25926 Federal Register / Vol. 72, No. 87 / Monday, May 7, 2007 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 320 and 350 

[Docket No. FR–5063–P–01] 

RIN 2503–AA19 

Government National Mortgage 

Association: Mortgage-Backed 

Securities (MBS) Program—Payments 

to Securityholders; Book-Entry 

Procedures; and Financial Reporting 

AGENCY: Government National Mortgage 

Association, HUD. 

ACTION: Proposed rule. 

SUMMARY: The Government National 

Mortgage Association (Ginnie Mae) is 

proposing regulations that would 

restrict the issuance of physical 

certificates representing Ginnie Mae 

mortgage-backed securities and would 

clarify that book-entry securities may be 

withdrawn from the Federal Reserve 

book-entry system after Ginnie Mae has 

approved a request for physical 

certificates, also known as definitive 

securities, in the same amount. This 

proposed rule would also eliminate the 

requirement for a classified balance 

sheet. 

DATES: Comment Due Date: July 6, 2007. 

ADDRESSES: Interested persons are 

invited to submit comments to the 

Office of General Counsel, Rules Docket 

Clerk, Department of Housing and 

Urban Development, 451 Seventh Street, 

SW., Room 10276, Washington, DC 

20410–0500. Communications should 

refer to the above docket number and 

title. 

Electronic Submission of Comments. 

Interested persons may submit 

comments electronically through the 

Federal eRulemaking Portal at 

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 

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 Web site 

to submit comments electronically. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. In 

all cases, communications must refer to 

the docket number and title. 

Public Inspection of Public 

Comments. All comments and 

communications submitted to HUD will 

be available, without charge, 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). 

Copies of all comments submitted are 

available for inspection and 

downloading at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Thomas R. Weakland, Senior Vice 

President, Office of Program 

Administration, Government National 

Mortgage Association, Department of 

Housing and Urban Development, Room 

B–133, 451 Seventh Street, SW., 

Washington, DC 20410; telephone (202) 

475–4915 (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 

The Government National Mortgage 

Association (GNMA) (Ginnie Mae) 

guarantees privately issued securities 

backed by trusts or pools of mortgage 

loans that are insured or guaranteed by 

the Federal Housing Administration, the 

Rural Housing Service, the Department 

of Veterans Affairs, and the Department 

of Housing and Urban Development 

(HUD). Ginnie Mae is a government 

corporation within HUD, authorized by 

the National Housing Act (12 U.S.C. 

1716 et seq.). The regulations governing 

Ginnie Mae are located at 24 CFR part 

300. 

II. This Proposed Rule 

Ginnie Mae-guaranteed securities are 

issued in book-entry form. Under 

current Ginnie Mae regulations, a 

securityholder may request that the 

book-entry security be converted into 

certificated form after initial issuance. 

Certificates are physical documentation 

of the ownership of the security. Ginnie 

Mae proposes to revise the regulations 

to state that for all securities issued after 

particular issue dates, physical 

certificates may only be issued as 

approved by Ginnie Mae. Also, the 

proposed rule would clarify that bookentry securities may be withdrawn after 

Ginnie Mae has approved a request for 

definitive Ginnie Mae securities. 

Ginnie Mae proposes to limit the 

issuance of physical securities because: 

(1) Virtually all of Ginnie Mae’s 

investors hold their securities in bookentry form through the Federal Reserve 

Bank of New York (FRBNY) or through 

a FRBNY participant; (2) book-entries 

will decrease the costs for issuers; (3) 

physical securities provide more 

opportunities for fraud; and (4) the shift 

from physical securities to book-entry 

securities conforms with industry 

practice. 

Additionally, Ginnie Mae proposes to 

revise the financial reporting rule for 

issuers participating in its MBS 

programs. The revisions will remove the 

requirement that issuers submit 

classified balance sheets. Ginnie Mae 

proposes to remove this requirement in 

order to conform with industry practice. 

III. 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 

This proposed 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. Accordingly, 

under 24 CFR 50.19(c)(1), this proposed 

rule is categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) generally requires an 

agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This proposed 

rule introduces a streamlining 

amendment to the financial reporting 

regulations and a change in the 

maintenance of Ginnie Mae book-entry 

and certificated securities. Small 

entities will not be adversely affected by 

the more streamlined financial reporting 

requirement or the book-entry 


rwilkins on PROD1PC63 with PROPOSALS2
Federal Register / Vol. 72, No. 87 / Monday, May 7, 2007 / Proposed Rules 25927 

requirement; in fact, a more streamlined 

financial reporting requirement may 

alleviate some burden. Furthermore, all 

such issuers, regardless of size, are 

subject to the new requirements 

proposed by the rule. Therefore, the 

undersigned certifies that this proposed 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Notwithstanding HUD’s 

determination that this proposed rule 

will not have a significant economic 

impact on a substantial number of small 

entities, HUD specifically invites 

comments regarding less burdensome 

alternatives to this rule that will meet 

HUD’s program responsibilities. 

Executive Order 13132, Federalism 

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 order. This proposed 

rule will not have federalism 

implications and would not impose 

substantial direct compliance costs on 

state and local governments or preempt 

state law within the meaning of the 

order. 

Paperwork Reduction Act 

The information collection 

requirements contained in this proposed 

rule are currently approved by the 

Office of Management and Budget 

(OMB) under section 3504(h) of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520) and assigned OMB 

control number 2503–0033. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless the 

collection displays a currently valid 

control number. 

Executive Order 12866, Regulatory 

Planning and Review 

OMB reviewed this rule under 

Executive Order 12866 (entitled 

‘‘Regulatory Planning and Review’’). 

OMB determined that this rule is a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of the order 

(although not an economically 

significant regulatory action, as 

provided under section 3(f)(1) of the 

order). The docket file is available for 

public inspection between the hours of 

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

Regulations Division, Office of General 

Counsel, Department of Housing and 

Urban Development, 451 Seventh Street, 

SW., Room 10276, Washington, DC 

20410–0500. Due to security measures 

at the HUD Headquarters building, 

please schedule an advance 

appointment to review the docket file by 

calling the Regulations Division at (202) 

708–3055 (this is not a toll-free 

number). Hearing- and speech-impaired 

individuals may access this number 

through TTY by calling the toll-free 

Federal Information Relay Service at 

(800) 877–8339. 

List of Subjects for 24 CFR Parts 320 

and 350 

Mortgages, Securities. 

Accordingly, for the reasons described 

in the preamble, HUD proposes to 

amend 24 CFR parts 320 and 350 as 

follows: 

PART 320—GUARANTY OF 

MORTGAGE-BACKED SECURITIES 

1. The authority citation for 24 CFR 

part 320 continues to read as follows: 

Authority: 12 U.S.C. 1721(g) and 1723a(a); 

and 42 U.S.C. 3535(d). 

2. Revise § 320.5(e) to read as follows: 

§ 320.5 Securities. 

* * * * * 

(e) Issue Date. Securities backed by 

single-family mortgages with issue dates 

of October 1, 1998, or before, serial 

notes with issue dates of July 1, 2002, 

or before, and securities backed by 

multifamily mortgages with issue dates 

of February 1, 2002, or before, have been 

issued in certificated form. Securities 

issued after these dates will be issued in 

book-entry form. The Association may 

approve the issuance of certificated 

securities for good cause. 

* * * * * 

3. Revise § 320.10 to read as follows: 

§ 320.10 Financial Reporting. 

Issuers shall submit to the Association 

audited annual financial statements 

within 90 days of their fiscal year end. 

All financial statements shall include a 

balance sheet and a statement of 

operations and cash flows. The audit 

shall be conducted in accordance with 

the standards for financial audits of the 

U.S. Government Accountability 

Office’s Government Auditing 

Standards, issued by the Comptroller 

General of the United States. 

PART 350—BOOK-ENTRY 

PROCEDURES 

4. The authority citation for 24 CFR 

part 350 continues to read as follows: 

Authority: 12 U.S.C. 1721(g) and 1723a(a); 

and 42 U.S.C. 3535(d). 

5. Revise § 350.8(a) to read as follows: 

§ 350.8 Withdrawal of Eligible Book-Entry 

Ginnie Mae Securities for Conversion to 

Definitive Form. 

(a) Eligible book-entry Ginnie Mae 

securities may be withdrawn from the 

book-entry system after Ginnie Mae has 

approved a request for the delivery of 

definitive Ginnie Mae securities in the 

same amount. 

* * * * * 

Dated: April 3, 2007. 

Robert M. Couch, 

President, Government National Mortgage 

Association. 

[FR Doc. E7–8499 Filed 5–4–07; 8:45 am] 

BILLING CODE 4210–67–P 


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