71724 Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Notices 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520), and have been 

assigned OMB control number 2502– 

0306. In accordance with the Paperwork 

Reduction Act, HUD 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 control number. 

Dated: November 17, 2010. 

David H. Stevens, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2010–29654 Filed 11–23–10; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–5459–N–01] 

Real Estate Settlement Procedures Act 

(RESPA): Solicitation of Information on 

Changes in Warehouse Lending and 

Other Loan Funding Mechanisms 

AGENCY: Office of General Counsel, 

HUD. 

ACTION: Notice. 

SUMMARY: HUD is considering issuing 

guidance under RESPA to address 

possible changes in warehouse lending 

and other financing mechanisms used to 

fund federally related mortgage loans 

that have occurred since HUD issued 

regulations specifically related to this 

area in 1992 and 1994. In order to assist 

HUD in determining whether such 

guidance is needed and to formulate 

such guidance, HUD is seeking 

information on how funding 

mechanisms have evolved in recent 

years, and especially on how warehouse 

lending currently operates within 

residential real estate mortgage 

transactions. 

HUD welcomes input from warehouse 

lenders, retail lenders, mortgage 

bankers, wholesale lenders, 

correspondent lenders, mortgage 

brokers, and others in the mortgage 

lending industry, as well as from 

federal, state, and local consumer 

protection and enforcement agencies; 

consumer groups; and other members of 

the public. Based on information 

received in response to this solicitation, 

HUD will decide what, if any, 

additional guidance is needed on the 

scope of RESPA as applied to current 

mortgage funding practices. 

DATES: Comment Due Date: December 

27, 2010. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this notice to the Regulations Division, 

Office of General Counsel, 451 7th 

Street, SW., Room 10276, Department of 

Housing and Urban Development, 

Washington, DC 20410–0500. 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 

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 

http://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 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 

through TTY by calling the toll-free 

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: For 

legal questions, contact Paul S. Ceja, 

Assistant General Counsel for RESPA/ 

SAFE, telephone number 202–708– 

3137; or Peter S. Race, Assistant General 

Counsel for Program Compliance, 

telephone number 202–708–2350; 

Department of Housing and Urban 

Development, 451 7th Street, SW., 

Room 9262, Washington, DC 20410. For 

other questions, contact Barton Shapiro, 

Director, or Mary Jo Sullivan, Deputy 

Director, Office of RESPA and Interstate 

Land Sales, Office of Housing, 

Department of Housing and Urban 

Development, 451 7th Street, SW., 

Room 9158, Washington, DC 20410; 

telephone number 202–708–0502. These 

telephone numbers are not toll-free. 

Persons with hearing or speech 

impairments may access these numbers 

via TTY by calling the toll-free Federal 

Information Relay Service at 1–800– 

877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Due to the length of time since the 

issuance of regulations on the treatment 

and coverage of warehouse lending 

under RESPA (12 U.S.C. 2601–2617), 

HUD is reviewing the need to provide 

additional guidance in this area 

pursuant to its authority under section 

19 of RESPA (12 U.S.C. 2617). 

The requirements and prohibitions 

under RESPA apply to credit 

transactions that involve federally 

related mortgage loans. These mortgage 

loans include most purchase loans, 

assumptions, refinances, property 

improvement loans, and home equity 

lines of credit that are secured by liens 

placed on one- to four-family residential 

properties. The purposes of RESPA are, 

generally, to help consumers become 

better shoppers for settlement services 

and to eliminate kickbacks and referral 

fees that unnecessarily increase the 

costs of certain settlement services. 

To achieve its purposes, RESPA 

requires, in part, that borrowers receive 

disclosures at various times in the 

transaction. These disclosures explain 

the borrower’s loan, detail the costs 

associated with settlement, summarize 

servicing and escrow account practices, 

and describe affiliated business 

relationships among settlement service 

providers. In January 2010, major 

revisions to the Good Faith Estimate 

(‘‘GFE’’) and uniform settlement 

statement (‘‘HUD–1/1A’’) disclosure 

forms mandated in HUD’s RESPA 

regulations (24 CFR part 3500) took 

effect. 

RESPA also prohibits certain practices 

that increase the cost of settlement 

services. For example, section 8 of 

RESPA prohibits a person from giving or 

accepting anything of value for referrals 

of business incident to or part of a 

settlement service provided in a covered 

transaction. RESPA also prohibits a 

person from giving or accepting any part 

of a charge other than for services 

actually performed. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Notices 71725 

1The 1992 rule noted an exemption for ‘‘bona fide 

secondary market transactions’’ (57 FR at 49605); 

codified the exemption in 24 CFR 3500.5(b)(3) (57 

FR at 49609); and added Appendix B, Illustration 

5, as an example of a transaction in the secondary 

market (57 FR at 49618). 

2 58 FR 28478 (May 13, 1993). 

3 59 FR 6506 (February 10, 1994). 

4See, 24 CFR 3500.5(b)(7) (‘‘Secondary market 

transactions’’); and 3500.2 (definition of ‘‘Table 

funding’’). 

II. Scope of RESPA Coverage 

In order to effectively and efficiently 

accomplish the consumer protection 

purposes of RESPA, it is important for 

HUD to ensure that RESPA’s 

requirements and prohibitions are 

applied appropriately in all covered 

home mortgage transactions. A 

consumer needs reliable information 

about the terms of his or her mortgage 

transaction, which can include 

understanding any competing interests 

of other persons who are involved in the 

transaction. While settlement service 

providers are expected to profit from the 

services they provide with regard to the 

transaction, Congress was clear in its 

intent in passing RESPA that consumers 

be ‘‘provided with greater and more 

timely information on the nature and 

costs of the settlement process and 

* * * protected from unnecessarily 

high settlement charges.’’ 12 U.S.C. 

2601(a). 

HUD’s commitment to protect 

homebuyers and to ensure that 

consumers are provided with greater 

and timelier information on the nature 

and costs of the settlement process was 

clearly demonstrated in the rulemaking 

that led to the recent revisions to the 

GFE and HUD–1/1A disclosures and 

related requirements. However, HUD 

also seeks to avoid economic 

inefficiencies and burdens on other 

participants in the mortgage process that 

could harm consumers through 

increased settlement costs, as well as to 

recognize technological and business 

arrangement innovations that could 

reduce settlement costs for consumers. 

For example, HUD has been reviewing 

industry practices in the funding of 

residential mortgage loans, and the 

evolution of those practices since HUD 

issued its major revision of the basic 

RESPA regulations in 1992 (57 FR 

49600, November 2, 1992) (‘‘1992 rule’’). 

In the 1992 rule, HUD codified a 

regulatory exemption from the RESPA 

requirements for transactions in the 

secondary market.1 Subsequently, in a 

1993 proposed rule 2 and 1994 final 

rule,3 HUD discussed and revised the 

secondary market exemption, and added 

a new definition of ‘‘table funding’’.4

Since 1992, HUD’s regulations have 

provided some type of exemption from 

RESPA for bona fide transfers of the 

mortgage loan obligation in the 

secondary market. In the 1992 rule, 

HUD stated that ‘‘[i]n determining what 

constitutes a bona fide transfer, HUD 

would consider the real source of the 

funding and the real interest of the 

settlement lender.’’ (See 57 FR at 49609; 

‘‘settlement lender’’ later changed to 

‘‘funding lender’’ as clarification in 

February 10, 1994 final rule. See 59 FR 

at 6509). In the 1992 rule, HUD also 

referenced ‘‘table funding’’ in clarifying 

how the exemption would apply to 

mortgage broker transactions. 

HUD has continued to review 

mortgage loan funding practices and is 

considering issuing guidance to address 

changes in the operation of warehouse 

lending since HUD’s RESPA regulations 

relevant to this area were promulgated 

and revised over 15 years ago. To assist 

HUD in determining both whether 

updated guidance would be helpful and 

the scope of such guidance, HUD is 

seeking information on the current state 

of warehouse lending and how it 

currently operates within residential 

real estate mortgage transactions. HUD 

particularly seeks input from the 

mortgage lending industry, including 

specifically warehouse lenders, retail 

lenders, mortgage bankers, wholesale 

lenders, correspondent lenders, and 

mortgage brokers, and from federal, 

state, and local consumer protection and 

enforcement agencies; consumer groups; 

and other members of the public. 

III. Suggested Topics for Comment 

HUD encourages commenters to 

provide any relevant information 

describing and discussing the structures 

and operation of warehouse lending and 

other mechanisms currently used to 

fund mortgage loans. HUD suggests the 

following specific questions for which 

answers could provide HUD with 

helpful information as it assesses the 

need for and extent of any further 

guidance in this area: 

(1) What are the general 

characteristics of warehouse lending in 

the context of mortgage loan financing? 

Specifically: 

(a) How does a warehouse lender 

provide funding to loan originators (e.g., 

through a line of credit; by funding 

individual loans; any other method)? If 

funding is provided through a line of 

credit, what characteristics indicate a 

bona fide warehouse line of credit? 

With regard to each type of funding 

provided, what criteria does the 

warehouse lender use to determine that 

it will provide funding to a loan 

originator? 

(b) What mechanisms are used by the 

warehouse lender to assure repayment 

of the funding provided to the loan 

originator? For example, what security 

is taken or other evidence of the debt 

obligation is accepted, and what kinds 

of agreements are made concerning 

liability for repayment? 

(c) Does ownership of a mortgage loan 

that is originated by a loan originator 

who is funded by the warehouse lender 

ever transfer to the warehouse lender? If 

ownership does transfer, how does the 

transfer occur (e.g., through purchase or 

assignment), and for typically what 

period of time? Additionally, how is the 

transfer of ownership accomplished 

(e.g., does physical possession change)? 

(d) If ownership of loans is transferred 

to the warehouse lender, are the loan 

originators ever obligated to repurchase 

the loan under a repurchase agreement? 

If so, how often is a repurchase 

agreement used in such transactions? 

Is the obligation to repurchase a loan 

subject to such an agreement absolute or 

conditional? If conditional, please 

describe the typical conditions that 

apply. 

What repurchase agreement terms are 

necessary to ensure that the 

arrangement between the warehouse 

lender and loan originator is truly only 

a financing mechanism for the loan 

originator’s business? Specifically, what 

agreement terms are necessary to 

conclude that the arrangement is a 

mechanism for financing a loan 

originator, as distinguished from a 

method of funding an individual loan 

(e.g., the lack of conditions on the loan 

originator’s obligation to repurchase the 

loan)? Are there factors beyond the 

repurchase agreement between the 

parties that HUD should consider in 

determining the real interests of the 

parties with regard to each loan 

transaction? If so, please identify any 

such factors. 

(e) To what extent is the warehouse 

lender involved in the loan-level credit 

approval decision with respect to each 

mortgage loan application? 

What level of scrutiny do warehouse 

lenders engage in with regard to 

individual loan files on originated 

loans? 

When does this review take place in 

the transaction (e.g., before a funding 

commitment; after a funding 

commitment but before settlement)? 

Does the warehouse lender establish 

underwriting criteria that must be 

accepted by the loan originator? Do the 

criteria vary based on fluctuations in the 

market? Do the criteria change at the 

discretion of the warehouse lender? 

Do warehouse lenders approve the 

funding of individual loans before 

settlement? 

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71726 Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Notices 

Does the size or creditworthiness of 

the loan originator influence the level of 

scrutiny of individual loans? 

(f) How has warehouse lending 

evolved since HUD issued its 

regulations on table funding and 

secondary market transactions in 1994? 

(2) What particular characteristics 

distinguish warehouse lending from 

retail lending? What is the role of 

warehouse lending within the primary 

mortgage market versus the secondary 

market? 

(3) What distinguishes the funding of 

a mortgage loan from a sale of the 

mortgage loan in the secondary market? 

For example, what characteristics 

indicate a bona fide transfer of the loan 

obligation, such that the transaction 

would be a secondary market 

transaction that is not covered by HUD’s 

RESPA regulations? 

What are the basic mechanics for the 

sale of a loan by a warehouse lender 

into the secondary market? Specifically, 

what are the mechanics for identifying, 

locating, and transferring mortgages to 

secondary market participants, and 

what are the respective roles of each of 

the parties involved in these activities? 

Do warehouse lenders sell directly to 

the secondary market? Do warehouse 

lenders utilize loan originators in the 

sale of loans into the secondary market? 

If so, how? 

Do warehouse lenders participate in 

purchasing loans in the secondary 

market? If so, do warehouse lenders 

purchase loans from loan originators 

with whom they have a warehouse 

lending relationship? Do the criteria for 

purchase from a loan originator within 

the warehouse lending relationship 

differ from the criteria for purchase from 

a loan originator without this 

relationship? 

Is there a need to clarify the 

secondary market exemption as set forth 

in 24 CFR 3500.5(b)(7)? If so, how 

should the exemption be clarified? 

(4) What role does a warehouse lender 

play in a table funded transaction? 

Does a warehouse lender fund loans 

at settlement contemporaneously with 

assignment of the loans to the 

warehouse lender by the loan originator, 

or contemporaneously with receiving 

some other evidence of a debt obligation 

from the loan originator? 

(5) What, if any, characteristics 

distinguish a table funded transaction 

completed by a mortgage broker from a 

loan made by a mortgage banker who 

has an advance commitment to sell the 

loan after settlement? 

(6) Does a warehouse lender fund 

mortgage loans within the meaning of 

‘‘settlement service’’ as that term is 

defined in section 2 of RESPA and 24 

CFR 3500.2? 

(7) What factors determine who is 

identified as the payee on the mortgage 

loan note? 

(8) Have concerns about protection 

under bankruptcy laws influenced 

changes in how warehouse lenders 

operate in relation to loan originators? If 

so, what concerns, and what changes 

have resulted? 

(9) What do warehouse lenders regard 

as being their obligations for providing 

the disclosures required under RESPA? 

For example, in a mortgage loan 

transaction that involves a warehouse 

lender, what is the warehouse lender’s 

obligation with regard to providing a 

good faith estimate disclosure to the 

borrower? 

(10) Do consumers or others have 

concerns with regard to mortgage 

industry participants’ current 

interpretation of HUD’s secondary 

market exemption, including the impact 

that such interpretations may have on 

consumers regarding coverage of RESPA 

disclosures and Section 8 protections 

against kickbacks and referral fees? 

Authority: 12 U.S.C. 2601–2617; 42 U.S.C. 

3535(d). 

Dated: November 16, 2010. 

Helen R. Kanovsky, 

General Counsel. 

[FR Doc. 2010–29663 Filed 11–23–10; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF THE INTERIOR 

Central Utah Project Completion Act 

AGENCY: Department of the Interior, 

Office of the Assistant Secretary—Water 

and Science. 

ACTION: Notice of availability of the 

Finding of No Significant Impact 

(FONSI) and associated Final 

Environmental Assessment (EA)— 

Realignment of a Portion of the Utah 

Lake Drainage Basin Water Delivery 

System. 

SUMMARY: On November 15, 2010, the 

Department of the Interior (Interior), 

signed a FONSI associated with the 

Final EA—Realignment of a Portion of 

the Utah Lake Drainage Basin Water 

Delivery System. Interior has 

determined that the proposed action as 

detailed in the FONSI will not have a 

significant impact on the quality of the 

human environment, and that an 

environmental impact statement is not 

required. 

ADDRESSES: Copies of the EA and FONSI 

are available for inspection at: 

• Central Utah Water Conservancy 

District, 355 West University Parkway, 

Orem, Utah 84058–7303. 

• Department of the Interior, Central 

Utah Project Completion Act Office, 302 

East 1860 South, Provo, Utah 84606. 

The documents are also available at 

http://www.cuwcd.com and http:// 

www.cupcao.gov. 

FOR FURTHER INFORMATION: Contact Mr. 

Lee Baxter, Central Utah Project 

Completion Act Office, 302 East 1860 

South, Provo, Utah 84606; (801) 379– 

1174; e-mail at lbaxter@uc.usbr.gov. 

Date: November 17, 2010. 

Reed R. Murray, 

Program Director, Central Utah Project 

Completion Act, Department of the Interior. 

[FR Doc. 2010–29582 Filed 11–23–10; 8:45 am] 

BILLING CODE 4310–RK–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

[FWS–R1–ES–2010–N227; 10120–1113– 

0000–C4] 

Endangered and Threatened Wildlife 

and Plants; 5-Year Status Reviews of 

58 Species in Washington, Oregon, 

California, and Hawaii 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Notice of initiation of reviews; 

request for information. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service, are initiating 5-year 

reviews for 58 species in Washington, 

Oregon, California, and Hawaii under 

the Endangered Species Act of 1973, as 

amended (Act). We request any new 

information on these species that may 

have a bearing on their classification as 

endangered or threatened. Based on the 

results of our 5-year reviews we will 

determine whether these species are 

properly classified under the Act. 

DATES: To ensure consideration in our 

reviews, we are requesting submission 

of new information no later than 

January 24, 2011. However, we will 

continue to accept new information 

about any listed species at any time. 

ADDRESSES: For the 52 species in Hawaii 

(see Table 1 below), submit information 

to: Field Supervisor, Attention: 5-Year 

Review, U.S. Fish and Wildlife Service, 

Pacific Islands Fish and Wildlife Office, 

300 Ala Moana Blvd., Room 3–122, Box 

50088, Honolulu, HI 96850. Information 

can also be submitted by e-mail to: 

pifwo-5yr-review@fws.gov. 

For the Oregon silverspot butterfly, 

northern spotted owl, and 

Stephanomeria malheurensis, submit 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES