[Federal Register Volume 72, Number 165 (Monday, August 27, 2007)]
[Rules and Regulations]
[Pages 49124-49125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-16890]



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Part IV





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; Final Rule

  Federal Register / Vol. 72 , No. 165 / Monday, August 27, 2007 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 320 and 350

[Docket No. FR-5063-F-02]
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: Final rule.

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SUMMARY: On May 7, 2007, the Government National Mortgage Association 
(Ginnie Mae) published a proposed rule that would restrict the issuance 
of physical certificates representing Ginnie Mae mortgage-backed 
securities (MBS) and 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withdrawn from the Federal Reserve book-entry system after Ginnie Mae 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. The rule also proposed to 
eliminate the requirement for a classified balance sheet. Ginnie Mae 
did not receive any public comments on this rule. Ginnie Mae is 
adopting, at this final rule stage, the proposed rule without change.

DATES: Effective Date: September 26, 2007.

FOR FURTHER INFORMATION CONTACT: Thomas R. Weakland, Senior Vice 
President, Office of Program Operations, Government National Mortgage 
Association, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room B-133, Washington, DC 20410; telephone number (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 and the May 7, 2007, Proposed Rule

    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.
    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. On May 7, 2007 (72 FR 25925), Ginnie Mae 
published a rule that proposed to revise its regulations to state that 
for all securities issued after particular issue dates, physical 
certificates may only be issued as approved by Ginnie Mae. Also, in the 
proposed rule, Ginnie Mae proposed to clarify that book-entry 
securities may be withdrawn after Ginnie Mae has approved a request for 
definitive Ginnie Mae securities. Additionally, in order to conform to 
industry practice, Ginnie Mae proposed to revise the financial 
reporting rule for issuers participating in its MBS programs, by 
removing the requirement that issuers submit classified balance sheets.

II. This Final Rule

    At this final rule stage, Ginnie Mae is adopting the proposed rule 
without change. The public comment period for the May 7, 2007, proposed 
rule closed on July 6, 2007, and Ginnie Mae did not receive any 
comments on the proposed rule. The revised regulations, which are 
promulgated by this final rule, restrict the issuance of physical 
certificates representing Ginnie Mae MBS and 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 rule also 
eliminates the requirement for a classified balance sheet.

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 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 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 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 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 
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 rule will not have 
a significant economic impact on a substantial number of small 
entities.

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 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 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

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information, unless the collection displays a currently valid control 
number.

List of Subjects in 24 CFR Parts 320 and 350

    Mortgages, Securities.

0
Accordingly, for the reasons described in the preamble, HUD amends 24 
CFR parts 320 and 350, as follows:

PART 320--GUARANTY OF MORTGAGE-BACKED SECURITIES

0
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).


0
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.
* * * * *


0
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

0
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).


0
5. Revise Sec.  350.8(a) to read as follows:


Sec.  350.8(a)  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: August 17, 2007.
Roy A. Bernardi,
Deputy Secretary.
 [FR Doc. E7-16890 Filed 8-24-07; 8:45 am]
BILLING CODE 4210-67-P