[Federal Register Volume 70, Number 13 (Friday, January 21, 2005)]
[Proposed Rules]
[Pages 3266-3268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1046]



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Part III





Department of Housing and Urban Development





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24 CFR Part 203



Change in Default Reporting Period; Proposed Rule

  Federal Register / Vol. 70, No. 13 / Friday, January 21, 2005 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 203

[Docket No. FR-4916-P-01]

HUD-2004-0022

RIN 2502-AI20


Change in Default Reporting Period

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the regulations under the 
single-family mortgage insurance program that require mortgagees to 
report the status of all single-family mortgages insured by HUD that 
are in default after 60 days or that are 90 or more days delinquent, as 
applicable. The rule would require mortgagees to report to HUD 
mortgages that are 30 or more days delinquent on the last day of the 
month. The Department believes that the rule would, among other things, 
provide HUD with more recent delinquency information. The receipt of 
more up-to-date information will enable HUD to better monitor its loss 
mitigation program and strengthen the soundness of the Federal Housing 
Administration (FHA) Mortgage Insurance Funds.

DATES: Comment Due Date: February 22, 2005.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-0500. Interested persons may also submit 
comments electronically through either:
     The Federal eRulemaking Portal at: http://www.regulations.gov; or
     The HUD electronic Web site at: http://www.epa.gov/feddocket. Follow the link entitled ``View Open HUD Dockets.'' 
Commenters should follow the instructions provided on that site to 
submit comments electronically.

Facsimile (FAX) comments are not acceptable. In all cases, 
communications must refer to the docket number and title. All comments 
and communications submitted will be available, without revision, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Copies are also available for inspection and downloading 
at http://www.epa.gov/feddocket.

FOR FURTHER INFORMATION CONTACT: Joseph McCloskey, Director, Office of 
the Deputy Assistant Secretary for Single Family Housing, Office of 
Housing, Department of Housing and Urban Development, Room 9172, 451 
Seventh Street, SW., Washington, DC 20410-8000; telephone 202-708-1672 
(this is not a toll-free number). Persons with hearing or speech 
impairments may access this number through TTY by calling the toll-free 
Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Under HUD's existing regulations at 24 CFR 203.332, 203.439(c), and 
203.468, mortgagees are required to report to HUD the status of all FHA 
single-family mortgages that are delinquent. Section 203.332 provides 
that a monthly report is to be made to the FHA Commissioner 
(Commissioner) by the mortgagee with respect to ``mortgages insured 
under this part that are 90 or more days delinquent.'' The report also 
must list the ``status of all mortgages which were reported as 90 or 
more days delinquent the previous month.''
    Under section 203.439(c), mortgagees are required to notify the 
Department of Hawaiian Home Lands each month of those mortgages insured 
under section 247 of the National Housing Act (12 U.S.C. 1715z-12) on 
leaseholds of Hawaiian home lands that are 90 or more days delinquent, 
including mortgages reported the previous month as 90 or more days 
delinquent. The regulation provides that the notice is in addition to 
the report required under Sec.  203.332.
    With regard to default, Sec.  203.468 requires that the lender 
notify the Commissioner of a default within 60 days after its 
occurrence, unless the default has been cured or unless the 
Commissioner has been notified of a previous default that remains 
uncured.
    The delinquency and default information is used to identify status 
and trends of FHA insured mortgages. Default reporting is also an 
effective indicator of FHA lenders' origination and servicing 
activities along with potential risks to the FHA Mutual Mortgage 
Insurance Fund. HUD's Single Family Default Monitoring System, through 
the submission of data by the mortgagees, captures loan level default 
data and feeds this information to other HUD portfolio management and 
lender monitoring systems, including Credit Watch and Neighborhood 
Watch. Accurate default reporting is essential to HUD's portfolio and 
lender monitoring activities.

II. This Proposed Rule

    This rule would revise 24 CFR 203.330 and 203.331 by changing the 
data reporting period for delinquent mortgages and defaulted mortgages 
to once each month on a day prescribed by HUD. The report shall be made 
in a manner prescribed by HUD. In light of the proposed revisions to 
Sec. Sec.  203.330 and 203.331, this rule would remove Sec.  203.332 to 
avoid unnecessarily duplicative sections.
    This rule would also revise paragraph (c) of 203.439 to state that 
the mortgagee shall notify the Department of Hawaiian Home Lands once a 
month on a day prescribed by HUD of all mortgages insured under section 
247 of the National Housing Act on leaseholds of Hawaiian home lands 
that are delinquent on the last day of the month. The notice would be 
in addition to the requirements in Sec. Sec.  203.330 and 203.331.
    Finally, Sec. Sec.  203.466 and 203.467 also would be revised to 
conform them to the proposed revisions of Sec. Sec.  203.330 and 
203.331, with respect to the definitions and notice requirements, 
respectively, of the former sections. In light of the proposed 
revisions to Sec. Sec.  203.466 and 203.467, this rule would remove 
Sec.  203.468 to avoid unnecessarily duplicative sections.
    The revisions proposed by this rule would require mortgagees to 
begin their delinquency reporting of all loans in which the monthly 
payment is due but not paid by the last day of the month. HUD believes 
that the proposed regulatory changes should be welcomed by mortgagees. 
These changes would bring FHA's requirements closer to Fannie Mae, 
Freddie Mac, the Mortgage Bankers Association, and industry standards 
for delinquency reporting requirements. As such, FHA would be in a 
better position to integrate itself, should it choose to do so, into a 
single platform for industry-wide default data reporting. Additionally, 
mortgagees should better understand references to payments due and 
unpaid rather than being required to count days from the due date.
    HUD also believes that the proposed revisions would also contribute 
to FHA's efforts in protecting the financial integrity of the FHA 
Mutual Mortgage Insurance Fund. The revisions proposed in this rule 
would result in the Department's receiving more recent and timely 
delinquency and default information thereby increasing FHA's ability to 
forecast default volume, future defaults, and potential insurance 
losses. More timely information will also enable FHA to better monitor 
its loss mitigation program. This is important

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since FHA insures 100 percent of a mortgage loan as compared to private 
mortgage insurers that insure only 10 to 20 percent of a loan.

Findings and Certifications

Paperwork Reduction Act
    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance 
with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless the collection displays a currently valid OMB control number.
    The burden of the information collections in this proposed rule is 
estimated as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated
                                                 Number of        Number of       average time      Estimated
              Section reference                   parties       responses per   for requirement   annual burden
                                                                  respondent       (in hours)       (in hours)
----------------------------------------------------------------------------------------------------------------
All activity under this rule................             600             7200                1             7200
----------------------------------------------------------------------------------------------------------------

    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Under the provisions 
of 5 CFR part 1320, OMB is required to make a decision concerning this 
collection of information between 30 and 60 days after today's 
publication date. Therefore, a comment on the information collection 
requirements is best assured of having its full effect if OMB receives 
the comment within 30 days of today's publication. This time frame does 
not affect the deadline for comments to the agency on the interim rule, 
however. Comments must refer to the proposal by name and docket number 
(FR-4712) and must be sent to:

Mark Menchik, HUD Desk Officer, Office of Management and Budget, New 
Executive Office Building, Washington, DC 20503-0001, Fax number: (202) 
395-6947, E-mail: [email protected]

 and

Kathleen McDermott, Reports Liaison Officer, Office of Housing-Federal 
Housing Commissioner, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 9116, Washington, DC 20410-8000.
Environmental Impact
    This rule is categorically excluded from environmental review under 
the National Environmental Policy Act (42 U.S.C. 4321). In keeping with 
the exclusion provided for in 24 CFR 50.19(c)(1), this rule does not 
direct, provide for assistance or loan and mortgage insurance for, or 
otherwise govern or regulate, real property acquisition, disposition, 
leasing, rehabilitation, alteration, demolition, or new construction, 
or establish, revise or provide for standards for construction or 
construction materials, manufactured housing, or occupancy. 
Accordingly, under 24 CFR 50.19(c)(2), this rule is categorically 
excluded because it amends an existing document where the existing 
document as a whole would not fall within the exclusion in 24 CFR 
50.19(c)(1) but the amendment by itself would do so.
Unfunded Mandates Reform Act
    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
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 rule does not impose a federal mandate on any 
state, local, or tribal government, nor on the private sector, within 
the meaning of the Unfunded Mandates Reform Act of 1995.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This proposed rule 
would not impose any new obligation small entities participating in the 
FHA single-family mortgage insurance programs. Although the rule would 
require timelier reporting by servicers of delinquent mortgages, the 
information that the servicers will report is already in their 
possession. As a result, any new expense to small entities caused by 
this rule would be negligible. Further, there are no anti-competitive 
discriminatory aspects of the rule with regard to small entities. 
Accordingly, the undersigned certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.
Executive Order 13132, Federalism
    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
state and local governments nor preempt state law within the meaning of 
the executive order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number is 14.117.

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List of Subjects in 24 CFR Part 203

    Hawaiian Natives, Home improvement, Indians-lands, Loan programs-
housing and community development, Mortgage insurance, Reporting and 
record keeping requirements, Solar energy.

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 203 to as follows:

PART 203--SINGLE FAMILY MORTGAGE INSURANCE

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

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

    2. Revise Sec.  203.330 to read as follows:


Sec.  203.330  Definition of delinquency and requirement for notice of 
delinquency to HUD.

    (a) A mortgage account is delinquent any time a payment is due and 
not paid.
    (b) Once each month on a day prescribed by HUD, the mortgagee shall 
report to HUD all mortgages insured under this part that were 
delinquent on the last day of the month. The report shall be made in a 
manner prescribed by HUD.
    3. Revise 203.331 to read as follows:


Sec.  203.331  Definition of default, date of default, and requirement 
of notice of default to HUD.

    (a) Default. If the mortgagor fails to make any payment or to 
perform any other obligation under the mortgage, and such failure 
continues for a period of 30 days, the mortgage shall be considered in 
default for the purposes of this subpart.
    (b) Date of default. For the purposes of this subpart, the date of 
default shall be considered as 30 days after-
    (1) The first uncorrected failure to perform any obligation under 
the mortgage; or
    (2) The first failure to make a monthly payment that subsequent 
payments by the borrower are insufficient to cover when applied to the 
overdue monthly payments in the order in which they became due.
    (c) Notice of default. Once each month, on a day prescribed by HUD, 
the mortgagee shall report to HUD all mortgages that were in default on 
the last day of the month. The report shall be made in a manner 
prescribed by HUD.
    (d) Number of days in month. For the purposes of this section, each 
month shall be considered to have 30 days.


Sec.  203.332  [Removed and reserved]

    4. Remove and reserve Sec.  203.332.
    5. Amend Sec.  203.439 by revising paragraph (c) to read as 
follows:


Sec.  203.439  Mortgages on Hawaiian home lands insured pursuant to 
section 247 of the National Housing Act.

* * * * *
    (c) Notice of delinquency. Once each month on a day prescribed by 
HUD, the mortgagee shall notify the Department of Hawaiian Home Lands 
of all mortgages insured pursuant to section 247 of the National 
Housing Act on leaseholds of Hawaiian home lands that are delinquent on 
the last day of the month. The notice is in addition to the requirement 
in Sec. Sec.  203.330 and 203.331.
    6. Revise 203.466 to read as follows:


Sec.  203.466  Definition of delinquency and requirement for notice of 
delinquency to HUD.

    (a) A mortgage account is delinquent any time a payment is due and 
not paid.
    (b) Once each month on a day prescribed by HUD, the mortgagee shall 
report to HUD all mortgages insured under this part that were 
delinquent on the last day of the month. The report shall be made in a 
manner prescribed by HUD.
    7. Revise 203.467 to read as follows:


Sec.  203.467  Definition of default, date of default, and requirement 
of notice of default to HUD.

    (a) Default. If the borrower fails to make any payment or to 
perform any other obligation under the mortgage, and such failure 
continues for a period of 30 days, the mortgage shall be considered in 
default for the purposes of this subpart.
    (b) Date of default. For the purposes of this subpart, the date of 
default shall be considered as 30 days after-
    (1) The first uncorrected failure to perform any obligation under 
the mortgage; or
    (2) The first failure to make a monthly payment that subsequent 
payments by the borrower are insufficient to cover when applied to the 
overdue monthly payments in the order in which they became due.
    (c) Notice of default. Once each month, on a day prescribed by HUD, 
the mortgagee shall report to the Secretary all mortgages that were in 
default on the last day of the month. The report shall be made on a 
form prescribed by HUD.
    (d) Number of days in month. For the purposes of this section, each 
month shall be considered to have 30 days.


Sec.  203.468  [Removed and reserved]

    8. Remove and reserve Sec.  203.468.

    Dated: December 20, 2004.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 05-1046 Filed 1-19-05; 8:45 am]
BILLING CODE 4916-01-P