[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Page 39408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16154]



[[Page 39408]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5735-N-03]


Home Equity Conversion Mortgage (HECM) Program: Limit on 
Insurability of Fixed Interest Rate Products Under the HECM Program--
Solicitation of Comment

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

ACTION: Notice.

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SUMMARY: On June 18, 2014, the Federal Housing Administration (FHA) 
issued Mortgagee Letter 2014-11, announcing a limit on the insurability 
of fixed interest rate mortgages under the HECM program to mortgages 
with the Single Disbursement Lump Sum payment option. FHA issued this 
Mortgagee Letter pursuant to the authority granted to it in subsections 
202(a) and 255(c) of the National Housing Act and in the Reverse 
Mortgage Stabilization Act of 2013 to make this change to the HECM 
program. The limitation on the eligibility for insurance of fixed 
interest rate mortgages is necessary in order to ensure the financial 
viability of the HECM program and the Mutual Mortgage Insurance Fund 
(Fund). These changes took effect for case numbers assigned on or after 
June 25, 2014. This notice solicits comment for a period of 30 days on 
the new requirements announced in Mortgagee Letter 2014-11.

DATES: Comment Due Date: August 11, 2014.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0500. Communications must refer to the 
above docket number and title. There are two methods for submitting 
public comments. All submissions must refer to the above docket number 
and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. 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 site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
notice.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available 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 appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). Individuals with speech or 
hearing impairments may access this number via TTY by calling the 
Federal Relay Service at 1-800-877-8339 (this is a toll-free number). 
Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Karin Hill, Senior Advisor, Single 
Family Program Development, Office of Housing, Department of Housing 
and Urban Development, 451 7th Street SW., Room 9280, Washington, DC 
20410-9000, telephone number 202-708-4308 (this is not a toll-free 
number). Hearing or speech impaired individuals may access this number 
via TTY by calling the Federal Relay Service during business hours at 
1-800-877-8337 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: On April 1, 2014, Ginnie Mae issued an All 
Participants Memorandum (APM) announcing that fixed interest rate HECM 
loans with future draws will be ineligible for securitization through 
Ginnie Mae programs on or after June 1, 2014. The only fixed interest 
rate HECM product that will be eligible for securitization through 
Ginnie Mae programs will be mortgages with the Single Disbursement Lump 
Sum payment option selected at closing, which was the option that was 
introduced with the September 30, 2013, program changes. As a result of 
this change, risk to FHA and the Fund would be increased if FHA were to 
allow for these other fixed rate products to continue to be eligible 
for insurance.
    The Secretary has a responsibility to ensure that the Fund remains 
financially sound under subsection 202(a)(3) of the National Housing 
Act (12 U.S.C. 1708) and the authority to insure HECMs upon such terms 
and conditions as he may prescribe to the extent that he determines 
such mortgages have potential for acceptance in the mortgage market 
under subsection 255(c)(3) of the National Housing Act (12 U.S.C. 
1715z-20). Therefore, to address the increased risk that would be borne 
by FHA and the Fund as a result of Ginnie Mae's APM, HUD issued 
Mortgagee Letter 2014-11,\1\ which requires all fixed interest rate 
HECMs to have the Single Disbursement Lump Sum payment option and 
prevents future draws to the mortgagor after closing. The Reverse 
Mortgage Stabilization Act of 2013 (Pub. L. 113-29), which amended 
section 255 of the National Housing Act by adding a new subsection 
(h)(3), gives FHA the authority to establish, by notice or mortgagee 
letter, any additional or alternative requirements that the Secretary, 
in the Secretary's discretion, determines are necessary to improve the 
fiscal safety and soundness of the HECM program authorized by section 
255 of the National Housing Act.
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    \1\ The Mortgagee Letter can be found at http://portal.hud.gov/hudportal/documents/huddoc?id=14-11ml.pdf.
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    Comments on the changes announced in Mortgagee Letter 2014-11 will 
be accepted for a period of 30 days.\2\
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    \2\ HUD will carefully consider the public comments received 
through this solicitation in the development of a final rule.

    Dated: July 1, 2014.
Carol J. Galante,
 Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 2014-16154 Filed 7-9-14; 8:45 am]
BILLING CODE 4210-67-P