Mitigation Center and is subject to future 
refinement.
    3. Computer system capabilities. The mortgagee must have the 
technical capability to interface with the FHA Single Family Claims 
system, through the internet (using the FHA Connection System) and 
using Electronic Data Interchange (EDI) technology. In addition, the 
mortgagee must have the technical capability to interface with any 
other computer systems utilized by FHA or its contractors pertaining to 
the ACD Demonstration.
    4. Use of the Freddie Mac Early Indicator Risk Scoring System. The 
mortgagee must have the ability to run risk scoring models using the 
Freddie Mac Early Indicator Risk Scoring software program.
    5. Other criteria. The mortgagee will be required to meet any 
additional criteria that HUD may establish regarding the eligibility of 
mortgagees for participation in the ACD Demonstration.

D. Eligible Loans

    Only certain defaulted FHA-insured loans are eligible for the 
accelerated claim payment process. To be eligible for payment of an 
accelerated claim, the defaulted mortgage must meet the following 
criteria:
1. FHA Insurance
    (a) The mortgage is an FHA-insured single family mortgage loan on a 
one-to four-unit home.

[[Page 66041]]

    (b) The mortgage loan is an actively insured by FHA under either 
section 203(b) or 234 of the National Housing Act (12 U.S.C. 1709(b) 
and 1715y).
    (c) The FHA endorsement date of the mortgage is prior to February 
5, 2002.
    (d) There is no pending or paid partial FHA mortgage insurance 
claim in connection with the mortgage.
2. Loan Status
    (a) The mortgage loan has an unpaid principal balance of no less 
than $20,000.
    (b) The mortgage must be in default for at least four full monthly 
installments (i.e., four full mortgage payments are due and unpaid). 
However, the number of missed monthly installments on the mortgage as 
of the provisional approval date may not exceed the maximum number 
allowed by HUD for the jurisdiction in which the property securing the 
mortgage is located.
    (c) The mortgage has a loan to value ratio of 85 percent or 
greater. The loan to value ratio represents the relationship between 
the amount of the mortgage loan and the value of the real estate. The 
loan to value ratio is to be determined using the original appraisal 
or, if none is available, the original principal balance of the 
mortgage loan.
    (d) The mortgage must have received a score of D, E, or F on the 
Freddie Mac Early Indicator Risk Scoring software system.
    (e) To the knowledge of the participating mortgagee, the mortgage 
loan is not subject to an Indemnification Agreement as of the 
provisional claim approval date.
4. Property Securing Mortgage
    (a) The mortgage must be secured by a property located within the 
jurisdiction of HUD's Philadelphia, Pennsylvania or Atlanta, Georgia 
HOCs. However, the property must not be located in an asset control 
area designated under section 204(h) of the National Housing Act as 
added by section 602 of the FY 1999 HUD Appropriations Act.
    (b) The mortgage must not be secured by a property that has been 
seized by the U.S. Department of Justice or otherwise subject to a 
seizure order in connection with a drug-related case.
    (c) As of the provisional claim approval date, the cost of any 
required repairs to the property must be less than 10% of the 
property's value.
5. Foreclosure
    (a) No foreclosure sale of the property has been scheduled within 
the sixty (60) day period after the claim date, there has been no 
foreclosure sale or pre-foreclosure sale, and no deed-in-lieu of 
foreclosure has been accepted.
    (b) If the first step required under applicable law to initiate a 
foreclosure of the property has been taken, the foreclosure action has 
not been contested.
6. Other Eligibility Requirements
    The mortgage must meet any additional criteria that HUD may 
establish regarding the eligibility of defaulted mortgage loans for an 
accelerated claim under the ACD Demonstration.

E. Risk Scoring

    At the 90th day of delinquency, mortgagees participating in the ACD 
Demonstration will be required to begin running scoring models using 
the Freddie Mac Early Indicator Risk Scoring System to confirm the 
eligibility of the mortgage for payment of an accelerated claim. 
Provided that the mortgage meets the eligibility criteria described in 
paragraph. IV.D. of this notice, participating mortgagees will have the 
option to submit an accelerated claim.

F. Disposition Methods

    HUD will use one or both of the following disposition methods under 
the ACD Demonstration. HUD, in its sole discretion, will determine 
which of the two disposition methods to use for particular mortgages 
under the demonstration.
    1. Joint Venture. The joint venture method will be the primary 
disposition method used under the ACD Demonstration. Under this 
disposition method, HUD will sell a majority interest in a public/
private joint venture formed to acquire, service and dispose of the 
mortgage loans submitted under the ACD Demonstration. The private 
sector entity will be selected through a competitive bid process and 
will serve as the Manager of the joint venture. The joint venture 
Manager will receive a percentage of the net cashflow from the joint 
venture derived from the eligible mortgages submitted by mortgagees 
participating in the ACD Demonstration. The private sector joint 
venture Manager will be responsible for maximizing the value of each 
mortgage loan asset through re-performance, refinancing, workout, 
foreclosure and/or disposition. HUD expects the joint venture Manager 
to conduct its operations in a manner consistent with applicable FHA 
and industry standards for integrity and avoidance of predatory lending 
practices.
    Private sector firms that pre-qualify will be given the opportunity 
to bid at a competitive auction to be the joint venture Manager. To 
qualify, bidders must be adequately capitalized and must meet other FHA 
standards for loan servicing, experience and integrity. Before bidding, 
investors will be required to make a security deposit with HUD.
    2. Other disposition methods may be used. HUD may also consider 
using the special servicing disposition method or other disposition 
methods under later subsequent demonstrations. The ACD Demonstration 
will not initially use this method, and HUD may decide not to use this 
disposition method at all during the course of the demonstration. Under 
this disposition method, servicing of the mortgage may be transferred 
to a special servicer. The special servicer may provide assistance to 
HUD in undertaking one or more of the following actions: (a) 
Foreclosing and selling the properties; (b) accumulating mortgages for 
a whole loan sale; and/or (c) accumulating mortgages for disposition in 
a securitization.

V. Evaluating the Success of the ACD Demonstration

    At the conclusion of the ACD Demonstration, HUD will assess its 
success and determine whether to implement the ACD process on a 
permanent basis throughout the country. In conducting this evaluation, 
HUD will assess such factors as whether the use of the ACD process 
will: (1) reduce loss rates; (2) reduce the cost and time associated 
with claim dispositions; and (3) enhance the ability of HUD to assess 
risk and manage the FHA mortgage insurance fund.

VI. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was prepared for the February 5, 2002 notice in accordance with HUD 
regulations at 24 CFR part 50, which implement section 102(2)(c) of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4332). That 
Finding of No Significant Impact remains applicable to this notice and 
is available for public inspection between the hours of 7:30 a.m. and 
5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC.

[[Page 66042]]

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating 
policies that have federalism implications and either impose 
substantial direct compliance costs on State and local governments and 
are not required by statute, or preempt State law, unless the relevant 
requirements of section 6 of the Executive Order are met. This notice 
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.

    Dated: October 23, 2002.
Sean Cassidy,
General Deputy Assistant Secretary for Housing-Federal Housing 
Commissioner.
[FR Doc. 02-27559 Filed 10-28-02; 8:45 am]
BILLING CODE 4120-27-P