[Federal Register Volume 69, Number 165 (Thursday, August 26, 2004)]
[Notices]
[Pages 52518-52519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19491]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4917-N-02]


Mortgage and Loan Insurance Programs Under the National Housing 
Act--Debenture Interest Rates

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

ACTION: Notice.

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SUMMARY: This notice announces changes in the interest rates to be paid 
on debentures issued with respect to a loan or mortgage insured by the 
Federal Housing Commissioner under the provisions of the National 
Housing Act (the Act). The interest rate for debentures issued under 
section 221(g)(4) of the Act during the 6-month period beginning July 
1, 2004, is 5\3/8\ percent. The interest rate for debentures issued 
under any other provision of the Act is the rate in effect on the date 
that the commitment to insure the loan or mortgage was issued, or the 
date that the loan or mortgage was endorsed (or initially endorsed if 
there are two or more endorsements) for insurance, whichever rate is 
higher. The interest rate for debentures issued under these other 
provisions with respect to a loan or mortgage committed or endorsed 
during the 6-month period beginning July 1, 2004, is 5\1/2\ percent. 
However, as a result of a recent amendment to section 224 of the Act, 
if an insurance claim relating to a mortgage insured under sections 203 
or 234 of the Act and endorsed for insurance after January 23, 2004, is 
paid in cash, the debenture interest rate for purposes of calculating a 
claim shall be the monthly average yield, for the month in which the 
default on the mortgage occurred, on United States Treasury Securities 
adjusted to a constant maturity of 10 years as found in Federal Reserve 
Statistical Release H-15.

FOR FURTHER INFORMATION CONTACT: L. Richard Keyser, Department of 
Housing and Urban Development, 451 Seventh Street, SW., Room 2232, 
Washington, DC 20410-8000; telephone (202) 755-7500 (this is not a 
toll-free number). Individuals with speech or hearing impairments may 
access this number through TTY by calling the toll-free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: Section 224 of the National Housing Act (12 
U.S.C. 1715o) provides that debentures issued under the Act with 
respect to an insured loan or mortgage (except for debentures issued 
pursuant to section 221(g)(4) of the Act) will bear interest at the 
rate in effect on the date the commitment to insure the loan or 
mortgage was issued, or the date the loan or mortgage was endorsed (or 
initially endorsed if there are two or more endorsements) for 
insurance, whichever rate is higher. This provision is implemented in 
HUD's regulations at 24 CFR 203.405, 203.479, 207.259(e)(6), and 
220.830. These regulatory provisions state that the applicable rates of 
interest will be published twice each year as a notice in the Federal 
Register.
    Section 224 further provides that the interest rate on these 
debentures will be set from time to time by the Secretary of HUD, with 
the approval of the Secretary of the Treasury, in an amount not in 
excess of the annual interest rate determined by the Secretary of the 
Treasury pursuant to a statutory formula based on the average yield of 
all outstanding marketable Treasury obligations of maturities of 15 or 
more years.
    The Secretary of the Treasury (1) has determined, in accordance 
with the provisions of Section 224, that the statutory maximum interest 
rate for the period beginning July 1, 2004, is 5\1/2\ percent; and (2) 
has approved the establishment of the debenture interest rate by the 
Secretary of HUD at 5\1/2\ percent for the 6-month period beginning 
July 1, 2004. This interest rate will be the rate borne by debentures 
issued with respect to any insured loan or mortgage (except for 
debentures issued pursuant to section 221(g)(4)) with insurance 
commitment or endorsement date (as applicable) within the last 6 months 
of 2004.
    For convenience of reference, HUD is publishing the following chart 
of debenture interest rates applicable to mortgages committed or 
endorsed since January 1, 1980:

------------------------------------------------------------------------
  Effective interest
         rate                On or after                Prior to
------------------------------------------------------------------------
9\1/2\...............  Jan. 1, 1980...........  July 1, 1980.
9\7/8\...............  July 1, 1980...........  Jan. 1, 1981.
11\3/4\..............  Jan. 1, 1981...........  July 1, 1981.
12\7/8\..............  July 1, 1981...........  Jan. 1, 1982.
12\3/4\..............  Jan. 1, 1982...........  Jan. 1, 1983.
10\1/4\..............  Jan. 1, 1983...........  July 1, 1983.
10\3/8\..............  July 1, 1983...........  Jan. 1, 1984.
11\1/2\..............  Jan. 1, 1984...........  July 1, 1984.
13\3/8\..............  July 1, 1984...........  Jan. 1, 1985.
11\5/8\..............  Jan. 1, 1985...........  July 1, 1985.
11\1/8\..............  July 1, 1985...........  Jan. 1, 1986.
10\1/4\..............  Jan. 1, 1986...........  July 1, 1986.
8\1/4\...............  July 1, 1986...........  Jan. 1. 1987.
8....................  Jan. 1, 1987...........  July 1, 1987.
9....................  July 1, 1987...........  Jan. 1, 1988.
9\1/8\...............  Jan. 1, 1988...........  July 1, 1988.
9\3/8\...............  July 1, 1988...........  Jan. 1, 1989.
9\1/4\...............  Jan. 1, 1989...........  July 1, 1989.
9....................  July 1, 1989...........  Jan. 1, 1990.
8\1/8\...............  Jan. 1, 1990...........  July 1, 1990.
9....................  July 1, 1990...........  Jan. 1, 1991.
8\3/4\...............  Jan. 1, 1991...........  July 1, 1991.
8\1/2\...............  July 1, 1991...........  Jan. 1, 1992.
8....................  Jan. 1, 1992...........  July 1, 1992.
8....................  July 1, 1992...........  Jan. 1, 1993.
7\3/4\...............  Jan. 1, 1993...........  July 1, 1993.
7....................  July 1, 1993...........  Jan. 1, 1994.
6\5/8\...............  Jan. 1, 1994...........  July 1, 1994.
7\3/4\...............  July 1, 1994...........  Jan. 1, 1995.
8\3/8\...............  Jan. 1, 1995...........  July 1, 1995.
7\1/4\...............  July 1, 1995...........  Jan. 1, 1996.
6\1/2\...............  Jan. 1, 1996...........  July 1, 1996.
7\1/4\...............  July 1, 1996...........  Jan. 1, 1997.
6\3/4\...............  Jan. 1, 1997...........  July 1, 1997.
7\1/8\...............  July 1, 1997...........  Jan. 1, 1998.
6\3/8\...............  Jan. 1, 1998...........  July 1, 1998.
6\1/8\...............  July 1, 1998...........  Jan. 1, 1999.
5\1/2\...............  Jan. 1, 1999...........  July 1, 1999.
6\1/8\...............  July 1, 1999...........  Jan. 1, 2000.
6\1/2\...............  Jan. 1, 2000...........  July 1, 2000.
6\1/2\...............  July 1, 2000...........  Jan. 1, 2001.
6....................  Jan. 1, 2001...........  July 1, 2001.
5\7/8\...............  July 1, 2001...........  Jan. 1, 2002.
5\1/4\...............  Jan. 1, 2002...........  July 1, 2002.
5\3/4\...............  July 1, 2002...........  Jan. 1, 2003.
5....................  Jan. 1, 2003...........  July 1, 2003.
4\1/2\...............  July 1, 2003...........  Jan. 1, 2004.
5\1/8\...............  Jan. 1, 2004...........  July 1, 2004.
5\1/2\...............  July 1, 2004...........  Jan. 1, 2005.
------------------------------------------------------------------------

    Section 215 of HUD's 2004 Appropriations Act amended section 224 of 
the Act, to change the debenture interest rate for purposes of 
calculating certain insurance claim payments made in cash. Therefore, 
effective immediately, for all claims paid in cash on mortgages insured 
under section 203 or 234 of the National Housing Act and endorsed for 
insurance after January 23, 2004, the debenture interest rate will be 
the monthly average yield, for the month in which the default on the 
mortgage occurred, on United States Treasury Securities adjusted to a 
constant maturity of 10 years, as found in Federal Reserve Statistical 
Release H-15. The Federal Housing Administration is in the process of 
making conforming amendments to applicable regulations to fully 
implement this recent change to section 224 of the Act.

[[Page 52519]]

    Section 221(g)(4) of the Act provides that debentures issued 
pursuant to that paragraph (with respect to the assignment of an 
insured mortgage to the Secretary) will bear interest at the ``going 
Federal rate'' in effect at the time the debentures are issued. The 
term ``going Federal rate'' is defined to mean the interest rate that 
the Secretary of the Treasury determines, pursuant to a statutory 
formula based on the average yield on all outstanding marketable 
Treasury obligations of 8- to 12-year maturities, for the 6-month 
periods of January through June and July through December of each year. 
Section 221(g)(4) is implemented in the HUD regulations at 24 CFR 
221.255 and 24 CFR 221.790.
    The Secretary of the Treasury has determined that the interest rate 
to be borne by debentures issued pursuant to Section 221(g)(4) during 
the 6-month period beginning July 1, 2004, is 5\3/8\ percent.
    HUD expects to publish its next notice of change in debenture 
interest rates in January 2005.
    The subject matter of this notice falls within the categorical 
exemption from HUD's environmental clearance procedures set forth in 24 
CFR 50.19(c)(6). For that reason, no environmental finding has been 
prepared for this notice.

(Authority: Sections 211, 221, 224, National Housing Act, 12 U.S.C. 
1715b, 1715l, 1715o; section 7(d), Department of HUD Act, 42 U.S.C. 
3535(d)).

    Dated: August 18, 2004.
Sean Cassidy,
General Deputy Assistant Secretary for Housing.
[FR Doc. 04-19491 Filed 8-25-04; 8:45 am]
BILLING CODE 4210-27-P