[Federal Register Volume 80, Number 154 (Tuesday, August 11, 2015)]
[Rules and Regulations]
[Pages 48024-48028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19714]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 200 and 232

[Docket No. FR-5632-F-02]
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: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule updates HUD fees for multifamily housing and 
residential healthcare facilities, and updates and

[[Page 48025]]

streamlines the Section 232 program regulations that govern the 
financing of the purchase and installation of fire safety equipment in 
insured healthcare facilities, which have not been substantially 
updated in over 20 years. This final rule gives HUD flexibility in 
raising or lowering fees, and for residential healthcare facilities, 
streamlines 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: Effective Date: September 10, 2015.

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 these numbers through TTY by calling the toll-free Federal Relay 
Service at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Background--the January 14, 2015, Proposed Rule

    On January 14, 2015, HUD published a proposed rule in the Federal 
Register, at 80 FR 1855, to update HUD fees for multifamily housing and 
residential healthcare facilities, and update and streamline the 
Section 232 program regulations that govern the financing of the 
purchase and installation of fire safety equipment in insured 
healthcare facilities. See the January 14, 2015, proposed rule for a 
more detailed listing of the proposed changes.

Update HUD Fees

    HUD's January 14, 2015, rule proposed to amend HUD's general fee 
regulations in 24 CFR 200.40, which contain the fees that apply to most 
mortgages insured by FHA, including Section 232 mortgages. To bring 
consistency and conformity to HUD's regulations, the amount of the 
application fee for Section 232 programs would be moved to a new Sec.  
200.40(d)(2), and only cross-referenced in the Section 232 program 
regulations. The current Sec.  200.40(d), setting the general 
application fee, would be redesignated as Sec.  200.40(d)(1). In 
addition, paragraphs (d)(1) and (d)(2) would allow the Secretary 
flexibility in setting the respective fees, up to a maximum fee of 
$5.00 per thousand dollars of the requested mortgage amount to be 
insured.
    The rule proposed to eliminate the commitment fee in HUD's 
regulations at 24 CFR part 232, subpart C, and therefore also proposed 
to eliminate the requirement in Sec.  232.515 that the commitment fee 
be refunded. The provisions allowing for refund of the application fee 
remained unchanged. In addition, instead of being set out in the 
Section 232 program regulations, the maximum fees and charges and the 
inspection fee in Sec. Sec.  232.520 and 232.522, respectively, would 
cross-reference the Sec. Sec.  200.40 and 200.41 regulations.

Update and Streamline 24 CFR 232, Subpart C, Regulations

    HUD's January 14, 2015, rule proposed to update and streamline the 
requirements of HUD's regulations at 24 CFR part 232, subpart C, and 
primarily focused on removing or revising several fees required in 
these regulations that HUD has determined are no longer needed or, 
alternatively, are not set at sufficient levels.
    Health and Human Services (HHS) requirements and involvement. The 
rule proposed to streamline HUD's regulations by eliminating 
duplicative and unnecessary involvement by HHS. For example, the rule 
proposed to 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. HUD has determined that the estimate by the Secretary of 
HHS is an unnecessary step.
    The rule proposed to remove the requirement at Sec.  232.505(a) 
that an application for insurance of a fire safety loan under part 232 
be considered in connection with a proposal approved by the Secretary 
of HHS. Section 232.615 would still require, however, that the facility 
requesting the loan meet HHS fire safety requirements.
    In Sec.  232.510(b), the rule proposed to replace the 
responsibility of the Secretary of HHS to determine the satisfactory 
completion of installation of fire safety equipment with that of the 
Commissioner.
    In Sec.  232.570, the rule proposed to eliminate the requirement 
that the Secretary of HHS submit a statement that the fire safety 
equipment has been satisfactorily installed. The rule proposed to 
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.
    The rule proposed to eliminate the requirement in Sec.  232.620 
that an application for insurance under 24 CFR part 232, subpart C, 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 rule proposed to substitute a 
reference to certification of compliance with HHS, Federal, State, and 
local requirements for fire safety equipment to be provided prior to 
endorsement.
    Definitions. The rule proposed to update the outdated standard in 
Sec.  232.500(c)(1) which required ``fire safety equipment'' to meet 
the standards for applicable occupancy of any edition of the Life 
Safety Code \1\ (LSC) 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)). For Sec.  
232.500(c)(1)(i), the rule proposed instead to require that ``fire 
safety equipment'' meet the applicable provisions of the edition of the 
LSC adopted by the Secretary of HHS. For Sec.  232.500(c)(1)(ii), HUD 
proposed no change. HUD proposed to remove Sec.  232.500(c)(1)(iii), 
because approval by the Secretary of HHS is achieved through the change 
to Sec.  232.500(c)(1)(i).
---------------------------------------------------------------------------

    \1\ 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.
---------------------------------------------------------------------------

    The rule also proposed to revise the definition of ``eligible 
borrower'' in Sec.  232.615 to eliminate all references to the 
requirement that the facility meet

[[Page 48026]]

HHS health and safety requirements, although the facility would still 
have to meet HHS fire safety requirements.
    Applications. HUD proposed to remove the requirement in Sec.  
232.505(b) to submit applications to HUD's local offices.
    Method of loan payment and amortization period. Instead of being 
set out in the 232 program regulations, the method of loan payment and 
amortization period in Sec.  232.540 would cross-reference Sec.  
200.82.
    Maximum loan amount. In Sec.  232.565, the rule proposed to revise 
the maximum loan amount to allow for the financing of fees, similar to 
the regulations governing fees in other Section 232 loan insurance 
programs.
    Contract requirements. The rule proposed to remove the limitation 
in Sec.  232.605 that contracts be either lump sum or cost plus 
contracts and instead proposed to allow such contracts as may be 
specified by the FHA Commissioner.
    Certification of cost requirements. In Sec.  232.610, the rule 
proposed to require that 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 proposed to eliminate the requirement that the amount 
of the loan be adjusted to reflect the actual cost to the borrower of 
the improvements.

II. This Final Rule

    This final rule follows publication of the January 14, 2015, 
proposed rule and adopts that proposed rule without change. The public 
comment period for the proposed rule closed on March 16, 2015, and HUD 
received one public comment.
    Comment: This rulemaking is the appropriate solution to an outdated 
and burdensome loan application process. Commenter is supportive of 
HUD's proposed rule to update outdated and burdensome requirements. 
Commenter states that updating the rules that govern the financing of 
the purchase and installation of fire safety equipment in insured 
healthcare facilities will save lives and streamlining the loan 
application process will reduce administrative burdens and costs.
    HUD Response: HUD appreciates the commenter's support for this rule 
and adopts the proposed rule without change.

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.
    At the proposed rule stage, this document was determined not to be 
a ``significant regulatory action'' as defined in section 3(f) of the 
Executive order. Because this final rule adopts the January 14, 2015, 
proposed rule, without change, the final rule is also not a 
``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
rule have been submitted to the 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 (FONSI) with respect to the 
environment for this rule was made at the proposed rule stage, 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(2)(C)). The FONSI remains applicable, and is available for 
public inspection between 8 a.m. and 5 p.m., weekdays, in the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 
20410-5000. Due to security measures at the HUD Headquarters building, 
please schedule an appointment to review the FONSI 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 (this is a 
toll-free number).

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 final rule imposes no requirements on small businesses. In 
fact, streamlining the Fire Safety Equipment Loan Program 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 final 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 (i) imposes substantial direct compliance costs on State and 
local governments and is not required by statute or (ii) preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive order. This rule does not have federalism 
implications and does 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

[[Page 48027]]

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 discussed in this preamble, HUD amends 
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 to:
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)(i) and (ii) and (e) to 
read as follows:


Sec.  232.500  Definitions.

* * * * *
    (c) * * *
    (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. Revise Sec.  232.505 to 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 to:
0
a. Revise paragraphs (b), (c), and (d);
0
b. Remove paragraph (e); and
0
c. Redesignate paragraph (f) as paragraph (e) and revise newly 
designated 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 as 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 the loan 
amount 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:

[[Page 48028]]

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

    Dated: August 6, 2015.
Edward L. Golding,
Principal Deputy, Assistant Secretary for Housing.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2015-19714 Filed 8-10-15; 8:45 am]
 BILLING CODE 4210-67-P