[Federal Register Volume 87, Number 191 (Tuesday, October 4, 2022)]
[Notices]
[Pages 60186-60187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21047]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6342-N-01]


Request for Information Regarding Small Mortgage Lending

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, Department of Housing and Urban Development, HUD.

ACTION: Request for information.

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SUMMARY: In its 2022-2026 Strategic Plan, the Department established 
strategic goals to ``Support Underserved Communities'' and to ``Promote 
Homeownership.'' Among the goal of supporting underserved communities 
is to advance housing justice and proactively strengthen and protect 
vulnerable and underserved communities. Through this Request for 
Information (RFI), the Federal Housing Administration (FHA) seeks 
public input regarding barriers to the origination of small mortgages 
in the FHA program. Information provided in response to this RFI will 
allow FHA to identify barriers to the origination of small mortgages in 
the FHA program and consider the development of policies and programs 
that better support and expand affordable homeownership opportunities 
in underserved markets with lower housing prices.

DATES: Comments are requested on or before December 5, 2022. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: Interested persons are invited to submit comments responsive 
to this RFI. All submissions must refer to the docket number and title 
of the RFI. Commenters are encouraged to identify the number of the 
specific question or questions to which they are responding. Responses 
should include the name(s) of the person(s) or organization(s) filing 
the comment; however, because any responses received by HUD will be 
publicly available, responses should not include any personally 
identifiable information or confidential commercial information.
    There are two methods for submitting public comments.
    1. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov.
    2. 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.
    HUD strongly encourages commenters to submit their feedback and 
recommendations electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a response, 
ensures timely receipt by HUD, and enables HUD to make comments 
immediately available to the public. Comments submitted electronically 
through the http://www.regulations.gov website 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.

    Public Inspection of Public Comments. All comments and 
communications properly 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 
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). Individuals can dial 7-1-1 to access the 
Telecommunications Relay Service (TRS), which permits users to make 
text-based calls, including Text Telephone (TTY) and Speech to Speech 
(STS) calls. Copies of all comments submitted are available for 
inspection and downloading at http://www.regulations.gov.

[[Page 60187]]


FOR FURTHER INFORMATION CONTACT: Kevin Stevens, Acting Director, Office 
of Single Family Program Development, Department of Housing and Urban 
Development, 451 7th Street SW, Room 9266, Washington, DC 20410-0500; 
telephone number 202-402-4317 (this is not a toll-free number). 
Individuals can dial 7-1-1 to access the Telecommunications Relay 
Service (TRS), which permits users to make text-based calls, including 
Text Telephone (TTY) and Speech to Speech (STS) calls.

SUPPLEMENTARY INFORMATION:

I. Background

    HUD's 2022-2026 Strategic Plan,\1\ released in March 2022, 
established strategic goals to ``Support Underserved Communities'' and 
to ``Promote Homeownership.'' Among the objectives of supporting 
underserved communities is to ``Advance Housing Justice,'' which 
includes expanding the Department's role in proactively strengthening 
and protecting vulnerable and underserved communities. Borrowers often 
experience difficulty finding affordable options to finance the 
purchase or refinance of properties below certain price thresholds, 
especially in areas where home values are low. FHA's mission is to 
provide mortgage financing options for low- to moderate-income 
borrowers who are not well served by the private mortgage market, 
including those seeking small mortgage. HUD understands that a primary 
barrier to small mortgage lending is the costs to originate and service 
small mortgages in relation to the limited potential compensation 
afforded by these loans. Therefore, lenders do not find it economically 
feasible to originate mortgages with low principal balances. This lack 
of financing availability for mortgages with low principal balances 
creates a significant barrier to affordable homeownership for 
underserved households, particularly in certain geographic areas.
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    \1\ U.S. Dept of Housing and Urban Development, Fiscal Year 
2022-2026 Strategic Plan (2022), available at https://www.hud.gov/sites/dfiles/CFO/documents/FY2022-2026HUDStrategicPlan.pdf.
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    Under Title II of the National Housing Act (NHA),\2\ FHA insures 
loans made by FHA-approved mortgagees for the purchase or refinance of 
1-4 family residences, including individual condominium units and 
manufactured homes classified as real estate. FHA insures mortgages to 
increase the availability of affordable home financing options for low- 
and moderate-income borrowers by protecting mortgagees and lenders 
against the risk of default.
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    \2\ 12 U.S.C. 1707 et seq.
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    The Title II program provides limits on the maximum loan amounts 
but does not contain limitations on a minimum loan amount. 
Additionally, FHA's regulation at 24 CFR 203.18d prohibits lenders from 
establishing a minimum principal loan amount under FHA's Title II 
program.
    The House of Representatives Committee Report, 116-452, 
accompanying the U.S. Departments of Transportation, Housing and Urban 
Development, and Related Agencies Appropriations Bill, 2021 \3\ 
directed HUD to submit a review of its FHA single-family mortgage 
insurance policies, practices, and products to identify any barriers or 
impediments to supporting, facilitating, and making available mortgage 
insurance for mortgages having an original principal obligation of 
$70,000 or less. In response, HUD is issuing a report concurrently with 
this RFI that outlines FHA's role in the small mortgage lending market 
and identifies certain potential impediments to small mortgage lending.
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    \3\ Available at https://www.congress.gov/congressional-report/116th-congress/house-report/452.
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II. Purpose of this Request for Information

    The purpose of this RFI is to solicit information regarding 
barriers to originating small mortgage lending in the FHA program and 
obtain feedback on ways to improve FHA policies and programs that 
support affordable homeownership opportunities in underserved markets 
with lower housing prices.

III. Specific Information Requested

    While FHA welcomes all comments relevant to expanding small 
mortgage lending in the FHA mortgage insurance program, FHA is 
particularly interested in receiving input from interested parties on 
the questions outlined below.
    1. Communities have reported a lack of available financing for 
small balance mortgage loans in some areas. Have you observed this to 
be true and is there a particular mortgage loan amount below which the 
problem is most acute?
    2. What housing supply market conditions and purchasing 
characteristics affect the availability of and demand for small 
mortgages?
    3. What information can you provide regarding the ways in which the 
FHA program serves or does not serve borrowers seeking small mortgages?
    4. What barriers (e.g., origination and servicing costs, 
compensation, disincentives) exist for mortgage lenders and other 
industry participants in facilitating transactions that include the 
origination or servicing of small mortgages in the FHA program?
    5. What technology solutions could improve the availability of 
small mortgages in the FHA program?
    6. What changes to policies, regulations, features, or processes of 
the current FHA program would encourage mortgagees to do more lending 
for small mortgages in the FHA program?
    7. What policies, regulations, features, or processes outside of 
FHA/HUD impact the availability of small mortgages in the FHA program?
    8. What, if any, state and local requirements affect the 
availability of small mortgages in the FHA program?
    9. What consumer protections are unique to small mortgages that 
should be considered in the FHA program?
    10. What issues should be considered relating to provision of 
liquidity for small mortgage lending through securitization?
    11. Offer any additional comments on the role that FHA programs 
could play in improving the supply of small mortgages.

Julia R. Gordon,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2022-21047 Filed 10-3-22; 8:45 am]
BILLING CODE 4210-67-P