This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

69363 

Vol. 75, No. 218 

Friday, November 12, 2010 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 200 and 207 

[Docket No. FR–5393–P–01] 

RIN 2502–AI95 

HUD Multifamily Rental Projects: 

Regulatory Revisions 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

amend certain Federal Housing 

Administration (FHA) regulations to 

update these regulations to reflect 

current HUD policy in the area of 

multifamily rental projects. On January 

21, 2010, HUD issued for public 

comment a comprehensive set of closing 

documents for use in FHA multifamily 

rental projects. As noted in the January 

21, 2010, notice, the issuance of revised 

multifamily rental project closing 

documents for public comments is 

HUD’s effort to restart the update of 

these documents that first commenced 

in 2004, but was not completed. In 

2004, HUD also issued a companion 

proposed rule that identified outdated 

language and policies that not only 

needed to be changed in closing 

documents but also in HUD’s 

regulations. Consistent with the restart 

of the updating of multifamily rental 

project closing documents, HUD is once 

again issuing a corresponding proposed 

rule to remove outdated regulatory 

language and policies. Neither the 

closing documents issued for comment 

on January 21, 2010, nor this proposed 

rule include changes to regulations 

affecting health care forms for nursing 

homes, intermediate care facilities, 

board and care homes, and assisted 

living facilities. HUD will propose 

changes to those documents separately. 

Through update of the multifamily 

rental project closing documents and 

the update of certain regulations as 

provided in this proposed rule, HUD 

strives to have its documents and 

regulations reflect current terminology, 

lending laws, and practices with respect 

to multifamily projects. 

DATES: Comment Due Date: December 

13, 2010. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this rule to the Rules Docket Clerk, 

Office of General Counsel, Room 10276, 

Department of Housing and Urban 

Development, 451 7th Street, SW., 

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 

Seventh Street, SW., Room 10276, 

Washington, DC 20410–0001. 

2. Electronic Submission of 

Comments. Interested persons may 

submit comments electronically through 

the Federal eRulemaking Portal at 

http://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 

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 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 with speech or hearing 

impairments may access this number 

via TTY by calling the Federal 

Information Relay Service at 800–877– 

8339. Copies of all comments submitted 

are available for inspection and 

downloading at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: John 

Daly, Associate General Counsel for 

Insured Housing, Office of General 

Counsel, Department of Housing and 

Urban Development, 451 7th Street, 

SW., Washington, DC 20410–0500; 

telephone 202–708–1274 (this is not a 

toll-free number). Persons with hearing 

or speech impairments may access this 

number through TTY by calling the tollfree Federal Information Relay Service 

at 800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

By notice published in the Federal 

Register on January 21, 2010 (75 FR 

3544), HUD started anew the process for 

updating the multifamily rental project 

closing documents (closing documents), 

a process that first commenced with 

issuance of a notice published on 

August 2, 2004 (69 FR 46214). The 

update of the closing documents 

commenced in 2004 and restarted in 

2010 does not include update of 

hospital closing documents. Many of 

these documents, as explained in both 

the 2004 and 2010 notices, have not 

been revised in years and need updating 

to ensure that the documents are 

consistent with modern real estate and 

lending laws. 

In addition to the closing documents, 

the update effort that commenced in 

2004 included a proposed rule 

published on August 2, 2004 (69 FR 

46210) that would update certain FHA 

regulations, which like many of the 

closing documents, did not reflect 

current real estate and lending practices. 

This proposed rule issued in today’s 

Federal Register restarts the process to 

update regulations first identified in 

2004 as needing revisions to be 

consistent with revised closing 

documents. The regulatory changes 

proposed in this rule are similar to those 

proposed in 2004, and arise from HUD’s 

review of the closing documents over 

the last several years. 


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69364 Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 

This proposed rule identifies the 

changes that HUD intends to make to its 

regulations in 24 CFR parts 200 and 207. 

The preamble to this proposed rule also 

includes a discussion of the public 

comments formally submitted on the 

August 2, 2004 proposed rule, and 

provides HUD’s response to those 

comments. While HUD addresses the 

prior public comments received, HUD 

emphasizes that it is starting anew with 

this proposed rule process and 

welcomes comments on all issues. 

II. This Proposed Rule 

Part 200 

The requirements for commitment 

and endorsement of a mortgage note are 

provided in 24 CFR part 200, subpart A. 

Generally, where specific closing 

documents are referenced in 24 CFR 

part 200, subpart A, the regulations in 

this subpart provide that the referenced 

documents be in a form prescribed by 

HUD. The subpart also iterates other 

closing requirements that are reflected 

in the closing documents. 

Section 200.5. Regulatory changes to 

part 200, subpart A, prompted by the 

review and updating of the closing 

documents pertain to natural persons 

and ‘‘tenants in common’’ as eligible 

mortgagor entities. In the August 2004 

rule, HUD had proposed removing 

tenancies in common as eligible 

mortgagor entities, except for tenancies 

in common comprised only of natural 

persons. In this rule, HUD proposes to 

amend § 200.5, which defines an 

eligible mortgagor under HUD’s 

multifamily mortgage insurance 

programs, to reflect the removal of 

natural persons and the complete 

removal of tenants in common as 

eligible mortgagor entities. 

Section 200.88. A revision of the Note 

is included in the update of the closing 

documents (HUD 94001M) published on 

January 21, 2010. HUD is revising the 

Note with respect to late charges, to 

provide that the late charge applies 

when the lender does not receive 

payment within 10 days after the 

payment is due. The change responds to 

comment HUD received that suggested 

that standardizing the time when the 

late fee applies would facilitate 

compliance by Ginnie Mae issuers with 

their obligation to make payments to 

investors. HUD is revising 24 CFR 

200.88 to reflect this change. 

Part 207 

Section 207.255. Included in the 

update of the closing documents is a 

revision of the security instrument 

(HUD 94000M). As part of the revision 

to this document, HUD developed a new 

two-tiered default scheme. Class A, as 

proposed in 2004 and now, on the basis 

of public comments, named ‘‘Monetary 

Event of Default’’ is for financial 

defaults, which give the lender an 

immediate right to an insurance fund 

claim. Class B, as proposed in 2004 and 

now, on the basis of public comments, 

named ‘‘Covenant Event of Default’’ is 

for all other bases for default, and 

requires the prior written approval of 

HUD for the lender to make an 

insurance fund claim. The Covenant 

Event of Default category would include 

several new bases for default derived, in 

part, from the Freddie Mac model. 

These include fraud or material 

misrepresentation or omission by the 

borrower, its officers, directors, trustees, 

general partners, members, managers, or 

guarantors (1) in the application for the 

HUD-insured loan; (2) in the application 

for financial assistance, other than the 

HUD-insured loan; (3) in any financial 

statement, rent roll, or other report or 

information provided by the borrower 

during the term of the Indebtedness; and 

(4) in any request for lender’s consent to 

any proposed action. Other new bases 

for default would include the 

commencement of a forfeiture action or 

proceeding, which in the lender’s 

reasonable judgment could result in the 

loss of the property or impairment of the 

lien. HUD has revised 24 CFR 207.255 

to reflect this two-tiered default scheme. 

As provided in 24 CFR 207.255, once a 

default exists under the security 

instrument and continues for a 

minimum period of 30 days, the lender 

would become eligible to receive 

mortgage insurance benefits. 

In addition to reflecting the new twotiered default system, § 207.255 would 

be revised to clarify that the purpose of 

the section is to define ‘‘default’’ and 

‘‘date of default’’ for purposes of filing an 

insurance claim with the FHA 

Commissioner. Also, editorial revisions 

would be made to improve the 

readability of this section. 

Section 207.256. Minor editorial 

changes would also be made to 

§ 207.256 to improve readability and to 

clarify which provisions in § 207.255 

would be cross-referenced in § 207.256. 

Sections 207.256a, 207.256b, and 

207.257. Minor editorial changes would 

be made to these sections to improve 

readability, and some changes have 

been made to correspond to changes 

made to the closing documents that 

were published in the January 21, 2010 

Notice. 

Section 207.258. HUD is also 

proposing to amend § 207.258, which 

provides insurance claim requirements, 

to provide, consistent with existing 

HUD practice and policy, that the 

mortgagee request a three-month 

extension of the 45-day deadline 

prescribed by § 207.258 for a mortgage 

funded with the proceeds of state or 

local bonds, Government National 

Mortgage Association (Ginnie Mae) 

mortgage-backed securities, or other 

bond obligations specified by HUD, any 

of which contains a lock-out or penalty 

provision. 

Section 207.259. HUD is proposing to 

amend § 207.259 by adding a new 

paragraph (b)(2)(vi). This proposed 

amendment would pertain to cases of a 

covenant default when the 

Commissioner, pursuant to § 207.257, 

has requested the mortgagee to 

accelerate payment of the outstanding 

principal balance due under an insured 

mortgage, and the mortgagee does not 

comply promptly with such request. In 

such cases, mortgage insurance benefits, 

if requested, will be reduced by an 

amount equal to the difference between 

the project’s market value as of the date 

of the Commissioner’s request and the 

project’s market value on the date the 

mortgagee makes an election to assign 

the mortgage, or convey title to the 

project, as determined by appraisal 

procedures established by the 

Commissioner. 

III. Discussion of Public Comments on 

2004 Proposed Rule 

The public comment period on the 

August 2, 2004, proposed rule closed on 

October 2, 2004. HUD received 10 

public comments on the proposed rule. 

Comments were submitted by lenders, 

home builders, and realty organizations. 

The following discussion presents the 

significant issues, questions, and 

suggestions submitted by public 

commenters, and HUD’s response to 

these issues, questions and suggestions. 

Citations to specific sections of the 

closing documents in the summaries of 

public comment, below, refer to the 

versions of closing documents originally 

published for public comment on 

August 2, 2004. 

Eligible Mortgagor (24 CFR 200.5) 

Comment: Commenters stated that 

tenants in common (TICs) should not be 

eliminated as eligible mortgagors and 

that the option should remain open. 

Commenters pointed out that at the time 

comments were solicited in 2004 Fannie 

Mae and Freddie Mac were seeing an 

increasing number of TICs borrowers 

due to a growing number of Like-Kind 

exchanges. They suggested that HUD 

require a Tenants-in-Common 

Agreement dealing with such issues as 

serial bankruptcy, dispute resolution 

and forced sale and partition and that 

failure to comply with the Agreement 


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Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 69365 

would be an event of default under the 

Security Instrument. 

HUD response: HUD notes the 

concerns raised by the commenters. 

Based on comments received in 2004 

and subsequently on the closing 

documents, HUD is now proposing in 

the closing documents, namely the 

Security Instrument, that the borrower 

be a single asset entity. Ownership by 

an individual has been abandoned by 

the commercial lending industry, is not 

a sound practice and is not a current 

practice in the insurance programs. Both 

the natural person and tenants in 

common structure of ownership is 

generally inconsistent with HUD’s 

proposed requirements that borrowers 

should be an entity that can qualify as 

a single asset mortgagor. FHA’s 

financing requirement (non-recourse, 

single-asset mortgagor entity) and asset 

management capabilities are different 

from Fannie Mae and Freddie Mac. 

Late Charge (24 CFR 200.88) 

Comment: During the 2010 

solicitation of comments on HUD’s 

multifamily closing documents, HUD 

received a comment that standardizing 

the time when the late fee applies 

would facilitate compliance by Ginnie 

Mae issuers with their obligation to 

make payments to investors. 

HUD response: HUD concurs with 

this comment and consequently is 

proposing a corresponding change to the 

regulations, making the late charge 

applicable 10 days in arrears. 

Defaults for Purposes of Insurance 

Claim (Two-Tiered Default) (24 CFR 

207.255) 

Comment: A commenter stated that 

the regulatory language provides that if 

a default continues for a minimum 

period of 30 days, the mortgagee shall 

be entitled to receive the benefits of the 

insurance provided for the mortgage. 

The commenter suggested that the 

regulatory language be revised to make 

the period of default in the regulation 

consistent with the language in the 

Security Instrument to ensure that the 

30-day time period in the regulations is 

the 30-day grace period that exists 

under the Security Instrument and the 

Note, and is not sequential to that grace 

period. 

HUD response: HUD reviewed this 

language, but believes there is no 

confusion on the time period, and 

therefore has not made a change to the 

language. 

Comment: One commenter suggested 

that allowing HUD to require a lender to 

declare a default and accelerate the 

Security Instrument due to a default 

under the Regulatory Agreement is 

overly broad. 

HUD response: HUD has, in the 

companion Notice published on January 

21, 2010, addressed issues raised by 

commenters on the proposed rule. 

Namely, HUD concurred that the bases 

for Class B/Covenant Event of Defaults 

were overly broad, and has added a 

‘‘materiality’’ standard to breach of the 

covenants under the mortgage as a 

criterion for Class B/Covenant Event of 

Defaults. HUD has added that change 

into the proposed regulation as well. 

Comment: One commenter suggested 

that language be added to 24 CFR 

207.255, to cover acceleration required 

by the FHA Commissioner, as that new 

authority is provided under 24 CFR 

207.257 of the proposed regulation. 

HUD response: HUD believes the 

language in the regulation is already 

sufficiently broad to cover this 

provision. 

Comment: One commenter suggested 

that HUD should publish for comment 

specific criteria that would be used in 

determining whether to grant approval 

for an insurance claim. 

HUD response: HUD believes the 

criteria is already quite specific and 

needs no further clarification. 

Modification of Mortgage Terms (24 CFR 

207.256b) 

Comment: One commenter suggested 

that HUD add language to make it clear 

that if, as is common practice, the 

mortgage is modified and the default is 

simultaneously cured, technically 

entering default for the purposes of an 

insurance claim would be automatically 

withdrawn. 

HUD response: HUD did not make 

this change. It is HUD’s view that a 

modified mortgage would not be 

considered to be in default after the 

modification was put in place. 

Comment: One commenter suggested 

that cash flow generated during a 

workout should be held by the 

mortgagor in trust for disposition, as 

existing regulations provide, rather than 

by the mortgagee. 

HUD response: HUD recognizes the 

concerns raised by this commenter and 

has adopted a change in the regulation 

to allow the mortgagor or the mortgagee, 

as may be appropriate in the particular 

situation to hold the cash flow 

generated during a work out. 

Commissioner’s Right To Require 

Acceleration (24 CFR 207.257) 

Comment: One commenter noted that 

there should be no mandatory 

acceleration. 

HUD response: The regulation does 

not require mandatory acceleration, but 

rather reserves to HUD the right to 

require the mortgagee to accelerate. 

Mortgagee Notice of Election To Assign 

for Insurance Benefits (24 CFR 207.258) 

Comment: One commenter noted that 

the proposed regulation unnecessarily 

elevates policies promulgated in 

Mortgagee Letters and Certificates to 

regulatory language. 

HUD response: HUD has included 

these provisions in the regulation 

because codification offers, among other 

things, an easily identifiable location for 

these requirements. 

Comment: Commenters suggested that 

the proposed language does not specify 

the length of the required extension of 

the deadline to assign. 

HUD response: HUD notes that it has 

retained current regulatory language 

that allows the Commissioner to extend 

the 30 day period during which the 

mortgagee may file its application for 

insurance for a period not to exceed 60 

days. 

Comment: A commenter stated that in 

situations where the mortgagee believes 

it would be futile to delay assignment, 

it may be in the best interest of HUD, 

the investors, and the mortgagee to 

assign promptly rather than seek the 

extension. 

HUD response: HUD agrees with this 

comment, and notes that 24 CFR 

207.257 provides that the Commissioner 

reserves the right to require the 

mortgagee to accelerate payment in 

order to protect the interests of the 

Commissioner upon receipt of notice of 

violation of a covenant. The 

Commissioner can exercise this 

discretion to take an assignment. 

Comment: A commenter stated that if 

the requirement to seek an extension is 

made mandatory by regulation, it would 

be more onerous for a mortgagee to 

obtain a waiver in instances warranting 

one. 

HUD response: HUD notes that this 

new language does not mandate an 

extension. Section 207.258 of HUD’s 

regulations (24 CFR 207.258) allows the 

mortgagee to assign the mortgage or to 

acquire and convey title to the 

Commissioner. Further, it will not be 

more onerous for a mortgagee to obtain 

a waiver simply because this language is 

in regulatory form rather than in a 

mortgagee letter. 

Comment: One commenter noted that 

there is no definition of ‘‘other bond 

obligations’’ here, although ‘‘other bond 

obligation’’ is defined in Mortgagee 

Letter 87–9 Mortgage Prepayment 

Provisions for HUD-Insured and 

Coinsured Multifamily Projects 

(Mortgagee Letter 87–9) and in Chapter 

12 of the Multifamily Accelerated 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
69366 Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 

Processing (MAP) Guide. At least 

‘‘participation certificates,’’ a commonly 

used arrangement, should be added. 

HUD response: HUD agrees and has 

added ‘‘participation certificates’’ and 

other bond obligations to the definition. 

Comment: A commenter stated that 

the mortgagee community is concerned 

that elevating the contractual duties 

between HUD and mortgagees to 

regulatory obligations may be construed 

by aggressive litigants as creating thirdparty benefits to them. 

HUD response: There is no change in 

the substance of the mortgagee’s 

obligations if the provisions are found 

in the Mortgagee Letter or in the 

regulation, so there are no additional 

third party benefits beyond the notice 

provided in regulatory format. 

Comment: One commenter noted that 

rather than requiring the mortgagee to 

‘‘assist’’ in obtaining refinancing, it 

would be more prudent for the 

mortgagee to be obligated to ‘‘cooperate.’’ 

HUD response: HUD’s position is that 

‘‘assist’’ is the appropriate terminology 

in Mortgagee Letter 87–9, and that 

consistency in the rule should assure 

that HUD will continue to interpret this 

provision as it has in the past. 

Comment: One commenter noted that 

the parenthetical clause at the end of the 

introductory paragraph should be 

revised from ‘‘Prior to the date on which 

prepayments may be made with 

penalty’’ to ‘‘prior to the date on which 

prepayments may be made without 

penalty’’ to conform to Mortgagee Letter 

87–9 and the new draft Lender’s 

Certificate. (Document No. HUD– 

92434M (Rev. XX/06) 

HUD response: The language quoted 

in the comment is incorrect. Mortgagee 

Letter 87–9, and the Mortgagee 

Certificate (69 FR 46269) proposed in 

August 2004 both state: ‘‘Prior to the 

date on which prepayments may be 

made with a penalty of one percent or 

less.’’ HUD has also retained the ‘‘with 

penalty’’ language in Section 24(a) of the 

new Lender’s Certificate proposed 

January 21, 2010. 

Comment: Paragraph (a)(1) of 24 CFR 

207.258 should provide for an automatic 

90-day extension of the deadline for 

filing notice of the mortgagee’s election 

upon request. An automatic 90-day 

extension will allow a servicer to stop 

wasting time and money to obtain an 

extension and provides investors some 

knowledge and certainty as to the status 

of the assignment process for the loan. 

HUD response: HUD declined this 

recommendation as the mortgagee 

currently has the option of selecting a 

30 day extension, and additional, if 

requested and approved, 60-day 

extension. 

Comment: Paragraph (a)(5) of 24 CFR 

207.258 requiring a successor to certify 

compliance with regulations is not 

necessary, since the regulations are part 

of the Contract of Insurance. 

HUD response: The certification is 

required. There is no change in policy, 

and the notice provided by including 

this provision in the regulations 

improves the probability that potentially 

affected parties are aware of this 

requirement. 

Comment: One commenter noted that 

paragraph (a)(6) of 24 CFR 207.258 was 

unclear with respect to ‘‘after 

completion of any refinancing.’’ The 

commenter recommended that ‘‘after 

commencement of amortization of the 

mortgage’’ should be used, as similar 

language is used with respect to 

‘‘Improvements’’ in the Building Loan 

Agreement documents, and because the 

project could actually be refinanced 

with a non-HUD program. 

HUD response: HUD has adopted the 

recommendation. 

Comment: One commenter noted that 

paragraph (a)(6) of 24 CFR 207.258 

should be changed to require the 

mortgagee to notify HUD if payment was 

not received by the 16th day after the 

date on which such payment is due. 

HUD response: HUD has modified 

this provision to be consistent with the 

late charge established under 24 CFR 

200.88. HUD is revising the Note (HUD 

94001M) with respect to late charges, to 

provide that the late charge applies 

when the lender does not receive 

payment within 10 days after the 

payment is due. That change responds 

to comment HUD received that 

suggested that standardizing the time 

when the late fee applies would 

facilitate compliance by Ginnie Mae 

issuers with their obligation to make 

payments to investors. HUD is 

consequently revising 24 CFR 207.258 

to be consistent with the late charge in 

the Note and with the proposed changes 

in 24 CFR 200.88 previously described. 

Comment: One commenter noted that 

a clause should be added at the end of 

paragraph (a) of 24 CFR 207.258 to 

provide the mortgagee with reasonable 

notice of a decision not to grant an 

extension in order to prepare the 

necessary documents and to provide for 

denial of an extension request when 

such a denial is warranted. 

HUD response: HUD is sympathetic to 

the concern expressed by the 

commenter. To address this issue, HUD 

proposed to add a sentence to 

§ 207.258(b) providing that a mortgagee 

may consider failure to receive an 

extension notice within 30 days, a 

denial of the request for an extension. In 

addition, HUD has taken the 

opportunity afforded by this proposed 

rule to reorganize § 207.258(b) by 

breaking down the lengthy paragraph 

into several shorter paragraphs. The 

reorganization does not affect the 

substance of § 207.258(b) but will clarify 

and improve the readability of the 

regulatory provision. 

IV. Justification for Shortened 

Comment Period 

For HUD rules issued for public 

comment, it is HUD’s policy to afford 

the public ‘‘not less than sixty days for 

submission of comments’’ (24 CFR 10.1). 

In cases in which HUD determines that 

a shorter public comment period may be 

appropriate, it is also HUD’s policy to 

provide an explanation of why the 

public comment period has been 

abbreviated. 

In this case, with one exception and 

minor changes, HUD is resubmitting for 

public comment the same regulatory 

amendments presented in HUD’s 

proposed rule published on August 2, 

2004 (69 FR 46210). The one regulatory 

amendment not proposed in 2004, was 

the proposed amendment to § 200.88. 

All other regulatory provisions 

presented for public comment in this 

rule are the same as those proposed for 

amendment in 2004, with minor 

changes, in a few places, with some of 

the proposed language changes. As 

discussed in this preamble, HUD 

received only 10 public comments on 

the proposed regulatory amendments in 

the 2004 proposed rule. 

Given that this is the second time that 

HUD is issuing for comment, almost the 

identical amendments, HUD believes 

that a 30-day public comment period is 

sufficient. 

V. 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 proposed 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 

A Finding of No Significant Impact 

with respect to the environment for this 

rule has been made 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 

Finding of No Significant Impact is 


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Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 69367 

available for public inspection between 

8 a.m. and 5 p.m. weekdays in the 

Regulations Division, Room 10276, 

Office of the General Counsel, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Washington, DC 20410–0500. Due to 

security measures at the HUD 

Headquarters building, please schedule 

an appointment to review the docket file 

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 

Information Relay Service at 800–877– 

8339. 

Impact on Small Entities 

The Regulatory Flexibility Act (RFA) 

(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 is limited to making certain 

conforming amendments to FHA 

regulations that address multifamily 

rental projects to ensure their 

consistency with the recent update and 

revision of the documents used for 

multifamily rental project and health 

care facility closings. Accordingly, the 

undersigned certifies that this rule will 

not have a significant economic impact 

on a substantial number of small 

entities. 

Notwithstanding HUD’s 

determination that this rule would not 

have a significant economic effect on a 

substantial number of small entities, 

HUD specifically invites comments 

regarding less burdensome alternatives 

to this rule that would meet HUD’s 

objectives as described in this preamble. 

Federalism Impact 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on State and local 

governments and is not required by 

statute, or preempts State law, unless 

the relevant requirements of section 6 of 

the executive order are met. 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. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance number 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, 

Incorporation by reference, Lead 

poisoning, Loan programs—housing and 

community development, Minimum 

property standards, Mortgage insurance, 

Organization and functions 

(Government agencies), Penalties, 

Reporting and recordkeeping 

requirements, Social Security, 

Unemployment compensation, Wages. 

24 CFR Part 207 

Manufactured homes, Mortgage 

insurance, Reporting and recordkeeping 

requirements, Solar energy. 

Accordingly, for the reasons 

discussed in this preamble, HUD 

proposes to amend 24 CFR parts 200 

and 207 as follows: 

PART 200—INTRODUCTION TO FHA 

PROGRAMS 

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). 

2. Revise § 200.5 to read as follows: 

§ 200.5 Eligible mortgagor. 

The mortgagor shall be a single asset 

mortgagor entity acceptable to the 

Commissioner, as limited by the 

applicable section of the Act, and shall 

possess the powers necessary and 

incidental to operating the project. 

Natural persons and tenancies in 

common are not eligible mortgagor 

entities. 

3. Revise § 200.88 to read as follows: 

§ 200.88 Late charge. 

The mortgage may provide for the 

collection by the mortgagee of a late 

charge in accordance with terms, 

conditions and standards of the 

Commissioner for each dollar of each 

payment to interest or principal more 

than 10 days in arrears to cover the 

expense involved in handling 

delinquent payments. Late charges shall 

be separately charged to and collected 

from the mortgagor and shall not be 

deducted from any aggregate monthly 

payment. 

PART 207—MULTIFAMILY HOUSING 

MORTGAGE INSURANCE 

4. The authority citation for part 207 

continues to read as follows: 

Authority: 12 U.S.C. 1701z–11(e), 1713, 

and 1715b; 42 U.S.C. 3535(d). 

5. Revise § 207.255 to read as follows: 

§ 207.255 Defaults for purposes of 

insurance claim. 

This section defines ‘‘default’’ and 

‘‘date of default’’ for purposes of a 

mortgagee filing an insurance claim 

with the Commissioner. 

(a) The following shall be considered 

a default under the terms of a mortgage 

insured under this subpart: 

(1) Failure of the mortgagor to make 

any payment due under the mortgage 

(also referred to as a ‘‘Monetary Event of 

Default’’ in certain mortgage security 

instruments); or 

(2) A material violation of any other 

covenant under the provisions of the 

mortgage, if because of such violation, 

the mortgagee has accelerated the debt, 

subject to any necessary HUD approval 

(also referred to as a ‘‘Covenant Event of 

Default’’ in certain mortgage security 

instruments). 

(b) For purposes of a mortgagee filing 

an insurance claim with the 

Commissioner, the failure of the 

mortgagor to make any payment due 

under an operating loss loan or under 

the original mortgage shall be 

considered a default under both the 

operating loss loan and original 

mortgage. 

(c) If a default as defined in 

paragraphs (a) or (b) of this section 

continues for a minimum period of 30 

days, the mortgagee shall be entitled to 

receive the benefits of the insurance 

provided for the mortgage, subject to the 

procedures in this subpart. 

(d) For the purposes of this section 

the date of default shall be: 

(1) The date of the first failure to make 

a monthly payment that subsequent 

payments by the mortgagor are 

insufficient to cover when those 

subsequent payments are applied by the 

mortgagee to the overdue monthly 

payments in the order in which they 

became due; or 

(2) The date of the first uncorrected 

violation of a covenant or obligation for 

which the mortgagee has accelerated the 

debt. 

6. Revise § 207.256 to read as follows: 

§ 207.256 Notice to the Commissioner of 

default. 

(a) If a default as defined in 

§ 207.255(a) or (b) is not cured within 

the grace period of 30 days provided 

under § 207.255(c), the mortgagee must, 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
69368 Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 

within 30 days after the date of the end 

of the grace period, notify the 

Commissioner of the default, in the 

manner prescribed in 24 CFR part 200, 

subpart B. 

(b) The mortgagee must give notice to 

the Commissioner, in the manner 

prescribed in 24 CFR part 200, subpart 

B, of the mortgagor’s violation of any 

covenant, whether or not the mortgagee 

has accelerated the debt. 

7. Revise § 207.256a to read as 

follows: 

§ 207.256a Reinstatement of defaulted 

mortgage. 

If, after default and prior to the 

completion of foreclosure proceedings, 

the mortgagor cures the default, the 

insurance shall continue on the 

mortgage as if a default had not 

occurred, provided the mortgagee gives 

notice of reinstatement to the 

Commissioner, in the manner 

prescribed in 24 CFR part 200, subpart 

B. 

8. Revise § 207.256b to read as 

follows: 

§ 207.256b Modification of mortgage 

terms. 

(a) The mortgagor and the mortgagee 

may, with the approval of the 

Commissioner, enter into an agreement 

that extends the time for curing a 

default under the mortgage or modifies 

the payment terms of the mortgage. 

(b) The Commissioner’s approval of 

the type of agreement specified in 

paragraph (a) of this section shall not be 

given, unless the mortgagor agrees in 

writing that, during such period as 

payments by the mortgagor to the 

mortgagee are less than the amounts 

required under the terms of the original 

mortgage, the mortgagor or mortgagee, 

as may be appropriate in the particular 

situation will hold in trust for 

disposition, as directed by the 

Commissioner, all rents or other funds 

derived from the secured property that 

are not required to meet actual and 

necessary expenses arising in 

connection with the operation of such 

property, including amortization 

charges under the mortgage. 

(c) The Commissioner may exempt a 

mortgagor from the requirement of 

paragraph (b) of this section in any case 

where the Commissioner determines 

that such exemption does not jeopardize 

the interests of the United States. 

9. Revise § 207.257 to read as follows: 

§ 207.257 Commissioner’s right to require 

acceleration. 

Upon receipt of notice of violation of 

a covenant, as provided for in 

§ 207.256(b), or otherwise being 

apprised of the violation of a covenant, 

the Commissioner reserves the right to 

require the mortgagee to accelerate 

payment of the outstanding principal 

balance due in order to protect the 

interests of the Commissioner. 

10. Amend § 207.258, as follows: 

a. Revise paragraph (a); 

b. Redesignate paragraphs (b)(1) 

through (b) (5) as (b)(2) through (b)(6) 

respectively; 

c. Redesignate the undesignated 

introductory paragraph of paragraph (b) 

as paragraph (b)(1); and 

d. Revise newly designated paragraph 

(b)(1), to read as follows: 

§ 207.258 Insurance claim requirements. 

(a) Alternative election by mortgagee. 

When the mortgagee becomes eligible to 

receive mortgage insurance benefits 

pursuant to § 207.255(c), the mortgagee 

must, within 45 days after the date of 

eligibility, give the Commissioner 

notice, in the manner prescribed in 

24 CFR part 200, subpart B, of its 

intention to file an insurance claim and 

of its election either to assign the 

mortgage to the Commissioner, as 

provided in paragraph (b) of this 

section, or to acquire and convey title to 

the Commissioner, as provided in 

paragraph (c) of this section. For 

mortgages funded with the proceeds of 

State or local bonds, GNMA mortgagebacked securities, participation 

certificates, or other bond obligations 

specified by HUD (such as an agreement 

under which the insured mortgagee has 

obtained the mortgage funds from third 

party investors and has agreed in 

writing to repay such investors at a 

stated interest rate and in accordance 

with a fixed repayment schedule), any 

of which contains a lock-out or penalty 

provision, the mortgagee must, in the 

event of a default during the term of the 

prepayment lock-out or penalty (i.e., 

prior to the date on which prepayments 

may be made with a penalty): 

(1) Request an extension of the 

deadline for filing notice of the 

mortgagee’s intention to file an 

insurance claim and the mortgagee’s 

election to assign the mortgage or 

acquire and convey title in accordance 

with the mortgagee certificate; 

(2) Assist the mortgagor in arranging 

refinancing to cure the default and avert 

an insurance claim, if HUD grants the 

requested (or a shorter) extension of 

notice filing deadline; 

(3) Report to HUD at least monthly on 

any progress in arranging refinancing; 

(4) Cooperate with HUD in taking 

reasonable steps in accordance with 

prudent business practices to avoid an 

insurance claim; 

(5) Require successors or assigns to 

certify in writing that they agree to be 

bound by these conditions for the 

remainder of the term of the prepayment 

lock-out or penalty; and 

(6) After commencement of 

amortization of the refinanced mortgage, 

notify HUD of a delinquency when a 

payment is not received by the 10th day 

after the date the payment is due. 

(b) Assignment of mortgage to 

Commissioner. (1) Timeframe; request 

for extension. 

(i) If the mortgagee elects to assign the 

mortgage to the Commissioner, the 

mortgagee shall, at any time within 

30 days after the date of notice of the 

election, file its application for 

insurance benefits and assign to the 

Commissioner, in such manner as the 

Commissioner may require, any 

applicable credit instrument and the 

realty and chattel security instruments. 

(ii) The Commissioner may extend 

this 30-day period by written notice that 

a partial payment of insurance claim 

under § 207.258b is being considered. A 

mortgagee may consider failure to 

receive a notice of an extension 

approval by the end of the 30-day time 

period a denial of the request for an 

extension. 

(iii) The extension shall be for such 

term, not to exceed 60 days, as the 

Commissioner prescribes; however, the 

Commissioner’s consideration of a 

partial payment of claim, or the 

Commissioner’s request that a 

mortgagee accept partial payment of a 

claim in accordance with § 207.258b, 

shall in no way prejudice the 

mortgagee’s right to file its application 

for full insurance benefits within either 

the 30-day period or any extension 

prescribed by the Commissioner. 

(iv) The requirements of paragraphs 

(b)(2) through (b)(6) of this section shall 

also be met by the mortgagee. 

* * * * * 

11. In § 207.259, add a new paragraph 

(b)(2)(vi) to read as follows: 

§ 207.259 Insurance benefits. 

* * * * * 

(b) * * * 

(2) * * * 

(vi) When there is a covenant default 

as defined in § 207.255(a)(2) and a 

mortgagee refuses to comply promptly 

with the Commissioner’s request to 

accelerate payment pursuant to 

§ 207.257, an amount equal to the 

difference between the project’s market 

value as of the date of the 

Commissioner’s request and the 

project’s market value as of the date the 

mortgagee makes an election to assign 

the mortgage, or convey title to the 

project, as determined by appraisal 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
Federal Register / Vol. 75, No. 218 / Friday, November 12, 2010 / Proposed Rules 69369 

procedures established by the 

Commissioner. 

* * * * * 

Dated: October 25, 2010. 

David H. Stevens, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2010–28420 Filed 11–10–10; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

29 CFR Part 1910 

[Docket No. OSHA–2007–0072] 

RIN 1218–AB80 

Walking-Working Surfaces and 

Personal Protective Equipment (Fall 

Protection Systems) 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Proposed rule; notice of 

informal public hearings. 

SUMMARY: OSHA is convening an 

informal public hearing to receive 

testimony and documentary evidence 

on the Walking-Working Surfaces and 

Personal Protective Equipment (Fall 

Protection Systems) proposed rule (29 

CFR part 1910, subparts D and I), 

published on May 24, 2010 (73 FR 

28862). 

DATES: Informal public hearings: OSHA 

will hold an informal public hearing in 

Washington, DC, beginning at 9:30 a.m., 

January 18, 2011. If necessary, the 

hearing will continue on subsequent 

days at the same time and location. 

Notice of intention to appear to 

provide testimony at the informal public 

hearing: Parties who intend to present 

testimony or question witnesses at the 

informal public hearing must notify 

OSHA in writing of their intention to do 

so by November 30, 2010. 

Hearing testimony and documentary 

evidence: Parties requesting more than 

10 minutes to present their testimony, 

or who will be submitting documentary 

evidence at the hearing must submit the 

full text of their testimony and all 

documentary evidence to OSHA by 

December 21, 2010. 

ADDRESSES: Informal public hearing: 

The hearing will be held in the 

auditorium of the Frances Perkins 

Building, U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC. 

Notices of intention to appear, 

hearing testimony, and documentary 

evidence: Submit notices of intention to 

appear, hearing testimony, and 

documentary evidence, identified by the 

docket number (OSHA–2007–0072) or 

the regulation identifier number (RIN 

1218–AB80) using any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions online for electronically 

submitting materials, including 

attachments, 

• Fax: Send written submissions not 

exceeding 10 pages in length, including 

attachments, to the OSHA Docket Office 

at (202) 693–1648. Hard copies of these 

documents are not required. Instead of 

transmitting facsimile copies of 

attachments that supplement these 

documents (e.g., studies, journal 

articles), submit these attachments in 

hard copy to the OSHA Docket Office, 

Technical Data Center, Room N–2625, 

OSHA, U.S. Department of Labor, 200 

Constitution Ave., NW., Washington, 

DC 20210. These attachments must 

clearly identify the sender’s name, date, 

subject, and docket number (i.e., 

OSHA–2007–0072) so that OSHA can 

attach them to the appropriate 

document. 

• Regular mail, express delivery, 

hand delivery, and messenger and 

courier service: Send materials to the 

OSHA Docket Office, Docket No. 

OSHA–2007–0072, Technical Data 

Center, U.S. Department of Labor, Room 

N–2625, 200 Constitution Avenue, NW., 

Washington, DC 20210; telephone (202) 

693–2350 (TTY number (877) 889– 

5627). Note that security-related 

problems may result in significant 

delays in receiving submissions by 

regular mail. Please contact the OSHA 

Docket Office for information about 

security procedures concerning delivery 

of materials by express delivery, hand 

delivery, or courier service. Deliveries 

(express mail, hand delivery, and 

messenger and courier service) are 

accepted during the Department of 

Labor’s and OSHA Docket Office’s 

normal hours of operation, 8:15 a.m. to 

4:45 p.m., e.t. 

Instructions: All submissions must 

include the Agency name and docket 

number (OSHA–2007–0072). All 

submissions, including any personal 

information, are placed in the public 

docket without change, and will be 

available online at http:// 

www.regulations.gov. Therefore, OSHA 

cautions members of the public against 

submitting information and statements 

that should remain private, including 

comments that contain personal 

information (either about themselves or 

others) such as Social Security numbers, 

birthdates, and medical information. For 

additional information on submitting 

notices of intention to appear, hearing 

testimony, or documentary evidence, 

see the SUPPLEMENTARY INFORMATION

section of this notice below. 

Docket: To read or download 

comments and other material in the 

docket, go to Docket No. OSHA–2007– 

0072 at http://www.regulations.gov or to 

the OSHA Docket Office at the address 

above. While all submissions to the 

docket are listed in the http:// 

www.regulations.gov, some information 

(e.g., copyrighted material) is not 

publicly available to read or download 

through this Web site. However, all 

submissions, including copyrighted 

material, are available for inspection 

and copying in the OSHA Docket Office. 

Contact the OSHA Docket Office for 

assistance in locating docket 

submissions, including notices of 

intention to appear, the text of 

testimony, and documentary evidence. 

The hours of operation for the OSHA 

Docket Office are 8:15 a.m. to 4:45 p.m., 

e.t. 

FOR FURTHER INFORMATION CONTACT: 

Press inquiries: MaryAnn Garrahan, 

Office of Communications, U.S. 

Department of Labor, Occupational 

Safety and Health Administration, 

Room N–3647, 200 Constitution 

Avenue, NW., Washington, DC 20210; 

telephone (202) 693–1999. 

Technical inquiries and inquiries 

about the hearing: Virginia Fitzner, 

Office of Safety Systems, Directorate of 

Standards and Guidance, U.S. 

Department of Labor, Occupational 

Safety and Health Administration, 

Room N–3609, 200 Constitution 

Avenue, NW., Washington, DC 20210; 

telephone (202) 693–2052. 

Copies of this Federal Register notice: 

Electronic copies of this Federal 

Register notice are available at http:// 

www.regulations.gov. This notice, as 

well as news releases and other relevant 

information regarding the hearing, also 

are available at OSHA’s Web page at 

http://www.osha.gov. 

SUPPLEMENTARY INFORMATION: 

Background. On May 24, 2010, OSHA 

published a proposed rule to update, 

revise, and reorganize the standards on 

walking-working surfaces and to add 

personal fall protection systems to the 

Personal Protective Equipment standard 

(73 FR 28862). OSHA invited written 

comments and requests for hearings on 

the proposed rule. The deadline for 

submitting comments and hearing 

requests was August 23, 2010. During 

this period, a number of commenters 

submitted requests for an informal 

public hearing (see, e.g., Ex. OSHA– 

2007–0072–0150.1). Accordingly, OSHA 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1