[Federal Register Volume 72, Number 87 (Monday, May 7, 2007)]
[Proposed Rules]
[Pages 25926-25927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8499]



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Part III





Department of Housing and Urban Development





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24 CFR Parts 320 and 350



Government National Mortgage Association: Mortgage-Backed Securities 
(MBS) Program--Payments to Securityholders; Book-Entry Procedures; and 
Financial Reporting; Proposed Rule

  Federal Register / Vol. 72, No. 87 / Monday, May 7, 2007 / Proposed 
Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 320 and 350

[Docket No. FR-5063-P-01]
RIN 2503-AA19


Government National Mortgage Association: Mortgage-Backed 
Securities (MBS) Program--Payments to Securityholders; Book-Entry 
Procedures; and Financial Reporting

AGENCY: Government National Mortgage Association, HUD.

ACTION: Proposed rule.

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SUMMARY: The Government National Mortgage Association (Ginnie Mae) is 
proposing regulations that would restrict the issuance of physical 
certificates representing Ginnie Mae mortgage-backed securities and 
would clarify that book-entry securities may be withdrawn from the 
Federal Reserve book-entry system after Ginnie Mae has approved a 
request for physical certificates, also known as definitive securities, 
in the same amount. This proposed rule would also eliminate the 
requirement for a classified balance sheet.

DATES: Comment Due Date: July 6, 2007.

ADDRESSES: Interested persons are invited to submit comments to the 
Office of General Counsel, Rules Docket Clerk, Department of Housing 
and Urban Development, 451 Seventh Street, SW., Room 10276, Washington, 
DC 20410-0500. Communications should refer to the above docket number 
and title.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that Web site to submit comments 
electronically.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable. 
In all cases, communications must refer to the docket number and title.
    Public Inspection of Public Comments. All comments and 
communications submitted to HUD will be available, without charge, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number). Copies of all comments submitted are 
available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Thomas R. Weakland, Senior Vice 
President, Office of Program Administration, Government National 
Mortgage Association, Department of Housing and Urban Development, Room 
B-133, 451 Seventh Street, SW., Washington, DC 20410; telephone (202) 
475-4915 (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

    The Government National Mortgage Association (GNMA) (Ginnie Mae) 
guarantees privately issued securities backed by trusts or pools of 
mortgage loans that are insured or guaranteed by the Federal Housing 
Administration, the Rural Housing Service, the Department of Veterans 
Affairs, and the Department of Housing and Urban Development (HUD). 
Ginnie Mae is a government corporation within HUD, authorized by the 
National Housing Act (12 U.S.C. 1716 et seq.). The regulations 
governing Ginnie Mae are located at 24 CFR part 300.

II. This Proposed Rule

    Ginnie Mae-guaranteed securities are issued in book-entry form. 
Under current Ginnie Mae regulations, a securityholder may request that 
the book-entry security be converted into certificated form after 
initial issuance. Certificates are physical documentation of the 
ownership of the security. Ginnie Mae proposes to revise the 
regulations to state that for all securities issued after particular 
issue dates, physical certificates may only be issued as approved by 
Ginnie Mae. Also, the proposed rule would clarify that book-entry 
securities may be withdrawn after Ginnie Mae has approved a request for 
definitive Ginnie Mae securities.
    Ginnie Mae proposes to limit the issuance of physical securities 
because: (1) Virtually all of Ginnie Mae's investors hold their 
securities in book-entry form through the Federal Reserve Bank of New 
York (FRBNY) or through a FRBNY participant; (2) book-entries will 
decrease the costs for issuers; (3) physical securities provide more 
opportunities for fraud; and (4) the shift from physical securities to 
book-entry securities conforms with industry practice.
    Additionally, Ginnie Mae proposes to revise the financial reporting 
rule for issuers participating in its MBS programs. The revisions will 
remove the requirement that issuers submit classified balance sheets. 
Ginnie Mae proposes to remove this requirement in order to conform with 
industry practice.

III. Findings and Certifications

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 the private sector. This proposed rule does not 
impose any federal mandate on any state, local, or tribal government, 
or the private sector within the meaning of UMRA.

Environmental Impact

    This proposed 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)(1), this 
proposed rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

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 
introduces a streamlining amendment to the financial reporting 
regulations and a change in the maintenance of Ginnie Mae book-entry 
and certificated securities. Small entities will not be adversely 
affected by the more streamlined financial reporting requirement or the 
book-entry

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requirement; in fact, a more streamlined financial reporting 
requirement may alleviate some burden. Furthermore, all such issuers, 
regardless of size, are subject to the new requirements proposed by the 
rule. Therefore, the undersigned certifies that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities.
    Notwithstanding HUD's determination that this proposed 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 program 
responsibilities.

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 order. This proposed rule will 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.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
rule are currently approved by the Office of Management and Budget 
(OMB) under section 3504(h) of the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520) and assigned OMB control number 2503-0033. An agency 
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 control number.

Executive Order 12866, Regulatory Planning and Review

    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, as 
provided under section 3(f)(1) of the order). The docket file 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. Due to security measures at the 
HUD Headquarters building, please schedule an advance appointment to 
review the docket file by calling the Regulations Division at (202) 
708-3055 (this is not a toll-free number). Hearing- and speech-impaired 
individuals may access this number through TTY by calling the toll-free 
Federal Information Relay Service at (800) 877-8339.

List of Subjects for 24 CFR Parts 320 and 350

    Mortgages, Securities.
    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR parts 320 and 350 as follows:

PART 320--GUARANTY OF MORTGAGE-BACKED SECURITIES

    1. The authority citation for 24 CFR part 320 continues to read as 
follows:

    Authority: 12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 
3535(d).

    2. Revise Sec.  320.5(e) to read as follows:


Sec.  320.5  Securities.

* * * * *
    (e) Issue Date. Securities backed by single-family mortgages with 
issue dates of October 1, 1998, or before, serial notes with issue 
dates of July 1, 2002, or before, and securities backed by multifamily 
mortgages with issue dates of February 1, 2002, or before, have been 
issued in certificated form. Securities issued after these dates will 
be issued in book-entry form. The Association may approve the issuance 
of certificated securities for good cause.
* * * * *
    3. Revise Sec.  320.10 to read as follows:


Sec.  320.10  Financial Reporting.

    Issuers shall submit to the Association audited annual financial 
statements within 90 days of their fiscal year end. All financial 
statements shall include a balance sheet and a statement of operations 
and cash flows. The audit shall be conducted in accordance with the 
standards for financial audits of the U.S. Government Accountability 
Office's Government Auditing Standards, issued by the Comptroller 
General of the United States.

PART 350--BOOK-ENTRY PROCEDURES

    4. The authority citation for 24 CFR part 350 continues to read as 
follows:

    Authority: 12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 
3535(d).

    5. Revise Sec.  350.8(a) to read as follows:


Sec.  350.8  Withdrawal of Eligible Book-Entry Ginnie Mae Securities 
for Conversion to Definitive Form.

    (a) Eligible book-entry Ginnie Mae securities may be withdrawn from 
the book-entry system after Ginnie Mae has approved a request for the 
delivery of definitive Ginnie Mae securities in the same amount.
* * * * *

    Dated: April 3, 2007.
Robert M. Couch,
President, Government National Mortgage Association.
 [FR Doc. E7-8499 Filed 5-4-07; 8:45 am]
BILLING CODE 4210-67-P