[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Proposed Rules]
[Pages 45498-45499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15473]



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Part III





Department of Housing and Urban Development





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24 CFR Part 206



Revision of Home Equity Conversion Mortgage Regulations; Proposed Rule

  Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 206

[Docket No. FR-4956-P-01; HUD-2005-0015]
RIN 2502-AI30


Revision of Home Equity Conversion Mortgage Regulations

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend HUD's Home Equity Conversion 
Mortgage (HECM) Insurance program regulations to accommodate any state 
law that may prohibit the line-of-credit payment option currently 
available to HECM mortgagors. The amendments made by this rule would 
accommodate any such state law by making HECMs available within the 
parameters of the state law.

DATES: Comment Due Date: October 4, 2005.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500. Electronic comments may be 
submitted through either:
     The Federal eRulemaking Portal http://www.regulations.gov; 
or
     The HUD 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 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: Margaret Burns, Acting Director, 
Office of Single Family Program Development, Office of the Deputy 
Assistant Secretary for Single Family Housing, Office of Housing, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 9172, Washington, DC 20410-8000; telephone (202) 708-2121. 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

    Section 255 of the National Housing Act (12 U.S.C. 1715z-20) (NHA) 
authorizes the Secretary to establish the Home Equity Conversion 
Mortgage (HECM) program. The HECM program was designed to provide 
persons age 62 or older an opportunity to convert home equity into 
monthly streams of income or lines of credit. Section 255(b)(3) of the 
NHA defines ``home equity conversion mortgage'' as a first mortgage, 
which provides for future payments to the homeowner based on 
accumulated equity and which a housing creditor is authorized to make 
under any state constitution, law, or regulation. The Department 
promulgated regulations at 24 CFR part 206 pursuant to section 255 that 
implemented an insurance program for HECMs.
    HUD is aware that state law, e.g., Texas, may prohibit the line-of-
credit payment option to HECM mortgagors. As a result of HUD's HECM 
program regulations at 24 CFR part 206, HUD-insured HECMs could be made 
only where such state law exists if HUD waived applicable regulations. 
This proposed rule is intended to address this problem. Specifically, 
this proposed rule would amend HUD's program regulation to broaden the 
circumstances under which HUD can insure HECMs in any state whose state 
law prohibits the line-of-credit payment available to HECM mortgagors.

II. This Proposed Rule

    This proposed rule would amend the regulations at 24 CFR 206.17 to 
add a new paragraph (d). New paragraph (d) would apply where a state 
prohibits the use of a line-of-credit payment option as required by 
Sec.  206.19(c), whether as a single option or in combination with 
other financing options, as provided in Sec.  206.25(d), thus reducing 
the payment options available to the mortgagor. The proposed rule would 
allow a mortgagor residing in a state that prohibits the use of a line-
of-credit reverse mortgage to change payment options between tenure and 
term options. The change is permissible provided that the provisions of 
Sec.  206.26, relating to a change in payment options, are met except 
those provisions in Sec.  206.26 with respect to line-of-credit payment 
options.

III. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, entitled ``Regulatory Planning and Review.'' OMB 
determined that this rule is a ``significant regulatory action'' as 
defined in section 3(f) of the order (although not an economically 
significant regulatory action under the order). Any changes made to the 
rule as a result of that review are identified in the docket file, 
which is available for public inspection in the Regulations Division, 
Office of General Counsel, 451 Seventh Street, SW., Room 10276, 
Washington, DC 20410-0500.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made 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 et seq.). The Finding of No Significant 
Impact is available for public inspection between the hours of 8 a.m. 
and 5 p.m. weekdays in the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 10276, Washington, DC 20410-0500.

Regulatory Flexibility Act

    The undersigned, in accordance with the Regulatory Flexibility Act 
(5 U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule would not have a significant 
economic impact on a substantial number of small entities. Rather, the 
rule would broaden the availability of HECMs in states where state law 
may limit payment options. HUD anticipates that mortgagees in states 
that limit the line-of-credit payment option will experience an 
increase in business as HUD-insured HECMs become more readily available 
as a result of this rule. More importantly, this rule does not place 
any new requirements on mortgagors as a result of this rule. 
Notwithstanding HUD's determination that this rule would 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

[[Page 45499]]

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 Order. This proposed rule would not have federalism 
implications and would not impose substantial direct compliance costs 
on state and local governments or preempt state law within the meaning 
of the Order. This proposed rule would not preempt state law. Rather, 
this proposed rule would amend HUD's regulations to accommodate the 
restrictions and limitations on HECMs and thereby make HECMs available 
in such states within the parameters imposed by state law.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (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 proposed rule would 
not impose any federal mandates on any state, local, or tribal 
government, or on the private sector, within the meaning of UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number 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, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 206 as follows:

PART 206--HOME EQUITY CONVERSION MORTGAGE INSURANCE

    1. The authority citation for part 206 continues to read as 
follows:

    Authority: 12 U.S.C. 1715b; 1715z-1720; and 42 U.S.C. 3535(d).

    2. Amend Sec.  206.17 by adding a new paragraph (d) to read as 
follows:


Sec.  206.17  General.

* * * * *
    (d) States where lines of credit are prohibited. If a state, as 
defined in section 201 of the National Housing Act (12 U.S.C. 1707), in 
its constitution, statute, or other laws, prohibits the use of a line 
of credit payment option, as a single option or in combination with 
other financing options (see Sec. Sec.  206.19(c) and 206.25(d)), then 
the mortgagor shall have only payment options in accordance with 
Sec. Sec.  206.19(a) and (b). A mortgagor in a state that prohibits the 
use of a line of credit reverse mortgage may change payment options 
between tenure and term options provided the requirements of Sec.  
206.26 are met, except those requirements with respect to lines of 
credit.

    Dated: July 8, 2005.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 05-15473 Filed 8-4-05; 8:45 am]
BILLING CODE 4210-27-P