[Federal Register Volume 65, Number 120 (Wednesday, June 21, 2000)]
[Rules and Regulations]
[Pages 38710-38711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15683]



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Part V





Department of Housing and Urban Development





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24 CFR Parts 25 and 30



Amendments to HUD's Mortgagee Review Board and Civil Money Penalty 
Regulations; Final Rule

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / 
Rules and Regulations

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 25 and 30

[Docket No. FR-4308-F-02]
RIN 2501-AC44


Amendments to HUD's Mortgagee Review Board and Civil Money 
Penalty Regulations

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule makes conforming changes to HUD's regulations 
to reflect statutory changes made by the Multifamily Assisted Housing 
Reform and Affordability Act of 1997. These amendments are designed to 
strengthen HUD's enforcement authority under its insured housing 
programs. The final rule also makes several clarifying, non-substantive 
amendments to these regulations. This final rule follows publication of 
a February 23, 2000 interim rule. No public comments were received on 
the interim rule. Accordingly, HUD is adopting the February 23, 2000 
interim rule without change.

DATES: Effective Date: July 21, 2000.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Deputy Chief Counsel for 
Administrative Proceedings, Departmental Enforcement Center, Room B-
133, Department of Housing and Urban Development, 451 Seventh Street, 
SW, Washington, DC 20410; telephone (202) 708-2350 (this is not a toll-
free number). Hearing or speech-impaired persons may access this number 
via TTY by calling the toll-free Federal Information Relay Service at 
1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background--The February 23, 2000 Interim Rule

    On February 23, 2000 (65 FR 9084), HUD published an interim rule 
amending its regulations at 24 CFR part 25 (which establishes the 
procedures governing HUD's Mortgagee Review Board) and 24 CFR part 30 
(which implements HUD's civil money penalty provisions). The February 
23, 2000 interim rule updated these regulations to reflect statutory 
amendments made by sections 551 and 553 of the Multifamily Assisted 
Housing Reform and Affordability Act of 1997 (Title V of the Fiscal 
Year 1998 HUD Appropriations Act; Pub.L. 105-65, approved October 27, 
1997) (referred to as the ``Multifamily Reform Act'' or the ``Act'').
    The Multifamily Reform Act made several amendments to strengthen 
HUD's enforcement authority under the National Housing Act (12 U.S.C. 
1701 et seq.), which establishes the statutory framework for HUD's 
insured housing programs. Section 551 of the Act provides that 
suspensions issued by the HUD Mortgagee Review Board are effective, 
without previous 30-day written notice of violation to the mortgagee, 
if there is sufficient evidence that immediate action is required to 
protect the financial interests of HUD or the public. Section 553 of 
the Multifamily Reform Act expands the list of persons and types of 
violations subject to a civil money penalty under HUD's insured housing 
programs.
    In addition to implementing sections 551 and 553 of the Multifamily 
Reform Act, the February 23, 2000 interim rule also made several 
clarifying, non-substantive, amendments to HUD's regulations at 24 CFR 
parts 25 and 30. The first amendment clarified under what conditions 
HUD's Mortgagee Review Board may issue a suspension. The second 
amendment clarified the effect of a suspension or withdrawal issued by 
the Board. The third amendment clarified that the Assistant Secretary 
for Public and Indian Housing may initiate a civil money penalty under 
the section 184 Indian housing loan guarantee program.
    A complete description of the amendments to 24 CFR parts 25 and 30 
was provided in the preamble to the February 23, 2000 interim rule.

II. This Final Rule

    This final rule adopts the policies and procedures contained in the 
February 23, 2000 interim rule. The public comment period on the 
interim rule closed on April 24, 2000. HUD did not receive any public 
comments on the interim rule. Accordingly, this final rule adopts the 
February 23, 2000 interim rule without change.

III. Other Enforcement-Related Amendments Made by the Multifamily 
Reform Act

    In addition to the statutory amendments described above, the 
Multifamily Reform Act made several other revisions to HUD's 
enforcement authority under its programs. For example, section 561 of 
the Multifamily Reform Act expands the list of persons and types of 
violations subject to a civil money penalty under section 537 of the 
National Housing Act. Further, section 563 of the Multifamily Reform 
Act amends the United States Housing Act of 1937 (the statutory 
authority for HUD's public and assisted housing programs) to provide 
for the imposition of civil money penalties for noncompliance with 
Section 8 Housing Assistance Payment contracts. The Multifamily Reform 
Act directs that HUD implement these statutory amendments using notice 
and comment rulemaking procedures. Accordingly, the amendments made by 
sections 561 and 563 of the Multifamily Reform Act will be the subject 
of a separate HUD proposed rule.

IV. Small Entities and HUD Enforcement Actions

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 104-121, 110 Stat. 847, approved March 29, 1996) (``SBREFA'') 
provides, among other things, for agencies to establish specific 
policies or programs to assist small entities. Small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. On May 21, 1998 (63 FR 28214), HUD published a Federal 
Register notice describing HUD's actions on implementation of SBREFA.
    Section 223 of SBREFA requires agencies that regulate the 
activities of small entities to establish a policy or program to reduce 
or, under appropriate circumstances, waive civil penalties when a small 
entity violates a statute or regulation. Where penalties are determined 
appropriate, HUD's policy is to consider: (1) The nature of the 
violation (the violation must not be one that is repeated or multiple, 
willful, criminal or poses health or safety risks), (2) whether the 
entity has shown a good faith effort to comply with the regulations; 
and (3) the resources of the regulated entity.
    With respect to the imposition of civil money penalties, HUD is 
cognizant that section 222 of the SBREFA requires the Small Business 
and Agriculture Regulatory Enforcement Ombudsman to ``work with each 
agency with regulatory authority over small businesses to ensure that 
small business concerns that receive or are subject to an audit, on-
site inspection, compliance assistance effort or other enforcement 
related communication or contact by agency personnel are provided with 
a means to comment on the enforcement activity conducted by this 
personnel.'' To implement this statutory provision, the Small Business 
Administration has requested that agencies include the following 
language on agency publications and notices which are provided to small 
businesses concerns at the time the enforcement action is undertaken. 
The language is as follows:

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Your Comments Are Important

    The Small Business and Agriculture Regulatory Enforcement 
Ombudsman and 10 Regional Fairness Boards were established to 
receive comments from small businesses about federal agency 
enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to 
small business. If you wish to comment on the enforcement actions of 
[insert agency name], call 1-888-REG-FAIR (1-888-734-3247).

    As HUD stated in its May 21, 1998 Federal Register notice, HUD 
intends to work with the Small Business Administration to provide small 
entities with information on the Fairness Boards and National Ombudsman 
program, at the time enforcement actions are taken, to ensure that 
small entities have the full means to comment on the enforcement 
activity conducted by HUD.

V. Findings and Certifications

Environmental Impact

    In accordance with 24 CFR 50.19(c)(1) of the Department's 
regulations, this final rule does not direct, provide for assistance or 
loan and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Therefore, this final rule is categorically 
excluded from the requirements of the National Environmental Policy Act 
(42 U.S.C. 4321 et seq.).

Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final 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.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this final rule is not anticipated to have a significant 
economic impact on a substantial number of small entities. As discussed 
in this preamble, the rule makes conforming changes to HUD regulations 
in 24 CFR parts 25 and 30 to reflect statutory changes made to the 
National Housing Act by the Multifamily Reform Act. These changes are 
not discretionary on the part of HUD. These changes are applicable 
regardless of whether HUD revises its regulations to reflect these 
statutory amendments.
    The purpose of the legislation is to grant additional enforcement 
tools to HUD to use against those who violate agreements and program 
requirements. The Multifamily Reform Act expanded the list of persons 
and the types of violations subject to civil money penalties under 
HUD's insured housing programs for the purpose of protecting the FHA 
insurance fund. To the extent that these statutory changes impact small 
entities it will be as a result of actions taken by small entities 
themselves--that is, violation of applicable program regulations and 
requirements.
    The rule also makes three clarifying, non-substantive amendments to 
these regulations. These amendments do not impose new regulatory 
requirements, but codify existing HUD practice. Accordingly, HUD has 
determined that this final rule will have no adverse or 
disproportionate economic impact on small entities.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 establishes 
requirements for Federal agencies to assess the effects of their 
regulatory actions on State, local, and tribal governments and the 
private sector. This rule does not impose a Federal mandate that will 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year.

List of Subjects

24 CFR Part 25

    Administrative practice and procedure, Loan programs--housing and 
community development, Organization and functions (Government 
agencies).

24 CFR Part 30

    Administrative practice and procedure, Loan programs--housing and 
community development, Mortgages, Penalties.

PARTS 24 AND 30--[AMENDED]

    For the reasons discussed in the preamble, the interim rule 
amending 24 CFR part 25 and 24 CFR part 30, which was published at 65 
FR 9084, is adopted as a final rule without change.

    Dated: June 14, 2000.
Andrew Cuomo,
Secretary.
[FR Doc. 00-15683 Filed 6-20-00; 8:45 am]
BILLING CODE 4210-32-P