[Federal Register Volume 80, Number 9 (Wednesday, January 14, 2015)]
[Proposed Rules]
[Pages 1855-1860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00373]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 200 and 232

[Docket No. FR-5632-P-01]
RIN 2502-AJ27


Federal Housing Administration (FHA): Updating Regulations 
Governing HUD Fees and the Financing of the Purchase and Installation 
of Fire Safety Equipment in FHA-Insured Healthcare Facilities

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

ACTION: Proposed rule.

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SUMMARY: FHA insures mortgage loans to facilitate the construction, 
substantial rehabilitation, purchase, and refinancing of multifamily 
housing under the National Housing Act, and nursing homes, intermediate 
care facilities, board and care homes, and assisted-living facilities 
(collectively residential healthcare facilities) under section 232 of 
the National Housing Act (the Section 232 program). Through this rule, 
HUD proposes to update HUD fees for multifamily housing and residential 
healthcare facilities and to update and streamline the Section 232 
program regulations that govern the financing of the purchase and 
installation of fire safety equipment in the insured healthcare 
facilities, which have not been substantially updated in over 20 years. 
The proposed changes would give HUD flexibility in raising or lowering 
fees, and for residential healthcare facilities, streamline the loan 
application process by eliminating unnecessary requirements, conforming 
needed requirements to current industry practices, and allowing for HUD 
to centralize the loan application process.

DATES: Comment Due Date: March 16, 2015.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule 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 
rule.

    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 800-877-8339. Copies of all comments submitted 
are available for inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For information about: HUD's 
Multifamily Housing program, contact Dan Sullivan, Deputy Director, 
Office of Multifamily Housing Development, Office of Housing, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
6148, Washington, DC 20410-8000; telephone number 202-708-1142; HUD's 
Healthcare program, contact Vance Morris, Office of Healthcare 
Programs, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW., Room 6134, Washington, DC 20410-8000; 
telephone number 202-402-2419. The telephone numbers listed above are 
not toll-free numbers. Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal Relay 
Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

HUD Fees

    Section 207(d) of the National Housing Act (12 U.S.C. 1713) 
authorizes the Secretary, as he determines necessary, to charge and 
collect fees for the appraisal of a property or project offered for 
insurance and for the inspection of such property, as long as such fees 
do not exceed one percent of the amount of the mortgage. Despite the 
flexibility to set fees given to the Secretary in the statute, relevant 
HUD fees are currently set by regulation in parts 200 and 232, which 
does not allow HUD the flexibility necessary to adapt to market changes 
in a timely manner.

Loans To Finance the Purchase of Fire Safety Equipment

    Under section 232 of the National Housing Act (12 U.S.C. 1715w), 
FHA insures mortgage loans to finance the development of residential 
healthcare facilities. HUD's regulations for the Section 232 program 
are codified in 24 CFR part 232. In addition to insuring such mortgage 
loans, FHA insures, under the Section 232 program, loans to finance the 
purchase and installation of fire safety equipment in insured 
healthcare facilities.
    The Fire Safety Equipment Loan Act (Pub. L. 93-204, approved 
December 28, 1973) amended section 232 of the National Housing Act to 
provide that

[[Page 1856]]

insurable equipment under the Section 232 program includes the cost of 
installation of fire safety equipment (see 12 U.S.C. 1715w(i)). This 
law was enacted to help residential healthcare facilities comply with 
the 1967 Life Safety Code of the National Fire Protection Program 
(LSC).\1\
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    \1\ The LSC is administered, trademarked, copyrighted, and 
published by the National Fire Protection Association. The standard 
primarily addresses ``those construction, protection, and occupancy 
features necessary to minimize danger to life from the effects of 
fire, including smoke, heat, and toxic gases created during a 
fire.''
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    In 1974, HUD established its Fire Safety Equipment Loan Program 
(FSELP) and promulgated regulations in 24 CFR part 232, subpart C, to 
implement the program (Subpart C regulations). On August 13, 2008, at 
73 FR 47075, the Centers for Medicare and Medicaid Services (CMS) 
published in the Federal Register a final rule that requires every CMS 
certified long-term care facility \2\ to have automatic fire sprinkler 
systems installed no later than August 13, 2013.\3\ CMS requirements 
for these facilities to have automatic sprinkler systems highlights 
HUD's need to update the Section 232 regulations that govern the 
financing of the purchase and installation of fire safety equipment.
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    \2\ A CMS certified long-term care facility is one approved to 
participate in the Medicare and Medicaid programs.
    \3\ On May 12, 2014, CMS published a final rule, at 79 FR 27106, 
to permit a very limited extension of the automatic sprinkler due 
date for a facility that is building a replacement or undergoing 
modification to unsprinklered areas.
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II. This Proposed Rule

Update and Streamline HUD Fees

    A. Application and Commitment Fees. Currently, under Sec.  
232.505(c), the borrower is required to pay, as an application fee, 
$2.00 per thousand dollars of the amount of the fire safety loan. Under 
Sec.  232.510(d), the borrower must pay a commitment fee which, when 
added to the application fee, will aggregate $4.00 per thousand of the 
amount of the fire safety loan but with a minimum of $50.00 for both 
fees. HUD's general ``fee'' provisions in 24 CFR 200.40, entitled ``HUD 
Fees'', which set forth the applicable fees for relevant FHA-insured 
mortgages, however, combine the application fee and commitment fee 
rather than providing two separate fees as is currently the case in the 
Subpart C regulations.
    To bring consistency among these fee regulations and to more 
clearly set forth HUD's fee structure, this rule proposes to revise 
Sec.  232.505(c), entitled ``Application fee'' and Sec.  232.510(d) 
entitled ``Commitment fee'' to cross-reference to a new Sec.  
200.40(d)(2), which would be entitled ``Application fee--Section 232 
Programs.'' Specifically, in Sec.  200.40, HUD proposes to amend Sec.  
200.40(d) to designate the existing text in paragraph (d) as paragraph 
(d)(1), revise newly designated paragraph (d)(1) to allow the Secretary 
to decrease the application fee, and add a new paragraph (d)(2) that 
would provide the Secretary with flexibility to set the application fee 
for insured loans to finance the purchase and installation of fire 
safety equipment.
    B. Maximum fees and charges. In Sec.  232.520, the proposed rule 
would cross-reference 24 CFR 200.40 and 24 CFR 200.41. These two 
regulatory sections contain the fees that apply to most mortgages 
insured by FHA, including Section 232 mortgages.
    C. Inspection fee. In Sec.  232.522, the proposed rule would cross-
reference 24 CFR 200.40 and 24 CFR 200.41 for the same reasons stated 
above.
    D. Refund of fees. Since this rule proposes to eliminate the 
commitment fee in the Subpart C regulations, the rule also proposes to 
eliminate the requirement in Sec.  232.515 that the commitment fee be 
refunded. The provisions allowing for refund of the application fee 
remains unchanged.

Update and Streamline 24 CFR 232 Subpart C Regulations

    Through this rule, HUD also proposes to update and streamline the 
requirements of other Subpart C regulations. HUD's Subpart C 
regulations currently provide that fire safety equipment means 
equipment that is purchased, installed, and maintained in a nursing 
home, intermediate care facility, assisted living facility, or board 
and care home and that meets the following standards for the applicable 
occupancy: (i) The Life Safety Code of the National Fire Protection 
Association (any edition after 1966); or (ii) A standard mandated by a 
State, under the provisions of section 1616(e) of the Social Security 
Act; \4\ or (iii) Any appropriate requirement approved by the Secretary 
of Health and Human Services (HHS) for providers of services under 
title XVIII or title XIX of the Social Security Act. (These sections 
establish the Medicare and Medicaid programs, respectively.) Therefore, 
this rule does not need to propose language to require the installation 
of an automated fire sprinkler system as recently promulgated by CMS 
but, given that this requirement is now in place, HUD seeks to 
streamline its regulations to assist owners of healthcare facilities to 
obtain a loan, if necessary, to finance the purchase and installation 
of such systems. The streamlining of the Subpart C regulations proposed 
by this rule would primarily focus on removing or revising several fees 
required in the Subpart C regulations that HUD has determined are no 
longer needed or, alternatively, are not set at sufficient levels.
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    \4\ Under section 1616(e) of the Social Security Act, States are 
required to establish or designate one or more State or local 
authorities that must establish, maintain and ensure the enforcement 
of standards for any category of institution, foster home, or group 
living arrangement in which (as determined by the State) a 
significant number of SSI recipients are residing or are likely to 
reside. Standards shall be appropriate to the needs of the recipient 
and the character of the facilities involved and shall govern such 
matters as admission policies, safety, sanitation, and protection of 
civil rights. Further, each State is required to maintain records of 
information concerning standards, procedures available to ensure 
enforcement of the standards, and a list of waivers of standards and 
violations of standards by specific facilities. These records must 
be made available annually to the public. To ensure compliance with 
the requirements of section 1616(e) of the Social Security Act, each 
State must certify annually to SSA's Office of the Commissioner that 
designated licensing authorities have implemented all aspects of the 
program.
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    A. Definitions. This rule proposes to revise two definitions in 
Sec.  232.500. First, HUD would revise the definition of ``fire safety 
equipment'' in Sec.  232.500(c)(1) regarding the standard for 
acceptable fire safety equipment. The proposed rule would update the 
outdated standard in Sec.  232.500(c)(1) which currently requires 
``fire safety equipment'' to meet the standards for applicable 
occupancy of any edition of the Life Safety Code \5\ of the National 
Fire Protection Association after 1966 (Sec.  232.500(c)(1)(i)); or a 
standard mandated by a State, under the provisions of section 1616(e) 
of the Social Security Act (Sec.  232.500(c)(1)(ii)); or any 
appropriate requirement approved by the Secretary of HHS for providers 
of services under title XVIII or title XIX of the Social Security Act 
(Sec.  232.500(c)(1)(iii)).
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    \5\ The Life Safety Code addresses those construction, 
protection, and occupancy features necessary to minimize danger to 
life from the effects of fire, including smoke, heat, and toxic 
gases created during a fire. The Code also addresses protective 
features and systems, building services, operating features, 
maintenance activities, and other provisions in recognition of the 
fact that achieving an acceptable degree of life safety depends on 
additional safeguards to provide adequate egress time or protection 
for people exposed to fire.
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    For Sec.  232.500(c)(1)(i), this rule proposes to instead require 
``fire safety equipment'' to meet the applicable provisions of the 
edition of the LSC adopted by the Secretary of HHS. For Sec.  
232.500(c)(1)(ii), HUD proposes no change. For Sec.  
232.500(c)(1)(iii), HUD

[[Page 1857]]

proposes to remove this requirement since approval by the Secretary of 
HHS is achieved through the change to Sec.  232.500(c)(1)(i). This 
update will allow HUD's regulation to continue to reflect the LSC 
standards specified by HHS without undergoing the lengthy rulemaking 
process when the standards are changed over time.
    Second, the proposed rule would revise the definition of 
``equipment cost'' in Sec.  232.500(e) to eliminate the involvement of 
the Secretary of HHS in estimating the reasonable cost of the fire 
safety equipment installation. As Sec.  232.500(e) currently provides, 
the FHA Commissioner makes the determination of the reasonableness of 
cost, while the Secretary of HHS only provides an estimate. HUD has 
determined that the estimate by the Secretary of HHS is an unnecessary 
step.
    B. Applications. This proposed rule would remove the requirement at 
Sec.  232.505(a) that an application for insurance of a fire safety 
loan under part 232 must be considered in connection with a proposal 
approved by the Secretary of HHS. In order to streamline the loan 
application process, this proposed change reflects HUD's decision that 
approval of a proposal by the Secretary of HHS in connection with each 
loan application is unnecessary. Section 232.615 would still require, 
however, that the facility requesting the loan meet HHS fire safety 
requirements.
    In Sec.  232.505(b), entitled ``Filing of Application,'' HUD 
proposes to remove the requirement to submit applications to HUD's 
local offices. This rule would allow HUD to centralize the application 
process for insurance of a fire safety loan. HUD believes that the 
centralization effort will facilitate review of initial applications.
    C. HHS Determination of the Need for Fire Safety Equipment. In 
Sec.  232.510, in addition to proposing to eliminate the ``commitment 
fee,'' HUD proposes in Sec.  232.510(b), to remove the requirement that 
HHS must first determine that a facility needs fire safety equipment 
before FHA will insure the financing for purchase and installation of 
the equipment. As stated earlier, Sec.  232.615 would continue to 
require that the healthcare facility meet HHS fire safety requirements 
upon completion of installation in order for the facility to be an 
eligible borrower. Therefore, a provision that the Secretary of HHS 
must approve each facility before HUD makes a commitment is 
superfluous.
    D. Method of loan payment and amortization period. For Sec.  
232.540, the proposed rule would cross reference 24 CFR 200.82. Section 
200.82 establishes the maximum and minimum mortgage term, and specifies 
that the mortgage shall contain complete amortization satisfactory to 
the Commissioner.
    E. Maximum loan amount. In Sec.  232.565, the maximum loan amount 
would be revised to allow for the financing of fees, similar to the 
regulations governing fees in other Section 232 loan insurance 
programs. Specifically, financing of fees is permitted for Section 232 
refinance and acquisition transactions (see Sec.  232.903(c) and Sec.  
232.903(d), respectively).
    F. Endorsement of credit instrument. In Sec.  232.570, which 
establishes qualifications for the endorsement of the credit 
instrument, the proposed rule would eliminate the requirement that the 
Secretary of HHS submit a statement that the fire safety equipment has 
been satisfactorily installed. The proposed rule would replace this 
provision with a requirement of a certification that the improvements 
were installed as required by Sec.  232.500(c). As stated earlier in 
regard to other proposed changes, Sec.  232.615 would still require the 
facility to meet HHS fire safety requirements in order for HUD to 
insure the loan.
    G. Contract requirements. In Sec.  232.605, the proposed rule would 
remove the limitation that contracts be either lump sum or cost plus 
contracts and instead allow such contracts as may be specified by the 
FHA Commissioner.
    H. Certification of cost requirements. In Sec.  232.610, the 
proposed rule would require a certification of actual cost be made for 
all forms of contract, instead of only when a cost plus form of 
contract is used. Further, it would eliminate the requirement that the 
amount of the loan be adjusted to reflect the actual cost to the 
borrower of the improvements.
    I. Eligible borrowers. In Sec.  232.615, the proposed rule would 
revise the definition of ``eligible borrowers'' to eliminate all 
references to the facility meeting HHS health and safety requirements. 
However, the proposed rule would retain the provision that requires the 
facility to meet HHS fire safety requirements. HUD's proposed changes 
reflect that the Subpart C regulations are about FHA-insured healthcare 
facilities having the appropriate fire safety equipment and were not 
promulgated to implement all requirements that HHS may require of 
healthcare facility providers to ensure eligibility to receive Medicare 
and Medicaid services.
    J. Determination of compliance with HHS. In Sec.  232.620, the 
proposed rule would eliminate the requirement that an application for 
fire safety equipment be accompanied by a statement from HHS or the HHS 
Secretary's designee, such as a State, that the facility will meet 
pertinent health and safety requirements of HHS--other than the fire 
safety equipment requirements--once the fire safety equipment has been 
installed. Instead of this requirement, the proposed rule would 
substitute a reference to certification of compliance with HHS, 
Federal, state and local requirements for fire safety equipment to be 
provided prior to endorsement. The proposed language in this section 
would maintain consistency with the changes made in Sec.  232.615 and 
the changes are made for the same reason.

III. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and therefore, subject to review by the Office of Management and Budget 
(OMB) in accordance with the requirements of the order. Executive Order 
13563 (Improving Regulations and Regulatory Review) directs executive 
agencies to analyze regulations that are ``outmoded, ineffective, 
insufficient, or excessively burdensome, and to modify, streamline, 
expand, or repeal them in accordance with what has been learned.'' 
Executive Order 13563 also directs that, where relevant, feasible, and 
consistent with regulatory objectives, and to the extent permitted by 
law, agencies are to identify and consider regulatory approaches that 
reduce burdens and maintain flexibility and freedom of choice for the 
public.
    Because this proposed rule merely updates out-of-date practices, 
streamlines requirements and reduces burdens, it is not determined to 
be a ``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866. By updating the regulations in this way, FHA is 
not causing a material effect on the economy, interfering with an 
action or planned action of another agency, materially changing the 
budgetary impact of the loan program or the rights or obligations of 
its recipients, or raising any novel legal or policy issues. The 
proposed rule simply consolidates fees, allows the Secretary discretion 
in setting fees consistent with section 207(d) of the National Housing 
Act, and streamlines the loan application process. Furthermore, the 
proposed rule comports with the directive of Executive Order 13563. As 
stated in the preamble,

[[Page 1858]]

the regulations being modified have not been substantially updated for 
a long time.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
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), and 
approved under OMB control numbers 2502-0605 and 2502-0541. In 
accordance with the Paperwork Reduction Act, 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 OMB 
control number.

Environmental Review

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations in 24 CFR part 50 that 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4332(2)(C)). The Finding is available for public 
inspection during regular business hours 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 
appointment to review the Finding by calling the Regulations Division 
at 202-402-3055 (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 800-877-8339.

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 rule would not 
impose any federal mandates on any state, local, or tribal governments, 
or on the private sector, within the meaning of the UMRA.

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.
    The proposed rule imposes no requirements on small businesses. In 
fact, streamlining FSELP requirements should ease an existing burden on 
those small businesses seeking to accommodate acute care patients and 
those needing to upgrade or install fire safety equipment to meet HHS 
requirements.
    Accordingly, 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 rule will not 
have a significant effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in the preamble to this rule.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
imposes either 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 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 Executive Order.

Catalogue of Federal Domestic Assistance

    The Catalogue of Federal Domestic Assistance Number for the 
Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board 
and Care Homes and Assisted Living Facilities is 14.129; for Mortgage 
Insurance-Rental Housing is 14.134; for Mortgage Insurance for the 
Purchase or Refinancing of Existing Multifamily Housing Projects is 
14.155.

List of Subjects

24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Home improvement, Housing standards, Lead 
poisoning, Loan programs--housing and community development, Mortgage 
insurance, Organization and functions (Government agencies), Penalties, 
Reporting and recordkeeping.

24 CFR Part 232

    Fire prevention, Health facilities, Loan programs-health, Loan 
programs-housing and community development, Mortgage insurance, Nursing 
homes, Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated above, HUD proposes to amend 24 
CFR parts 200 and 232 as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

0
1. The authority citation for 24 CFR part 200 continues to read as 
follows:

    Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).

0
2. Amend Sec.  200.40 by:
0
a. Redesignate paragraph (d) as paragraph (d)(1);
0
b. Revise the paragraph heading and first sentence of newly 
redesignated (d)(1); and
0
c. Add paragraph (d)(2).
    The revisions and addition read as follows:


Sec.  200.40  HUD fees.

* * * * *
    (d)(1) Application fee--firm commitment: General. An application 
for firm commitment shall be accompanied by an application-commitment 
fee in an amount determined by the Secretary, which when added to any 
prior fees received in connection with the same application, shall not 
exceed $5.00 per thousand dollars of the requested mortgage amount to 
be insured. * * *
    (2) Application fee--Section 232 Programs. For purposes of 
mortgages insured under HUD's regulations in 24 CFR part 232, subpart 
C, an application for firm commitment shall be accompanied by an 
application fee in an amount determined by the Secretary, which shall 
not exceed $5.00 per thousand dollars of the requested mortgage amount 
to be insured.
* * * * *

PART 232--MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE 
FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES

0
3. The authority citation for 24 CFR part 232 continues to read as 
follows:

    Authority: 12 U.S.C. 1715b; 1715w; 42 U.S.C. 3535(d).

Subpart C--Eligibility Requirements--Supplemental Loans to Finance 
Purchase and Installation of Fire Safety Equipment

0
4. In Sec.  232.500, revise paragraphs (c)(1) and (e) to read as 
follows:


Sec.  232.500  Definitions.

* * * * *
    (c) * * *

[[Page 1859]]

    (1) * * *
    (i) The edition of The Life Safety Code of the National Fire 
Protection Association as accepted by the Department of Health and 
Human Services in 42 CFR 483.70; or
    (ii) A standard mandated by a State under the provisions of section 
1616(e) of the Social Security Act.
* * * * *
    (e) Equipment cost means the reasonable cost of fire safety 
equipment fully installed as determined by the Commissioner.
* * * * *
0
5. Amend Sec.  232.505 by:
0
a. Removing paragraph (a); and
0
b. Redesignating paragraphs (b) and (c) as paragraphs (a) and (b), and 
revising the newly redesignated paragraphs.
    The revisions read as follows:


Sec.  232.505  Application and application fee.

    (a) Filing of application. An application for insurance of a fire 
safety loan for a nursing home, intermediate care facility, assisted 
living facility or board and care home shall be submitted on an 
approved HUD form by an approved lender and by the owners of the 
project to the HUD office.
    (b) Application fee. See 24 CFR 200.40(d)(2).
0
6. Amend Sec.  232.510 by:
    (a) Revising paragraphs (b), (c) and (d);
    (b) Removing paragraph (e); and
    (c) Redesignating paragraph (f) as paragraph (e) and revising 
newlydesignated paragraph (e) to read as follows:


Sec.  232.510  Commitment and commitment fee.

* * * * *
    (b) Type of commitment. The commitment will provide for the 
insurance of the loan after satisfactory completion of installation of 
the fire safety equipment, as determined by the Commissioner.
    (c) Term of commitment. A commitment shall have a term as the 
Commissioner deems necessary for satisfactory completion of 
installation.
    (d) Commitment fee. See 24 CFR 200.40(d)(2).
    (e) Increase in commitment prior to endorsement. An application, 
filed prior to endorsement, for an increase in the amount of an 
outstanding firm commitment shall be accompanied by an additional 
application fee. The additional application fee shall be in an amount 
determined by the Secretary equal to the amount determined under 24 CFR 
200.40(d)(2), which shall not exceed $5.00 per thousand dollars of the 
amount of the requested increase. If an inspection fee was required in 
the original commitment, an additional inspection fee shall be paid in 
an amount computed at the same dollar rate per thousand dollars of the 
amount of increase in commitment as was used for the inspection fee 
required in the original commitment. The additional inspection fee 
shall be paid prior to the date installation of fire safety equipment 
is begun, or, if installation has begun, it shall be paid with the 
application for increase.
0
7. Revise Sec.  232.515 to read as follows:


Sec.  232.515  Refund of fees.

    If the amount of the commitment issued or an increase in loan prior 
to endorsement is less than the amount applied for, the Commissioner 
shall refund the excess amount of the application fee submitted by the 
applicant. If an application is rejected before it is assigned for 
processing, or in such other instances as the Commissioner may 
determine, the entire application fee or any portion thereof may be 
returned to the applicant.
0
8. Revise Sec.  232.520 to read as follows:


Sec.  232.520  Maximum fees and charges by lender.

    See 24 CFR 200.40 titled ``HUD fees'' and 200.41 titled ``Maximum 
mortgage fees and charges'' for maximum fees and charges applicable to 
mortgages insured under 24 CFR part 232.
0
9. Revise Sec.  232.522 to read as follows:


Sec.  232.522  Inspection fee.

    See 24 CFR 200.40 titled ``HUD fees'' and 200.41 titled ``Maximum 
mortgage fees and charges'' for maximum fees and charges applicable to 
mortgages insured under 24 CFR part 232.
0
10. Revise Sec.  232.540 to read as follows:


Sec.  232.540  Method of loan payment and amortization period.

    See 24 CFR 200.82 titled ``Maturity'' for loan payment and 
amortization period requirements applicable to mortgages insured under 
24 CFR part 232.
0
11. In Sec.  232.565, revise the first sentence to read as follows:


Sec.  232.565  Maximum loan amount.

    The principal amount of the loan shall not exceed the lower of the 
Commissioner's estimate of the cost of the fire safety equipment, 
including the cost of installation and eligible fees, or the amount 
supported by ninety percent (90%) of the residual income, which is 
ninety percent (90%) of the amount of net income remaining after 
payment of all existing debt service requirements, as determined by the 
Commissioner. * * *
0
12. In Sec.  232.570, revise paragraph (c) to read as follows:


Sec.  232.570  Endorsement of credit instrument.

* * * * *
    (c) Certification that fire safety equipment was installed as 
required by Sec.  232.500(c).
0
13. Revise Sec.  232.605 to read as follows:


Sec.  232.605  Contract requirements.

    The contract between the mortgagor and the general contractor may 
be in the form of a lump sum contract, a cost plus contract, or 
different or alternative forms of contract specified by the 
Commissioner.
0
14. In Sec.  232.610, revise paragraph (a) to read as follows:


Sec.  232.610  Certification of cost requirements.

    (a) Certificate and adjustment. No loan shall be insured unless a 
certification of actual cost is made by the contractor.
* * * * *
0
15. In Sec.  232.615, revise paragraph (a) to read as follows:


Sec.  232.615  Eligible borrowers.

    (a) In order to be eligible as a borrower under this subpart the 
applicant shall be a profit or non-profit entity, which owns a nursing 
home or intermediate care facility for which the Secretary of Health 
and Human Services has determined that the installation of fire safety 
equipment in such facility is necessary to meet the applicable 
requirements of the Secretary of Health and Human Services for 
providers of services under Title XVIII and Title XIX of the Social 
Security Act and that upon completion of the installation of such 
equipment the nursing home or intermediate care facility will meet the 
applicable fire safety requirements of HHS. Until the termination of 
all obligations of the Commissioner under an insurance contract under 
this subpart and during such further period of time as the Commissioner 
shall be the owner, holder, or reinsurer of the loan, the borrower 
shall be regulated or restricted by the Commissioner as to methods of 
operation including requirements for maintenance of fire safety 
equipment.
* * * * *
0
16. Revise Sec.  232.620 to read as follows:


Sec.  232.620  Determination of compliance with fire safety equipment 
requirements.

    Prior to Endorsement, applicant must provide certification that the 
installed

[[Page 1860]]

improvements will meet HHS, as well as all other Federal, state and 
local requirements for fire safety equipment, if applicable.

    Dated: December 16, 2014.
Biniam Gebre,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2015-00373 Filed 1-13-15; 8:45 am]
BILLING CODE 4210-67-P